TIDMPXC
RNS Number : 9056N
Phoenix Copper Limited
28 September 2023
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
28 September 2023
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 2023 (the "Period").
Year-to-date Highlights
Corporate & Financial
- Investment in Empire Mine increased to $35.88 million (2022: $29.73 million)
- Group reports loss of $0.63 million (2022: loss of $1.052 million)
- Period-end net assets of $37.39 million (2022: $38.22 million)
- Company reports a profit of $309,759 (2022: loss of $368,534)
- Company loans to operating subsidiaries increased to $29.63 million (2022: $25.23 million)
- Corporate copper bond documentation being finalised, prior to
listing on The International Stock Exchange in the Channel Islands,
and anticipated closing of an initial tranche of up to $80
million
- Inaugural Sustainability Report published and the Company
scoring an overall 'A' rating on Digbee ESG Platform
Operational
- Continuity of Empire Mine open pit mineralisation further
confirmed, including intercepts of up to 12.8% copper, 269.10
grammes per tonne ("g/t") silver and 0.75 g/t gold
- Metallurgical test work to recover copper, gold and silver via
flotation plus leaching completed and now being optimised
- Further higher-grade base and precious metals mineralisation
encountered at Red Star silver-lead deposit
- 28 holes (3,300 metres) of drilling completed on 60-hole
Navarre Creek gold drilling programme
Chairman's Statement
As we approach the final quarter of 2023, we continue to make
good operational progress at our Empire project in Idaho, both in
terms of the development of the initial open-pit mine and the
exploration of the surrounding mineralised district. It remains our
intention to fund construction of this first mine, which will give
us production and financial autonomy, with minimal additional
dilution to shareholders. With this objective in mind, we are
currently finalising the documentation to create a class of
authorised bonds in a total amount of $300 million, and to admit
them to trading on The International Stock Exchange ("TISE") in the
Channel Islands, as a prelude to closing an initial tranche to
raise up to $80 million. We have been in discussion with a number
of interested parties for some time, and we are hopeful that we can
finally close the book in the near future. We share the frustration
that this apparent delay has caused, but we have to acknowledge
that we are trying to raise multiples of our current market
capitalisation, and that the market remains turbulent, to say the
least. Although there can be no certainty until the bonds have been
issued and settled, we are confident that the issue will close and
that the Company will have access to the relevant construction
funding when required.
Since we last reported, we have made several advances with the
Empire open-pit project. These are described in detail in the CEO's
report. With the success of our metallurgical test work, first
announced in June and updated at the beginning of September, we
have narrowed our focus to three process design options that will
produce the most economic value for shareholders while considering
current metal prices, reagent costs and capital expenditure
requirements. If, as the laboratory tests indicate, we can process
copper, gold and silver on a commercial scale using a
flotation-based process, we will be able to recover the metals
without the use of cyanide, and may be able to build the majority
of our operations on patented (Company-owned) land, which may
simplify the permitting process. In addition to processing the
oxide ore from the open pit, the flotation-based plant may also
enable us to process the higher-grade sulphide ore below the
open-pit, effectively giving us two plants for the price of one. As
we make the final adjustments to our economic model and Plan of
Operations, we look forward to updating you with the feasibility
study in Q4.
I would like to thank our Environmental, Social and Governance
("ESG") team whose hard work enabled Phoenix to gain one of the
highest marks awarded by Digbee ESG, the specialist mining sector
ratings agency, which is used by an increasing number of investors
to source ESG compliant investments. Phoenix scored an overall "A."
This has helped us as several funds considering investing in our
bonds regard this as a crucial part of the decision-making
process.
The other highlight of the summer was the commencement of
drilling at Navarre Creek, our 3,578 acre (14.48 sq km) gold
exploration project, situated some 8 kilometres west-northwest of
the Empire open-pit mine, which followed on from our surface
sampling and field magnetics surveys. We have drilled 28 holes to
date within a permitted 60-hole programme, and we look forward to
sharing the results when they are back from the assay
laboratory.
As always, I would like to thank shareholders for their
continued support and patience, and look forward to updating you
with further progress, both operationally and corporately, in the
4(th) quarter and beyond.
Marcus Edwards-Jones
Chairman
Chief Executive Officer's Report
The Company started the year with fresh analytical data from the
2022 metallurgical core drilling program and with the contracting
of RDI Laboratories (now Forte Dynamics) in Colorado, USA to
complete final metallurgical test work and a final process design
for recovering copper, gold and silver at our Empire Open-Pit Mine.
At the same time as we were evaluating the 2022 drilling results,
the last of which arrived in March 2023, we were preparing for the
summer arrival of a reverse-circulation drill rig to begin
subsurface exploration at our Navarre Creek gold claim block. Assay
results from the 2022 Red Star drilling campaign were also
delivered and reported in April 2023. The drilling results were
consistent with previous results and continued to indicate robust
metal grades, in particular gold, silver, and lead. The Company's
ESG program continued strong forward momentum after receiving an
overall score of "A" on Digbee ESG, a disclosure platform for the
mining industry that simplifies peer reporting and rewards
management action, and the publication of the Company's inaugural
Sustainability Report. The Company purchased and moved all of the
laboratory assets from the former AuRIC Metallurgical Laboratories
in Salt Lake City to Mackay, Idaho, for use in the future mine's
onsite assay laboratory. As we move through the second half of the
year, the U.S. Department of Energy has announced that it is
upgrading copper to the "near critical" classification for clean
energy technologies.
This new classification, coupled with last year's US Defense
Production Act announcement providing for an increase in the
domestic production of metals for national defense, electric
vehicle technologies, and electrical transmission and storage,
further sets the stage for long-term stability in the global copper
market.
2023 Metallurgical Testing Program
In 2022, 3,502 feet (1,067 metres) of core were drilled at the
Empire copper deposit for the purpose of collecting samples
3-dimensionally representative of the oxide portion of the deposit
for copper, gold and silver recovery testing. Initially, the
metallurgical work was intended to further develop a commercial
leaching design using only ammonium thiosulfate ("ATS") as the
primary reagent for recovering copper, gold and silver. Following
the initial test work, our metallurgists determined that adding a
flotation step upstream of the leaching circuit and generating a
saleable concentrate stream containing all of the metals could
provide an immediate revenue stream with less concern over reagent
pricing and product supply, as well as reducing the total volume of
ore entering the downstream leaching circuit. If the
flotation-followed-by-leaching process proves to be commercially
viable, it has the potential of reducing overall capital and
operating costs as well as the potential of sizing down the
operational footprint and allowing a greater portion of the
operation to reside on the Company's patented mining claims.
Another possible advantage of the flotation circuit design is in
the flotation milling equipment. Similar flotation technologies are
widely used in the processing of sulphide ores, similar to the
deeper sulphide mineralization at Empire, and at least part or all
of the flotation circuit constructed for the open-pit processing
could be employed for processing sulphide material in the future.
The initial flotation and leaching results are shown in Table 1
below, and are based on "open-cycle" testing.
Table 1: Flotation and Leaching Results
Process flowsheet Cu Recovery Au Recovery Ag Recovery Gross Revenue
option (USD/metric
tonne)
Flotation Only 37.3% 48.8% 44.6% 35.54
------------ ------------ ------------ --------------
Flotation plus ATS
Leach of Flot Tails 66.5% 92.7% 73.0% 64.42
------------ ------------ ------------ --------------
Flotation plus Acid
Leach of Flot Tails 87.8% 48.8% 44.6% 57.80
------------ ------------ ------------ --------------
Note: Revenue based on $1,875 / oz gold, $4/lb copper, and
$18.75 / oz silver
The test work completed to date is currently being optimized
through "locked-cycle" testing, which mimics the characteristics of
an operating mill by recirculating material and process fluids. It
is not uncommon to see recovery improvements resulting from locked
cycle testing. Once fully optimized, the final process design will
be completed and capital and operating costs, as well as the costs
for mining and general construction, will be finalized and an
updated project economic model generated. This will enable the Plan
of Operations to be updated and submitted to the regulatory
authorities in order to complete the permitting process.
2023 Navarre Creek Drilling Program
Reverse-circulation drilling commenced on the Company's Navarre
Creek gold project in July. Up to 60 drill holes located at four
primary target areas within the 14.48 sq km (3,578 acres) property
have been planned. The drilling program plan was approved by the US
Forest Service in August 2022 and allows for holes to be drilled
from 30 drill pads through July 2024. 28 holes have been completed
to date, totalling 10,830 feet (3,300 metres). Initial assay
results for the drilling are anticipated from late Q3 this year.
Drill hole targets at Navarre Creek were selected based on the
results of the past several years of surface geochemistry results
as well as geophysical anomalies identified from a total field
magnetics survey and hyperspectral mineral survey conducted in
2021.
While there is no guarantee that the Navarre Creek exploratory
drilling program will result in the discovery of a viable ore
deposit, the geology, mineralogy, and geochemistry of Navarre Creek
fits all the criteria necessary for a potentially significant gold
bearing system. The geological characteristics of the Navarre Creek
rocks evident on the surface are also evident in many of the drill
cuttings logged since drilling commenced in July, and the pending
assays will be the determining factor of mineralization in the four
initial target areas.
Red Star Drilling Results
In 2022, 875 feet of reverse-circulation drilling was completed
that tested the magnetic anomalies identified during the ground
magnetics survey. Assay results from the 2022 drilling program were
received in Q2 2023. The assay values for copper, silver, lead, and
zinc were consistent with previous drilling programs. Of particular
interest are the results from drill hole RS22-02, which tested the
western margin of a strong magnetic anomaly, assaying 7.62 metres
of 142.7 grammes/tonne ("g/t") silver, 2.94% lead, and 1.54% zinc.
Additionally, drill hole RS22-04 assayed 9.15 metres of 1.56 g/t
gold and 0.62% copper, including 1.52 metres averaging 7.59 g/t
gold and 0.58% copper. While our primary focus is on the
engineering and development of the Empire Open-Pit Mine, a plan is
being constructed for follow-up drilling at Red Star in 2024.
Other Business
The Company purchased all of the laboratory assets from AuRIC
Metallurgical Laboratories following its closure this spring,
including the analytical equipment and supplies necessary for the
onsite laboratory that will service the Empire Mine once it is in
operation. The purchase of these laboratory assets will prove most
cost effective, saving up to three times as much as the purchase of
new equipment, which is significant in light of the current
laboratory equipment market.
Empire Mineral Resources
Polymetallic Open Pit Mine
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.
Table 2: 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 - High-grade Silver
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. Red Star was identified from a 20-metre wide
surface outcrop across a skarn structure. 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.
Table 3: Maiden Inferred Resource Statement for Red Star, May
2019
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
Over the past six months, the copper price has been less
volatile than in 2022, ranging between $3.50 and $4.00/pound. Gold
and silver have followed suit and settled in at $1,900 and
$23/ounce, respectively. The cost of the materials and supplies
necessary for the construction and operation of our Empire open pit
project have also appeared to stabilize, although generally at
higher levels than in the days before Covid-19 and the war in
Ukraine. While the cost of lumber and concrete have been
consistently decreasing, structural steel and diesel fuel remain
elevated. Diesel fuel in Idaho is over $4.00/gallon, nearly twice
the per gallon pre-Covid price. Labor costs have also increased, as
the current working generation demands more compensation for hours
worked. This is understandable as inflation has driven the cost of
living to all-time highs. As a result, it is our job to engineer
the most efficient mining and processing technologies available to
ensure that our operations can withstand the additional burdens on
production.
In July of this year, the U.S. Department of Energy announced
that it is upgrading the criticality of copper for clean energy
technologies as part of the agency's Critical Materials Assessment.
The purpose of the research and conclusions in the assessment is to
enable the Department of Energy to set priorities for investment to
secure domestic critical mineral and material supply chains,
support the clean energy transition, and promote sustainable
solutions to meet current and future needs. The assessment found
that copper is a material that serves a critical function in
electrification as many nations aim to reduce carbon emissions,
with some setting goals to achieve net zero by 2050. The report
notes that these efforts will increase the demand for clean energy
technologies and the materials they rely on. Copper, a key metal in
electric vehicles, wind turbines, and other green technologies, is
set to move from a 'noncritical' classification in the short term
to a 'near critical' classification in the medium term. Between
2025 and 2030, copper is expected to land on a level 3 out of 4 in
terms of its importance to energy on the agency's criticality
matrix. As mentioned, this new classification, coupled with last
year's US Defense Production Act announcement, further sets the
stage for long-term stability in the global copper market.
Copper remains 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 only increase the demand. 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.
Our Idaho projects host both EV metals and precious metals. Our
current metallurgical test work, which is focused on developing the
most efficient and economical methods of recovering copper, gold,
and silver, will be designed to deliver crucial metals to the
numerous infrastructure and green energy projects in the global
pipeline at the lowest cost possible to the consumer and the
highest margin possible for us.
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.
Conclusion
As the demand for metals increases globally, the Company is in
an ideal position to deliver copper, gold, and silver into a market
with increasing demands. Our team of highly-experienced engineers,
metallurgists, and geologists are continuing the work necessary to
position ourselves as future metal producers contributing to the
global transportation, manufacturing and energy sectors that are so
vital to our livelihoods.
I would like to thank all our professional staff, consultants
and advisors, all of whom continue to work tirelessly to accomplish
our common goal of putting the Empire Mine into production and
exploring and developing our other projects for inclusion in a
pipeline of future producing mines. I look forward to reporting
further positive news as we continue our exploration and
development programs during the remainder of 2023.
Ryan McDermott
Chief Executive Officer
ESG & Sustainability Committee Chairman's Report
It is a great pleasure to provide an update on the ESG &
Sustainability ("ESG&S") activities since our last report in
May 2023.
Following the publication of our inaugural Sustainability Report
in Q2 2023, we continue to work with the KCAT (Konnex Community
Advisory Team) to ensure that our stakeholders remain informed
about our progress as we continue through the development and
permitting stages. We are keen to continue sharing our knowledge of
the industry within the community in which we will be operating,
including at the elementary and middle school levels, as well as
providing general mining and Company operations updates for the
immediate community. Community involvement is a cornerstone of our
ESG philosophy.
The tone of the national conversation about copper is changing.
The USA is looking at ways to become more mineral independent, and
PXC is exploring various ways to collaborate with Federal and State
governments to assist in this process. In particular, the ESG&S
team has been exploring government programmes and grants for mine
exploration process development.
We are also currently exploring ways to reduce our operational
footprint and operate as much as possible on our existing patented
(private) land. Minimizing our footprint, without adversely
affecting the mining process, is the right decision both
operationally and environmentally.
In addition, the ESG&S team is currently initiating
discussions with several other mining companies in order to
formulate a dispute resolution process ahead of hiring a large
workforce. We are aiming to provide a clear process for employees
of the Company, as well as for our stakeholders.
We are excited to have identified a community education
opportunity partner who is willing to provide a highly practical
eight-month mechanical training course targeted predominantly at
recent and future graduates in the local high schools, and who is
able to offer the course at 1/8(th) of the usual price. We are very
keen to publicise this locally. In the first place, it is a
fantastic opportunity for our youth, but also because when we move
to production, we will be hiring individuals with mechanical
qualifications, and it will be an absolute priority for us to hire
locally whenever possible. All anecdotal evidence and research
shows that local hires tend to show greater loyalty, and remain in
employment for longer than out-of-area hires.
We currently have two openings in our KCAT team which we will
publicise shortly in order to find individuals with suitable
experience who can assist in acting as liaisons between the Company
and the community.
In association with the KCAT, we are in the process of
finalising a Konnex Vendor Handbook, which sets out the
requirements and expectations we have of external contractors and
suppliers who conduct business with, or wish to conduct business
with, the Company. We have also drafted a Konnex Employee Handbook,
which sets out the Company's core values and goals, as well as a
detailed set of requirements of employee expectations.
We are looking forward to updating you further in the future. In
the meantime, we would be delighted to receive feedback and
suggestions at esg@phoenixcopper.com .
Catherine Evans
Non-Executive Director
Financial Overview
The Group reports a loss for the Period of $0.63 million (2022:
loss of $1.052 million). This includes a non-cash foreign exchange
gain on sterling denominated assets of $96,172 (2022: foreign
exchange loss of $503,593), and a charge of $18,992 (2022: $36,623)
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 2023 totalled $37.39 million (2022: $38.22 million),
including $35.88 million (2022: $29.73 million) relating to the
Empire Mine, and $2.75 million (2022: $9.05 million) in cash.
The Company reports a profit for the Period of $309,759 (2022:
loss of $368,534), and net assets of $41.81 million (2022: $40.88
million). During the Period, the Company charged its operating
subsidiaries $450,000 (2022: $465,000) in respect of management
services provided, and $837,108 (2022: $610,653) in respect of
interest at 6% per annum on its inter-company loans, the latter
eliminating on consolidation. At 30 June 2023, the Company's loan
to Konnex Resources Inc ("Konnex"), owner of the Empire Mine, stood
at $27.03 million (2022: $22.95 million). This loan will be repaid
from Konnex's operating cash flow in due course and is intended,
together with royalties receivable from Konnex, to form a platform
for a future proposed dividend policy to return money to
shareholders.
The Company has also advanced $2.60 million (2022: $nil) to KPX
Holdings Inc ("KPX"), its Idaho registered intermediate holding
company, into which the Company's investment in Konnex, and
investments in and related loans to Borah Resources Inc, Lost River
Resources Inc and Salmon Canyon Resources Inc, totalling $4.42
million, were transferred on 31 December 2022 in return for 100% of
the equity of KPX.
During the Period, the Company issued 50,000 ordinary shares of
no par value ("Ordinary Shares") pursuant to the exercise of
warrants. Since the Period-end a further 2,250,000 Ordinary Shares
have been issued pursuant to the exercise of warrants. The
outstanding share capital of the Company is currently 124,928,622
Ordinary Shares.
In September 2023 the board approved the creation of a class of
corporate copper bonds to a total authorised amount of $300
million, as a prelude to the anticipated closing of an initial
tranche to raise up to $80 million (before expenses) for the
development and construction of the Empire open pit mine, plus
operational working capital. The bonds will pay a floating rate
coupon subject to a minimum of 8.5% per annum and a maximum of 20%.
The floating rate coupon will be calculated as to the higher of a
copper price coupon linked to the copper price on the London Metal
Exchange, or an interest rate coupon linked to the US Federal
Discount Rate. The bonds will be secured on the Group's patented
open pit mining claims, will be listed on The International Stock
Exchange in the Channel Islands, and will have a ten-year life with
bondholder option to request redemption at nominal value after six
years and the Company's option to offer redemption at a 10% premium
to nominal value after five years. M&G Trustee Company are
acting as Security Trustee and Escrow Agent, and The Bank of New
York Mellon ("BNYM") as Custodian and Transfer, Paying and
Settlement Agent.
On 24 March 2023 the Company announced a short-term, unsecured
$2,000,000 loan facility (the "Loan Facility"), for which the
initial three month term was extended for a further three months on
23 June 2023, at a fixed 4% coupon. The Company has extended the
initial term of the Loan Facility for a further two months until 22
November 2023 at a fixed 2% coupon. At the Company's option, the
Loan Facility may be extended to 22 March 2024, at an interest rate
of 1% per month.
The Company's shares are listed on AIM, operated by the London
Stock Exchange under the ticker PXC, and are also admitted to
trading on New York's OTCQX Market under the ticker PXCLF, and in
the form of American Depositary Receipts ("ADRs") under the ticker
PXCLY, with each ADR comprising 10 Ordinary Shares. BNYM sponsored
the ADR Program and act as ADR depositary, custodian and
registrar.
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 24 May 2023, and the Company's 2022 Sustainability
Report, can be viewed on the Company's website at
https://phoenixcopperlimited.com.
Richard Wilkins
Chief Financial Officer
Condensed consolidated income
statement Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
Note $ $ $
Continuing operations
Revenue 3 - - -
Exploration and evaluation
expenditure (28,839) - -
---------- ------------ -------------
Gross loss (28,839) - -
Administrative expenses 4 (617,788) (1,057,717) (1,568,475)
Other operating expenses 9 - - (37,777)
Loss from operations (646,627) (1,057,717) (1,606,252)
Finance income 21,258 6,107 32,104
Loss before taxation (625,369) (1,051,610) (1,574,148)
Taxation - - -
---------- ------------ -------------
Loss for the period (625,369) (1,051,610) (1,574,148)
---------- ------------ -------------
Loss attributable to:
* Owners of the parent company (612,262) (1,038,033) (1,546,827)
* Non-controlling interests (13,107) (13,577) (27,321)
---------- ------------ -------------
(625,369) (1,051,610) (1,574,148)
---------- ------------ -------------
Basic and diluted loss per
share - US cents 5 (0.50) (0.86) (1.27)
---------- ------------ -------------
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
30 June 30 June 31 December
2023 2022 2022
$ $ $
---------- ------------ -------------
Loss for the period and total comprehensive
income for the period (625,369) (1,051,610) (1,574,148)
---------- ------------ -------------
Total comprehensive income for
the period attributable to:
Owners of the parent company (612,262) (1,038,033) (1,546,827)
Non-controlling interests (13,107) (13,577) (27,321)
---------- ------------ -------------
(625,369) (1,051,610) (1,574,148)
---------- ------------ -------------
Condensed consolidated statement
of
financial position Unaudited Unaudited Audited
30 June 30 June 31 December
Note 2023 2022 2022
$ $ $
------------ ------------ ------------
Non-current assets
Property, plant and equipment
- mining property 6 35,876,914 29,731,139 33,104,230
Intangible assets 7 347,000 345,844 347,000
------------
Total non-current assets 36,223,914 30,076,983 33,451,230
------------ ------------ ------------
Current assets
Trade and other receivables 8 1,433,783 780,299 1,534,507
Finance assets 9 18,563 56,340 18,563
Cash and cash equivalents 2,749,407 9,045,669 4,664,233
------------
Total current assets 4,201,753 9,882,308 6,217,303
------------ ------------ ------------
Total assets 40,425,667 39,959,291 39,668,533
------------ ------------ ------------
Current liabilities
Trade and other payables 10 35,321 478,302 572,470
Other liabilities 11 2,240,000 250,000 500,000
------------
Total current liabilities 2,275,321 728,302 1,072,470
------------ ------------ ------------
Non-current liabilities
Other liabilities 11 - 250,000 -
Provisions 12 757,702 757,702 757,702
------------ ------------ ------------
Total non-current liabilities 757,702 1,007,702 757,702
------------ ------------ ------------
Total liabilities 3,033,023 1,736,004 1,830,172
Net assets 37,392,644 38,223,287 37,838,361
------------ ------------
Equity
13
Share capital 10 - - -
Share premium account 44,889,817 44,848,384 44,878,927
Retained deficit (7,529,980) (6,684,755) (7,086,480)
Translation reserve (18,588) (18,588) (18,588)
Capital and reserves attributable
to the owners of the parent company 37,341,249 38,145,041 37,773,859
Non-controlling interests 51,395 78,246 64,502
Total equity 37,392,644 38,223,287 37,838,361
------------ ------------ ------------
Condensed consolidated statement of changes in equity
Share premium Retained Translation Total Non-controlling Total
deficit reserve interests Equity
$ $ $ $ $ $
Balance at 1 January 2022 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
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (508,794) - (508,794) (13,744) (522,538)
Total comprehensive income
for
the period - (508,794) - (508,794) (13,744) (522,538)
-------------- ------------ ------------ ------------ ---------------- ------------
Shares issued in the period 30,543 - - 30,543 - 30,543
Share-based payments - 107,069 - 107,069 - 107,069
-------------- ------------ ------------ ------------ ---------------- ------------
Total contribution by
owners 30,543 107,069 - 137,612 - 137,612
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 31 December 2022 44,878,927 (7,086,480) (18,588) 37,773,859 64,502 37,838,361
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (612,262) - (612,262) (13,107) (625,369)
------------ ------------ ------------ ---------------- ------------
Total comprehensive income
for
the period - (612,262) - (612,262) (13,107) (625,369)
-------------- ------------ ---------------- ------------
Shares issued in the period 10,890 - - 10,890 - 10,890
Share-based payments - 168,762 - 168,762 - 168,762
Total contribution by
owners 10,890 168,762 - 179,652 - 179,652
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 30 June 2023 44,889,817 (7,529,980) (18,588) 37,341,249 51,395 37,392,644
-------------- ------------ ------------ ------------ ---------------- ------------
Condensed consolidated statement
of cash flows Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2022
2023 2022
$ $ $
------------ ------------ ----------------
Loss before taxation (625,369) (1,051,610) (1,574,148)
Adjustments for:
Depreciation
Share-based payments 18,992 36,623 67,818
Fair value adjustment to financial
asset - - 37,777
(606,377) (1,014,987) (1,468,553)
Changes in working capital
Decrease/(increase) in trade and other
receivables 172,175 49,896 (58,563)
(Decrease) in trade and other payables (537,149) (404,894) (310,726)
------------ ------------ ----------------
Cash (used in)/generated from operating
activities (971,351) (1,369,985) (1,837,842)
------------ ------------ ----------------
Investing activities
Purchase of intangible assets - (15,000) (16,156)
Purchase of property, plant and equipment (2,622,914) (3,539,095) (6,836,312)
Net cash outflow from investing activities (2,622,914) (3,554,095) (6,852,468)
------------ ------------
Cash flows from financing activities
Proceeds from the issuance of ordinary
shares 10,890 1,387,637 1,418,180
Preliminary bond-issue expenses (71,451) (464,417) (1,110,166)
Proceeds from new short-term loans 2,000,000 - -
Repayment of deferred consideration (260,000) - -
Net cash inflow from financing activities 1,679,439 923,220 308,014
------------ ------------ ----------------
Net (decrease)/increase in cash and
cash equivalents (1,914,826) (4,000,860) (8,382,296)
Cash and cash equivalents at the beginning
of the period 4,664,233 13,046,529 13,046,529
Cash and cash equivalents at the
end of the period 2,749,407 9,045,669 4,664,233
------------ ------------ ----------------
An amount of $149,770, (30 June 2022: $68,014, 31 December 2022:
$143,888) 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 27 September 2023.
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 $450,000 (30 June 2022: $465,000;
31 December 2022: $930,000) in respect of management services
provided.
4. Administrative expenses
Administrative expenses include $96,172 of foreign exchange
gains (30 June 2022: foreign exchange losses of $503,593; 31
December 2022: foreign exchange losses of $564,353).
Administrative expenses also include share-based payments of
$18,992 (30 June 2022: $36,623; 31 December 2022: $67,818). 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 2022
2023 2022
$ $ $
------------------- ------------------- -----------------
Loss for the period attributable
to equity holders of the parent
company (612,262) (1,038,033) (1,546,827)
------------------- ------------------- -----------------
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 122,668,401 121,105,350 121,794,101
------------------- ------------------- -----------------
Loss per share - basic and diluted
(US cents) (0.50) (0.86) (1.27)
------------------- ------------------- -----------------
Non-current assets
6. Property, plant and equipment - mining Mining
property Property
$
----- -------------------------
Cost or valuation
At 1 January 2022 26,124,030
Additions 3,607,109
-------------------------
At 30 June 2022 29,731,139
Additions 3,373,091
At 31 December 2022 33,104,230
Additions 2,772,684
At 30 June 2023 35,876,914
-------------------------
Depreciation
At 30 June 2022, 31 December 2022 and 30 June -
2023
----- -------------------------
Net book value:
30 June 2022 29,731,139
-------------------------
31 December 2022 33,104,230
30 June 2023 35,876,914
-------------------------
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. There has
been no impairment charged in any period due to the early stage in
the Group's project to reactivate the mine.
7. Intangible assets
Exploration
and evaluation
expenditure
$
---- ----------------
Cost or valuation
At 1 January 2022 330,844
Additions 15,000
----------------
At 30 June 2022 345,844
Additions 1,156
----------------
At 31 December 2022 347,000
Additions -
---- ----------------
At 30 June 2023 347,000
----------------
Net book value:
30 June 2022 345,844
--------
31 December 2022 347,000
30 June 2023 347,000
--------
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 KPX Holdings Inc, a wholly owned
subsidiary of the parent entity, and each of which are 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 of Toronto,
Canada.
8. Trade and other receivables Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
$ $ $
---------- ---------- ------------
Other receivables 193,952 206,918 181,072
Preliminary bond issue expenses 1,181,617 464,417 1,110,166
Prepaid expenses 58,214 108,964 243,269
---------- ---------- ------------
1,433,783 780,299 1,534,507
---------- ---------- ------------
The preliminary bond issue expenses relate to the Company's
corporate copper bonds. These expenses will be deducted from the
proceeds of the bonds when issued and amortised over the expected
life of the bonds.
9. Financial assets Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2022
2023 2022
$ $ $
Quoted investments 18,563 56,340 18,563
---------- ---------- ----------------
In May 2021 the Group entered into an earn-in agreement with
First Cobalt Idaho, a wholly-owned subsidiary of Toronto-based
Electra Battery Materials Corporation ("Electra"), in respect of
the Group's Redcastle cobalt property on the Idaho Cobalt Belt. The
Group received consideration of $50,000 and 11,111 shares (as
consolidated) in Electra valued at $56,340, a total initial
consideration of $106,340.
The shares were valued at market price as at 31 December 2022
and a fair value adjustment of $37,777 has been charged to other
operating expenses as at 31 December 2022.
10. Trade and other payables Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
$ $ $
----------- ----------- ------------
Trade payables 19,175 478,302 569,864
Other payables
Need 16,146 - 2,606
35,321 478,302 572,470
----------- ----------- ------------
11. Other liabilities Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
$ $ $
----------- ----------- ------------
Current liabilities
Short-term loan 2,000,000 - -
Deferred consideration 240,000 250,000 500,000
----------- ----------- ------------
2,240,000 250,000 500,000
----------- ----------- ------------
Non-current liabilities
Deferred consideration - 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 $560,000 has been paid.
Deferred consideration comprises one further payment of $240,000
due on 31 December 2023.
The $2,000,000 short-term loan facility is unsecured, carries an
effective interest rate of 12% per annum, and is repayable on or
before 22 November 2023, unless extended at the Company's option to
22 March 2024.
12. Provisions Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
$ $ $
---------- ---------- ------------
Decommissioning provision 100,000 100,000 100,000
Royalties payable 657,702 657,702 657,702
---------- ---------- ------------
757,702 757,702 757,702
---------- ---------- ------------
There has been no change to provisions in the period ended 30
June 2023 and the year ended 31 December 2022.
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
2023 2022 2022
Number Number Number
------------ ------------ ------------
Allotted and issued
Ordinary shares with no par value 122,678,622 122,471,622 122,628,622
------------ ------------ ------------
The Ordinary Shares rank pari passu.
During the period the Company issued 50,000 Ordinary Shares
pursuant to the exercise of warrants raising $10,890 with an
average issue cost of 21.8 US cents.
Since the period end a further 2,250,000 Ordinary Shares have
been issued pursuant to the exercise of warrants raising $500,400
with an average issue cost of 22.2 US cents.
14. Events after the reporting date
In September 2023 the board approved the creation of a class
of corporate copper bonds to a total authorised amount of $300
million, as a prelude to the anticipated closing of an initial
tranche to raise up to $80 million (before expenses) for the
development and construction of the Empire open pit mine, plus
operational working capital. The bonds will pay a floating rate
coupon subject to a minimum of 8.5% per annum and a maximum of
20%. The floating rate coupon will be calculated as to the higher
of a copper price coupon linked to the copper price on the London
Metal Exchange, or an interest rate coupon linked to the US Federal
Discount Rate. The bonds will be secured on the Group's patented
open pit mining claims, will be listed on The International Stock
Exchange in the Channel Islands, and will have a ten-year life
with bondholder option to request redemption at nominal value
after six years and the Company's option to offer redemption
at a 10% premium to nominal value after five years. M&G Trustee
Company are acting as Security Trustee and Escrow Agent, and
The Bank of New York Mellon ("BNYM") as Custodian and Transfer,
Paying and Settlement Agent.
Market Abuse Regulation (MAR) Disclosure
The Company deems the information contained within this
announcement 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 Corporate David Hignell / Kasia Brzozowska Tel: +44 20 3470
Finance LLP (Nominated 0470
Adviser)
------------------------------------ -----------------
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
------------------------------------ -----------------
BlytheRay 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, gold and silver 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 out extensive drill programmes
which have defined a NI 43-101 completed PEA (preliminary economic
assessment) for an open pit heap leach solvent extraction and
electrowinning ("SX-EW") mine, which was updated in October 2020.
From the 2020 PEA, the measured and indicated resource is:
22,909,059 tonnes at an average grade of 0.38% copper, 0.324
grammes per tonne ("g/t") gold, 10.3 g/t silver, and 0.19% zinc.
The contained metal for the measured and indicated resource is
87,543 tonnes of copper, 238,406 ounces of gold, 7,595,198 ounces
of silver and 43,871 tonnes of zinc.
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 inferred resource of 103,000 tonnes containing 173.4 g/t
silver, 0.85 g/t 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, 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
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END
IR FLFVDARIDFIV
(END) Dow Jones Newswires
September 28, 2023 02:00 ET (06:00 GMT)
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