TIDMEEE
RNS Number : 8008V
Empire Metals Limited
19 April 2021
Empire Metals Limited / AIM: EEE / Sector: Natural Resources
19 April 2021
Empire Metals Limited ('Empire' or the 'Company')
Final Results
Empire Metals Limited, the AIM-quoted exploration and resource
development company, announces its final results for the year ended
31 December 2020.
The annual report and accounts for the year ended 31 December
2020 will be posted to shareholders today and will be available for
download on the Company's website, www.empiremetals.co.uk , later
today.
Chairman's Statement
2020 was a significant year in so many ways, but for Empire
Metals it was a year of significant forward momentum and marked the
emergence of a new and reenergised strategy, a new flagship asset
and a new jurisdiction of focus. These fresh dimensions to our
company have clearly resonated with investors and from both an
operational and corporate perspective, I am delighted with the
progress that we made during the year.
The decisions made over the past 14 months have resulted in
Empire now holding a 75% interest in a highly prospective gold
asset which is poised for rapid advancement up the exploration and
development curve. With the Eclipse Gold Project, I am confident
that we are in the right place, at the right time and in the right
commodity.
As investors may be aware, we are bearing witness to a
modern-day gold rush in Western Australia. Exploration activity in
the region hit a five-year high in 2020 despite initial fears
earlier that it would be severely impacted due to the COVID-19
pandemic. Mines Minister Bill Johnson reported in H2 2020 that gold
projects accounted for 70% of applications, prompted in part by the
strong gold price performance during 2020 and forecasts for further
gains in 2021 and beyond.
There have certainly been some notable winners in the gold
exploration and development industry in the region, with junior
miners and majors alike jostling for prime positions in Western
Australia, which is set to become one of the largest gold producing
regions globally. The combination of security of tenure,
exceptionally mineralised terrane and increasing metals prices has
triggered a review of both greenfield and brownfield projects
alike. Additionally, working in Western Australia has been far less
affected by Covid-19 restrictions than most regions of the world,
and coupled with its world-class gold potential and its top 5
ranking over past 5 years in the Fraser Institute survey of best
mining investment jurisdictions, Western Australia is clearly a
great address for value creative mineral exploration and mine
development.
Thanks to our acquisition of the Eclipse Gold Project, we
believe Empire is ideally placed to be among the winners in the
region. Located 55km north-east of Kalgoorlie, in a prime gold
district of Western Australia, the Eclipse Gold Project produced
954 tonnes @ 24.6 g/t Au for 754.25 oz Au from the Eclipse shaft
which operated up to 1910. In addition to the known mineralisation
at and surrounding the Eclipse old workings, recent geophysics and
geochemistry work has highlighted further potential mineralisation
at two additional targets north-west of Eclipse, the Houdini and
Easy prospects. The licence has been held by one private individual
for the past 30 years, during which time only cursory modern
exploration had been applied to a very small part of the entire
300ha licence area, highlighting the significant opportunity to
prove up known gold occurrences and make new gold discoveries.
Having announced the acquisition of a controlling interest in
the Eclipse option in August 2020, Empire quickly set to work
applying modern exploration programmes to this large, high-grade
and previously producing mining licence. To date, the Company has
conducted two phases of drilling at Eclipse and consistently
encouraging results have been returned. A total of 2,578 metres of
RC drilling was completed at the Eclipse and Houdini prospects in
October and November 2020, with a second round of drilling
commencing in January 2021. Highlights from this programme included
14m at 3.78 g/t gold ('Au') from 22m, including 1m @ 21.4 g/t Au,
and 1m @ 16.65 g/t Au. This hole includes three different clusters
of quartz veining mainly associated with the higher grades,
confirming there is more than one mineralised structure.
A total of 4,589m of RC drilling was completed in this second
phase, which was concluded in February 2021. Importantly, this
programme confirmed the existence of a number of parallel veins in
addition to the main Eclipse vein, including a different stockwork
style of near-surface mineralisation in the vicinity of the Jack's
Dream old workings, and including one intercept of 24m @ 1.44 g/t
Au from 46m downhole (containing 2m @ 2.86 g/t Au; and 3m @ 5.08
g/t Au). The interpretation of these results is underway, and a
further work programme will be announced shortly which is likely to
include preparation of a JORC compliant resource and initial pit
optimisation studies.
Outside of the Company's activities at Eclipse, the Board has
made progress on various corporate developments principally
concerning Empire's legacy interest in the Bolnisi Project in
Georgia. A Sale and Purchase Agreement was agreed in October 2020
with TSXV-listed Candelaria Mining Corporation to acquire Empire's
interest in the joint venture in Georgia, but the offer was subject
to a right-of-first-refusal ("ROFR") on behalf of Empire's joint
venture partner in Georgia. A long period of negotiations with the
partner then ensued, and at the time of writing this is approaching
a resolution. Throughout this period the Company has focussed on
achieving the best possible outcome for shareholders and the Board
is confident the Company will soon be able to put the frustrations
of the Georgian joint venture behind us and focus the majority of
our efforts on building on the new platform for growth in the
Western Australian gold mining industry.
Financial Results
As an exploration and development group which has no revenue we
are reporting a loss for the twelve months ended 31 December 2020
of GBP572,989 (31 December 2019: loss of GBP675,592).
The Group's cash position at the date of signing this report (16
April 2021) is GBP1.23 million.
Corporate
In keeping with the Company's focus on Western Australia, Mike
Struthers, who has led the Company as CEO since January 2018,
stepped down from his executive role in February 2021. I am
delighted that Mike will remain a key Empire team member through
his position as a Non-Executive Director of the Company, as well as
being engaged as a Technical Consultant, providing technical
guidance on the development of the Company's projects across its
portfolio. At the same time, Non-Executive Director David Ajemian
also resigned from the Empire board. The Board has an active search
underway for a new CEO.
Outlook
Empire has made significant progress during 2020 and we are not
breaking our stride as we move into 2021. The Eclipse Gold Project
has demonstrated its potential as a standalone mine development,
and we are now focussed on moving our exploration activities
through to resource definition and into the feasibility phase. The
project, region and commodity continue to generate significant
interest in the market, and we are confident that we have a highly
valuable asset poised for rapid value accretion. We will also be on
the lookout for additional value-accretive acquisitions in
2021.
Our genesis as a value-driven Australian-focussed resource
company will be cemented on the appointment of a new CEO, which we
anticipate in the coming weeks, as we look forward to what we
believe is a very bright future in this region.
I would like to thank shareholders and my board colleagues, both
past and present, as we advance our strategy in Western Australia
and look to deliver further high impact news flow throughout
2021.
Neil O'Brien
Non-Executive Chairman
16 April 2021
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
For further information please visit www.empiremetals.co.uk or
contact:
Mike Struthers Empire Metals Ltd Company Tel: 020 7907
9327
Ewan Leggat S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Adam Cowl S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Damon Heath Shard Capital Partners Joint Broker Tel: 020 7186
LLP 9950
Susie Geliher St Brides Partners Ltd PR Tel: 020 7236
1177
Cosima Akerman St Brides Partners Ltd PR Tel: 020 7236
1177
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
Group
----------------------------
Note 2020 2019
GBP GBP
---------------------------------------- ----- ------------- -------------
Non-Current Assets
Property, plant and equipment 9 1,423 17,882
Investment in joint venture 24 - -
Intangible assets 10 31,673 -
Total Non-current assets 33,096 17,882
---------------------------------------- ----- ------------- -------------
Current Assets
Trade and other receivables 11 294,366 167,971
Financial assets at fair value through
profit or loss 12 427,314 -
Cash and cash equivalents 1 3 2,289,638 50,840
Assets classified as held for sale 24 425,562 -
---------------------------------------- ----- ------------- -------------
Total current assets 3,436,880 218,811
---------------------------------------- ----- ------------- -------------
Total Assets 3,469,976 236,693
---------------------------------------- ----- ------------- -------------
Current Liabilities
Trade and other payables 14 82,340 91,191
---------------------------------------- ----- ------------- -------------
82,340 91,191
---------------------------------------- ----- ------------- -------------
Total Liabilities 82,340 91,191
---------------------------------------- ----- ------------- -------------
Net Assets 3,387,636 145,502
---------------------------------------- ----- ------------- -------------
Equity attributable to owners of the
Parent
Share capital 15 - -
Share premium 15 43,065,981 39,265,637
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 16 152,793 138,014
Accumulated losses (20,985,991) (20,413,002)
---------------------------------------- ----- ------------- -------------
Total equity attributable to owners
of the Parent 3,387,636 145,502
---------------------------------------- ----- ------------- -------------
Non-controlling interest - -
---------------------------------------- ----- ------------- -------------
Total Equity 3,387,636 145,502
---------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2020
Group
----------------------------
Note Year ended Year ended
31 December 31 December
2020 2019
Continuing Operations GBP GBP
------------------------------------------------------------------ ----- ------------- -------------
Revenue 6 1,204 111,457
Cost of sales - -
------------------------------------------------------------------ ----- ------------- -------------
Gross profit 1,204 111,457
------------------------------------------------------------------ ----- ------------- -------------
Administration expenses 7 (958,694) (718,509)
Other gains / (losses) 18 3,721 29,367
Impairment of intangible assets 10 - (97,907)
------------------------------------------------------------------ ----- ------------- -------------
Operating Loss (953,769) (675,592)
------------------------------------------------------------------ ----- ------------- -------------
Loss before Taxation (953,769) (675,592)
------------------------------------------------------------------ ----- ------------- -------------
Income tax 8 (1,555) -
------------------------------------------------------------------ ----- ------------- -------------
Loss for the year from continuing operations (955,324) (675,592)
------------------------------------------------------------------ ----- ------------- -------------
Profit from discontinued operations
(attributable to equity holders of
the Company) 24 382,335 -
------------------------------------------------------------------ ----- ------------- -------------
Loss for the year (572,989) (675,592)
------------------------------------------------------------------ ----- ------------- -------------
Loss attributable to:
* owners of the Parent (572,989) (675,592)
(572,989) (675,592)
------------------------------------------------------------------ ----- ------------- -------------
Other Comprehensive Income:
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translating
foreign operations 661 (6,298)
Total Comprehensive Income (572,328) (681,890)
------------------------------------------------------------------ ----- ------------- -------------
Attributable to:
* owners of the Parent (572,328) (681,890)
Total Comprehensive Income (572,328) (681,890)
------------------------------------------------------------------ ----- ------------- -------------
382,335 -
* Total comprehensive income attributable to
discontinued operations (954,663) -
* Total comprehensive income attributable to continued
operations
------------------------------------------------------------------ ----- ------------- -------------
-
------------------------------------------------------------------ ----- ------------- -------------
Earnings per share (pence) from continuing
operations attributable to owners of
the Parent - Basic & Diluted 21 (0.456) (0.535)
------------------------------------------------------------------ ----- ------------- -------------
Earnings per share (pence) from discontinued
operations attributable to owners of
the Parent - Basic & Diluted 21 0.183 -
------------------------------------------------------------------ ----- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2020
Attributable to Equity Shareholders
--------------------------------------------------------------------
Reverse
acquisition Other Retained
Share premium reserve reserves losses Total Total equity
GBP GBP GBP GBP GBP GBP
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
As at 1 January
2019 38,904,337 (18,845,147) 136,020 (19,737,410) 457,800 457,800
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Loss for the
year - - - (675,592) (675,592) (675,592)
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Other comprehensive
income
Exchange differences
on translating
foreign operations - - (6,298) - (6,298) (6,298)
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Total comprehensive
income for the
year - - (6,298) (675,592) (681,890) (681,890)
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Transactions
with owners
Issue of ordinary
shares 380,000 - - - 380,000 380,000
Share issue charge (18,700) - - - (18,700) (18,700)
Share option
charge - - 8,292 - 8,292 8,292
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Total transactions
with owners 361,300 - 8,292 - 369,592 369,592
As at 31 December
2019 39,265,637 (18,845,147) 138,014 (20,413,002) 145,502 145,502
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
As at 1 January
2020 39,265,637 (18,845,147) 138,014 (20,413,002) 145,502 145,502
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Loss for the
year - - - (572,989) (572,989) (572,989)
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Other comprehensive
income
Exchange differences
on translating
foreign operations - - 661 - 661 661
Total comprehensive
income for the
year - - 661 (572,990) (572,328) (572,328)
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
Transactions
with owners
Issue of ordinary
shares 4,014,288 - - - 4,014,288 4,014,288
(213,944
Share issue charge (213,944) - - - ) (213,944)
Share option
charge - - 14,118 - 14,118 14,118
Total transactions
with owners 3,800,344 - 14,118 - 3,814,462 3,814,462
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
As at 31 December
2020 43,065,981 (18,845,147) 152,793 (20,985,991) 3,387,636 3,387,636
---------------------- -------------- ------------- ---------- ------------- ---------- ----------------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2020
Group
----------------------
Note 2020 2019
GBP GBP
------------------------------------------- ----- ---------- ----------
Cash flows from operating activities
Loss after taxation (572,989) (675,592)
Adjustments for:
Finders fees satisfied by issue
of shares 82,144 8,292
Finders fees satisfied by issue 14,118 -
of warrants
Share of profit on joint venture (382,335) -
Income tax expense 1,555 -
Depreciation and amortisation 9,183 16,160
Impairment of assets - 97,907
Loss/(gain) on sale of PP&E (12,724) -
Decrease/ (increase) in trade and
other receivables (7,158) (26,866)
Increase in trade and other payables (8,595) (151,510)
Foreign exchange - (6,298)
Net cash used in operating activities (876,801) (737,907)
------------------------------------------- ----- ---------- ----------
Cash flows from investing activities
Loans granted to subsidiaries and
joint venture partners (44,164) (97,907)
Purchase of financial asset (345,170) -
Additions to exploration and evaluation (31,673) -
intangible asset
Sale of property, plant & equipment 20,000 -
Net cash used in investing activities (401,007) (97,907)
------------------------------------------- ----- ---------- ----------
Cash flows from financing activities
Proceeds from issue of shares 3,730,550 380,000
Cost of share issue (213,944) (18,700)
Net cash generated from financing
activities 3,516,606 361,300
------------------------------------------- ----- ---------- ----------
Net decrease in cash and cash equivalents 2,238,798 (474,514)
Cash and cash equivalents at beginning
of year 50,840 525,354
Cash and cash equivalents at end
of year 13 2,289,638 50,840
------------------------------------------- ----- ---------- ----------
Non-cash investing and financing
activities 164,288 -
Purchase of financial asset - share
based payment(1)
------------------------------------------- ----- ---------- ----------
(1) Comprises of 4,693,954 shares at 1.75p in respect of
consideration payable and 4,693,954 shares at 1.75p in respect of
finders' fees related to the Eclipse Option.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2020
ACCOUNTING POLICIES
1. General Information
The principal activity of Empire Metals Limited (formerly
Georgian Mining Corporation) ("the Company") and its subsidiaries
(together "the Group") is to implement its mineral exploration
strategy to advance projects towards defining a sufficient in-situ
mineral resource to support a detailed feasibility study towards
mine development and production.
The Company's shares are traded on AIM, a market operated by the
London Stock Exchange. The Company is incorporated in the British
Virgin Islands and domiciled in the United Kingdom. The Company
changed its name to Empire Metals Limited on 10 February 2020.
The address of its registered office is Craigmuir Chambers, PO
Box 71, Road Town, Tortola, BVI.
2. 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.
2.1 Basis of Preparation of Financial Statements
The Group Financial Statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee (IFRS IC) interpretations as adopted by
the European Union applicable to companies under IFRS. The Group
Financial Statements have been prepared under the historical cost
convention.
The Financial Statements are presented in UK Pounds Sterling
rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4 .
2.2 Changes in accounting policy and disclosures
(a) New and amended standards mandatory for the first time for
the financial periods beginning on or after 1 January 2020
As of 1 January 2020, the Company adopted IAS 1 (amendments)
definition of material, IAS 8 (amendments) definition of material,
IFRS 3 (amendments) definition of material and Amendments to
References to the Conceptual Framework in IFRS Standards. The
adoption of these standards did not have a material impact on the
financial statements.
Of the other IFRSs and IFRICs, none are expected to have a
material effect on the Group financial statements.
b) New standards, amendments and interpretations in issue but
not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet
effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
-------------------- ---------------------------------- ---------------
IFRS 16 (Amendments) Property, plant, and equipment *1 January 2022
---------------------------------- ---------------
IAS 1 (Amendments) Classification of Liabilities 1 January 2022
as Current or Non-Current.
---------------------------------- ---------------
IAS 37 (Amendments) Provisions, contingent liabilities *1 January 2022
and contingent assets
---------------------------------- ---------------
(*) Subject to endorsement
The Group is evaluating the impact of the new and amended
standards above which are not expected to have a material impact on
future Group financial statements .
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial
Statements of Empire Metals Limited and the financial statements of
all of its subsidiary undertakings made up to 31 December 2020.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Where an entity does not have returns, the Group's
power over the investee is assessed as to whether control is held.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date
that control ceases.
Below is a summary of subsidiaries of the Group:
Place of Parent company Registered Share capital Principal
Name of subsidiary business capital held activities
------------------- ---------------- ----------------- ------------------ -------------- ----------------
Kibe Investments British Empire Metals Ordinary 100% Dormant
No.2 Limited Virgin Islands Ltd shares US$12
------------------- ---------------- ----------------- ------------------ -------------- ----------------
Noricum Gold Austria Kibe Investments Ordinary 100% Exploration
AT GmbH No.2 Limited shares EUR35,000
------------------- ---------------- ----------------- ------------------ -------------- ----------------
GMC Investments British Empire Metals Ordinary 100% Dormant
Limited Virgin Islands Ltd shares US$1
------------------- ---------------- ----------------- ------------------ -------------- ----------------
European Mining United Kingdom Empire Metals Ordinary 100% Mining Services
Services Limited Ltd shares
GBP1
------------------- ---------------- ----------------- ------------------ -------------- ----------------
Inter-company transactions, balances, income and expenses on
transactions between group companies are eliminated. Profits and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
2.4 Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chairman's Report from page 3. In addition, Note
3 to the Financial Statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk
management objectives; and details of its exposure to credit and
liquidity risk.
The Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating steady
revenue streams, an operating loss has been reported and an
operating loss is expected in the 12 months to 31 December 2021,
the Directors believe that the Group will have sufficient funds to
meet its immediate working capital requirements and undertake its
targeted operating activities over the next 12 months from the date
of approval of these Financial Statements. As at the balance sheet
date, the Group has cash and cash equivalents of GBP2,289,638 which
is foreseen to adequately cover forecast working capital
requirements.
The outbreak of COVID-19 cast some uncertainty over the Parent
Company's ability to raise further funding, however, it
successfully raised net proceeds of GBP3.6m in the year and going
forwards the Directors are confident that similar levels of funding
can be obtained as required.
The Directors have, in the light of all the above circumstances,
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus,
they continue to adopt the going concern basis of accounting in
preparing the Group Financial Statements.
2.5 Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
Segment results, include items directly attributable to a
segment as well as those that can be allocated on a reasonable
basis.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the Company is Sterling, the
functional currency of the BVI subsidiaries is US Dollars and the
functional currency of the Austrian subsidiary is Euros. The
Financial Statements are presented in Pounds Sterling, rounded to
the nearest pound.
(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.
(c) Group companies
The results and financial position of all the Group's entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
-- income and expenses for each statement of comprehensive
income presented are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the
transactions); and
-- all resulting exchange differences are recognised in other
comprehensive income where material.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in the income statement as part of the gain or loss on sale.
2.7 Intangible Assets
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 and which
are classified as intangible 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 assessed for impairment
annually or when facts and circumstances suggest that the carrying
amount of an asset may exceed its recoverable amount. The
assessment is carried out by allocating exploration and evaluation
assets to cash generating units, which are based on specific
projects or geographical areas. IFRS 6 permits impairments of
exploration and evaluation expenditure to be reversed should the
conditions which led to the impairment improve. The Group
continually monitors the position of the projects capitalised and
impaired.
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.
2.8 Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is provided on all property, plant and equipment to
write off the cost less estimated residual value of each asset over
its expected useful economic life on a straight-line basis at the
following annual rates:
Computer equipment - 20 to 50% straight line
Field equipment - 20 to 50% straight line
Vehicles - 20% straight line
All assets are subject to annual impairment reviews. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replacement part is
derecognised. All other repairs and maintenance are charged to the
Income Statement during the financial period in which they are
incurred.
The asset's residual value and useful economic lives are
reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
net gains / (losses)' in the income statement.
2.9 Impairment of non-financial assets
Assets that have an indefinite useful life, for example,
intangible assets not ready to use, are not subject to amortisation
and are tested annually for impairment. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units).
Non-financial assets that suffered impairment (except goodwill)
are reviewed for possible reversal of the impairment at each
reporting date.
2.10 Assets classified as held for sale
Assets are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather
than through continuing use and a sale is considered highly
probable. They are measured at the lower of their carrying value
and fair value less costs to sell. An impairment loss is recognised
for any subsequent write-down of the asset to fair value less costs
to sell.
2.11 Financial Assets
(a) Classification
The Group classifies its financial assets in the following
categories: at amortised cost including trade receivables and other
financial assets at amortised cost, at fair value through other
comprehensive income and at fair value through profit or loss,
loans and receivables, and available-for-sale. The classification
depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial
assets at initial recognition.
(b) Recognition and measurement
Amortised cost
Trade and other receivables are recognised initially at the
amount of consideration that is unconditional, unless they contain
significant financing components, in which case they are recognised
at fair value. The group holds the trade and other receivables with
the objective of collecting the contractual cash flows, and so it
measures them subsequently at amortised cost using the effective
interest method.
The group classifies its financial assets as at amortised cost
only if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect the contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payments of principle and interest.
(c) Impairment of financial assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an
approximation of the original EIR. The expected cash flows will
include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and
other receivables due in less than 12 months, the Group applies the
simplified approach in calculating ECLs, as permitted by IFRS 9.
Therefore, the Group does not track changes in credit risk, but
instead, recognises a loss allowance based on the financial asset's
lifetime ECL at each reporting date.
The Group considers a financial asset in default when
contractual payments are 90 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 and usually
occurs when past due for more than one year and not subject to
enforcement activity.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
(d) Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivable is recognised in
profit or loss. This is the same treatment for a financial asset
measured at FVTPL.
2.12 Financial Liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Group's financial liabilities include trade
and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Trade and other payables
After initial recognition, trade and other payables are
subsequently measured at amortised cost using the EIR method. Gains
and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised,
as well as through the EIR amortisation process.
Amortised cost is calculated by considering any discount or
premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included as finance costs in
the statement of profit or loss and other comprehensive income.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
Fair value
All assets and liabilities for which fair value is measured or
disclosed in the consolidated financial statements are categorised
within the fair value hierarchy. The fair value hierarchy
prioritises the inputs to valuation techniques used to measure fair
value. The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments and other assets
and liabilities for which the fair value was used:
- level 1: quoted prices in active markets for identical assets or liabilities;
- level 2: inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and
- level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
2.13 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.14 Taxation
Tax for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it
relates to items recognised directly in equity. In this case the
tax is also recognised directly in other comprehensive income or
directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries
and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred tax is not accounted
for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the
time of the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted, or substantially enacted, by the
end of the reporting period and are expected to apply when the
related deferred income tax asset is realised, or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries,
associates and joint arrangements, except for deferred income tax
liability where the timing of the reversal of the temporary
difference is controlled by the group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Generally the group is unable to control the reversal of the
temporary difference for associates. Only where there is an
agreement in place that gives the group the ability to control the
reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries,
associates and joint arrangements only to the extent that it is
probable the temporary difference will reverse in the future and
there is sufficient taxable profit available against which the
temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities, and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
There has been no tax credit or expense for the period relating
to current or deferred tax.
2.15 Share Capital, share premium and other reserves
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity, as a deduction, net of tax, from the proceeds
provided there is sufficient premium available. Should sufficient
premium not be available placing costs are recognised in the Income
Statement.
Other reserves consist of the share option reserve and the
foreign exchange translation reserve.
2.16 Reverse acquisition reserve
The reverse acquisition reserve arose on the acquisition of Kibe
Investments No. 2 Limited in 2010. There has been no movement in
the reserve since that date.
2.17 Share Based Payments
The Group operates a number of equity-settled share-based
schemes, under which the entity receives services from employees or
third-party suppliers as consideration for equity instruments
(shares, options and warrants) of the Group. The Group may also
issue warrants to share subscribers as part of a share placing. The
fair value of the equity-settled share based payments is recognised
as an expense in the income statement or charged to equity
depending on the nature of the service provided or instrument
issued. The total amount to be expensed or charged in the case of
options is determined by reference to the fair value of the options
or warrants 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).
In the case of shares and warrants the amount charged to the
share premium account is determined by reference to the fair value
of the services received if available. If the fair value of the
services received is not determinable the shares are valued by
reference to the market price and the warrants are valued by
reference to the fair value of the warrants granted as described
previously.
Non-market vesting conditions are included in assumptions about
the number of options or warrants 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 another reserve in
equity.
When the warrants or options are exercised, the Company 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 warrants or options are exercised.
2.18 Operating Leases
Leases of assets under which the short-term exemption under IFRS
16 has been taken and which a significant amount of the risks and
benefits of ownership are effectively retained by the lessor are
classified as operating leases. Operating lease payments are
charged to the income statement on a straight-line basis over the
period of the respective leases.
2.19 Revenue Recognition
Revenue is recognised in respect of amounts recharged to project
strategic partners in accordance with their contractual terms.
Revenue is also generated from management and consulting services
to third parties.
The Group derives revenue from the transfer of services overtime
and at a point in time in the service lines detailed below.
Revenues from external customers come from consulting services.
The Group provides management services to subsidiary
undertakings and joint venture entities for a fixed monthly fee.
Revenue from providing services is recognised in the accounting
period in which the services are rendered. Efforts to satisfy the
performance obligation are expended evenly throughout the
performance period and so the performance obligation is considered
to be satisfied evenly over time.
2.20 Finance Income
Finance income consists of bank interest on cash and cash
equivalents which is recognised using the effective interest rate
method.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks
being market risk (including, interest rate risk, currency risk and
price risk), credit risk and liquidity risk. The Group's overall
risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects
on the Group's financial performance.
Market Risk
(a) Foreign currency risks
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the USD and Euros against the UK pound. Foreign
exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign
operations. The Group negotiates all material contracts for
activities in relation to its subsidiary in USD and Euros. The
Directors will continue to assess the effect of movements in
exchange rates on the Group's financial operations and initiate
suitable risk management measures where necessary.
(b) Price risk
The Group is not exposed to commodity price risk as a result of
its operations, which are still in the exploration phase. Other
than insignificant consulting revenue, the only revenue relates to
revenue charged to the joint venture JSC Georgian Copper &
Gold. The Directors will revisit the appropriateness of this policy
should the Group's operations change in size or nature.
The Group has no exposure to equity securities price risk, as it
has no listed equity investments.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest
rate risk on financial liabilities. The Group's interest rate risk
arises from its cash held on short-term deposit, which is not
significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. Management does not expect any losses from
non-performance of these receivables.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board. No credit
limits were exceeded during the reporting period, and management
does not expect any losses from non-performance by these
counterparties.
The Group considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Directors are confident that adequate funding will be
forthcoming with which to finance operations. Controls over
expenditure are carefully managed. Throughout 2020, the Company
raised net proceeds of GBP3.6m which will fund the Group for the
next 12 months. See note 2.4 for further details on going concern
and liquidity.
3.2 Capital Risk 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 to enable the Group to
continue its exploration and evaluation activities. The Group has
no debt at 31 December 2020 and defines capital based on the total
equity of the Company being GBP3.4m. The Group monitors its level
of cash resources available against future planned exploration and
evaluation activities and may issue new shares in order to raise
further funds from time to time.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements 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 statements and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
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:
Fair Value Financial Instruments through Profit and Loss
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques. The
group uses its judgement to select a variety of methods and make
assumptions that are mainly based on market conditions existing at
the end of each reporting period. This is the first year the group
has recognised Financial assets at FVTPL so there are no fair value
movements at the year-end as the fair value of the asset is based
on the carrying value of payments made in the year.
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2020 of GBP31,673 (2019: GBPnil): refer to Note 10 for
more information. The Group has a right to renew exploration
permits and the asset is only depreciated once extraction of the
resource commences. Management tests annually whether exploration
projects have future economic value in accordance with the
accounting policy stated in Note 2.7 . Each exploration project is
subject to an annual review by either a consultant or senior
company geologist to determine if the exploration results returned
during the year warrant further exploration expenditure and have
the potential to result in an economic discovery. This review takes
into consideration the expected costs of extraction, long term
metal prices, anticipated resource volumes and supply and demand
outlook. In the event that a project does not represent an economic
exploration target and results indicate there is no additional
upside, a decision will be made to discontinue exploration.
In 2018, the Directors reviewed the estimated value of each
project prepared by management and have concluded that the project
in Georgia be impaired to GBPNil. The Georgian exploration asset
was impaired in full due to the ongoing exploration licence
negotiations. On 28 January 2020 the Company announced that it had
received confirmation of tenure from the National Agency of Mines
('NAM') for two key deposits in the Bolnisi Project licence area,
namely Kvemo Bolnisi East and Dambludi. However, alongside this
tenure confirmation, correspondence from NAM confirmed its
intention to return the remainder of the Bolnisi Project licence
area, including three further deposits identified by the Company,
being Kvemo Bolnisi West, Tsitel Sopeli and Balichi, to the State.
An appeal process is currently underway with the Minister of
Economy and Sustainable Development in Georgia with the objective
of GCG securing its rights to the remainder of the licence area.
See Note 9 for further update in this regard.
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.
These assumptions have been described in more detail in Note
17.
Control of Georgian Copper and Gold
Judgement is required to determine whether the Group has control
over its subsidiaries. Georgian Copper and Gold is 50% owned but
management are of the opinion that they no longer have control of
the entity. On 18 March 2018, the Company entered into a Deed of
Variation with its joint venture partner in Georgian Copper &
Gold ("GCG") in relation to the ongoing operations of the operating
company, future work programmes and budgets. As a result, both
shareholders now have equal representation on the board of GCG and
therefore, from that date, the subsidiary was derecognised and the
ongoing 50% ownership accounted for as a joint venture in
accordance with IFRS 11.
Carrying value of investment in and receivables from joint
ventures
As above, during 2018, the Group lost control of GCG and
accounted for the joint arrangement relationship as an investment
in joint venture. On initial recognition on 18 March 2018, the
carrying value of the investment in joint venture was GBP3,994,585.
The equity accounting for the joint venture meant that the share of
loss of the joint venture was in excess of the carrying value and
as such the amount was written down to GBPnil. As mentioned above,
in January 2020, GCG received confirmation over their holdings in
two license areas (note 24) and as such the impairment previously
recognised in respect of these areas has been reversed.
As at 31 December 2020 GBP43,227 (2019: GBP109,188) is due from
GCG for services rendered in the year. Despite the ongoing license
issues at the year end, this amount is considered fully
recoverable. As disclosed in the Chairman's statement, a sale of
the Group's interest in GCG is being negotiated and the Directors
are confident a resolution will be achieved.
The assets relating to GCG have been transferred to assets held
for sale at the year end.
Carrying value of held for sale assets
At the year end, the Directors have made a committed plan to
sell the Group's holding in GCG and the Directors have a reasonable
expectation that the asset will be sold within 12 months of the
year end. In accordance with IFRS 5, the assets must be held at the
lower of carrying value and the fair value less costs to sell.
Based on offers received from two parties, the Directors believe
that the fair value of the assets, less costs to sell, is in excess
of the carrying value.
5. Segmental Information
As at 31 December 2020, the Group operates in three geographical
areas, the UK, Austria and Georgia. The Parent Company operates in
one geographical area, the UK. Activities in the UK are mainly
administrative in nature whilst activities in Austria relate to
exploration and evaluation work. The reports used by the chief
operating decision maker are based on these geographical
segments.
The Group generated revenue of GBP1,204 during the year ended 31
December 2020 (2019: GBP111,457).
2020 Austria UK Total
GBP GBP GBP
-------------------------------- --------- ---------- ----------
Revenue - 1,204 1,204
Administrative expenses (41,781) (916,913) (958,694)
Other gains/(losses) 164 3,557 3,721
Loss from operations per
reportable segment (41,617) (912,152) (953,769)
--------- ---------- ----------
Additions to non-current
assets
Reportable segment assets 41,155 3,428,821 3,469,976
Reportable segment liabilities 6,867 75,473 82,340
--------------------------------- --------- ---------- ----------
Segment assets and liabilities are allocated based on
geographical location.
2019 Austria UK Total
GBP GBP GBP
-------------------------------- -------- ---------- ----------
Revenue - 111,457 111,457
Administrative expenses (9,027) (709,482) (718,509)
Other gains/(losses) - (68,540) (68,540)
Loss from operations per
reportable segment (9,027) (666,595) (675,592)
-------- ---------- ----------
Additions to non-current - - -
assets
Reportable segment assets 4,731 231,962 236,693
Reportable segment liabilities 3,808 87,383 91,191
--------------------------------- -------- ---------- ----------
Costs of GBP425,562 have been incurred in relation to spend in
Australia. This will represent its own segment in future years as
the acquisition of Eclipse Exploration Pty Ltd has been completed
post year end.
6. Revenue
2020 2019
GBP GBP
--------------------- ----- -------
Operational services 1,204 111,457
1,204 111,457
----- -------
Operational services are recharged by European Mining Services
which include salaries, sample preparation and assay costs and
consulting fees. All operational services were invoiced to Georgian
Copper and Gold JSC and are denominated in GBP and considered fully
recoverable at year end.
7. Expenses by Nature
2020 2019
GBP GBP
------------------------------------------------ -------- --------
Directors' fees (note 19) 249,824 63,030
Fees payable to the Company's auditors
for the audit of the Parent Company and
group financial statements 30,180 30,000
Professional, legal and consulting fees 283,815 134,982
Accounting related services 16,425 14,537
Insurance 23,797 37,327
Office and administrative expenses 39,542 82,969
Depreciation 9,183 16,160
Travel and subsistence 8,156 41,302
AIM related costs including investor relations 154,083 101,843
Share option expense 14,118 8,292
Operations related costs 129,571 178,018
Other expenses - 10,049
------------------------------------------------ -------- --------
Total administrative expenses 958,694 718,509
------------------------------------------------ -------- --------
All employee costs incurred in the year and are included in
'Operations related costs'.
8. Taxation
The tax on the Group's loss differs from the theoretical amount
that would arise using the weighted average tax rate applicable to
the losses of the consolidated entities as follows:
Group
2020 2019
GBP GBP
Loss before tax (571,434) (675,592)
---------- ----------
Tax at the weighted average rate of 19%
(2019: 19.08%) (108,868) (128,905)
Expenditure not deductible for tax purposes (2,360) 19,636
Net tax effect of losses carried forward
on which no deferred tax asset is recognised 109,673 109,269
---------- ----------
Income tax for the year 1,555 -
---------- ----------
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 19.08% (2019:
19.08%) used is a combination of the 19% standard rate of
corporation tax in the UK, 25% Austrian corporation tax and 0% BVI
corporation tax.
The Group has accumulated tax losses of approximately
GBP6,547,000 (2019: GBP5,940,000 ) available to carry forward
against future taxable profits. A deferred tax asset has not been
recognised because of uncertainty over future taxable profits
against which the losses may be utilised.
9. Property, Plant and Equipment
Motor Field Computer Total
Vehicles equipment equipment GBP
GBP GBP GBP
---------------------------------- ----------- ----------- ----------- ---------
Cost
---------------------------------- ----------- ----------- ----------- ---------
As at 31 December 2019 - 66,253 25,545 91,798
----------------------------------- ---------- ----------- ----------- ---------
As at 1 January 2020 - 66,253 25,545 91,798
Additions - - - -
Disposals - (56,024) - (56,024)
Exchange differences - - - -
As at 31 December 2020 - 10,229 25,545 35,774
----------------------------------- ---------- ----------- ----------- ---------
Depreciation
---------------------------------- ----------- ----------- ----------- ---------
As at 31 December 2019 - 50,784 23,132 73,916
----------------------------------- ---------- ----------- ----------- ---------
Charge for the year - 7,638 1,545 9,183
----------------------------------- ---------- ----------- ----------- ---------
Disposals - (48,748) - (48,748)
As at 31 December 2020 - 9,674 24,677 34,351
----------------------------------- ---------- ----------- ----------- ---------
Net book value as at 31 December
2019 - 15,469 2,413 17,882
----------------------------------- ---------- ----------- ----------- ---------
Net book value as at 31 December
2020 - 555 868 1,423
----------------------------------- ---------- ----------- ----------- ---------
10. Intangible Assets
Exploration & Evaluation Assets at Cost 2020 2019
and Net Book Value GBP GBP
---------------------------------------- ------- -----
Balance as at 1 January - -
Additions 31,673 -
Impairment - -
Foreign currency differences - -
As at 31 December 31,673 -
---------------------------------------- ------- -----
The Exploration & Evaluation additions in the current year
relate to work performed at the Company's Rotguelden licence area
in Austria. A work programme was undertaken at the Altenburg target
to determine whether further investigation was warranted. The
Company is currently assessing the results and its options related
to these gold and copper projects. The Austrian licences were
renewed in December 2020 for an additional 5 years.
In accordance with IFRS 6, the Directors undertook an assessment
of the following areas and circumstances which could indicate the
existence of impairment:
-- The Group's right to explore in an area has expired or will
expire in the near future without renewal.
-- No further exploration or evaluation is planned or budgeted for.
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves.
-- Sufficient data exists to indicate that the book value m not
be fully recovered from future development and production.
The Directors do not consider the asset to be impaired.
11. Trade and Other Receivables
2020 2019
GBP GBP
------------------- -------- --------
Trade receivables 108,284 109,188
VAT receivable 34,519 25,465
Prepayments 16,762 21,314
Other receivables 134,801 12,004
------------------- -------- --------
294,366 167,971
------------------- -------- --------
Trade and other receivables are all due within one year. The
fair value of all receivables is the same as their carrying values
stated above. These assets, excluding prepayments, are the only
form of financial asset within the Group, together with cash and
cash equivalents.
Included within other receivables is GBP119,450 owed in relation
to shares subscribed for and issued in the year. These funds were
all received by 21 January 2021.
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2020 2019
GBP GBP
-------------------------------------------- ----------- -------------
UK Pounds 290,103 167,756
Euros 4,263 215
294,366 167,971
-------------------------------------------- ----------- -------------
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security. All trade and other
receivables are considered fully recoverable and performing.
12. Financial Assets At Fair Value Through Profit or Loss
2020 2019
GBP GBP
----------------------------- -------- -----
Option to acquire investment 427,314 -
----------------------------- -------- -----
On 12 August 2020, the Company entered into an Option Agreement
to acquire a 75% interest in the Eclipse Gold Project. The Company
paid AUD$100,000 (GBP55,000) in cash and AUD$150,000 (GBP82,144)
settled via the issue of 4,693,954 new ordinary shares of no-par
value at a price of 1.75p and the issue of 4,693,954 warrants
exercisable at 3p for two years. As part of the terms of the
arrangement, the Company agreed to spend AUD$300,000 on exploration
at Eclipse within the 6 month option period. Approximately
AUD$615,000 was spent in the period including the cost of the
Option.
During December 2020, the Company signed an agreement to
exercise the option to acquire a 75% interest in the Eclipse
project, pending certain regulatory approvals.
On 22 February 2021, the Company announced that it had
successfully completed the Eclipse acquisition and now owns 75% of
the project and license.
13. Cash and Cash Equivalents
2020 2019
GBP GBP
-------------------------- ---------- -------
Cash at bank and in hand 2,289,638 50,840
-------------------------- ---------- -------
All of the Group's cash at bank is held with institutions with
an AA credit rating.
14. Trade and Other Payables
2020 2019
GBP GBP
------------------ ------- -------
Trade payables 44,307 55,889
Other payables 2,091 2,277
Accrued expenses 35,942 33,025
------------------ ------- -------
82,340 91,191
------------------ ------- -------
15. Share Capital and Share Premium
On 15 December 2010 the shareholders approved the removal of the
Company's authorised share capital and so there is no limit on the
number of shares the Company is authorised to issue. On that date
the shareholders also approved the removal of the nominal value of
the shares, as permitted under local company legislation. As such
all amounts raised are considered to be share premium.
Issued share capital
Group Number of Share premium Total
shares GBP GBP
----------------------------------------- ------------ -------------- -----------
At 1 January 2019 114,756,991 38,904,337 38,904,337
----------------------------------------- ------------ -------------- -----------
Issue of Ordinary Shares - 23 May 2019
(1) 19,000,000 361,300 361,300
At 31 December 2019 133,756,991 39,265,637 39,265,637
----------------------------------------- ------------ -------------- -----------
Issue of Ordinary Shares - 28 February
2020 (2) 60,000,000 570,700 570,700
----------------------------------------- ------------ -------------- -------------
Issue of Ordinary Shares - 12 August
2020 9,387,908 164,288 164,288
----------------------------------------- ------------ -------------- -------------
Issue of Ordinary Shares - 10 September
2020 (3) 50,000,000 1,179,131 1,179,131
Issue of Ordinary Shares - 24 November
2020 (4) 61,538,462 1,886,225 1,886,225
At 31 December 2020 314,683,361 43,065,981 43,065,981
----------------------------------------- ------------ -------------- -----------
(1) Net of issue costs of GBP18,700
(2) Net of issues costs of GBP29,300
(3) Net of issue costs of GBP70,869
(4) Net of issue costs of GBP113,775
On 28 February 2020, the Company issued and allotted 60,000,000
new Ordinary Shares at a price of 1 pence per share for gross
proceeds of GBP600,000.
On 12 August 2020, the Company issued and allotted 4,693,954 new
Ordinary Shares at a price of 1.75 pence per share as consideration
for the purchase of the 75% Eclipse option. The Company issued and
allotted a further 4,693,954 new Ordinary shares at the same price
as payment of a finder's fee in respect of the Eclipse
transaction.
On 10 September 2020, the Company issued and allotted 50,000,000
new Ordinary Shares at a price of 2.5 pence per share for gross
proceeds of GBP1,250,000.
On 24 November 2020, the Company issued and allotted 61,538,462
new Ordinary Shares at a price of 3.25 pence per share for gross
proceeds of GBP2,000,000.
16. Other reserves
2020 2019
GBP GBP
-------------------------------------- ---------- ----------
Foreign currency translation reserve (231,021) (231,682)
-------------------------------------- ---------- ----------
Share option Reserve 383,814 369,696
-------------------------------------- ---------- ----------
152,793 138,014
-------------------------------------- ---------- ----------
Foreign currency translation reserve - the foreign currency
translation reserve represents the effect of changes in exchange
rates arising from translating the financial statements of
subsidiary undertakings into the Company's presentation
currency.
Share option reserve - the share option reserve represents the
fair value of share options and warrants in issue. The amounts
included are recycled to share premium on exercise or recycled to
retained earnings on expiry. Note 16 outlines the share based
payments made in the year.
17. Share Based Payments
Warrants and options outstanding at 31 December 2020 have the
following expiry dates and exercise prices:
Shares
--------------------------
Exercise
price
in GBP
Grant date Expiry date per share 2020 2019
----------------- ---------------- ----------- ----------- -----------
20 July 2016 20 July 2021 0.1400 5,000,000 5,000,000
----------------- ---------------- ----------- ----------- -----------
30 January 2017 3 March 2022 0.1200 1,900,000 1,900,000
----------------- ---------------- ----------- ----------- -----------
22 June 2017 21 July 2022 0.1825 3,300,000 3,300,000
----------------- ---------------- ----------- ----------- -----------
30 July 2018 26 July 2023 0.1400 1,000,000 1,000,000
----------------- ---------------- ----------- ----------- -----------
30 July 2018 26 July 2023 0.2000 1,000,000 1,000,000
----------------- ---------------- ----------- ----------- -----------
1 July 2019 30 June 2024 0.0130 3,376,553 3,376,553
----------------- ---------------- ----------- ----------- -----------
12 August 2020 12 August 2022 0.0300 9,387,908 -
----------------- ---------------- ----------- ----------- -----------
24,964,461 15,576,553
---------------------------------- ----------- ----------- -----------
2017 Warrants 2017 Warrants 2016 Warrants
-------------- -------------- --------------
Granted on: 30/01/2017 22/06/2017 20/07/2016
Life (years) 5.2 years 5 years 5 years
Share price on grant date 8.8p 17.7p 16p
Risk free rate 0.57% 0.57% 0.5%
Expected volatility 27.06% 34.43% 23.29%
Expected dividend yield - - -
Exercise price 12p 18.25p 14p
Marketability discount 20% 20% 20%
Total fair value (GBP) 20,225 140,043 188,690
--------------------------- -------------- -------------- --------------
2018 Warrants 2018 Warrants 2019 Warrants
-------------- -------------- --------------
Granted on: 30/07/2018 30/07/2018 1/7/2019
Life (years) 5 years 5 years 5 years
Share price on grant date 9.35p 9.35p 1.05p
Risk free rate 0.75% 0.75% 0.42%
Expected volatility 27.06% 27.06% 40.97%
Expected dividend yield - - -
Exercise price 20p 14p 1.3p
Marketability discount 20% 20% 20%
Total fair value (GBP) 3,575 8,871 8,292
--------------------------- -------------- -------------- --------------
2020 Warrants
--------------
Granted on: 12/08/2020
Life (years) 2 years
Share price on grant date 2.25p
Risk free rate 1.75%
Expected volatility 36.72%
Expected dividend yield -
Exercise price 3p
Marketability discount 20%
Total fair value (GBP) 14,118
--------------------------- --------------
The risk free rate of return is based on zero yield government
bonds for a term consistent with the warrant and option life.
The movement of options and warrants for the year to 31 December
2020 is shown below:
2020 2019
----------------------- -----------------------
Weighted Weighted
average average
exercise exercise
price price
Number (GBP) Number (GBP)
------------------------------- ----------- ---------- ----------- ----------
As at 1 January 15,576,533 0.12 12,200,000 0.15
Granted 9,387,908 0.03 3,376,553 0.013
Exercised - - - -
Expired - - - -
------------------------------- ----------- ---------- ----------- ----------
Outstanding as at 31 December 24,964,461 0.09 15,576,553 0.12
------------------------------- ----------- ---------- ----------- ----------
Exercisable at 31 December 24,964,461 0.09 15,576,533 0.12
------------------------------- ----------- ---------- ----------- ----------
2020 2019
--------------------------------------------------- --------------------------------------------------
Weighted Weighted Weighted Weighted
Weighted average average Weighted average average
Range average remaining remaining average remaining remaining
of exercise exercise life life exercise life life
prices price Number expected contracted price Number expected contracted
(GBP) (GBP) of shares (years) (years) (GBP) of shares (years) (years)
------------- ---------- ----------- ------------ ------------ ---------- ----------- ----------- ------------
0.013-0.2 0.09 24,964,461 1.741 1.741 0.12 15,576,533 2.7384 2.7384
------------- ---------- ----------- ------------ ------------ ---------- ----------- ----------- ------------
The total fair value charged to the statement of comprehensive
income for the year ended 31 December 2020 and included in
administrative expenses was GBP14,118 (2019: GBP8,292).
18. Other (losses)/gains - Net
Group
---------------------
2020 2019
GBP GBP
------------------------------------------------- -------- ---------
Net foreign exchange gains / (losses) (9,006) (14,849)
Profit on sale of property, plant and equipment 12,724 -
Written off directors fees (note 19) - 47,313
Other gains/losses 3 (3,097)
------------------------------------------------- -------- ---------
3,721 29,367
------------------------------------------------- -------- ---------
19. Employees
Group
------------------
2020 2019
Staff costs (excluding Directors) GBP GBP
----------------------------------- ------- -------
Salaries and wages 4,841 77,489
Social security costs - 6,769
Pensions - 795
12,772 85,053
----------------------------------- ------- -------
The average monthly number of employees during the year was 1
(2019: 3). All employee costs were incurred in European Mining
Services. Employee costs incurred in European Mining Services are
included in Operation Related Costs in Note 7 .
20. Directors' Remuneration
For the year ended 31 December 2020
---------------------------------------------------
Short term Post-Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ------------- ---------------- ------------ ----------
Executive Directors
Michael Struthers 99,824 - - 99,824
Gregory Kuenzel 40,000 1,200 - 41,200
Non-executive Directors
Neil O'Brien 35,000 - - 35,000
Peter Damouni 35,000 444 - 35,444
David Ajemian 40,000 1,044 - 41,044
Laurence Mutch - - - -
249,824 2,688 - 252,512
------------------------- ------------- ---------------- ------------ ----------
For the year ended 31 December 2019
---------------------------------------------------
Short term Post-Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ------------- ---------------- ------------ ----------
Executive Directors
Michael Struthers 63,030 - - 63,030
Gregory Kuenzel - - - -
Non-executive Directors - - - -
Neil O'Brien - - - -
Peter Damouni - - - -
Laurence Mutch - - - -
63,030 - - 63,030
------------------------- ------------- ---------------- ------------ ----------
For the year ended 31 December 2019, the Board agreed accrued
fees were to be written off in full and not payable by the Company.
The reversal of this accrual was included in other gains and losses
as per Note 18.
21. Earnings per Share
Continuing operations
The calculation of the total basic loss per share of 0.456 pence
(2019: loss 0.535 pence) is based on the loss attributable to
equity owners of the group of GBP955,324 (2019: GBP675,592 ) and on
the weighted average number of ordinary shares of 209,429,917
(2019: 126,365,211) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share
are identical as the effect of the exercise of share options or
warrants would be to decrease the loss per share.
Discontinued operations
The calculation of the total basic and diluted earnings per
share of 0.183 pence (2019: nil) is based on the profit
attributable to equity owners of the group of GBP382,335 (2019:
GBPnil ) and on the weighted average number of ordinary shares of
209,429,917 (2019: 126,365,211) in issue during the period
22. Commitments
(a) Work programme commitment
As a result of the continued delay in the renewal of the
exploration permit, no work programme has been agreed by the Joint
Venture partners as at 31 December 2020. The Company is committed
to funding 50% of the ongoing administrative expenditure of Georgia
Copper and Gold which currently totals approximately $7,000 per
month.
The Eclipse Mining Licence has an annual minimum expenditure
commitment of AUD$30,000.
(b) Royalty agreements
As part of the contractual arrangement with Kibe No.1
Investments Limited the Group has agreed to pay a royalty on
revenue from gold sales arising from gold mines developed by
Noricum Gold AT GmbH and covered by licenses acquired by Kibe No.1
Investments Limited. Under the terms of the Royalty Agreement
between Kibe No.1 Investments Limited and Noricum Gold AT GmbH, the
Group shall pay royalties, based on total ounces of gold sold,
equal to US$1 for every US$250 of the sale price per ounce.
23. Investment in Joint Venture
On 15 March 2018, the Company entered into a Deed of Variation
with its joint venture partner in Georgian Copper & Gold in
relation to the ongoing operations of the operating company, future
work programmes and budgets. As a result, both shareholders now
have equal representation on the board of GCG and therefore, from
that date, the subsidiary was derecognised and the ongoing 50%
ownership accounted for as a joint venture.
The carrying value of the investment in the joint venture is
determined as follows:
As at 31 As at 31
December December
2020 2019
GBP GBP
-------------------------------------------- ---------- ------------
Opening balance - -
Amounts loaned to entity 43,227 -
Share of profit in joint venture 382,335 -
Transferred to assets classified as (425,562) -
held for sale
- -
------------------------------------- ----------------- ------------
On 28 January 2020 the Group announced that it had received
confirmation of tenure from the National Agency of Mines ('NAM')
for two key deposits in the Bolnisi Project licence area, namely
Kvemo Bolnisi East and Dambludi. As a result, the exploration and
evaluation expenditure related to these license areas, which was
previously impaired, has been reinstated. As such the carrying
value of the investment in GCG has also been uplifted by the
Company's share of profit for the period.
The joint venture generated a profit after tax of GBP2,037,321
for the period. The share of profit of the joint venture for the
period recognised was GBP1,018,661. As per IAS 28, the share of
profit can only be recognised in excess of the Company's share of
historic losses not recognised. As a result, the share of profit
recognised has been reduced by the Company's share of the joint
venture losses which it has not previously recognised, being
GBP636,326. There are no further unrecognised losses.
The joint venture listed below has share capital consisting
solely of ordinary shares, which are held by the Group and their
joint venture partner Caucasian Mining Group.
Name of entity Address of the % of ownership Nature of relationship Measurement
registered office interest method
Georgian Copper 6 Saakadze Descent, 50 As above Equity
& Gold JSC 2(nd) Fl.
Tbilisi 0171, Georgia
As at the year end, the Directors have made a formal plan to
sell their interest in the joint venture and have signed a binding
sale and purchase agreement with a third party. The sale is subject
to a right-of-first-refusal in favour of the joint venture
partners. As such, the investment has been transferred to assets
classified as held for sale. See note 25 for details.
24. Assets held for sale
On 26(th) October 2020, the Directors announced that they have
made a formal plan to sell the Group's 50% interest in Georgian
Copper & Gold JSC and have signed a binding sale and purchase
agreement with a third party. The sale is subject to a
right-of-first-refusal in favour of the joint venture partners.
As such, the investment has been transferred to assets
classified as held for sale and the associated assets have
consequently been presented as held for sale.
The financial performance and cash flow information presented is
for the year ended 31 December 2020.
2020 2019
GBP GBP
--------------------------------------------- ---------- -----
Share of profit from joint venture 382,335 -
Profit from discontinued operations 382,335 -
--------------------------------------------- ---------- -----
Net cash flows from operating activities - -
Net cash flows from financing activities (44,164) -
Net cash flows from investment activities - -
--------------------------------------------- ---------- -----
Net decrease in cash generated from disposal (44,164) -
group
--------------------------------------------- ---------- -----
The following assets were reclassified as held for sale in
relation to the discontinued operation as at 31 December 2020:
As at 31 As at 31
December December
2020 2019
GBP GBP
----------------------------------------------- ---------- ----------
Loan receivable 43,227 -
Investment in joint venture 382,335 -
Total assets of disposal group held 425,562 -
for sale
--------------------------------------- ------------------ ----------
25. Financial instruments
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at
fair value is provided below. The different levels have been
defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or
indirectly (level 2),
- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
Cost may be an appropriate estimation of fair value at the
measurement date only in limited circumstances, such as for a
pre-revenue entity when there is no catalyst for change in fair
value, or the transaction date is relatively close to the
measurement date. The financial asset relates to costs incurred
with the acquisition of an option to invest in a 75% holding of
Eclipse Exploration PTY. Further detail can be found in note
11.
Group & Company
31 December 2020
Level 1 Level 2 Level 3 Total
GBP'000
Financial assets (fair value through the profit or loss) - - 427,314 427,314
---------- ---------- -------- --------
- - 427,314 427,314
========== ========== ======== ========
There were no Assets held at Fair value as at 31 December
2019
26. Related Party Transactions
Services provided by European Mining Services Limited to JSC
Georgian Copper & Gold
During the year European Mining Services Limited provided
geological, technical and other professional services with a total
value of GBP1,204 (2019: GBP111,457) to JSC Georgian Copper and
Gold, the joint venture entity.
Loans provided by Parent Company
As at 31 December 2020 there were amounts receivable of GBP7,454
(2019: GBP6,016) from Kibe No.2 Investments Limited. No interest
was charged on the loans.
As at 31 December 2020 there were amounts receivable of
GBP694,186 (2019: GBP694,186) from European Mining Services
Limited.
As at 31 December 2020 there were amounts receivable of
GBP74,126 (2019: GBPNil) from Noricum AT GmbH.
All intra-group transactions are eliminated on
consolidation.
Other Transactions
Heytesbury Corporate LLP, an entity in which Gregory Kuenzel is
a partner, was paid a fee of GBP46,800 (2019: GBP32,500) for
accounting services to the Group. At the year-end there was an
outstanding balance of GBP7,208 (2019: GBP6,155).
Michael Struthers received GBP99,824 (2019: GBP63,030) through
his service company, MS Mining Consulting LDA, as disclosed in Note
19.
27. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling
party.
28. Events after the Reporting Date
On 22 February 2021, the Company announced that it had
successfully completed the exercise of the Eclipse option and owns
100% of the equity in Eclipse Exploration Pty, the company that
holds a 75% interest in the Eclipse Gold Project, located 55km
north-east of Kalgoorlie, Western Australia.
**ENDS**
About Empire Metals Limited
Empire Metals' primary focus is on the Eclipse Gold Project in
Western Australia which produced 954 tonnes @ 24.6 g/t Au for
754.25 oz Au from the Eclipse shaft which operated up to 1910.
Empire owns 75% of Eclipse with a right to acquire a further
25%.
The Company also has a 50% joint venture in Georgia which covers
an area of over 860 sq km and has a 30-year mining licence. The
joint venture covers a variety of targets and projects ranging from
greenfield exploration / target definition phase through
intermediate target-testing phases to more advanced projects
including Kvemo Bolnisi East which is due to advance to Feasibility
Study.
The Board continues to evaluate opportunities through which to
realise the value of its wider portfolio and reviews further assets
which meet the Company's investment criteria.
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