TIDMCDL
RNS Number : 1060X
Cloudbreak Discovery PLC
30 December 2021
30 December 2021
Cloudbreak Discovery Plc
("Cloudbreak" or the "Company")
Update on Final Results for the Year Ended 30 June 2021
Further to the announcement released earlier today, the Company
is pleased to publish the details of its Final Results (the
"Results") for the Year Ended 30 June 2021. A full copy of the
Results will be available via the company website at:
www.cloudbreakdiscovery.com/investors/
An electronic version will shortly be available for inspection
at the National Storage Mechanism:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Chairman's Statement
Dear Shareholder,
Enclosed are the financial results of Cloudbreak Discovery Plc
("Cloudbreak" or the "Company") and its subsidiaries (together "the
Group") for the year ended 30 June 2021.
In June 2021, the Company changed its name from Imperial X Plc
to Cloudbreak Discovery Plc and became a project generator to the
natural resource sectors through the acquisition of a portfolio of
mineral properties, equity and royalty positions diversified across
multiple jurisdictions, but primarily in North America and West
Africa (the "Acquisition"). The Acquisition was considered a
reverse takeover transaction with the companies acquired
(Cloudbreak Discovery Corp., Howson Ventures Inc. and Cabox Gold
Corp., collectively "Cloudbreak Canada") becoming the going forward
entity for financial statement reporting purposes. The Company also
acquired various equity and debt positions in Anglo African
Minerals Plc, a Bauxite exploration company with assets in Guinea,
West Africa. The company agreed to the terms on these Acquisitions
in August 2020 and closed on them in June 2021.
Additionally, Cloudbreak was admitted to the Official List and
commenced trading on the London Stock Exchange's Main Market for
listed securities on June 3, 2021. The Company successfully
fundraised GBP2,416,348 during the year and entered into a Bought
Deal Facility (the "Bought Deal Facility") that allows the Company
to utilize a non-revolving GBP10,000,000 facility as cash needs
arise over a period of three years.
As a natural resource project generator listed on the London
Stock Exchange's Main Market, Cloudbreak is positioned to provide
UK and European investors with a business model and range of assets
which to date have largely been unavailable to UK and Europe
investors. The Company can pivot between natural resource
commodities for the best prospects and opportunities but will have
a core focus on base, bulk and industrial materials and metals,
which includes the suite of commodities required for the ongoing
electrification revolution sweeping the globe. The Company has a
well defined business strategy which limits its downside risk
quickly by attracting quality partners to advance assets, giving
Cloudbreak discovery exposure and considerable exploration exposure
while minimizing dilution. Our business model is not constrained by
geographic location or commodity, allowing us to diversify our
range of assets, jurisdiction and partners.
Financial Review
During the 2021 year the Company earned GBP2 million in revenue
from property sales and option sale agreements. At the end of the
fiscal year, there was GBP1.3m in cash on hand with the cash
reserves to be used in the short term to cover compliance costs,
initial mineral property due diligence and acquisition costs and
other costs incidental to the identification and development of
mineral acquisition opportunities.
Subsequent to the year end, the Company has continued to review
and acquire mineral properties and generate revenue through
optioning out mineral properties to exploration partners. The
buying and selling or optioning of
its mineral properties will continue the establishment of the Company as a new, growth-focused diversified project generator and natural resource royalty business.
In January 2021, the company completed a private fundraising of
GBP416,348 by issuing 16,653,937 ordinary shares at GBP0.025 per
share. In February 2021, the Company executed a Bought Deal
Facility. The agreement prescribes the conditions for the drawdown
of GBP10,000,000 by way of non-revolving equity. In June 2021, the
Company completed a private fundraising of GBP2,000,000 by issuing
66,666,667 ordinary shares at GBP0.03 per share.
The loss for the year was GBP902,060 (2020: GBP1,073,538 loss).
The result for the year ended 30 June 2021 consisted mainly of
income from property option payments and property sales and
expenses from professional and consulting fees and a listing fee
associated with the reverse take-over Acquisition. The change in
fair value of the equity holdings also contributed positively to
the Company's 2021 year but was offset by the impairment of some of
the properties Cloudbreak held and the Anglo African Minerals plc
("AAM") assets.
Financial Position
The Group's Statement of Financial Position as at 30 June 2021
and comparatives at 30 June 2020 are summarized below:
30 June 2021 30 June 2020
GBP GBP
--------------------------- ------------ ------------
Current assets 1,799,847 477,703
--------------------------- ------------ ------------
Non-current assets 4,383,998 435,402
--------------------------- ------------ ------------
Total assets 6,183,845 913,104
--------------------------- ------------ ------------
Current liabilities 895,264 316,039
--------------------------- ------------ ------------
Total liabilities 895,264 316,039
--------------------------- ------------ ------------
Net (liabilities)/assets 5,288,581 597,065
=========================== ============ ============
On behalf of the Board, I would like to record our thanks to
those who have helped the Company throughout the year.
Kyler Hardy
Chairman and Chief Executive Officer Cloudbreak Discovery
PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Group law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have elected
to prepare the financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and as regards the parent
company financial statements, as applied in accordance with
international accounting standards in conformity with the Companies
Act 2006. Under company law the Directors must not approve the
group and parent company financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the group and parent company and of the profit or loss
of the group and parent company for that period. In preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether international accounting standards in
conformity with the requirements of the Companies Act 2006 have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and parent
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and enable them to ensure
that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. The Directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Group's website. Legislation
in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
This report was approved by the Board on 29 December 2021 and
signed on its behalf.
ON BEHALF OF THE BOARD:
Kyler Hardy
Chairman and Chief Executive Officer Cloudbreak Discovery
Plc
Audit Report
In auditing the financial statements, the independent auditors
have concluded that the director's use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate. The independent auditors' evaluation of the directors'
assessment of the Group's and Parent Company's ability to continue
to adopt the going concern basis of accounting included obtaining
management's assessment of going concern and associated cashflow
forecasts for a period of 12 months from the date of approval of
the financial statements.
The independent auditors reviewed the assessment and made
enquiries of management to confirm key assumptions made and drivers
of the assessment. The independent auditors evaluated the inputs to
the cashflow forecast for reasonableness, compared nondiscretionary
costs to historic costs incurred by the Group, and also considered
the availability of funding or access to additional working capital
of the Group. The Group's liquid investment assets and existing
debt facilities have been used as a basis to the going concern
assumption.
Based on the work the independent auditors have performed,
independent auditors have not identified any material uncertainties
relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's or Parent
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
The Independent Auditor's Report on the Group financial
statements is set out in full on pages 22 to 26 of the 2021 Annual
Report and Accounts.
Directors' responsibilities pursuant to DTR4 (Disclosure and
Transparency Rules)
The Directors confirm to the best of their knowledge:
-- The Group and Company financial statements have been prepared
in accordance with lFRS's in conformity with the requirements of
the Companies Act 2006 and Article 4 of the IAS Regulation and give
a true and fair view of the assets, liabilities, financial position
and profit and loss of the group and company included in the
consolidation taken as a whole; and
-- The annual report includes a fair review of the development
and performance of the business and financial position of the Group
and Company together with a description of the principal risks and
uncertainties.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
For the year ended 30 June 2021
As at 30 As at 30
June 2021 June 2020
Note GBP GBP
------------------------------------------ ------------------ ---------------------- ---------------------
Continuing operations
Income
Unrealised gain on financial investments 11 1,412,787 -
Realised gain on financial investments 12,996 -
Profit on disposal of exploration &
evaluation asset sales 12 2,560,070 5,911
------------------------------------------ ------------------ ---------------------- ---------------------
3,985,853 5,911
Administrative expenses 5 (872,423) (184,272)
Listing Fee 4 (2,365,634) (557,992)
Bad debts - (384,614)
------------------------------------------ ------------------ ---------------------- ---------------------
747,796 (1,120,967)
Impairment of financial investments 10,11,12 (1,502,671) -
Unrealised foreign exchange (loss)
gain (193,772) 5,631
Finance income 46,586 41,798
------------------------------------------ ------------------ ---------------------- ---------------------
Profit/(Loss) before tax (902,060) (1,073,538)
Taxation 6 - -
------------------------------------------ ------------------ ---------------------- ---------------------
Profit/(Loss) for the period attributable to equity shareholders
of (902,060) (1,073,538)
the Company
Other comprehensive income / (expenditure) for - -
the period net of tax
-------------------------------------------------------------- ---------------------- ---------------------
Total comprehensive income/(expenditure) for
the period (902,060) (1,073,538)
-------------------------------------------------------------- ---------------------- ---------------------
Earnings per ordinary share
Basic and diluted loss per share attributable
to the equity shareholders 7 (0.85) (0.83)
-------------------------------------------------------------- ---------------------- ---------------------
The notes form part of these Financial Statements.
GROUP STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
As at June As at
30 2021 June
Note 30 2020
GBP GBP
---------------------------------- ----- ------------ ------------
ASSETS
Non-current assets
Investments 11 4,353,318 28,306
Royalty asset 12 1 178,232
Exploration and evaluation
assets 10 30,679 228,863
------------------------------------ ----- ------------ ------------
Total non-current assets 4,383,998 435,401
Current assets
Trade and other receivables 13 518,849 2,971
Tax receivable 3,381 8,290
Convertible loan note
receivable 9 - 459,964
Cash and cash equivalents 1,277,617 6,478
------------------------------------ ----- ------------ ------------
Total current
assets 1,799,847 477,703
TOTAL ASSETS 6,183,845 913,104
=================================== ===== ============ ============
LIABILITIES
Current liabilities
Trade and other payables 14 895,264 316,039
------------------------------------ ----- ------------ ------------
Total current
liabilities 895,264 316,039
TOTAL LIABILITIES 895,264 316,039
----------------------------------- ----- ------------ ------------
NET ASSETS 5,288,581 597,065
----------------------------------- ----- ------------ ------------
EQUITY ATTRIBUTABLE TO OWNERS OF
THE COMPANY
Share capital 15 560,520 50,120
Share premium 15 10,905,507 2,163,168
Reserve asset acquisition
reserve 4 (4,134,019) -
Other reserve 15 511,501 36,645
Retained losses (2,554,928) (1,652,868)
----------------------------------- ----- ------------ ------------
TOTAL EQUITY 5,288,581 597,065
=================================== ===== ============ ============
The notes form part of these Financial Statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
As at As at
June June
Company number 06275976 Note 30 2021 30 2020
GBP GBP
---------------------------------- ----- ------------ ------------
ASSETS
Non-current assets
Investment in subsidiaries 11 6,485,487 10
Investments 11 107,679 -
-------------------------------------- ----- ------------ ------------
Total non-current assets 6,593,166 10
Current assets
Trade and other receivables 13 514,849 40,018
Convertible loan note
receivable 9 - -
Cash and cash equivalents 1,232,385 34,430
------------------------------------ ----- ------------ ------------
Total current
assets 1,747,234 74,448
TOTAL ASSETS 8,340,400 74,458
=================================== ===== ============ ============
LIABILITIES
Current liabilities
Trade and other payables 14 449,885 111,374
------------------------------------ ----- ------------ ------------
TOTAL LIABILITIES 449,885 111,374
----------------------------------- ----- ------------ ------------
NET ASSETS 7,890,515 (36,916)
----------------------------------- ----- ------------ ------------
EQUITY ATTRIBUTABLE TO OWNERS OF
THE COMPANY
Share capital 15 560,520 227,586
Share premium 15 10,905,507 1,328,494
Reserve asset acquisition
reserve 15 - 15,200
Other reserve 15 407,656 112,406
Retained losses (3,983,168) (1,720,602)
----------------------------------- ----- ------------ ------------
TOTAL EQUITY 7,890,515 (36,916)
=================================== ===== ============ ============
Cloudbreak Discovery Plc has used the exemption granted under
s408 of the Companies Act 2006 that allows the non-disclosure of
the Income Statement of the parent company. The after-tax loss
attributable to Cloudbreak Discovery plc for the period ended 30
June 2021 was GBP2,025,931 (2020: GBP369,920)
The notes form part of these Financial Statements.
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
At July 01, 2019 43,566 1,471,495 - 21,109 (579,330) 956,840
Issuance of warrants - - 15,536 - 15,536
Share based payments
- Professional fees 1,355 79,146 - - - 80,501
Issuance of shares -
reverse take-over 5,199 612,527 - - - 617,726
Total comprehensive income
for the year - - - - (1,073,538) (1,073,538)
--------------------------------- -------- ----------- ----------------- ------- --------------- ---------------
Balance at June 30, 2020 50,120 2,163,168 - 36,645 (1,652,868) 597,065
================================= ======== =========== ================= ======= =============== ===============
Issue of shares 30,475 55,373 - - - 85,848
Transfer to reverse acquisition
reserve Recognition of
Cloudbreak Discovery (80,595) (2,218,542) 2,259,668 39,469 - -
Plc equity at reverse
acquisition 460,423 7,969,714 (6,393,687) - - 2,036,450
Warrants assumed - Reverse
take-over - - - 37,971 - 37,971
Options assumed - Reverse
take-over - - - 211,978 - 211,978
Issue of shares 100,097 2,935,793 - 157,695 - 3,193,585
Exchange differences
on translation - - - 27,744 - 27,744
Total comprehensive income
for the year - - - - (902,060) (902,060)
--------------------------------- ---------------------------------------- ------- --------------- ---------------
Balance at June 30, 2021 560,520 10,905,507 (4,134,019) 511,501 (2,554,928) 5,288,581
--------------------------------- -------- ----------- ----------------- ------- --------------- ---------------
The notes form part of these Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
At July 01, 2019 202,786 876,297 31,215 161,753 (1,400,029) (127,978)
Issue of shares 24,800 452,197 - - - 476,997
Equity to be issued - movement - - (16,015) - - (16,015)
Exercise of warrants - - - (49,347) 49,347 -
Total comprehensive loss
for the year - - - - (369,920) (369,920)
--------------------------------- ------- ---------- ------------- -------------- -------------- -----------
Balance at June 30, 2020 227,586 1,328,494 15,200 112,406 (1,720,602) (36,916)
================================= ======= ========== ============= ============== ============== ===========
Issue of shares - Acquisition
of Cloudbreak Canada Subsidiary 216,183 6,269,294 - - - 6,485,477
Issue of shares 116,751 3,307,719 (15,200) 195,678 - 3,604,948
Options granted - - - 99,572 - 99,572
Total comprehensive loss
for the year - - - - (2,262,566) (2,262,566)
--------------------------------- ---------------------------------- -------------- -------------- -----------
Balance at June 30, 2021 560,520 10,905,507 - 407,656 (3,983,168) 7,890,515
--------------------------------- ------- ---------- ------------- -------------- -------------- -----------
The notes form part of these Financial Statements.
GROUP AND COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Group Company
Year ended Year ended Year ended
June 30 2021 Year
ended June 30 2020 June
Notes GBP 30
2021 June 30 2020
GBP GBP GBP
-------------------------------- -------- --------------- ---------------------------------------------------------
Cash flows from operating
activities
Income from operations (902,060) (1,073,538) (2,262,566) (369,920)
Add items not affecting cash
Exploration and
evaluation asset
sales 10 (2,186,891) (28,279) - -
Change in fair value
of investments 11 (1,412,787) - (4,173) -
Gain on sale of
investments 11 (12,996) - - -
Impairment loss 10,11,12 1,502,671 - 1,035,990 -
Interest income (36,021) (42,012) - -
Unrealized foreign
exchange gain
(loss) (155,069) 217 4,617 -
Finance charge 16 200,000 15,536 200,000 -
Listing fee 4 2,365,634 557,992 - -
Bad debts - 384,614 - -
Stock based
compensation 15 - 80,501 137,553 97,905
Changes in non-cash working
capital
(Increase)/Decrease
in trade
and other
receivables (406,449) (5,357) (474,831) (33,683)
Increase/(Decrease)
in trade
and other payables (542,836) 104,279 338,511 21,903
-------------------------------- -------- --------------- ------------------- -------------------- --------------
Net cash used in operating
activities (1,586,804) (6,047) (1,024,899) (283,795)
-------------------------------- -------- --------------- ------------------- -------------------- --------------
Cash flows from investing
activities
Funds received on
sale of investments 11 195,510 - - -
Funds spent on
investments 11 (173,786) (27) (103,506) -
Cash received in
reverse take-over 4 860,389 8,599 - -
Exploration and
evaluation expenses 10 (29,675) - - -
-------------------------------- -------- --------------- ------------------- -------------------- --------------
Cash flows generated from investing
activities 852,438 8,572 (103,506) -
------------------------------------------ --------------- ------------------- -------------------- --------------
Cash flows from financing
activities
Issue of shares 15 2,008,773 - 2,326,358 316,480
Shares cancelled 15 (3,268) - - -
Repayment of loans - - - 446
-------------------------------- -------- --------------- ---------------------------------------------------------
Cash flows generated from financing
activities 2,005,505 - 2,326,358 316,926
------------------------------------------ --------------- ------------------- -------------------- --------------
Increase (decrease) in cash and cash
equivalents 1,271,139 2,524 1,197,955 33,131
Cash and cash equivalents at beginning
of the period 6,478 3,954 34,430 1,299
------------------------------------------ --------------- ------------------- -------------------- --------------
Cash and cash equivalents at end of
the period 1,277,617 6,478 1,232,385 34,430
========================================== =============== =================== ==================== ==============
The notes form part of these Financial
Statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 1: ACCOUNTING POLICIES
General Information
The Company is a public limited company incorporated and
domiciled in England (registered number: 06275976), which is listed
on the London Stock Exchange. The registered office of the Company
is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
Summary of significant accounting policies
The principal Accounting Policies applied in the preparation of
these Financial Statements are set out below. These Policies have
been consistently applied to all the periods presented, unless
otherwise stated.
Basis of Preparation of Financial Statements
The financial statements have been prepared in accordance with
international accounting standards in conformity with the Companies
Act 2006 and international financial reporting standards adopted
pursuant to Regulation (EC) No.1606/2002 as it applies in the
European Union. The financial statements have been prepared under
the historical cost convention.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Cloudbreak Discovery plc and its subsidiaries as at
30 June 2021. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using
consistent accounting policies.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. Cloudbreak Discovery plc owns the majority of the
shareholdings and has operational control over all its
subsidiaries. Please refer to Note 4 for information on the
consolidation of Cloudbreak Discovery plc.
Cloudbreak Discovery plc has used the exemption grated under
s408 of the Companies Act 2006 that allows for the non-disclosure
of the Income Statement of the parent company. The after-tax loss
attributable to Cloudbreak Discovery plc for the year ended 30 June
2021 was GBP2,262,566 (2019: GBP369,920).
Going Concern
The Group Financial Statements have been prepared on a going
concern basis. Although the Group's assets are not generating
revenues and an operating loss has been reported, the Directors are
of the view that, the Group has funds to meet its planned expenses
over the next 12 months from the date of these Financial
Statements.
In assessing whether the going concern assumption is
appropriate, the Directors have taken into account all relevant
available information about the current and future position of the
Group, including current level of resources and the required level
of spending on exploration and corporate activities. As part of the
assessment, the Directors have also taken into account the
potential for continuing warrant exercises and the ability to raise
new funding and utilizing the Crescita facility whilst maintaining
an acceptable level of cash for the Group to meet all
commitments.
The Directors are confident that the measures they have
available will result in sufficient working capital and cash flows
to continue in operational existence. Taking these matters in
consideration, the Directors continue to adopt the going concern
basis of accounting in the preparation of the financial
statements.
The spread of COVID-19 will continue to have a material impact
on many economies globally both through the effects of the virus
itself and the measures taken by government to restrict its spread.
The situation and guidance being given in respect of COVID-19 is an
evolving one, which the Board will continue to actively monitor.
The Directors acknowledge that the market volatility may impact the
ability of the Group to raise funds in the near future. The
auditors have included a 'material uncertainty' paragraph in their
audit report as a result of the uncertainty. The Directors, in
light of all of the above circumstances, have a reasonable
expectation that the Group will have access to adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern basis
of accounting in preparing the Financial Statements.
Changes in accounting policy and disclosures
During the financial year, the Group has adopted the following
new IFRSs (including amendments thereto) and IFRIC interpretations
that became effective for the first time.
Standard Effective date,
annual period
beginning on or
after
Amendments to IFRS 3 Business Combinations 1 January 2020
--------------------
Amendments to IAS 1 and IAS 8: Definition of Material 1 January 2020
--------------------
Amendments to IFRS 9, IAS 39 and IFRS 17: Interest 1 January 2020
Rate Benchmark Reform
--------------------
Their adoption has not had any material impact on the
disclosures or amounts reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Group and
which have not been applied in these financial statements, were in
issue but were not yet effective.
Standard Effective date,
annual period
beginning on or
after
Amendments to IAS 1: Presentation of Financial Statements Not yet
- Classification of Liabilities as Current or Noncurrent confirmed*
--------------------
Amendments to IFRS 3 Business Combinations 1 January 2022*
--------------------
Amendments to IAS 16: Property, Plant and Equipment 1 January 2022*
--------------------
Amendments to IAS 37: Provisions, Contingent Liabilities 1 January 2022*
and Contingent Assets
--------------------
Annual Improvements to IFRS Standards 2018-2020 1 January 2022*
Cycle
--------------------
Amendments to IAS 8: Accounting Policies, Changes Not yet
to Accounting Estimates and Errors confirmed*
--------------------
Amendments to IAS 12: Income Taxes - Deferred Tax Not yet
arising from a Single Transaction confirmed*
--------------------
*Subject to UK endorsement
The adoption of these standards is not expected to have any
material impact on the financial statements of the Group
Foreign currency translation
a) Functional and presentation currency
Items included in the Financial Information are measured using
the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The functional
currency of the parent company is Pounds Sterling as is the
functional currency of the subsidiary Imperial Minerals UK. The
functional currency of the other subsidiary, Cloudbreak Discovery
(Canada) is Canadian Dollars. The Financial Information in
Cloudbreak Discovery (Canada) Ltd is translated in accordance with
IAS 21 - The Effect of Changes in Foreign Exchange Rates.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement in other comprehensive
income. The financial statements are presented in Pounds Sterling
(GBP), the functional currency of Cloudbreak Discovery Plc is
Pounds Sterling, and the functional currency of its subsidiary
Cloudbreak Discovery (Canada) Ltd is Canadian Dollars.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at hand and current and
deposit balances with banks and similar institutions, which are
readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value. This definition is also
used for the Statement of Cash Flows.
Trade and other receivables and prepaids
Trade and other receivables and prepaids are amounts due from
third parties in the ordinary course of business. If collection is
expected in one year or less, they are classified as current
assets. If not, they are presented as non-current
assets.
Trade receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
Convertible loan notes receivable
Convertible loan notes receivable are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Royalty assets
Royalty financial assets are recognised or derecognised on
completion date where a purchase or sale of the royalty is under a
contract, and are initially measured at fair value, including
transaction costs. All of the Group's royalty financial assets have
been designated as at fair value through profit and loss ("FVTPL").
The royalty financial assets at FVTPL are measured at fair value at
the end of each reporting period, with any fair value gains or
losses recognised in the 'revaluation of royalty financial assets'
line item of the income statement.
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation
assets when it determines that those assets will be successful in
finding specific mineral resources. Expenditure included in the
initial measurement of exploration and evaluation assets relate to
the acquisition of rights to explore, topographical, geological,
geochemical and geophysical studies, exploratory drilling,
trenching, sampling and activities to evaluate the technical
feasibility and commercial viability of extracting a mineral
resource. Capitalisation of pre-production expenditure ceases when
the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at
cost
Exploration and evaluation assets are not subject to
amortisation, as such at the year-end all intangibles held have an
indefinite life but are assessed annually for impairment. The
assessment is carried out by allocating exploration and evaluation
assets to cash generating units ('CGU's'), which are based on
specific projects or geographical areas. The CGU's are then
assessed for impairment using a variety of methods including those
specified in IFRS 6.
Whenever the exploration for and evaluation of mineral resources
in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group
has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Income
Statement.
Exploration and evaluation assets recorded at fair-value on
business combination
Exploration assets which are acquired as part of a business
combination are recognised at fair value in accordance with IFRS 3.
When a business combination results in the acquisition of an entity
whose only significant assets are its exploration asset and/or
rights to explore, the Directors consider that the fair value of
the exploration assets is equal to the consideration. Any excess of
the consideration over the capitalised exploration asset is
attributed to the fair value of the exploration asset.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair
value measurements. IFRS 13 does not change when an entity is
required to use fair value, but rather provides guidance on how to
measure fair value under IFRS when fair value is required or
permitted. The resulting calculations under IFRS 13 affected the
principles that the Group uses to assess the fair value, but the
assessment of fair value under IFRS 13 has not materially changed
the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Group. It requires specific disclosures about
fair value measurements and disclosures of fair values, some of
which replace existing disclosure requirements in other
standards.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group's accounting policy for each category
is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and
out-of-money derivatives where the time value offsets the negative
intrinsic value. They are carried in the statement of financial
position at fair value with changes in fair value recognised in the
consolidated statement of comprehensive income in the finance
income or expense line. Other than derivative financial
instruments, which are not designated as hedging instruments, the
Group does not have any assets held for trading nor does it
voluntarily classify any financial assets as being at fair value
through profit or loss.
Amortised Cost
These assets comprise the types of financial assets where the
objective is to hold these assets in order to collect contractual
cash flows and the contractual cash flows are solely payments of
principal and interest. They are initially recognised at fair value
plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment. Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses.
During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied
by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the trade
receivables. For the receivables, which are reported net, such
provisions are recorded in a separate provision account with the
loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the receivable will not
be collectable, the gross carrying value of the asset is written
off against the associated provision.
Impairment provisions for receivables from related parties and
loans to related parties are recognised based on a forward- looking
expected credit loss model. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of
the financial asset, based on analysis of internal or external
information. For those where the credit risk has not increased
significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest
income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with
the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are recognised.
The Group considers a financial asset in default when
contractual payments are 180 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position. Cash and cash
equivalents include cash in hand, deposits held at call with banks,
other short term highly liquid investments with original maturities
of three months or less, and - for the purpose of the statement of
cash flows - bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities on the consolidated
statement of financial position.
Financial investments
Non-derivative financial assets comprising the Group's strategic
financial investments in entities not qualifying as subsidiaries,
associates or jointly controlled entities. These assets are
classified as financial assets at fair value through profit or
loss. They are carried at fair value with changes in fair value
recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial
investment (which constitutes objective evidence of impairment),
the full amount of the impairment is recognised in the income
statement.
Listed investments are valued at closing bid price on 30 June
2021. Unlisted investments that are not publicly traded and whose
fair value cannot be measured reliably, are measured at fair value
through profit and loss less impairment.
Fair Value Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- In the principal market for the asset or liability; or
-- In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be accessible
by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy, as explained above.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
Other reserves
Other reserves consist of:
The share option reserve consists of the fair value of warrants
and options in issue.
Reverse asset acquisition reserve
Reverse asset acquisition reserve was recorded in connection
with the reverse take-over (Note 4).
Share based payments
The Group operates an equity-settled, share-based scheme under
which the Group receives services from employees or contractors as
consideration for equity instruments (options and warrants) of the
Group. The fair value of the third-party suppliers' services
received in exchange for the grant of the options is recognised as
an expense in the Income Statement or charged to equity depending
on the nature of the service provided. The value of the employee
services received is expensed in the Income Statement and its value
is determined by reference to the fair value of the options
granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The fair value of the share options and warrants are determined
using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
or charge is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the Income
Statement or equity as appropriate, with a corresponding adjustment
to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The
proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium when the options are exercised.
Taxation
Current tax is the tax currently payable or receivable based on
the taxable loss for the year.
Deferred tax is provided in full, using the liability method, on
temporary differences between the carrying amounts of assets and
liabilities and their tax bases, except when, at the initial
recognition of the asset or liability, there is no effect on
accounting or taxable profit or loss. Deferred tax is determined
using tax rates and laws that have been substantially enacted by
the Statement of Financial Position date, and that are expected to
apply when the temporary difference reverses.
Tax losses available to be carried forward are recognised as
deferred tax assets, to the extent that it is probable that there
will be future taxable profits against which the temporary
differences can be utilised.
NOTE 2: FINANCIAL RISK MANAGEMENT
Capital Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
Treasury policy and financial instruments
During the years under review, the only financial instruments
were cash and cash equivalents and other receivables which were or
will be required for the normal operations of the Group.
The Group operates informal treasury policies which include
ongoing assessments of interest rate management and borrowing
policy. The Board approves all decisions on treasury policy.
The Group has raised funds to finance future activities through
the placing of shares, together with share options and warrants.
There are no differences between the book value and fair value of
the above financial assets. The risks arising from the Group's
financial instruments are liquidity and interest rate risk. The
Directors review and agree policies for managing these risks and
they are summarised below:
Market risk and foreign exchange risk
The Group is exposed to market risk, primarily relating to
interest rate and foreign exchange movements. The Group does not
hedge against market or foreign exchange risks as the exposure is
not deemed sufficient to enter into forwards or similar
contracts.
Liquidity and interest rate risk
The Group seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. This is achieved by the close control
by the Directors of the Group in the day- to-day management of
liquid resources. Cash is invested in deposit accounts which
provide a modest return on the Group's resources whilst ensuring
there is limited risk of loss to the Group.
Credit Risk
Credit risk arises from cash and cash equivalents. The Group
considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk. The long-term Moody's
credit rating of HSBC Bank Plc is Aa3.
NOTE 3: CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENTS
The preparation of the Financial Information in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
Financial Information and the reported amount of expenses during
the year. Actual results may vary from the estimates used to
produce this Financial Information.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
Share based payment transactions
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package. Certain warrants have also been
issued to shareholders as part of their subscription for shares and
to suppliers for various services received.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility,
future dividend yields, expected life of the options and
forfeiture rates.
Classification of royalty arrangements: initial recognition and
subsequent measurement
The Directors must decide whether the Group's royalty
arrangements should be classified as:
-- Intangible assets in accordance with IAS 38 Intangible Assets; or
-- Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify
the characteristics which determine which accounting standard to
apply to each royalty arrangement:
Type 1 - Intangible assets: Royalties, are classified as
intangible assets by the Group. The Group considers the substance
of a simple royalty to be economically similar to holding a direct
interest in the underlying mineral asset. Existence risk (the
commodity physically existing in the quantity demonstrated),
production risk (that the operator can achieve production and
operate a commercially viable project), timing risk (commencement
and quantity produced, determined by the operator) and price risk
(returns vary depending on the future commodity price, driven by
future supply and demand) are all risks which the Group
participates in on a similar basis to an owner of the underlying
mineral licence. Furthermore, in a royalty intangible, there is
only a right to receive cash to the extent there is production and
there are no interest payments, minimum payment obligations or
means to enforce production or guarantee repayment. These are
accounted for as intangible assets under IAS 38.
Type 2 - Financial royalty assets (royalties with additional
financial protection): In certain circumstances where the risk is
considered too high, the Group will look to introduce additional
protective measures. This has taken the form of minimum payment
terms. Once an operation is in production, these mechanisms
generally fall away such that the royalty will display identical
characteristics and risk profile to the intangible royalties;
however, it is the contractual right to enforce the receipt of cash
which results in these royalties being accounted for as financial
assets under IFRS. There are currently no royalties classified as
financial royalty assets.
Estimated impairment of convertible loan notes receivable
The Group has assessed whether the convertible loan notes
receivable continues to be fully impaired based upon all available
information, which includes assumptions and judgments regarding
circumstances in the future, which could have an impact upon
recoverability.
Unlisted investments
The Group is required to make judgments over the carrying value
of investments in unquoted companies where fair values cannot be
readily established and evaluate the size of any impairment
required. It is important to recognise that the carrying value of
such investments cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being
realised immediately. Management's significant judgement in this
regard is that the value of their investment represents their cost
less previous impairment.
Valuation of exploration and evaluation assets
Exploration and evaluation costs have a carrying value of 30
June 2021 of GBP30,679 (2020: 228,863). Such assets have an
indefinite useful life as the Group has the right to renew
exploration licenses or options and the asset is only amortised
once extraction of the resource commences. The value of the Group's
exploration and evaluation expenditure will be dependent upon the
success of the Group in discoverying economic and recoverable
mineral resources, especially in the countries of operation where
political, economic, legal, regulatory and social uncertainties are
potential risk factors. The future revenue flows relating to these
assets is uncertain and will also be affected by competition,
relative exchange rates and potential new legislation and related
environmental requirements. The Group's ability to continue its
exploration programs and develop its projects is dependent on
future fundraisings the outcome of which is uncertain. The ability
of the Group to continue operating within Botswana is dependent on
a stable political environment which is uncertain based on the
history of the country. This may also impact the Group's legal
title to assets held which would affect the valuation of such
assets. There have been no changes made to any past
assumptions.
The Directors have undertaken a review to assess whether
circumstances exist which could indicate the existence of
impairment as follows:
-- The Group no longer has title to mineral leases
-- A decision has been taken by the Board to discontinue
exploration due to the absence of a commercial level of
reserves
-- Sufficient data exists to indicate that the costs incurred
will not be fully recovered from future development and
participation
Following their assessment, the Directors concluded that no
impairment charge is necessary (2019: Nil).
NOTE 4: REVERSE ACQUISITION AND LSE LISTING
On June 2, 2021, the Company acquired the entire issued share
capital of Cloudbreak Discovery Corp, Howson Ventures Inc, Cabox
Gold Corp. and 1278953 B.C. Ltd. (together "Cloudbreak Canada"),
which are private companies incorporated in British Columbia, by
way of share exchange. These entities amalgamated on June 29, 2021,
and were renamed Cloudbreak Discovery (Canada) Ltd. These financial
statements are presented as if Cloudbreak Discovery Corp, Howson
Ventures Inc, Cabox Gold Corp. and 1278953 B.C. Ltd. were
amalgamated as of July 1, 2019.
Although the transaction resulted in Cloudbreak Canada becoming
a wholly owned subsidiary of the parent company, the transaction
constitutes a reverse acquisition in as much as the shareholders of
Cloudbreak Canada own a majority of the outstanding ordinary shares
of the Group. In substance, the shareholders of Cloudbreak Canada
acquired a controlling interest in the Group and the transaction
has therefore been accounted for as a reverse acquisition.
As the parent company was engaged in acquiring Cloudbreak Canada
and raising equity financing to provide the required funding for
the operations of the acquisition and listing on the main market of
the LSE, it did not meet the definition of a business according to
the definition in IFRS 3. Accordingly, this reverse acquisition
does not constitute a business combination and was accounted for in
accordance with IFRS 2 Share-based payment and IFRIC guidance, with
the difference between the equity value given up by the Cloudbreak
Canada shareholders and the share of the fair value of net assets
gained by the Cloudbreak Canada shareholders charged to the
statement of comprehensive income as the cost of acquiring an LSE
quoted listing.
In accordance with reverse acquisition accounting principles,
these consolidated financial statements represent a continuation of
the consolidated financial statements of Cloudbreak Canada and
include:
a. The assets and liabilities of Cloudbreak Canada at their
pre-acquisition carrying amounts and the results for both periods;
and
b. The assets and liabilities of the parent company as at 30
June 2021 and its results from 2 June to 30 June 2021.
On 2 June 2021, the parent company issued 216,182,566 shares for
the issued and outstanding capital of Cloudbreak Canada.
On June 2, 2021, the quoted share price of Cloudbreak Discovery
Plc was GBP0.03 and therefore this valued the investment in
Cloudbreak Canada at GBP6,485,477.
Because the legal subsidiary, Cloudbreak Canada, was treated as
the accounting acquirer and the legal parent company, Cloudbreak
Discovery Plc, was treated as the accounting subsidiary, the fair
value of the shares and warrants and options deemed to have been
issued by Cloudbreak Canada was calculated at GBP2,764,950 based on
an assessment of the purchase consideration for a 100% holding in
Cloudbreak Discovery Plc.
The fair value of net assets of Cloudbreak Discovery plc at the
date of acquisition was as follows:
Cash and cash equivalents GBP860,389
Receivables GBP215,267
Liabilities GBP (1,122,063)
Net assets GBP(46,407)
The fair value of shares issued for Cloudbreak's net assets and
the warrants and options assumed upon acquisition was as
follows:
Warrants GBP21,092
Options GBP99,572
Common shares issued GBP2,198,563
Total deemed cost GBP2,319,227
The difference between the deemed cost and the fair value of the
net assets acquired of GBP2,365,634 has been expensed in accordance
with IFRS 2, Share based payments, reflecting the economic cost to
the Cloudbreak Canada shareholders of acquiring a quoted
entity.
A reverse asset acquisition reserve has also been recorded of
GBP4,134,019 which represents the retained losses of the Company
before acquisition and the Company equity at reverse
acquisition.
NOTE 5: EXPENSES BY NATURE
Group
----------------------------------------------- ----------------------------------------------------
For the year For the year
ended 30 June ended 30 June
2021 2020
GBP GBP
----------------------------------------------------------------------------------------------------
Professional fees 279,568 145,790
Consulting fees 302,485 2,955
Finance charge (Note 16) 200,000 -
Transfer agent and filing fees 65,178 695
Other expenses 25,192 34,832
Total administrative expenses 872,423 184,272
--------------------- ---------------------
NOTE 6: TAXATION ON LOSS FROM ORDINARY ACTIVITIES
Group
--------------------- ---------------------
For the year For the year
ended 30 June ended 30 June
2021 2020
GBP GBP
------------------------------------------------------- --------------------- ---------------------
Gain/(Loss) before tax (902,060) (1,073,538)
--------------------- ---------------------
Tax on gain (loss) for the year multiplied
by the weighted average (202,964) (289,855)
corporation tax rate of 22.5% (2019: 27%)
Tax losses carried forward on which no deferred
tax asset has been recognised 186,271 29,313
Expenses not deducted for tax purposes 16,693 260,542
--------------------- ---------------------
Tax charge for the year - -
===================== =====================
The Group has not recognised a deferred tax asset in the
financial statements as there is no certainty that taxable profits
will be available against which these assets could be utilised.
NOTE 7: EARNINGS PER SHARE
The calculation of the basic loss per share of GBP0.85 is based
on the loss attributable to ordinary shareholders of
GBP902,060 and on the weighted average number of ordinary and
deferred shares of 105,829,101 in issue during the year.
In accordance with IAS 33, no diluted earnings per share is
presented as the effect on the exercise of share options or
warrants would be to decrease the loss per share.
Details of share options and warrants that could potentially
dilute earnings per share in future periods are set out in Note
15.
NOTE 8: DIRECTORS AND EMPLOYEES
The total number of Directors who served in the year was 4
(2020: 4). There are no employees of the Group. The following
amounts were paid during the year to Directors:
Directors Fees and Consulting Fees 23,760 -
23,760 -
Amounts included in Directors fees and salaries include GBPNil
(2020: GBPNil) in relation to share option charges. 3,000,000
options were issued to directors on 2 June 2021 for their services.
The options have an exercise price of
GBP0.03 and expire on 30 June 2024. Details of the Share Option
charges can be found in Note 15.
NOTE 9: CONVERTIBLE LOAN
Principal Total 2021 Total 2020 Total Total
2021 2020
(GBP) (GBP) (GBP) (GBP)
----------------------- ---------------------------- ----------------- -------------- ----------- ----------
Convertible loan $500,000 USD (GBP361,847) GBP450,591 GBP459,964 GBP - GBP -
note
Convertible loan $420,000 USD (GBP303,744) GBP350,718 - GBP - GBP -
note
Convertible loan $49,790 USD (GBP35,949) GBP44,000 - GBP - GBP -
note
Convertible loan $250,000 USD (GBP180,500) GBP220,281 - GBP - GBP -
note
Impairment provision GBP (1,065,590)
---------------------------- ----------------- -------------- ----------- ----------
GBP - GBP459,964 GBP - GBP -
============================ ================= ============== =========== ==========
On March 20, 2019, the Group issued a $500,000 USD (GBP361,847)
unsecured convertible loan note to Anglo-African Minerals plc
("AAM"). The convertible loan note bears interest at 10% per annum
and compounds monthly, is unsecured, and had an original maturity
date of September 20, 2019. The convertible loan note is
convertible into common shares of AAM at $0.01 USD per share. The
maturity date of the convertible loan note was subsequently
extended to March 20, 2020, and the Group was issued 21,029,978 AAM
warrants per the terms of the extension. These warrants have a
strike price of $0.025 USD per share, with an expiry date of
September 19, 2021. As at June 30, 2021, the Group impaired the
balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible
loan note that was issued to AAM from Cronin Services Ltd., a
company controlled by the Chairman and CEO of the Group, that had a
principal value of $420,000 USD (GBP303,744) and accrued interest
of $61,261 (GBP44,304) for total value of $481,261 USD
(GBP348,048). The Group issued 14,166,790 ordinary shares and
7,083,395 share purchase warrants to acquire this note. Each share
purchase warrant may be converted into one ordinary share of the
Group at GBP0.05 per ordinary share and expires June 2, 2025. The
convertible loan note bears interest at 10% per annum and compounds
monthly, is unsecured, and had a maturity date of May 31, 2021. The
convertible loan note is convertible into common shares of AAM at
$0.01 USD per share. As at June 30, 2021, the Group impaired the
balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible
loan note that was issued to AAM from Cronin Capital Corp., a
company controlled by the Chairman and CEO of the Group, that had a
principal value of $49,790 USD (GBP35,949) and accrued interest of
$9,826 USD (GBP7,094) for total value of $59,617 USD (GBP43,043).
The Group issued 1,630,832 ordinary shares and 1,630,832 share
purchase warrants to acquire this note. Each share purchase warrant
may be converted into one ordinary share of the Group at GBP0.05
per ordinary share and expires 2025 June 2. The convertible loan
note bears interest at 15% per annum and compounds monthly, is
unsecured, and had a maturity date of 2020 September 30. The
convertible loan note is convertible into common shares of AAM at
$0.005 USD per share. As at June 30, 2021, the Group impaired the
balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible
loan note that was issued to AAM by Reykers Nominees Limited that
had a principal value of $250,000 USD (GBP180,500) and accrued
interest of $52,776 (GBP38,104) for total value of $302,776 USD
(GBP218,604). The Group also acquired 12,500,000 AAM share purchase
warrants that had a conversion price of $0.03 USD and expiry date
of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The
Group issued 8,912,756 ordinary shares to acquire this convertible
note, 1,200,000 ordinary shares to acquire the 12,500,000 AAM share
purchase warrants and 3,520,000 ordinary shares to acquire the
11,000,000 AAM ordinary shares. The convertible loan note bears
interest at 10% per annum and compounds monthly, is unsecured, and
had a maturity date of 30 June 2020. The convertible loan note is
convertible into common shares of AAM at $0.01 USD per share. As at
June 30, 2021, the Group impaired the balance down to $Nil as
collectability of the convertible loan was considered doubtful and
the shares and warrants impaired.
NOTE 10: EXPLORATION AND EVALUATION ASSETS
As at June 30, 2021, the Group's exploration and evaluation
assets are as follows:
Group Company
E & E Assets 2021 (GBP) 2020 2021 2020
(GBP) (GBP) (GBP)
------------------------------------------ ---------- ------- ------ ------
Caribou Property, British Columbia 1 1 - -
South Timmins, British Columbia 16,080 - - -
Gold Vista Property, British Columbia 1 5,941 - -
La Blanche Property, British Columbia - 29,704 - -
Spectrum Property, British Columbia - 75,880 - -
Silver Vista Property, British Columbia 1 53,470 - -
Silver Switchback Property, British
Columbia 1 4,456 - -
Rupert Property, British Columbia 14,595 59,411 - -
------------------------------------------ ---------- ------- ------ ------
Balance, June 30, 2021 30,679 228,863 - -
------------------------------------------ ---------- ------- ------ ------
As at June 30, 2021, the Group's reconciliation of exploration
and evaluation assets are as follows:
Group Company
E & E Assets 2021 (GBP) 2020 2021 2020
(GBP) (GBP) (GBP)
------------------------------ ----------- -------- ------ ------
Cost
As at July 1 228,863 28,574 - -
Additions 97,058 200,287 - -
Net proceeds from sale (2,855,312) -
Gain on sale 2,560,070 - - -
------------------------------ ----------- -------- ------ ------
Balance, June 30 30,679 228,863 - -
------------------------------ ----------- -------- ------ ------
Caribou Property, Canada
On November 20, 2017, the Group acquired the Caribou mineral
property for GBP1 from a company controlled by the CEO of the
Group. As at June 30, 2021, included in Exploration and Evaluation
Assets is GBP1 (June 30, 2020 - GBP1) attributed to the Caribou
property.
On June 2, 2020, the Group entered into an option agreement with
Norseman Silver Inc. ("Norseman"), a company with a common
director, under which Norseman may acquire up to a 100% interest in
the Group's Caribou Property subject to a 2% net smelter return
("NSR") to the Group. In order for Norseman to fully exercise the
option on the Caribou Property, they must pay the Group an
aggregate of $80,000 CAD, issue 2,750,000 common shares of Norseman
and incur
exploration expenses of $225,000 CAD over three years. Norseman
will have the right to repurchase one-half (1%) of the 2% NSR for
$1,000,000 CAD.
During the year ended June 30, 2021, the Group received cash
payments of $30,000 CAD (GBP17,517) and 1,750,000 Norseman shares
in relation to the option payments due under the agreement valued
at $290,000 CAD (GBP171,100).
South Timmins Property, Canada
During the year ended June 30, 2021, the Group paid $27,540 CAD
(GBP16,080) in asset staking costs to acquire twelve mineral titles
in Ontario, Canada known as the South Timmins property.
Subsequent to June 30, 2021, the Group optioned the South
Timmins property. See Note 17.
Gold Vista Property, Canada
On May 8, 2020, the Group entered into an option agreement to
purchase 100% of the rights to the Gold Vista Property located in
British Columbia, Canada. To earn a 100% interest, the Group must
make aggregate cash payments of $65,000 CAD ($30,000 CAD paid -
GBP17,700), issue 1,375,000 shares in the Group and incur work
commitments on the property of $225,000 CAD, over three years. The
property is subject to a 2% NSR which the Group may acquire
one-half (1%) for $1,000,000 CAD.
On October 6, 2020, the Group entered into an option agreement
with Deep Blue Trading ("Deep Blue") in which Deep Blue may acquire
up to a 100% interest in the Gold Vista Property subject to a 1%
NSR to the Group. Deep Blue will have the right to repurchase
one-half (0.5%) of the NSR for $500,000 at any time prior to
commercial production. In order for Deep Blue to fully exercise the
option on the Gold Vista Property, they must pay the Group a
$10,000 CAD (GBP5,839) (received) and assume certain obligations
payable to the original vendor.
La Blache Property, Canada
On May 20, 2019, the Group purchased 100% of the La Blache
mineral claims in Cote-Nord, Quebec for $50,000 CAD
(GBP29,195).
On June 18, 2020, the Group and Cronin Services Ltd., a company
controlled by the CEO and President of the Group (collectively
known as "Vendors"), entered into a definitive agreement with Temas
Resources Corp. ("Temas") for the sale of 100% interest in the
property for 10,000,000 Temas shares, $30,000 CAD in cash payments
and a 2% NSR to the Group. Temas has the right to repurchase
one-half (1%) of the NSR for $2,500,000 CAD. On September 23, 2020,
the transaction closed with the Group receiving 10,000,000 Temas
shares valued at $2,000,000 CAD
(GBP1,167,815) and $30,000 CAD (GBP17,517). The 10,000,000
shares the Group received are subject to pooling restrictions as
follows: 25% of the Temas shares were released from the pool March
23, 2021, and the balance will be released September 23, 2021. Upon
its sale, total value of $50,000 CAD (GBP29,195) in exploration and
evaluation assets attributed to La Blache property was
expensed.
Spectrum Property, Canada
On January 10, 2019, the Group entered into an option agreement
to acquire 100% interests in the Southern Spectrum Mineral Property
located in the Lillooet Mining Division of British Columbia. In
order to exercise the option, the Group must pay an aggregate of
$70,000 CAD in cash ($50,000 CAD, GBP29,500 paid), issue 1,200,000
common shares (675,000 issued), and incur work commitments of
$1,250,000 ($50,000 CAD, GBP29,500 incurred) over three years. The
property is subject to a 3% NSR which the Group may acquire 1% for
$1,000,000 CAD.
During the year ended June 30, 2021, the Group sold, transferred
and assigned all of the Group's right, title interest and
obligations under its original Spectrum property option agreement
to 1162832 BC Ltd. (the "Vendor") for $10,000 CAD (GBP5,839) cash.
Upon the Vendor receiving at least 500,000 shares from the
transfer, option, or other disposition of some or all of the
Vendor's interest in the Spectrum property ("Consideration
Shares"), the Vendor will transfer to the Group at least 500,000 of
those Consideration Shares. As a result of the sale, total value in
exploration and evaluation assets of
$117,722 CAD (GBP49,456) attributed to the property was expensed
in the current year.
Silver Switchback Property, Canada
On May 8, 2020, the Group entered into an option agreement to
purchase 100% of the rights to the Silver Switchback Property
located in British Columbia, Canada. To earn a 100% interest, the
Group must make aggregate cash payments of $75,000 CAD ($15,000 CAD
paid - GBP8,850), issue 1,850,000 shares (250,000 shares issued at
a value of $40,000 CAD - GBP23,356) in the Group and incur work
commitments on the property of $475,000 CAD over three years. The
property is subject to a 2% NSR which the Group may re-purchase
1.5% for $1,250,000 CAD.
On August 27, 2020, the Group entered into an option agreement
with Norseman, under which Norseman may acquire up to a 100%
interest in the Group's Silver Switchback Property subject to a 1%
NSR to the Group. In order for Norseman to fully exercise the
option on the Silver Switchback Property, they must pay the Group
$30,000 CAD (received), issue 750,000 common shares (370,000
received valued at $83,250 CAD - GBP46,610), and assume certain
obligations due to the original vendor over three years. Norseman
will have the right to repurchase one-half (0.5%) of the NSR from
the Group for $500,000 CAD.
Silver Vista, Canada
On May 8, 2020, the Group entered into an option agreement to
purchase 100% of the rights to the Silver Vista Property located in
British Columbia, Canada. To earn a 100% interest, the Group will
need to make aggregate cash payments of $65,000 CAD ($20,000 CAD
paid - GBP11,678), issue 1,375,000 shares (370,000 shares issued at
a value of $75,000 CAD - GBP43,793) in the Group and incur work
commitments on the property of $275,000 CAD, over three years. The
property is subject to a 2% NSR which the Group may acquire
one-half (1%) for $1,000,000 CAD.
During the year ended June 30, 2021 the Group made a payment of
$80,000 CAD (GBP46,713) to a prior optionor to fulfil prior option
agreement obligation.
On September 21, 2020, the Group entered into an option
agreement with Norseman, under which Norseman may acquire up to a
100% interest in the Group's Silver Vista Property subject to a 1%
NSR payable to the Group. In order for Norseman to fully exercise
the option on the Silver Switchback Property, they must pay the
Group $50,000 CAD (received
- GBP29,500), and issue 2,000,000 common shares (received and
valued at $40,000 CAD - GBP23,600). Norseman will have the right to
repurchase one-half (0.5%) of the NSR for $500,000 CAD.
Rupert, Canada
On September 11, 2018, the Group entered into an asset purchase
agreement with a company controlled by a director of the Group and
two unrelated persons to purchase the Rupert Property, located in
British Columbia, Canada. As consideration for the property, the
Group issued 2,000,000 common shares valued at $100,000 CAD
(GBP59,000) and granted a 2% NSR. At any time, 1% of the NSR can be
purchased by the Group for $1,500,000 CAD. Of the common shares
issued to acquire the property, 1,000,000 were issued to a company
that was controlled by a director of the Group. The Group also
agreed to incur aggregate expenditures on the property of $800,000
($100,000 CAD - GBP59,000 incurred).
On December 11, 2020, the Group sold the Rupert Property to
Buscando Resources Corp. ("Buscando"), a company with a director in
common. Payments to be received by the Group are as follows:
-- $150,000 CAD in total cash payments with $25,000 CAD
(GBP14,750) on closing (received), $50,000 CAD on or before 12
months after Buscando is listed on a public exchange, $75,000 CAD
on or before 24 months after Buscando is listed on a public
exchange;
-- 3,750,000 shares in total issued to the Group with 1,000,000
shares issued on closing (received and valued at $50,000 CAD -
GBP29,500, 1,250,000 on or before 12 months after Buscando is
listed on a public exchange, 1,500,000 on or before 24 months after
Buscando is listed on a public exchange; and
-- $200,000 expenditures incurred on the property with $100,000
CAD on or before 12 months after Buscando is listed on a public
exchange, $100,000 CAD on or before 24 months after Buscando is
listed on a public exchange.
As a result of the sale to Buscando, the original vendors waived
the exploration commitments required by the Group
under the September 11, 2018 agreement.
New Moon, Canada
On August 20, 2020 the Group acquired the New Moon property in
British Columbia, Canada for acquisition costs of
$6,188 CAD (GBP3,651). On December 9, 2020 the Group sold the
New Moon property to Norseman,in exchange for
$10,000 CAD (GBP5,800)(received) and 2,500,000 Norseman shares
(received and valued at $50,000 CAD - GBP29,500). The Group
retained a 2% net smelter return on the property. Norseman will
have the right to repurchase one-half (1.0%) of the NSR for
$1,000,000 CAD any time prior to commercial production.
NOTE 11: INVESTMENTS & INVESTMENTS IN SUBSIDIARIES
----------------------
Investments in Subsidiaries
--------------------------------------------------- ---------------- ----
Company
2021 2020
GBP GBP
July 1 10 10
Investment in Cloudbreak Discovery (Canada)
Ltd. 6,485,477 -
---------------- ----
Cost at the end of the year 6,485,487 10
Investments in group undertakings are stated at cost. Cloudbreak
Discovery (Canada) Ltd. was acquired during the year and is
considered a reverse take-over (Note 4). The 216,182,566 Cloudbreak
Discovery (Canada) Ltd. shares were valued at GBP0.03 for a value
of GBP6,485,477.
Details of subsidiary undertaking
Details of the subsidiary undertaking at 30 June 2021 are as
follows:
Imperial Minerals (UK) Limited
- nature
of business is to make investments
in the Group's chosen business 6th Floor, 60 Gracechurch
sector. Street, London, EC3V 0HR 100%
------------------------------------ ----------------------------------- ----------------
Cloudbreak Discovery (Canada)
Limited - a mineral property Suite 520/999 West Hastings
project generator Street, Vancouver BC 100%
V6C2W2
------------------------------------------------------------------------ ----------------
Investments Held
Financial assets at fair value through profit or loss are as
follows:
Level 1 Level Level 3 Total
GBP 2 GBP GBP
GBP
30 June 2019 - - - -
Additions - - 28,306 28,306
------------------------- ------------------ --------- ----------- ---------
30 June 2020 - - 28,279 28,306
------------------------- ------------------ --------- ----------- ---------
Additions 3,008,047 - 434,090 3,178,842
Disposal proceeds (195,510) - - (195,510)
Realized gain on sale of
investments 12,996 - - 12,996
Fair value changes 1,412,787 - - 1,412,787
Foreign exchange changes 85,743 - - 85,743
Impairment - - ( 433,141) (433,141)
------------------------- ------------------------- -------------- ---------
30 June 2021 4,324,063 - 29,255 4,353,318
------------------------- ------------------------- -------------- ---------
As at June 30, 2021, investments were classified as held for
trading and recorded at their fair values based on quoted market
prices (if available). Investments that do not have quoted market
prices are measured at cost less impairment.
Imperial Helium Corp.
On April 20, 2020, the Group purchased 450,000 preferred shares
in Imperial Helium Corp. for $45 CAD (GBP26). On December 15, 2020,
45,000 of these preferred shares were converted into common shares
for no additional consideration. On December 11, 2020, the Group
purchased $110,000 CAD (GBP66,138) in Imperial Helium Corp.
convertible debenture notes that yielded 10%. On May 18, 2021, the
convertible debenture converted into 575,767 ordinary shares of
Imperial Helium Corp. At June 30, 2021 the fair value of the
Imperial helium Corp. shares is
GBP107,679.
Temas Resources Corp.
On September 23, 2020, the Group sold its La Blache property to
Temas Resources Corp. ("Temas") for a cash payment of $30,000 CAD
(GBP17,517) and 10,000,000 Temas shares which had a value at the
time of $2,000,000 CAD (GBP1,167,815). The Group retained a 2% net
smelter return ("NSR") on the La Blache property. The Temas shares
are subject to pooling restrictions with 2,500,000 Temas shares
released March 23, 2021, and 7,500,000 Temas shares to be released
September 23, 2021.
Norseman Silver Inc.
On August 19, 2020, the Group received 1,000,000 shares from
Norseman Silver Inc. in relation to the option agreement with
Norseman for the Caribou property. The Norseman shares had a value
of $50,000 CAD (GBP29,195) when received.
On August 27, 2020, the Group received 370,000 shares in
Norseman Silver Inc. in relation to the option agreement with
Norseman for the Silver Switchback property. The Norseman shares
had a value of $83,250 CAD (GBP48,610) when received.
On December 9, 2020, the Group sold the New Moon property to
Norseman Silver Inc., in exchange for $10,000 CAD (GBP5,839) and
2,500,000 Norseman common shares. The Group retained a 2.0% net
smelter return royalty on the property.
On January 6, 2021, the Group sold and transferred 1,350,000
Norseman common shares for gross proceeds of
$337,500 CAD (GBP197,068).
On March 1, 2021, the Group participated in a private placement
whereby they purchased 1,200,000 shares in Norseman Silver Inc at
$0.25 per share for a cost of $300,000 CAD (GBP175,172).
On April 30, 2021, the Group received 2,000,000 shares from
Norseman Silver Inc. in relation to the option agreement with
Norseman for the Silver Vista property. The Norseman shares had a
value of $760,000 CAD (GBP443,770) when received.
Buscando Resources Corp.
On December 31, 2020, the Group sold the Rupert property to
Buscando Resources Corp., in exchange for 1,000,000 shares in
Buscando Resources Corp at a value of $50,000 CAD (GBP29,195).
Linceo Resources Corp.
On August 17, 2019, the Group sold the Granny Smith and Fuji
mineral claims to Linceo Media Group ("Linceo"), a company with a
director in common, for 4,000 shares in Linceo at a value of
$47,600 CAD (GBP27,793) and retained a 2.5% NSR on each property.
During the year ended June 30, 2021, the Group impaired the shares
in Linceo to $1.
AAM shares
On June 2, 2021, the Group acquired 12,500,000 AAM share
purchase warrants that had a conversion price of $0.03 USD and
expiry date of July 1, 2021 and acquired 11,000,000 AAM ordinary
shares. The Group issued 1,200,000 ordinary shares to acquire the
12,500,000 AAM share purchase warrants (GBP36,000 value) and
3,520,000 ordinary shares (GBP105,600 value) to acquire the
11,000,000 AAM ordinary shares. The warrants expired on July 1,
2021, with the GBP36,000 impaired to $1. During the year ended June
30, 2021, the Group impaired the shares in AAM to $1.
NOTE 12: ROYALTY ASSET
Apple Bay Property, Canada
On April 5, 2017, the Group purchased a 1.50% production royalty
on the Apple Bay property located in British Columbia, Canada. The
production royalty was purchased for 3,000,000 shares of the Group
at a deemed value of
$0.10 CAD (GBP0.058) per share from a company controlled by the
CEO of the Group. As at June 30, 2021, included in Royalty Assets
is GBP1 (June 30, 2020 - GBP178,232) attributed to the Apple Bay
property. During the year ended June 30, 2021, the Group determined
that the royalty was impaired and reduced the balance to GBP1.
NOTE 13: TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
Group Company
---------------------- ----------------------
2021 2020 2021 2020
GBP GBP GBP GBP
----------------------------- ---------- ---------- ---------- ----------
Non-current
Amounts due from subsidiary
undertaking - - 97,818 97,818
Provision for impairment - - (97,818) (97,818)
---------- ---------- ---------- ----------
- - - -
---------- ---------- ---------- ----------
Current
Loan receivable 119,468 119,468 119,468 119,468
Provision for impairment
to loan (119,468) (119,468) (119,468) (119,468)
Sundry Debtors 227,019 2,971 213,844 27,700
Prepayments 291,830 - 291,830 12,318
---------- ---------- ---------- ----------
518,849 2,971 514,849 40,018
---------- ---------- ---------- ----------
The fair value of all current receivables is as stated
above.
On 20 December 2014 the Group entered into a loan agreement with
Symerton Holdings S.A ("Symerton") in which the Group lent Symerton
US$150,000 (equivalent to GBP119,468). The loan is unsecured and
bears an interest rate of 12% per annum. The Directors have fully
impaired the loan.
The maximum exposure to credit risk at the year-end date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security. Except for the
above-mentioned loan, trade and other receivables are all
denominated in GBP sterling.
NOTE 14: TRADE AND OTHER PAYABLES
Group Company
------------------------- -------------------- -------- ------------- -------------------------- ----------
2021 2020 2021 2020
GBP GBP GBP GBP
------------------------- -------------------- -------- ------------- -------------------------- ----------
Current
Trade payables 823,465 156,205 407,282 69,721
Accruals and other payables 71,799 159,834 42,603 41,653
-------------------------------------- ------------- ----------------- ------------------- -----------------
895,264 316,039 449,885 111,374
====================================== ============= ================= =================== =================
NOTE 15: SHARE CAPITAL
Share capital and share premium
Issued Number of Share Capital Share Premium
shares GBP GBP
------------------------------------------ ------------ ------------- -------------
At 31 July 2019 43,566,071 43,566 1,471,495
------------------------------------------ ------------ ------------- -------------
Share based payments (i) 1,355,000 1,355 79,146
Issuance of shares - RTO (ii) 5,198,778 5,199 612,527
------------------------------------------ ------------ ------------- -------------
At 30 June 2020 50,119,849 50,120 2,163,169
------------------------------------------ ------------ ------------- -------------
Issue of shares (iii, iv, vi, vii,
iv) 30,475,001 30,475 55,373
Transfer to reserve acquisition reserve (80,594,850) (80,595) (2,218,542)
Recognition of Cloudbreak Discovery
Plc equity at reverse acquisition 289,468,015 460,423 7,969,714
Issued - private placement (net of
issuance costs) (viii) 66,666,667 66,667 1,886,312
Issue of shares - AAM acquisitions
(x) 29,430,378 29,430 853,481
Issue of shares - equity drawdown
facility fee (net of 4,000,000 4,000 196,000
issuance costs) (ix)
------------------------------------------ ------------ ------------- -------------
At 30 June 2021 389,565,060 560,520 10,905,507
------------------------------------------ ------------ ------------- -------------
As Cloudbreak Discovery Corp, Howson Ventures Inc. and Cabox
Gold amalgamated on June 29, 2021, as Cloudbreak Discovery (Canada)
Ltd., the below events are grouped by entity prior to the
amalgamation:
Cloudbreak Discovery Corp.
(i) On May 11, 2020, Cloudbreak Discovery Corp issued 1,355,000
common shares at $0.10 CAD (GBP0.058) per share to a consultant of
the Group for professional services. These were recorded as
share-based payments of $135,500 CAD (GBP80,501).
(ii) On May 19, 2020, Cloudbreak Discovery Corp merged with
Ridge Royalty Corp. ("Ridge") pursuant to which Ridge amalgamated
with Cloudbreak Discovery Corp's wholly owned subsidiary 1237611
B.C. Ltd. and became a 100% owned subsidiary of Cloudbreak
Discovery Corp. Under the transaction, Cloudbreak Discovery Corp
issued an aggregate of 26,485,071 post consolidated common shares
pro rata to Ridge shareholders. After the merger, Cloudbreak
Discovery Corp had 31,683,849 common shares issued and outstanding.
Upon closing, former Ridge shareholders will hold approximately 84%
of the outstanding shares of Cloudbreak Discovery Corp. After
merger, three properties of Ridge: La Blache Property, Caribou
Property and Apple Bay Property were included in the Exploration
and Evaluation assets of Cloudbreak Discovery Corp. A listing
expense of $944,011 (GBP557,992) was recorded.
The merger was considered a reverse takeover in which Ridge
shareholders obtained control of Cloudbreak Discovery Corp. The
transaction is therefore accounted for in accordance with IFRS 2
Share-based Payment whereby Ridge is deemed to have issued shares
in exchange for the net assets of Cloudbreak Discovery Corp
together with its Reporting Issuer status at the fair value of
consideration received by Ridge. The accounting for this
transaction was as follows:
i. The consolidated financial statements of the merged entity
are issued under the legal parent, the former Cloudbreak, but are
considered a continuation of the financial statements of the legal
subsidiary and accounting acquirer, Ridge.
ii. Since Ridge is deemed to be the acquirer for accounting
purposes, its assets and liabilities will be included in the
consolidated financial statement at their historical carrying
values.
iii. The identifiable assets and liabilities of the former
Cloudbreak will be recognized at their fair value at the
acquisition date of May 19, 2020, with the excess of the fair value
of the equity interest consideration paid over the fair value of
the net assets acquired being charged to the consolidated
statements of loss and comprehensive loss as a listing expense;
and
iv. The fair value of the equity interest consideration paid is
determined based on the percentage ownership former Cloudbreak
Discovery Corp's shareholders have in the consolidated entity after
the transaction. This represents the fair value of the shares that
Ridge would have had to issue for the ratio of ownership interest
in the combined entity to be the same, if the transaction had taken
the legal form of Ridge acquiring 100% of the common shares of
Cloudbreak Discovery Corp. The consideration paid in the
reverse-acquisition is therefore equivalent to the fair value of
the 5,198,778 of Cloudbreak Discovery Corp shares deemed to have
been issued by Ridge and controlled by former Cloudbreak Discovery
Corp's shareholders, estimated to be $1,039,756 CAD (GBP617,726)
based on the fair market value of
$0.20 CAD (GBP0.11) per post consolidation share, being the
price of a recent financing of Cloudbreak Discovery Corp.
(iii) On October 23, 2020, the Group issued 575,000 common
shares in relation to the Silver Vista and Switchback option
agreements (Note 10).
Cabox Gold Corp
(iv) On July 22, 2020, 5,000,001 shares in Cabox Gold Corp. were
cancelled.
(v) On August 15, 2020, 5,000,000 shares in Cabox Gold Corp were
issued at $0.001 CAD (GBP0.0005) per share for a gross proceeds of
$5,000 CAD (GBP2,920).
(vi) On December 15, 2020, 30,000,000 shares in Cabox Gold Corp
were issued at $0.001 (GBP0.0005) per share for a gross proceeds of
$30,000 CAD (GBP17,517).
Howson Ventures Inc.
(vii) On December 23, 2020, there was a share buyback whereby
100,000 shares were purchase by Howson Ventures Inc. at a price of
$0.05 per share for gross proceeds of $5,000 CAD (GBP2,920).
Cloudbreak Discovery Plc
(viii) On June 2, 2021, the Group issued 66,666,667 shares at a
price of GBP0.03 per share for gross proceeds of GBP2,000,000.
(ix) On June 2, 2021, the Group issued 4,000,000 shares at a
price of GBP0.05 per share valued at GBP200,000 which was a 2%
commission fee related to the equity investment facility (Note
16).
(x) On June 2, 2021, the Group issued 29,430,378 shares at a
price of GBP0.03 per share in relation to the acquisition of the
AAM convertible notes (Note 9).
(xi) On June 2, 2021, the Group entered into a reverse takeover
transaction (Note 4). 73,285,449 ordinary shares were
issued, and an additional 135,587,716 ordinary shares were
issued through a reverse split.
Other reserves
Other reserves consist of:
Share option and warrant reserve
During the year ended 30 June 2021, the outstanding options and
warrants were cancelled and the residual value from 30 June 2020
being GBP36,644 was allocated to contributed surplus.
Options and warrants in issue
The outstanding share options and warrants as at 30 June 2021 are
shown below:
Weighted
Options Warrants average
exercise
price
(GBP)
------------------------------------------- ------ ------------------- ------------------------ ---------------
Exercisable at 30 June 2019 950,000 4,303,000 0.04
Grant of Warrants - Howson Ventures 500,000 0.06
------------------------------------------- ------ ------------------- ------------------------ ---------------
At 30 June 2020 950,000 4,803,000 0.05
------------------------------------------- ------ ------------------- ------------------------ ---------------
Cancelled - Howson Ventures Options (950,000) 0.03
Cancelled - Howson Ventures Warrants (500,000) 0.06
Cancelled - Cloudbreak Discovery
Corp warrants (4,303,000)
Warrants Assumed with reverse
take-over 8,326,698 0.10
Warrants Assumed with reverse
take-over 636,625 0.01
Warrants Assumed with reverse
take-over 4,530,497 0.03
Warrants Assumed with reverse
take-over 19,978,776 0.0125
Issued - AAM Acquisition 8,714,227 0.05
Issued - Options 5,050,000 0.025
------------------------------------------- ------ ------------------- ------------------------ ---------------
At 30 June 2021 5,050,000 42,186,823 0.015
------------------------------------------- ------ ------------------- ------------------------ ---------------
30
June
2021
Range of Weighted average Number of options/warrants Weighted average Weighted average
exercise exercise price remaining life remaining life
prices (GBP) (GBP) expected (years) contracted (years)
0.01 0.01 636,625 0.55 0.55
0.0125 0.0125 17,643,353 0.55 0.54
0.0125 0.0125 928,598 0.63 0.63
0.0125 0.0125 1,406,825 0.02 0.02
0.025 0.025 5,050,000 3.08 3.08
0.05 0.05 8,714,227 4.00 4.00
0.10 0.10 4,530,497 2.71 2.71
0.05 0.05 8,326,698 1.50 1.49
======================= ================== =========================== ======================== ===============
30 June 2020
Range of Weighted average Number of options/warrants Weighted average Weighted average
exercise exercise price remaining life remaining life
prices (GBP) (GBP) expected (years) contracted
(years)
---------------- ------------------ --------------------------- ---------------------- --------------------
0.03 0.03 950,000 (options) 3.75 3.75
0.06 0.06 3,800,000 (warrants) 1.55 1.55
0.06 0.06 200,000 (warrants) 1.63 1.63
0.23 0.23 303,000 (warrants) 1.02 1.02
---------------- ------------------ --------------------------- ---------------------- --------------------
The valuation of the options and warrants issued during 2021
were carried out using the Black Scholes model. Key assumptions
used in the valuation are detailed in the table below.
Warrants
Jun 2, Jun 2, Jun 2,
2021 2021 2021
Number of warrants
- weighted average 636,625 4,530,497 8,714,227
risk- free interest
rate 0.07% 0.55% 0.81%
- dividend yield
of 0.00% 0.00% 0.00%
- volatility rate 74% 100% 100%
- expected life
(years) 0.55 2.71 4
- fair value GBP12,971 GBP46,092 GBP157,695
These 636,625 and 4,530,497 warrants were assumed at the
reverse-take over and were charged to the deemed cost of the
transaction (Note 4). The 8,714,227 warrants were charged as part
of the AAM asset acquisition (Note 9).
Options
Jun 2,
2020
Number of options 5,050,000
- weighted average risk-free
interest rate 0.64%
- dividend yield of 0.00%
- volatility rate 100%
.- expected life (years) 3.08
- fair value GBP99,572
These 5,050,000 options were assumed at the reverse-take over
and were charged to the deemed cost of the transaction (Note
4).
NOTE 16: BOUGHT DEAL FACILITY
On February 15, 2021, the Group entered into a GBP10,000,000 CAD
bought deal facility with Crescita Capital. The Group can draw down
funds from the GBP10,000,000 equity investment facility from time
to time during the three -- year term at the Group's discretion by
providing a drawdown notice to Crescita Capital, and in return for
each draw-down notice funded by Crescita Capital, the Group will
allot, and issue fully paid common shares to Crescita Capital.
The shares issued in connection with any drawdown notice will be
priced at the higher of (i) the floor price set by the Group and
(ii) 90% of the average closing bid price resulting from the
following ten days of trading after the drawdown notice ("Pricing
Period"). The drawdown notice amount requested by the Group cannot
exceed 700% of the average daily trading volume of the Pricing
Period.
In connection with the bought deal facility, the Group paid a
commitment fee. This fee consisted of a 2% commission to be paid in
common shares, at a price of GBP0.05 per share (4,000,000 shares
valued at GBP200,000) and warrants equal to 8% of the outstanding
common shares of the Group (4,530,497 warrants valued at
GBP46,092). The warrants have an exercise price of GBP0.10 per
common share and expire three years from the grant date. The
warrants were fair valued using the Black- Scholes Option Pricing
Model upon acquisition of the Group using the following
assumptions:
- average risk-free interest rate -- 0.55%;
- expected life -- 2.71 years;
- expected volatility -- 100.00%;
- forfeiture rate -- Nil and
- expected dividends -- Nil.
The value of the commitment fee was recorded as a finance charge
(Note 5).
NOTE 17: SUBSEQUENT EVENTS
Subsequent to June 30, 2021, the Group staked the Atlin West
Project in British Columbia, Canada and on August 9, 2021 optioned
the Altin West Project to 1315843 BC Ltd. who will need to spend
$700,000 CAD in exploration expenditures on the property, issue a
total of 8,000,000 ordinary shares to the Group and make aggregate
payments of $325,000 CAD over three years to the Group. Upon
completion of the option agreement obligations, the Group will
transfer 75% interest in the property to 1315843 BC Ltd. and will
retain a 2% NSR, of which one-half (1.0%) can be re-purchased from
the Group for $1,500,000 CAD.
On August 25, 2021, the Group issued 11,250,000 options to
certain directors, officers and consultants of the Group. The
options have an exercise price of GBP0.03 and expire on August 25,
2025.
On September 20, 2021, the Group optioned the South Timmins
property in Ontario, Canada (Note 10) to 1315956 BC Ltd. who will
need to spend $1,515,000 CAD in exploration expenditures on the
property, issue a total of 2,250,000 shares and make aggregate
payments of $495,000 CAD over three years to the Group. Upon
completion of the option agreement obligations, the Group will
transfer 100% interest in the property to 1315956 BC Ltd. and will
retain a 1% NSR, of which one-half (0.5%) can be re-purchased from
the Group for $750,000 CAD.
Subsequent to June 30, 2021 the Group staked the Yak Project in
British Columbia, Canada and on October 13, 2021 optioned the Yak
Project to Moonbound Mining Ltd. who will need to spend $700,000
CAD (GBP408,735) in exploration expenditures on the property, issue
a total of 2,700,000 ordinary shares to the Group and make
aggregate payments of
$145,000 CAD (GBP84,667) over three years to the Group. Upon
completion of the option agreement obligations, the Group will
transfer 100% interest in the property to Moonbound Mining Ltd. and
will retain a 2% NSR, of which one-half (1.0%) can be re-purchased
from the Group for $1,500,000 CAD.
Subsequent to June 30, 2021 the Group, along with its partner
Alianza Minerals Ltd. ("Alianza"), staked the Klondike Project in
Colorado, USA (50% each) and on December 3, 2021 optioned the
Klondike Project to Allied Copper Corp ("Allied"). Allied will be
required to incur $4,750,000 CAD in exploration expenditures on the
property, issue a total of 7,000,000 ordinary shares, issue
3,000,000 share purchase warrants and make aggregate payments of
$400,000 CAD over four years to the Group and Alianza. Upon Allied
filing an NI 43-101 technical report indicating an inferred
resource of at least 50,000,000 tonnes of copper or copper
equivalent, Allied will issue an additional 3,000,000 warrants, in
aggregate, to the Group and Alianza. Upon completion of the option
agreement obligations, the Group and Alianza will transfer 100%
interest in the property to Allied and will retain a 2% NSR, of
which one-half (1.0%) can be re-purchased from the Group and
Alianza for $1,500,000 CAD.
NOTE 18: RELATED PARTIES
Details of the directors' remuneration can be found in Note 8.
Key Management Personnel are considered to be the directors.
During the year, the Group sold La Blache property to Temas
Resources and Rupert Property to Buscando Resources. Kyler Hardy is
a director of both Temas Resources and Rupert Property.
At June 30, 2021, the Group held investments of GBP4,353,317 in
Imperial Helium, Temas Resources, Norseman Silver and Buscando
Resources where Kyler Hardy is also a director (2020: GBPNil)
During the year, the Group paid amounts totalling GBP32,212
(2020: GBP5,941) to Cronin Capital Corp. through Cronin Services
Limited, companies controlled by the CEO Kyler Hardy. These were in
relation to consultancy fees under a management service agreement
dated 1 February 2020 and 1 June 2021. In addition, the Group paid
Cronin Services GBP60,000 for the provision of accounting and
back-office management services during the year (2020: GBP44,855).
The amount outstanding owing to Cronin Capital and Cronin Services
at the year-end was GBP523,021 (2020: GBP33,267).
During the year the Group acquired convertible debenture notes
from Cronin Capital and Cronin Services (Note 9).
During the year, the Group paid GBP32,212 (2020: GBP5,941)
interest on a line of credit to a company with a common
director.
NOTE 19: FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Board receives monthly reports
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility.
The Group reports in Sterling. Internal and external funding
requirements and financial risks are managed based on policies and
procedures adopted by the Board of Directors. The Group does not
use derivative financial instruments such as forward currency
contracts, interest rate and currency swaps or similar instruments.
The Group does not issue or use financial instruments of a
speculative nature.
Capital management
The Group's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders.
The capital structure of the Group consists of total
shareholders' equity as set out in the 'Statement of changes in
equity'. All working capital requirements are financed from
existing cash resources. Capital is managed on a day to day basis
to ensure that all entities in the Group are able to operate as a
going concern. Operating cash flow is primarily used to cover the
overhead costs associated with operating as London Standard- listed
company.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Directors consider that there is no significant liquidity
risk faced by the Group. The Group maintains sufficient balances in
cash to pay accounts payable and accrued expenses.
The Board receives forward looking cash flow projections at
periodic intervals during the year as well as information regarding
cash balances. At the balance sheet date the Group had cash
balances of GBP1,277,617 and the financial forecasts indicated that
the Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances and will
not need to establish overdraft or other borrowing facilities.
Interest rate risk
As the Group has no borrowings, it only has limited interest
rate risk. The impact is on income and operating cash flow and
arises from changes in market interest rates. Cash resources are
held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future
valuations of financial instruments held in accordance with the
Group's investment objectives. These future valuations are
determined by many factors but include the operational and
financial performance of the underlying investee companies, as well
as market perceptions of the future of the economy and its impact
upon the economic environment in which these companies operate.
This risk represents the potential loss that the Group might suffer
through holding its financial investment portfolio in the face of
market movements, which was a maximum of GBP4,353,319 (2020:
GBP28,306).
The investments in equity of quoted companies that the Group
holds are less frequently traded than shares in more widely traded
securities. Consequently, the valuations of these investments can
be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of
the Group if there were to be a 20% movement in overall share
prices of the financial investments held at 30 June 2021.
The impact of a change of 20% has been selected as this is
considered reasonable given the current level of volatility
observed and assumes a market value is attainable for the Group's
unlisted investments.
2021 2020
Other comprehensive Other comprehensive
income and Net income and Net
assets assets
GBP GBP
------------------------------------------ -------------------- --------------------
Decrease if overall share price falls
by 20%, with all other variables held
constant (870,664) (5,661)
Decrease in other comprehensive earnings
and net asset value per Ordinary share
(in pence) (0.009)p (0.000)p
Increase if overall share price rises
by 20%, with all other variables held
constant 870,664 5,661
Increase in other comprehensive earnings
and net asset value per Ordinary share
(in pence) 0.009p 0.000p
------------------------------------------ -------------------- --------------------
Currency risk
The Directors consider that there is minimal significant
currency risk faced by the Group. The current foreign currency
transactions the Group enters into are denominated in CAD$ and US$
in relation to transactions associated with exploration and
evaluation option payments and property expenditures. The Group
maintains minimal foreign currency holdings to minimize this
risk.
Credit risk
Credit risk is the risk that a counterparty will fail to
discharge an obligation or commitment that it has entered into with
the Group. The Group's maximum exposure to credit risk is:
2021 2020
GBP GBP
--------------------------------- --------- -------
Cash at bank 1,277,617 6,478
Other receivables 518,849 2,971
Convertible loan note receivable - 459,964
--------------------------------- --------- -------
1,796,466 469,413
--------------------------------- --------- -------
The Group's cash balances are held in accounts with HSBC, and
with its Investment Broker accounts.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of
Financial Position at either their fair value (financial
investments) or at a reasonable approximation of the fair value
(trade and other receivables, trade and other payables and cash at
bank).
The fair values are included at the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets
within Trade and other receivables.
2021 2020
Financial assets GBP GBP
------------------------------------------- ------------------------------------- ------------
Trade and other receivables - Non interest
earning 518,849 2,971
There are no financial assets which are past due and for which
no provision for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade
and other payables. These financial liabilities are predominantly
non-interest bearing. Other liabilities include tax and social
security payables and provisions which do not constitute
contractual obligations to deliver cash or other financial
assets.
2021 2020
Financial liabilities GBP GBP
---------------------------------------------- ------- -------
Trade and other payables
NOTE 20: ULTIMATE CONTROLLING PARTY 895,264 316,039
The Directors believe there to be no ultimate
controlling party.
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ACSTMBRTMTBJBTB
(END) Dow Jones Newswires
December 30, 2021 12:19 ET (17:19 GMT)
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