TIDMPXC
RNS Number : 5303J
Phoenix Copper Limited
14 April 2020
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
14 April 2020
Phoenix Copper Limited (the "Company" or "Phoenix")
Final audited results for the year ended 31 December 2019
Notice of AGM
Phoenix Copper Limited (AIM: PXC; OTCQX: PXCLF), the AIM quoted
North American focused base and precious metals exploration and
development company, is pleased to announce its audited results for
the year ended 31 December 2019.
Highlights
Corporate & Financial:
- $3.3 million raised during the year
- $1.85 million raised since the year-end
- Investment in Empire Mine increased to $11.67 million (2018: $9.88 million)
- Net assets increased to $10.56 million (2018: $9.15 million)
- 32% decrease in net loss to $1.13 million (2018: $1.65 million)
- Phoenix loan to operating subsidiary increased to $8.3 million (2018: $6.3 million)
- Company name changed to Phoenix Copper Limited
- Ryan McDermott appointed as Chief Executive Officer
Empire Mine, Idaho, USA:
- Updated Measured & Indicated open pit resource containing
73,872 tonnes of copper, 29,813 tonnes of zinc, 139,000 ounces of
gold and 6.038 million ounces of silver
- Maiden Inferred sulphide resource at newly discovered Red Star silver / lead zone
- Further drilling at Red Star to commence shortly
- Land acreage increased to 5,717 acres, including 2,420-acre Navarre Creek gold zone
- Completion of environmental studies for both Empire open pit resource and Red Star
- ESG Programme Coordinator appointed
The Company also announces that the Annual General Meeting
("AGM") will be held by webinar at 16.00 BST on 30 April 2020.
Details of how to access the webinar platform and vote by proxy
will be set out in the Notice of AGM.
The Notice of AGM and Forms of Proxy will be despatched to
shareholders on 15 April 2020 and will be available on the
Company's website at www.phoenixcopperlimited.com.
The Company's Annual Report and Consolidated Financial
Statements for the year ended 31 December 2019 will also be
available on the website from 15 April 2020.
COVID-19 Impact Statement
The Coronavirus pandemic has had a significant and immediate
impact on the operations and funding of many businesses both in the
USA and globally. However, mining was named an essential service
under Idaho Governor Brad Little's recent stay-at-home order, so
Phoenix employees are moving the Empire and Red Star Projects
forward without delay. To protect the health and safety of its
employees and the local community, the Company, in concert with
community leaders, has developed an innovative plan that minimizes
employee-to-employee contact and virtually eliminates contact with
the community at large while allowing the Company to proceed with
the Red Star drilling programme. The Company has closely examined
the supply chain and is confident that all necessary equipment and
supplies will be readily available for the drilling programme.
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.
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited Ryan McDermott Tel: +1 208 954
Dennis Thomas 7039 Tel: +44
Richard Wilkins 7827 290 849
Tel: +44 7590
216 657
SP Angel David Hignell / Caroline Rowe Tel: +44 20 3470
(Nominated Adviser) 0470
----------------------------------- ---------------------
Brandon Hill Capital Jonathan Evans / Oliver Stansfield Tel: +44 20 3463
(Joint Broker) 5000
----------------------------------- ---------------------
WH Ireland (Joint Harry Ansell / Adam Pollock Tel: +44 207 2201666
Broker) / Katy Mitchell
----------------------------------- ---------------------
Blytheweigh Tim Blythe / Camilla Horsfall Tel: +44 20 7138
(Financial PR) / Megan Ray 3204
----------------------------------- ---------------------
Notes
Phoenix Copper Limited is a North American focused, base and
precious metal explorer and developer, which has carried out a
drilling programme and generated a copper, gold, silver and zinc
resource on which it is carrying out a feasibility study to bring
the historically producing Empire Mine in Idaho, USA, back into
production. It is also evaluating the silver and gold resources
around three other past producing mines within the 23 km(2) Empire
claims block as well as cobalt in two claims blocks north of Empire
in Idaho.
Phoenix's primary operations are focused near Mackay, Idaho in
the Alder Creek mining district. This district includes the
historical Empire, Horseshoe, White Knob and Blue Bird Mines, past
producers of copper, gold, silver, zinc, lead and tungsten from
underground mines in the first half of the twentieth century.
Additionally, the district includes Navarre Creek a Carlin-trend
gold discovery which hosts a 6.1 km gold strike length within a 9.8
km(2) area.
Phoenix acquired an 80% interest in the historical Empire Mine
property in 2017 and, based on a total of 320 drill holes, an oxide
resource was completed in late 2017. A NI 43-101 compliant PEA
(preliminary economic assessment) for an open pit heap leach
solvent extraction and electrowinning ("SX-EW") mine was completed
in April 2018. In 2018 a further 8,600 metres in 93 holes was
completed to upgrade the oxide resources, provide samples for
ongoing metallurgical test work, geotechnical and hydrological
studies and condemnation drilling for the heap leach pad site,
waste dump and plant site. An updated NI 43-101 compliant resource
was completed in early May 2019.
Since acquiring the Empire project, Phoenix has increased the
claim area from 818 acres to 5,717 acres, mainly to the northwest
and west, and in so doing has increased the potential for
additional oxide and sulphide copper resources, as well as the
potential for stand-alone gold and silver resources, along a strike
length of approximately 5.4 km towards the other brownfield mines
of the Horseshoe, White Knob and Blue Bird Mines now within the
property boundary. In particular, a new discovery at Red Star, 330
metres north west of the Empire Mine proposed open pit, has
revealed sulphide ore and from three shallow exploration drill
holes a NI 43-101 compliant maiden resource of 1.6 million silver
equivalent ounces was reported.
At Empire, it is estimated that less than 1% of the potential
ore system has been explored to date and, accordingly, there is
significant opportunity to increase the resource through phased
exploration.
More details on the Company, its assets and its objectives can
be found on PXC's website at www. phoenixcopperlimited.com .
CHAIRMAN'S STATEMENT
Dear Shareholders
"May you live in interesting times," was first used, in English
at any rate, by Sir Austen Chamberlain, in 1936, and later cited as
an "ancient Chinese curse." As I write, copper trades 35% below its
2018 high at $2.14 a pound, a level at which approximately 17% of
world copper production is losing money on a true, sustaining
capital expenditure basis, according to analysts at Jefferies.
However, the fundamentals of precious metals as a store of value
while governments are printing money have begun to reassert
themselves, and we are very fortunate to have the Red Star silver
project, which shows robust economics at the current silver price,
as a route to early production and revenue generation. We are
commencing our 2020 drilling programme later this month, and as we
will only have three crew members on a drill pad at any given time,
Covid-19 should have less impact on us than on many other
companies. Barring any delays at the assay laboratory, we hope to
produce an updated resource at Red Star in Q3 2020, keeping us on
track for commencement of production in late 2021. Meanwhile, we
expect the electric vehicle and cleaner air revolution to resume
once a degree of calm returns, creating shortages of both copper
and cobalt.
Although fluctuations in metals prices have made planning
decisions, and the funding of them, more difficult, we have also
been very fortunate to have amongst our shareholders some long-term
investors who have continued to support us. We have continued to
work on the development of the open-pit copper mine, in
anticipation of higher copper prices, although we can see earlier
cash flow potential from the Red Star project, to the north of the
Empire open pit. The Red Star discovery is in primary high-grade
silver/lead sulphide mineralisation. After only three holes
drilled, we were able to generate a maiden NI 43-101 compliant
resource of some 103,500 tonnes, containing over half a million
ounces of silver. Our current view is that Red Star may develop
into a high-grade underground silver-lead mine with a modest level
of capital expenditure, and we are going full steam ahead with the
drilling programme to prove up enough metal in order to make a
production decision later in the year.
Although we are a small company, we have both "safe haven" and
economically sensitive metals in our various claims. During 2019 we
expanded our territory from 1,837 acres to 5,717 acres (7.43 sq km
to 23.14 sq km), to include the old polymetallic workings at White
Knob, Bluebird and Horseshoe, along with the historic prospects at
Windy Devil and the 9.8 sq km Navarre Creek gold property to the
north west. This expansion gives us 5.4 km of mineralised strike
length at Empire, and a further 6.1 km at Navarre Creek. Mindful of
keeping dilution by the issue of more shares at depressed prices to
a minimum, we are working on sharing the costs of exploring these
properties with potential joint venture partners.
Our properties are located in central Idaho. Custer County,
Idaho, home to our Empire Mine, has a recorded population of 0.9
people per square mile, making it one of the least populated
Counties in the State. Although the Company will be taking every
precaution available when it comes to our employees' and
contractors' health and safety, we believe that our location will
help to minimise any possible business interruptions arising from
the Coronavirus pandemic. I am lucky to have a great team of fellow
directors and operatives in the UK and Idaho, and we were pleased
Ryan McDermott agreed to step up to the role of Chief Executive
Officer. Idaho born and raised, but with a wealth of international
experience, he could not have a better resume for the job. Dennis
Thomas, who brought the project to Phoenix, is now a Non-Executive
Director and VP Investor Relations. We thank him for his
contribution, and his energy and enthusiasm endure in his new
role.
We are also pleased to announce the appointment of Idaho-based
Ms Lenie Wilkie as head of ESG compliance. We take our
environmental and social responsibilities very seriously and
welcome her in this new role.
Although our sterling market capitalisation is currently not as
we would wish I am encouraged that our balance sheet is denominated
in US dollars, as are our principal assets. We have ensured that
money raised from shareholders has been spent developing our
assets. The Empire Mine now has a carrying value of approximately
$12 million, and much of this value is underpinned by a shareholder
loan of almost $9 million from Phoenix to Konnex Resources, our 80%
owned operating subsidiary in Idaho. This loan earns interest at 6%
per annum and will be repaid from cashflow generated from
commercial production at Empire. It is our current intention that
this loan, when repaid, together with profits distributed to us by
Konnex, will allow us to return money to shareholders by way of
dividends.
We thank you all for your continued support, and look forward to
updating you on the Red Star development programme and other
matters in what should still be an exciting year for us.
Marcus Edwards-Jones
Executive Chairman
9 April 2020
CHIEF EXECUTIVE OFFICER'S REPORT
Principal activities and review of the business
In 2017 the Phoenix team set out to explore and develop an
open-pit oxide-copper deposit at our Empire Mine property in Idaho,
USA. What has become plainly clear in the past two years of
extensive mapping, sampling and drilling is that the Empire group
of projects, including Red Star, Horseshoe, and Navarre Creek,
holds not only an oxide-copper resource, but it also offers a true
suite of polymetallics including gold, silver, lead, zinc and
sulphide copper. The variety and grade of mineralization
encountered thus far on the many claim blocks that make up the
Empire property is providing Phoenix with the unique opportunity to
exploit metals other than copper during a period where the
fluctuating copper market is proving challenging for the industry
as a whole. While the 2019 copper market experienced some
unforeseen lows, the precious metals markets have experienced some
shining upswings. The Company is in a good position, particularly
with its Red Star high-grade silver and lead resource and its
cobalt holdings, to expand beyond the oxide-copper resource whilst
copper prices rebound.
The Coronavirus pandemic has had a significant and immediate
impact on the operations and funding of many businesses both in the
USA and globally. However, mining was named an essential service
under Idaho Governor Brad Little's recent stay-at-home order, so
Phoenix employees are moving the Empire and Red Star Projects
forward without delay. To protect the health and safety of its
employees and the local community, the Company, in concert with
community leaders, has developed an innovative plan that minimizes
employee-to-employee contact and virtually eliminates contact with
the community at large while allowing the Company to proceed with
the Red Star drilling programme. The Company has closely examined
the supply chain and is confident that all necessary equipment and
supplies will be readily available for the drilling programme.
It is not possible to predict with certainty the potential
future impact on global copper, silver and other relevant mineral
prices. Markets will certainly fluctuate, as we have witnessed in
2019, and particularly at this time of the Coronavirus pandemic,
but we believe that global initiatives in electrification and
manufacturing will provide a demand well into the future. It is
also reassuring to note that the Company is operating in a
geopolitically stable jurisdiction and that we have both early
production potential and significant exploration upside.
Red Star - High-grade Silver and Lead
Red Star is a high-angle silver-lead vein system located 330
metres north-northwest of the proposed Empire oxide pit. Red Star
was identified from a 20-metre wide surface outcrop across a skarn
structure. Surface mineralisation is a mix of spectacularly covered
oxides and sulphides, with strong chrysocolla and bornite showings,
exposed in a heavily timbered canyon. Three reverse circulation
("RC") drill holes were drilled on the target and assay results
reported the presence of high-grade lead and silver sulphides
including intercepts of 21% lead and 1,111 g/t silver. In early May
2019 the Company announced a small maiden "Inferred" sulphide
resource of 103,500 tonnes, containing 580,324 ounces of silver,
3,985 tonnes of lead, 952 tonnes of zinc, 342 tonnes of copper, and
2,828 ounces of gold.
Grade / tonne Metal Content
Class Tonnes Ag Au Pb Zn Cu Ag Au Pb ZN Cu
g/t g/t % % % ozs ozs tonnes tonnes tonnes
------- ----- ---- ---- ---- ---- ------- ----- ------ ------ ------
Inferred 103,500 174.4 0.85 3.85 0.92 0.33 580,324 2,828 3,985 952 342
------- ----- ---- ---- ---- ---- ------- ----- ------ ------ ------
Following the estimation of the inferred resource, a second
drilling program was approved by the Company targeting the Red Star
vein system along strike and at depth. This represents an exciting
exploration prospect for the Company. Due to the depth of
overburden and general lack of outcrop in the area, drill roads
were constructed in late 2019 designed to "cut" below the
overburden and into the sub-crop along the vein system's strike.
Channel samples were collected across the mineralized sub-crop
where the vein system "daylighted" in the road cuts. The results of
the channel sample assays were on par with the channel sample
results taken from the Red Star discovery outcrop in 2018. The 2020
drill programme will utilize the channel samples for drill hole
targeting.
Empire Mine - Open-Pit Oxide-Copper
In May 2019 we announced a new NI 43-101 compliant open pit
copper-oxide "Measured and Indicated" resource of 15.2 million
tonnes at 0.49% copper. This resource incorporated the 2017 and
2018 drilling results and included gold, silver and zinc occurring
with the copper at the same cut-off grade. The table below shows
the distribution of metals and grades within the oxide-copper shell
at a cut-off grade of 0.184% copper. The Empire copper-oxide
deposit is envisioned as a heap-leachable, solvent
extraction/electrowinning (SX/EW) process.
CLASS Tonnes Average Grades Metal Content
Cu Zn Ag Au Cu Zn Ag Au
% % g/t g/t tonnes tonnes oz oz
----- ----- ------ ----- -------- -------- ---------- --------
Measured 6,176,000 0.49 0.21 12.18 0.26 30,262 12,970 2,418,457 51,626
----------- ----- ----- ------ ----- -------- -------- ---------- --------
Indicated 8,993,000 0.48 0.19 12.51 0.30 43,166 17,087 3,616,976 86,738
----------- ----- ----- ------ ----- -------- -------- ---------- --------
M+I 15,169,000 0.49 0.20 12.38 0.28 74,328 30,338 6,037,559 136,552
----------- ----- ----- ------ ----- -------- -------- ---------- --------
Inferred 4,271,000 0.44 0.13 9.76 0.32 18,792 5,552 1,340,180 43,940
----------- ----- ----- ------ ----- -------- -------- ---------- --------
We are continuing down the feasibility study and permitting
pathways with the copper-oxide resource, most recently completing
two years of environmental studies directly applicable to the
permitting and mine planning of the oxide-copper open-pit. Although
our resources are being focused in the direction of Red Star, we
are continuing to move the copper-oxide project forward in order to
better position ourselves as the copper market improves.
The Company is also currently examining alternative extraction
methods that may allow for the recovery of gold, silver, and zinc
along with copper.
Empire Mine Expansion - Horseshoe and White Knob, Windy Devil,
and Navarre Creek
We have made a point of focusing our efforts on our flagship
Empire Mine projects. However, we have increased our land position
from time-to-time as our geologists recognize prospective and
strategic opportunities. At the time of the Company's IPO in
mid-2017, our Empire Mine property consisted of 818 acres. Since
then we have increased the core Empire claim block to 3,297 acres
by expanding north to the former Horseshoe and White Knob Mines and
onto Windy Devil. The expansion covers approximately 30 historic
adits, shafts and prospects, which exhibit geology and mineralogy
similar to Red Star.
In February 2019 we staked another 2,420 acres in Navarre Creek,
north and west of the core Empire claim block. Navarre Creek is a 6
km long zone of felsic volcanic and intrusive rocks with alteration
and mineralization characteristics typical of epithermal, hot
spring-type gold deposits.
Empire Mine - Polymetallic Sulphide Potential
The Red Star vein system appears to be a distal, near-surface
expression of a deeper, copper-rich sulphide vein system that lies
below the oxide-copper open pit and was mined extensively
underground until the 1940s. Two deep diamond drill holes drilled
in late 2017 confirmed the presence of higher-grade sulphide
mineralisation in the skarn structures at depth. Both of the core
holes intersected mineralised skarn over much of their length and
the analytical data from both drill holes intersected numerous
significant intervals of copper, gold, silver, zinc, lead, and
tungsten throughout their depths. The tungsten values were
particularly interesting as they positively reinforced the
Company's consulting geologist's predictions of the Empire system
being the uppermost horizon of a larger molybdenum-tungsten
porphyry. In 2018 five drill holes intercepted copper sulphide
mineralisation. One hole returned 5.53% copper, 7.67 g/t gold, and
120 g/t silver, and was further north of any historical underground
mining, whilst another returned 5.19% copper adjacent to historical
underground workings. The gold and silver grades generally are
major considerations, ranging to 7.93 g/t gold and 256 g/t
silver.
Borah Resources - Idaho Cobalt Belt
Borah Resources is a 100% Idaho registered subsidiary of the
Company. Comprised of two strategically located properties,
Redcastle and Bighorn, the Company believes that they are an
important asset in a time of global electrification and the rarity
of cobalt resources from first world jurisdictions. The properties
are strategically located in the USA's only prospective cobalt
region, the Idaho Cobalt Belt, approximately 100 miles north of the
Empire Mine. In 2018 we announced the results of our 2017
reconnaissance programme of 46 surface grab samples which gave
cobalt values ranging from 2 ppm to 0.31% cobalt.
Environmental, Social and Governance
Our successes so far are related directly to the local community
support we receive from the citizens of Custer County, Idaho. We
are fortunate to work in an area rooted so deeply in mining and
with a population understanding of the economic benefits of the
industry. Our recent roll-out of the Company's Environmental,
Social and Governance (ESG) programme was based largely on our
desire to include the community in our team. We initiated the
programme by appointing Ms Lenie Wilkie to the position of ESG
Programme Coordinator.
Ms Wilkie is a well-respected local businesswoman and community
leader and has been playing an integral role as liaison between the
community and Phoenix, assisting in the hiring of local labour,
reviewing and selecting the beneficiaries of Company donations, and
managing local supply acquisitions and inventory. She was integral
in the placing of Company donations for the Mackay, Idaho FFA Fish
Lab and the Lost River Robotics Youth Team. Both organizations
provide local youth the opportunity to compete in state and
national level scientific-based competitions. Her deep roots in the
community, her Native American background, and her success driven
work ethic provide her with a unique perspective on the importance
of balancing sustainable job growth with an emphasis on both
environmentally and socially responsible business practices.
Outlook
My outlook on the Company is more positive now than in the three
years since joining the Phoenix team. In that time, we have
expanded our resources and exploration potential from a single
oxide-copper resource into a high-grade silver lead vein system, a
polymetallic sulphide vein system, a very prospective
volcanic-hosted gold system, and two strategically located cobalt
properties, all within the same geopolitically stable, pro-mining
jurisdiction.
In addition to the expansion of the oxide-copper resource into
the polymetallic system we currently recognise, I am particularly
encouraged by the results of two years of extensive baseline
environmental studies that we recently released that included the
research of flora, wildlife, hydrological, and archaeological
studies, and indicate that we have no critical habitat for
threatened or endangered plant and wildlife species, including sage
grouse. The studies also concluded that no legacy impacts to
surface or groundwater occurred as a result of any historical
mining operations on the Empire Mine properties. Archaeological
studies were also unable to identify any significant cultural
artefacts on the Empire property. These findings are important as
they clear the path to the development of an operating plan for Red
Star, and the permitting of the Empire oxide-copper deposit, and
the deeper sulphide system. That is three metal-rich systems with
favourable environmental conditions.
Despite challenging metals markets, we came out of 2019 well
positioned for further expansion and with more confidence in our
projects than ever before. We have an oxide-copper resource within
a stone's throw of a high-grade silver lead vein system, all on
patented mining claims in a first world jurisdiction, and all with
favourable environmental baseline results. The positives have not
blinded us to the work we have ahead, however, but it has provided
us confidence that we are on the cusp of developing a mineralized
system of which we believe we have barely scratched the
surface.
Our Red Star discovery provides us with a seriously attractive
and low cost near surface sulphide exploration target and the
expanded claim holdings protect our future from competition,
providing the Company with potential base and precious metals
resources and perhaps the discovery of a world class polymetallic
deposit.
In conclusion I would like to thank the dedicated and highly
motivated team of professional staff, consultants and advisers,
community liaisons, shareholders, and directors who will allow us
to continue to adapt our work programmes to market conditions in
order to maximise the medium and long-term benefits for the
Company. The Company understands the importance of putting
shareholder money to work in the field, where it counts. I look
forward to next year's annual report, wherein I can report on what
I still expect to be a very positive 2020 for the Company, despite
current market conditions.
Key performance indicators ('KPIs')
To date the Group has been focused on the delivery of the
project evaluation work programmes to assess the available mineral
resources and the extraction methods to apply, each within the
available financial budgets. This work will continue until the
relevant feasibility studies are completed, and construction
commences.
At that stage the Group will consider and implement appropriate
operational performance measures and related KPIs as the objective
of recommencing commercial production at the Empire Mine nears
fruition.
On behalf of the board
Ryan McDermott
Chief Executive Officer
9 April 2020
Consolidated income statement Year Year
Ended Ended
31 December 31 December
2019 2018
Continuing operations Note $ $
Revenue 4 - -
Exploration & evaluation expenditure (3,429) (169,863)
------------- -------------
Gross loss (3,429) (169,863)
------------- -------------
Administrative expenses (1,101,811) (1,347,980)
Expenses of Placing 5 - (136,127)
(1,101,811) (1,484,107)
Loss from operations (1,105,240) (1,653,970)
Finance income - 1,709
Finance costs (22,911) -
Loss before taxation (1,128,151) (1,652,261)
Tax on loss on ordinary activities - -
------------- -------------
Loss for the year (1,128,151) (1,652,261)
------------- -------------
Loss attributable to:
Owners of the parent (1,116,563) (1,635,428)
Non-controlling interests (11,588) (16,833)
------------- -------------
(1,128,151) (1,652,261)
------------- -------------
Loss per share attributable to owners
of the parent:
Basic and diluted EPS expressed in
cents per share 6 (2.76) (5.82)
------- -------
Consolidated statement of comprehensive income Year Year
Ended Ended
31 December 31 December
2019 2018
$ $
Loss for the year (1,128,151) (1,652,261)
------------- -------------
Total comprehensive income attributable
to:
Owners of the parent (1,116,563) (1,635,428)
Non-controlling interests (11,588) (16,833)
------------ ------------
(1,128,151) (1,652,261)
------------ ------------
Consolidated statement of financial position
31 December 31 December
2019 2018
Note $ $
Non-current assets
Property, plant and equipment -
mining property 7 11,671,660 9,876,697
Intangible assets 8 246,895 207,160
------------ ------------
11,918,555 10,083,857
------------ ------------
Current assets
Trade and other receivables 9 267,932 212,516
Cash and cash equivalents 210,591 112,964
------------ ------------
478,523 325,480
------------ ------------
Total assets 12,397,078 10,409,337
------------ ------------
Current liabilities
Trade and other payables 10 282,900 501,301
------------ ------------
Non-current liabilities
Borrowings 11 800,000 -
Provisions for other liabilities 12 757,702 757,702
------------ ------------
1,557,702 757,702
------------ ------------
Total liabilities 1,840,602 1,259,003
------------ ------------
Net assets 10,556,476 9,150,334
------------ ------------
Equity
Ordinary shares 13 - -
Share Premium 15,627,730 13,362,353
Retained loss (5,186,083) (4,338,436)
Foreign exchange translation reserve (18,588) (18,588)
Equity attributable to owners of
the parent 10,423,059 9,005,329
Non-controlling interests 133,417 145,005
------------ ------------
Total equity 10,556,476 9,150,334
------------ ------------
Consolidated Foreign
statement of exchange
changes Ordinary Share Retained Translation Non-controlling
in equity shares premium loss reserve Total interest Total equity
$ $ $ $ $ $ $
At 1 January
2018 - 9,034,541 (2,876,840) (18,588) 6,139,113 161,838 6,300,951
--------- ------------- ------------ ------------- ------------ ---------------- -------------
Loss for the
year - - (1,635,428) - (1,635,428) (16,833) (1,652,261)
Total
comprehensive
income for
the year - - (1,635,428) - (1,635,428) (16,833) (1,652,261)
--------- ------------- ------------ ------------- ------------ ---------------- -------------
Shares issued
in the period - 4,653,727 - - 4,653,727 - 4,653,727
Share issue
expenses - (325,915) - - (325,915) - (325,915)
Share-based
payments - - 173,832 - 173,832 - 173,832
Total
transactions
with owners - 4,327,812 173,832 - 4,501,644 - 4,501,644
--------- ------------- ------------ ------------- ------------ ---------------- -------------
7
At 31
December 2018 - 13,362,353 (4,338,436) (18,588) 9,005,329 145,005 9,150,334
--------- ------------- ------------ ------------- ------------ ---------------- -------------
At 1 January 2019 - 13,362,353 (4,338,436) (18,588) 9,005,329 145,005 9,150,334
----------- ------------ --------- ------------ --------- ------------
Loss for the year - - (1,116,563) - (1,116,563) (11,588) (1,128,151)
Total comprehensive income for
the year - - (1,116,563) - (1,116,563) (11,588) (1,128,151)
----------- ------------ --------- ------------ --------- ------------
Shares issued in the period - 2,540,200 - - 2,540,200 - 2,540,200
Share issue expenses - (274,823) - - (274,823) - (274,823)
Share-based payments - - 268,916 - 268,916 - 268,916
Acquisition of non-controlling -
interest - - - - - -
----------- ------------ --------- ------------ --------- ------------
Total transactions with owners - 2,265,377 268,916 - 2,534,293 - 2,534,293
----------- ------------ --------- ------------ --------- ------------
At 31 December 2019 - 15,627,730 (5,186,083) (18,588) 10,423,059 133,417 10,556,476
----------- ------------ --------- ------------ --------- ------------
Consolidated statement of cash flows 31 December 31 December
2019 2018
$ $
Cash flows from operating activities
Loss before tax (1,128,151) (1,652,261)
Adjustments for:
Share-based payments 268,916 173,832
Exchange differences - -
Other reserve movements - -
(859,235) (1,478,429)
Increase in trade and other receivables (55,416) (198,266)
Decrease in trade and other payables 218,402 291,798
------------ ------------
Net cash (used)/generated from operating activities (1,133,053) (1,384,897)
------------ ------------
Cash flows from investing activities
Purchase of intangible assets (39,735) (139,591)
Purchase of property, plant and equipment (1,794,962) (4,594,101)
Cash transferred in business combination - -
Cash acquired with business - -
(1,834,697) (4,733,692)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares 2,540,200 4,653,727
Share-issue expenses (274,823) (325,915)
Proceeds from the issue of loan notes 800,000 -
Net cash generated from financing activities 3,065,377 4,327,812
------------ ------------
Net (decrease)/increase in cash and cash equivalents 97,627 (1,790,778)
Cash and cash equivalents at the beginning
of the year 112,964 1,903,742
Cash and cash equivalents at the end of the
year 210,591 112,964
------------ ------------
Significant non-cash transactions:
During the year the Directors capitalised $180,960 of fees into
shares (2018: $84,138).
1 General information
Phoenix Copper Limited (formerly Phoenix Global Mining Limited)
is engaged in exploration and mining activities, primarily precious
and base metals, primarily in North America. The Company is domiciled
and incorporated in the British Virgin Islands on 19 September
2013 (registered number 1791533). The address of its registered
office is OMC Chambers, Wickhams Cay 1, Road Town, Tortola VG1110,
British Virgin Islands. The Company is listed on London's AIM (ticker:
PXC) and trades on New York's OTCQX Market (ticker: PXCLF).
2 Going concern
The Group has no income and meets its working capital requirements
through raising development finance. In common with many businesses
engaged in exploration and evaluation activities prior to production
and sale of minerals the Group will require additional funds and/or
funding facilities in order to fully develop its business plan.
The directors believe that such funds are likely to come from a
combination of further equity issues and the arrangement of appropriate
debt and/or offtake finance arrangements. Ultimately the viability
of the Group is dependent on future liquidity in the development
period and this, in turn, depends on the availability of funds.
Whilst a number of discussions are ongoing to secure both additional
equity and appropriate structured finance for the development of
the Empire Mine, and the directors are confident that the necessary
funding will be available, at the date of the approval of these
financial statements it is not certain that this will be the case.
The Covid-19 pandemic has had a significant, immediate impact on
the operations and funding of many businesses both in the USA and
globally. However, the Group has recently raised funds, has very
few operational employees in Idaho and the Empire Mine is geographically
remote from areas significantly currently impacted by the pandemic.
The directors prepare annual budgets and forecasts in order to
ensure that they have sufficient liquidity in place and that they
comply with the terms and conditions of their obligations in relation
to the ongoing development of the mining assets and the Group's
environmental and other commitments.
In addition, in response to the rapidly evolving Covid-19 situation,
the directors, in formulating the plan and strategy for the future
development of the business, have considered a period beyond that
for which formal budgets and forecasts are prepared.
At the date of approval of these financial statements it is not
clear how long the current circumstances are likely to last and
what the long-term impact will be. However, having regard to the
above, and based on their latest assessment of the budgets and
forecasts for the business of the Group, the directors believe
it appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
3 Basis of preparation
This preliminary information does not comprise full financial statements.
The significant accounting policies and other information contained
within this preliminary announcement has been extracted from the
Company's audited financial statements a copy of which is available
on the Company's website: www.pgmining.com.
The financial information is presented in US dollars.
4 Revenue
The Group is not yet producing revenues from its mineral exploration
and mining activities. The Company charged its subsidiary entities
$563,476 (2018: $361,460) in respect of management services provided.
5 Expenses of placing 31 December 31 December
2019 2018
$ $
Admission to trading on the OTCQX Market. - 136,127
- 136,127
------------------------------------------------------------------- ------------
In October 2018 the Company was admitted to trading on the OTCQX
Market in New York.
6 Loss per share 31 December 31 December
2019 2018
$ $
Loss attributable to the parent used in calculating
basic and diluted loss per
Share (1,116,563) (1,635,428)
------------ ------------
Number of shares
Weighted average number of shares for the purpose
of basic earnings
per share (restated) 40,862,399 28,120,624
------------ ------------
Weighted average number of shares for the purpose
of diluted earnings
per share 40,862,399 28,120,624
------------ ------------
Basic loss per share (US cents per share) (2.76) (5.82)
------------ ------------
Diluted loss per share (US cents per share) (2.76) (5.82)
------------ ------------
Basic earnings per share amounts are calculated by dividing net
loss for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the year.
Where the Group has incurred a loss in a year or period the
diluted earnings per share is the same as the basic earnings per
share as the loss has an anti-dilutive effect.
The Company has potentially issuable shares of 10,265,195 (2018:
3,121,206) all of which relate to the potential dilution in respect
of warrants and share options issued by the Company. See also note
14.
7 Non-current assets
Mining property Total
At 1 January 2018 5,282,596 5,282,596
Additions 4,594,101 4,594,101
---------------- -----------
At 31 December 2018 9,876,697 9,876,697
---------------- -----------
At 1 January 2019 9,876,697 9,876,697
Additions 1,794,963 1,794,963
---------------- -----------
At 31 December 2019 11,671,660 11,671,660
---------------- -----------
Net book value
1 January 2018 5,282,596 5,282,596
---------------- -----------
31 December 2018 9,876,697 9,876,697
---------------- -----------
31 December 2019 11,671,660 11,671,660
---------------- -----------
Mining property assets relate to the past producing Empire Mine
copper - gold - silver - zinc project in Idaho, USA. The Empire
Mine has not yet recommenced production and no depreciation has
been charged in the statement of comprehensive income. There has
been no impairment charged in any period due to the early stage in
the Group's project to reactivate the mine.
The principal investment is based in the USA.
8 Intangible assets
Exploration
and evaluation
expenditure
$
At 1 January 2018 67,569
Additions 139,591
----------------
At 31 December 2018 207,160
----------------
At 1 January 2019 207,160
Additions 39,735
----------------
At 31 December 2019 246,895
----------------
Exploration and evaluation expenditure relates to the Bighorn
and Redcastle properties on the Idaho Cobalt Belt in Idaho, USA.
The properties are owned by Borah Resources Inc, a wholly owned
subsidiary of the parent entity, registered and domiciled in
Idaho.
9 Trade and other receivables
31 December 31 December
2019 2018
$ $
Other receivables 243,928 212,516
Prepaid expenses 24,004 -
267,932 212,516
------------- -------------
There were no receivables that were past due or considered to be
impaired. There is no significant difference between the fair value
of the other receivables and the values stated above.
10 Trade and other payables
31 December 31 December
2019 2018
$ $
Trade creditors 178,093 401,231
Other creditors 100,270 41,570
Accrued interest 4,537 58,500
------------ ------------
282,900 501,301
------------ ------------
All liabilities are payable on demand or have payment terms of
less than 90 days. The Company is not exposed to any significant
currency risk in respect of its payables.
11 Borrowings
31 December 31 December
2019 2018
$ $
Loan notes 800,000 -
------------ ------------
The Company has issued loan notes with a redemption value of
$800,000 in units of $25,000 (GBP20,000) each, including $50,000
issued to Andre Cohen, a director of the Company. The coupon is 12%
per annum. The final redemption date is 30 September 2021,
repayable earlier at the Company's option from new mezzanine or
construction finance for the Empire Mine if secured.
Since the year end the Company has issued further loan notes
with a redemption value of $309,500.
12 Provisions
$
At 1 January 2017 99,987
Arising from business combination 657,702
Exchange adjustments 9,755
---- --------------
At 31 December 2017 767,444
Exchange adjustments (9,742)
---- --------------
At 31 December 2018 and 31 December 2019 757,702
---- --------------
The provision of $100,000 for decommissioning the Empire Mine is
based on the directors' estimate after taking into account
appropriate professional advice.
The other provision of $657,702 arises from a business
combination in 2017 and comprises potential royalties payable in
respect of future production at the Empire Mine. This liability
will only be payable if the Empire Mine is successfully restored to
production and will be deducted from the royalties payable. The
amount of the provision will be reassessed as exploration work
continues and also on commencement of commercial production.
13 Share capital
Group and Group and
Company Company
Number Number
2019 2018
Number of ordinary shares of no par value
At the beginning of the year 33,078,999 22,975,552
Issued in the year 11,705,882 10,103,447
At the end of the year 44,784,881 33,078,999
----------- -----------
The Company does not have an authorised capital and is
authorised to issue an unlimited number of no par value shares of a
single class.
In the year the Company issued 11,705,882 ordinary shares at
GBP0.17 per share to raise $2.54 million. All issued shares were
fully paid.
Since the year end the Company has issued a further 7,900,000
shares at GBP0.15 per share. The Company currently has 52,684,881
ordinary shares in issue.
The ordinary shares in the Company have no par value. All
ordinary shares have equal voting rights in respect of shareholder
meetings. All ordinary shares have equal rights to dividends and
the assets of the Company.
The Company has issued warrants to subscribe for additional
shares to existing shareholders. Each warrant provides the right to
the holder to convert one warrant into one ordinary share of no-par
value at exercise prices ranging from GBP0.20 to GBP0.60. At 31
December 2019 the number of warrants in issue was 7,115,195 (2018:
1,896,206).
Since the year end a further 300,000 warrants have been issued
with an exercise price of GBP0.16.
The Company has issued options to subscribe for additional
shares to the directors and senior management of the Group. Each
option provides the right to the holder to subscribe for one
ordinary share of no par-value, subject to the vesting conditions,
at exercise prices of GBP0.45 and GBP0.17. At 31 December 2019 the
number of options in issue was 3,150,000 (2018: 1,225,000).
14 Share-based payments
The Company has issued 7,115,195 (2018: 1,896,206) warrants to
shareholders to subscribe for additional share capital of the
Company. Each warrant entitles the holder to subscribe for one
ordinary equity share in the Company. The right to convert each
warrant is unconditional.
Additionally, the Company has issued 3,150,000 (2018: 1,225,000)
share options to directors and senior employees of the Company.
Each share option entitles the holder to subscribe for one ordinary
equity share in the Company once the vesting conditions have been
satisfied. The right to subscribe for ordinary shares in the
Company is subject to a minimum 12 month holding period for 50% of
the share options and a 24 month holding period for the balance of
50% of the share options.
In the periods presented the Company has settled remuneration
liabilities by the issue of equity in lieu of cash payments for
services but has not operated any equity-settled share based
incentivisation schemes for employees.
Equity-settled share-based payments are measured at fair value
(excluding the effect of non-market-based vesting conditions) as
determined through use of the Black-Scholes technique, at the date
of issue. The warrants were issued as exercisable from the date
they were issued and there are no further vesting conditions
applicable.
Warrants issued Weighted 31 December 31 December
Average 2019 2018
Exercise
price Number Number
At the beginning of the year GBP0.38 1,896,206 1,024,308
Issued in the year GBP0.20 800,000 -
Exercised in the year GBP0.21 - (53,095)
Issued in the year GBP0.28 4,418,989 372,650
Issued in the year GBP0.35 - 427,343
Issued in the year GBP0.40 - 125,000
At the end of the year GBP0.30 7,115,195 1,896,206
------------ ------------
Share options issued Weighted 31 December 31 December
average 2019 2018
Exercise
price Number Number
At the beginning of the year GBP0.045 1,225,000 1,200,000
Issued in the year GBP0.170 1,925,000 25,000
------------ ------------
At the end of the year GBP0.120 3,150,000 1,225,000
------------ ------------
The total share-based payment charge for all warrants and
options issued in the year was $268,916 (2018: $173,832). The
share-based payment charge was calculated using the Black-Scholes
model. All warrants issued vest immediately on issue. Share options
vest over a 24-month period from the date of issue.
Volatility for the calculation of the share-based payment charge
in respect of both the warrants and the share-options issued was
determined by reference to movements in the Company's quoted share
price on AIM.
The inputs into the Black-Scholes model for the warrants and
share options issued and warrants modified in 2019 were as
follows:
31 December 31 December
2019 2019
Warrants Share options
issued issued
Weighted average share price at grant date GBP0.18 GBP0.18
Weighted average exercise prices GBP0.27 GBP0.17
Expected volatility 50.01% 52.78%
Expected life 2.70 3.00
Weighted average contractual life 2.22 1.87
Risk-free interest rate 1.5% 1.5%
Expected dividend yield 0% 0%
Fair-value of options granted (pence) GBP0.03 GBP0.06
------------ --------------
The warrants were issued in four tranches. The share prices at
the date of grant were between GBP0.13 to GBP0.19. The weighted
average warrant exercise prices at the date of grant were from
GBP0.20 to GBP0.60. Additionally, the exercise dates for 327,094
existing warrants with an exercise price of GBP0.60 were extended
to 31 December 2021. The extension has been valued as a new
instrument as at 20 December 2019 and the fair-values and charge
included above.
The expected volatility ranged from 49.89% to 51.52%. The
fair-values of warrants issued in the year were from GBP0.03 to
GBP0.04. The expected life of the outstanding warrants and options
ranged from 1.40 to 2.98 years.
Share-based payments charged to profit
and loss 31 December 31 December
2018 2017
$ $
On issue of share options 38,622 19,553
On issue of warrants 229,736 154,279
On modification of warrants 558 -
------------ ------------
268,916 173,832
------------ ------------
The share-based payment charge has been classified as an
administrative expense, and simultaneously credited to retained
deficit.
15 Events after the balance sheet date
Since the year end the Company has raised a further $1.85
million, $1.54 million through the issue of 7,900,000 shares at
GBP0.15, and $0.31 million through the issue of 12% unsecured loan
notes.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GPUMPCUPUUQC
(END) Dow Jones Newswires
April 14, 2020 02:31 ET (06:31 GMT)
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