TIDMEEE
RNS Number : 4451R
Empire Metals Limited
30 June 2020
Empire Metals Limited / AIM: EEE / Sector: Natural Resources
30 June 2020
Empire Metals Limited ('Empire' or the 'Company')
Final Results
Empire Metals Limited, the AIM-quoted resource exploration and
development company, announces its final results for the year ended
31 December 2019.
The annual report and accounts for the year ended 31 December
2019 will be posted to shareholders today.
The annual report and accounts for the year ended 31 December
2019 are available for download on the Company's website,
www.empiremetals.co.uk .
Chairman's Statement
As shareholders will be aware, our progress relating to the
advancement of our Bolnisi Project in Georgia towards production
was frustrated during the period under review by continuing delays
by the government in Georgia regarding the extension of the
exploration permit. Some of the uncertainty relating to this was
somewhat alleviated shortly after the year end, in January 2020,
when the Company's joint venture company, Georgian Copper &
Gold JSC ('GCG'), in which Empire Metals Limited ("EEE" or "Empire
Metals") holds a 50% interest, 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.
The confirmation of tenure over Kvemo Bolnisi East and Dambludi
was a significant milestone in the Company's ongoing efforts to
obtain the extension to the permit in Georgia and marked the
culmination of many months of work by the team and NAM. 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. Further updates regarding the appeal process will be
made as appropriate.
As reported in the Final Results for the year ended 31 December
2018, as a result of the previous delays to the confirmation of
tenure over the Georgian exploration assets the Board determined
that they did not, at that time, fully meet the capitalisation
criteria under IFRS 6 and an impairment provision was recognised
against these assets. As reported above, the confirmation of tenure
over Kvemo Bolnisi East and Dambludi was received post period end
and as such, the impairment has not been adjusted as at year end
however, it is expected that a partial write back will be reflected
in the Company's interim accounts for the half year ended 30 June
2020.
Following the confirmation of tenure over Kvemo Bolnisi East and
Dambludi on 28 January 2020, the Company updated its development
schedule for these assets, particularly in respect of Kvemo Bolnisi
East, the target which has been the focus of much of the Company's
investment to date. It had been the Company's objective to
re-commence activities at Kvemo Bolnisi East as soon as possible
however, partly due to the various travel and work restrictions
necessitated by the COVID-19 pandemic in March 2020, any planned
recommencement of work has been postponed. Also, the necessary
amendments to the licence to allow work to re-commence on these two
projects are unlikely to be made whilst the current appeal process
is still underway, and this has of course been further delayed by
the pandemic. The Board will continue to manage and respond to the
COVID-19 outbreak and will continue to act in the best interests of
keeping its employees, contractors and the local community safe.
Further updates relating to the Company's activities in Georgia
will be announced in due course.
Outside of Georgia, the Company has made progress with its
strategy to identify compelling new assets through which the
Company can add short term value. Post period end, Empire Metals
raised GBP600,000 by way of an equity placing and subscription of
new ordinary shares with new and existing shareholders in the
Company announced on 28 February 2020, to advance this process.
The Board evaluated a large number of potential targets and
narrowed its search down to a small number of opportunities which
it believed met its stringent investment criteria. Following this,
on 27 April 2020, EEE announced that it had entered into a Binding
Heads of Agreement with ASX listed Artemis Resources Limited
("Artemis") to acquire a 41% interest in the Munni Munni Palladium
Project in the West Pilbara, Western Australia and has first right
of refusal on a further 29% interest in the project.
Munni Munni comprises four granted mining leases and an
exploration licence covering a 64km2 tenement area. It is the
largest unexploited primary PGE resource in Australia and contains
the largest intrusion in the West Pilbara hosting a JORC-compliant
2004 Resource of 24Mt @ 2.9 g/t Platinum Group Element (PGE) and
gold (12.4Mt Measured, 9.8Mt Indicated, and 1.4Mt Inferred),
containing 1,140,000 ounces palladium, 830,000 ounces platinum,
152,000 ounces gold and 76,000 ounces rhodium. The teams at Artemis
and Empire Metals are making progress toward the completion of the
acquisition and in the meantime have agreed to commence with the
planned drilling programme at the project in order to take
advantage of the current drilling season. The programme is designed
to extend primary reef mineralisation and test historical assay
grades from diamond drilling using RC drilling, test for the
presence of a second reef below the primary PGE reef, and generate
data that may contribute to a JORC 2012 Mineral Resources Estimate
in the future.
The Board is very excited about the opportunity that the Munni
Munni Project offers. It satisfies Empire Metal's objective of
de-risking the Company's growth strategy by diversifying away from
a single jurisdiction investment, combining an exceptional project
with an attractive and mature investment environment, and I look
forward to updating shareholders on completion and further plans
for Munni Munni in due course.
Financial Results
As an exploration and development group which has no revenue we
are reporting a loss for the twelve months ended 31 December 2019
of GBP675,592 (31 December 2018: loss of GBP8,785,533).
The Group's cash position at the date of signing this report is
GBP363,000.
Corporate
Post period end, the Company announced the appointment of David
Ajemian, a prominent natural resources and growth company investor
and entrepreneur, as a Non-Executive Director. At the same time,
Laurie Mutch, who had held the position of Non-Executive Director
since March 2017, stepped down from the Board in order to
concentrate on his other business interests. During his time on the
Board, Laurie was a hugely supportive force behind the business and
his many contributions to the Company will be missed.
As shareholders will be aware, the Board also agreed that to
reflect the Company's developing growth strategy, particularly with
regard to the investment in, and advancement of, projects in new
jurisdictions outside of Georgia, a change of name would be
appropriate. The Company's new name - Empire Metals Limited - came
into effect on 10 February 2020.
The Company's website can now be found at
www.empiremetals.co.uk.
Outlook
Following the confirmation of tenure over two of the Company's
key Georgian projects in January, along with the successful
fundraising in February and the agreement to acquire a controlling
interest in the Munni Munni Project in April, the Board is positive
about the future for EEE. Emerging from the difficult and
frustrating year that was 2019, the Company has been strengthened
both financially and corporately in 2020 and on behalf of the
Board, I am optimistic about our ability to deliver on our key
strategic aims this year. We are of course cognisant of the
unprecedented global disruption which the COVID-19 pandemic is
creating for communities and economies worldwide, however the Board
has adopted a prudent and responsible approach to both our
financial and operational activities and we are confident that EEE
is well equipped to weather the current market downturn.
We look forward to reporting on our activities in Georgia and in
new jurisdictions over the second half of 2020. I would like to
take this opportunity to thank our shareholders and my fellow
directors for their continued support as we look forward to a
bright future as Empire Metals Limited.
Neil O'Brien
Non-Executive Chairman
30 June 2020
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
Soltan Tagiev 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
Beth Melluish St Brides Partners Ltd PR Tel: 020 7236
1177
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Group
----------------------------
Note 2019 2018
GBP GBP
-------------------------------------- ----- ------------- -------------
Non-Current Assets
Property, plant and equipment 8 17,882 34,042
Investment in joint venture 22 - -
Intangible assets 9 - -
17,882 34,042
-------------------------------------- ----- ------------- -------------
Current Assets
Trade and other receivables 10 167,971 141,105
Cash and cash equivalents 11 50,840 525,354
-------------------------------------- ----- ------------- -------------
218,811 666,459
-------------------------------------- ----- ------------- -------------
Total Assets 236,693 700,501
-------------------------------------- ----- ------------- -------------
Current Liabilities
Trade and other payables 12 91,191 242,701
-------------------------------------- ----- ------------- -------------
91,191 242,701
-------------------------------------- ----- ------------- -------------
Total Liabilities 91,191 242,701
-------------------------------------- ----- ------------- -------------
Net Assets 145,502 457,800
-------------------------------------- ----- ------------- -------------
Equity attributable to owners of the
Parent
Share capital 13 - -
Share premium 13 39,265,637 38,904,337
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 14 138,014 136,020
Retained losses (20,413,002) (19,737,410)
-------------------------------------- ----- ------------- -------------
Total equity attributable to owners
of the Parent 145,502 457,800
-------------------------------------- ----- ------------- -------------
Non-controlling interest - -
-------------------------------------- ----- ------------- -------------
Total Equity 145,502 457,800
-------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2019
Group
----------------------------
Note Year ended Year ended
31 December 31 December
2019 2018
Continuing Operations GBP GBP
--------------------------------------------- ----- ------------- -------------
Revenue 6 111,457 213,265
Cost of sales - -
--------------------------------------------- ----- ------------- -------------
Gross profit 111,457 213,265
--------------------------------------------- ----- ------------- -------------
Administration expenses 7 (718,509) (1,420,729)
Loss on deconsolidation of subsidiary - (265,094)
Other gains / (losses) 16 29,367 866,638
Impairment of intangible assets 9 (97,907) (4,185,028)
--------------------------------------------- ----- ------------- -------------
Operating Loss (675,592) (4,790,948)
--------------------------------------------- ----- ------------- -------------
Share of net loss of joint venture
accounted for using equity method 22 - (3,994,585)
--------------------------------------------- ----- ------------- -------------
Loss before Taxation (675,592) (8,785,533)
--------------------------------------------- ----- ------------- -------------
Income tax 19 - -
--------------------------------------------- ----- ------------- -------------
Loss for the year (675,592) (8,785,533)
--------------------------------------------- ----- ------------- -------------
Loss attributable to:
* owners of the Parent (675,592) (8,774,021)
* non-controlling interests - (11,512)
--------------------------------------------- ----- ------------- -------------
Loss for the year (675,592) (8,785,533)
--------------------------------------------- ----- ------------- -------------
Other Comprehensive Income:
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translating
foreign operations (6,298) 448,800
Total Comprehensive Income (681,890) (8,336,733)
--------------------------------------------- ----- ------------- -------------
Attributable to:
* owners of the Parent (681,890) (8,542,591)
* non-controlling interests - 205,858
--------------------------------------------- ----- ------------- -------------
Total Comprehensive Income (681,890) (8,336,733)
--------------------------------------------- ----- ------------- -------------
Earnings per share (pence) from continuing
operations attributable to owners of
the Parent - Basic & Diluted 20 (0.535) (7.647)
--------------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2019
Attributable to Equity Shareholders
-------------------------------------------------------------------
Reverse
Share acquisition Other Retained Non-controlling Total
premium reserve reserves losses Total interest equity
GBP GBP GBP GBP GBP GBP GBP
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
As at 1 January
2018 38,880,612 (18,845,147) 384,099 (11,033,204) 9,386,360 3,787,365 13,173,725
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Loss for the
year - - - (8,774,021) (8,774,021) (11,512) (8,785,533)
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Other
comprehensive
income
Exchange
differences
on translating
foreign
operations - - 231,430 - 231,430 217,370 448,800
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Total
comprehensive
income for the
year - - 231,430 (8,774,021) (8,542,591) 205,858 (8,336,733)
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Transactions
with owners
Issue of
ordinary
shares 23,725 - - - 23,725 - 23,725
Share option
charge - - (12,634) 168 (12,466) - (12,466)
Expiry of share
options - - (69,647) 69,647 - - -
Deconsolidation
of Georgian
Copper
and Gold - - (397,228) - (397,228) (3,993,223) (4,390,451)
Total
transactions
with owners 23,725 - (479,509) 69,815 (385,969) (3,993,223) (4,379,192)
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
As at 31
December
2018 38,904,337 (18,845,147) 136,020 (19,737,410) 457,800 - 457,800
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
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
----------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2019
Group
------------------------
Note 2019 2018
GBP GBP
------------------------------------------- ----- ---------- ------------
Cash flows from operating activities
Loss before taxation (675,592) (8,785,533)
Adjustments for:
Share option expenses 8,292 12,446
Share of loss on joint venture - 3,994,585
Loss on deconsolidation of Georgian
Copper & Gold - 265,094
Depreciation 16,160 23,092
Impairment of assets 97,907 4,185,028
Decrease/ (increase) in trade and
other receivables (26,866) 90,845
Increase in trade and other payables (151,510) 141,058
Foreign exchange (6,298) (889,814)
Net cash used in operating activities (737,907) (963,199)
------------------------------------------- ----- ---------- ------------
Cash flows from investing activities
Loans granted to subsidiaries and
joint venture partners (97,907) (801,929)
Purchase of property, plant & equipment - (2,815)
Additions to exploration and evaluation
intangible asset - (287,245)
Decrease in cash on deconsolidation - (13,180)
Net cash used in investing activities (97,907) (1,105,169)
------------------------------------------- ----- ---------- ------------
Cash flows from financing activities
Proceeds from issue of shares 380,000 23,725
Cost of share issue (18,700) -
Net cash generated from financing
activities 361,300 23,725
------------------------------------------- ----- ---------- ------------
Net decrease in cash and cash equivalents (474,514) (2,044,643)
Cash and cash equivalents at beginning
of year 525,354 2,569,997
Cash and cash equivalents at end
of year 11 50,840 525,354
------------------------------------------- ----- ---------- ------------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
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 2019
As of 1 January 2019, the Company adopted IFRS 16 Leases, IFRIC
23 Uncertainty over leases, and IAS 28 (Amendments) Long term
interests in associates and joint ventures. The transition to these
standards had no material impact on the Group. There were no long
term operating leases in the Group as at the transition date for
IFRS 16; as such no adjustments were made under this standard.
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 3 (Amendments) Definition of a Business *1 January 2020
----------------------------- ---------------
IAS 1 and IAS 8 (Amendments) Definition of material 1 January 2020
----------------------------- ---------------
IAS 1 Classification of Liabilities 1 January 2022
as Current or Non-Current.
----------------------------- ---------------
(*) Subject to EU 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 s
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 2019.
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 subsequent to 31
December 2019, 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. The
Group has significantly reduced its working capital requirements
and has ceased expenditure on exploration as existing funds are not
sufficient. The amount of funding required cannot be reliably
estimated at the point of approval of these Financial Statements
and the Group will need to raise additional funds either via an
issue of equity or through the issuance of debt.
The outbreak of the recent global COVID-19 virus will lead to
short term market volatility and uncertain long term impacts which
may affect the Groups ability to raise further funding. The Group
has implemented business continuity plans as well as reducing
working capital expenditure whilst continuing to monitor the
impacts of COVID-19. The Directors' acknowledge that the market
volatility may impact the ability of the Company to raise funds in
the near future. The auditors have included a 'Material
Uncertainty' paragraph in their audit report as a result of this
uncertainty.
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, which is the Company's functional and the
Group's presentation currency.
(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 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, 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.
2.11 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 taking into account 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.
2.12 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.13 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.
2.14 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 consists of the share option reserve and the
foreign exchange translation reserve.
2.15 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.
2.16 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.
2.17 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.
2.18 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.
2.19 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. In February 2020, the Company
raised GBP600,000 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 2019 and defines capital based on the total
equity of the Company being GBP145,502. 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:
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2019 of GBPnil (2018: GBPnil): refer to Note 9 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
15.
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 (2018: GBPnil). No
liability has been recognised for the loss in excess of the
carrying value as the Group does not have an obligation to pay for
these losses.
As at 31 December 2019 GBP109,188 (2018: GBP39,748) 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. The joint venture partners are committed to additional
funding to repay the liability or this would be converted to
equity.
5. Segmental Information
As at 31 December 2019, 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. As from 18 March 2018, the Group
no longer has control of Georgian Copper and Gold and as a result
the below segmental information only includes information from this
entity up until this date. The reports used by the chief operating
decision maker are based on these geographical segments.
The Group generated revenue of GBP111,457 during the year ended
31 December 2019 (2018: GBP213,265).
2019 Georgia Austria UK Total
GBP 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
-------------------------------- --------- -------- ---------- ----------
Segment assets and liabilities are allocated based on
geographical location.
2018 Georgia Austria UK Total
GBP GBP GBP GBP
-------------------------------- ------------ -------- ------------ ------------
Revenue - - 213,265 213,265
Administrative expenses (36,518) (880) (1,383,331) (1,420,729)
Other gains/(losses) 800,241 - 66,397 866,638
Impairment of intangible
assets (3,706,915) - (478,113) (4,185,028)
Loss on deconsolidation
of subsidiary (265,094) - - (265,094)
Share of loss from Georgian
Copper and Gold (3,994,585) - - (3,994,585)
------------ -------- ------------ ------------
Loss from operations per
reportable segment (7,202,871) (880) (1,581,782) (8,785,533)
------------ -------- ------------ ------------
Additions to non-current
assets - - 2,815 2,815
Reportable segment assets - 8,627 691,874 700,501
Reportable segment liabilities - 5,246 237,455 242,701
-------------------------------- ------------ -------- ------------ ------------
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
2019 2018
GBP GBP
------------------------------------ ---------- ------------
Loss from operation per reportable
segment (675,592) (4,790,948)
- Finance income - (3,994,585)
Loss for the year before taxation (675,592) (8,785,533)
------------------------------------ ---------- ------------
6. Revenue
2019 2018
GBP GBP
------------------------------- ------- -------
Operational services 111,457 207,575
Geological consulting services - 5,690
111,457 213,265
------- -------
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
2019 2018
GBP GBP
------------------------------------------------ -------- ----------
Directors' fees 63,030 100,323
Employee salaries - 48,273
Fees payable to the Company's auditors
for the audit of the Parent Company and
group financial statements 30,000 40,000
Professional, legal and consulting fees 134,982 294,841
Accounting related services 14,537 11,147
Insurance 37,327 35,057
Office and administrative expenses 82,969 85,822
Depreciation 16,160 23,092
Travel and subsistence 41,302 80,019
AIM related costs including investor relations 101,843 191,167
Share option expense 8,292 12,446
Operations related costs 178,018 400,760
Other expenses 10,049 97,782
------------------------------------------------ -------- ----------
Total administrative expenses 718,509 1,420,729
------------------------------------------------ -------- ----------
All employee costs incurred in the year and are included in
'Operations related costs'.
8. Property, Plant and Equipment
Motor Field Computer Total
Vehicles equipment equipment GBP
GBP GBP GBP
---------------------------------- ---------- ----------- ----------- ----------
Cost
---------------------------------- ---------- ----------- ----------- ----------
As at 1 January 2018 58,670 113,714 51,898 224,282
Additions - - 2,815 2,815
Disposals - - (5,312) (5,312)
Disposals on deconsolidation (60,082) (48,604) (24,430) (133,116)
Exchange differences 1,412 1,143 574 3,129
----------------------------------- ---------- ----------- ----------- ----------
As at 31 December 2018 - 66,253 25,545 91,798
----------------------------------- ---------- ----------- ----------- ----------
As at 31 December 2019 - 66,253 25,545 91,798
----------------------------------- ---------- ----------- ----------- ----------
Depreciation
---------------------------------- ---------- ----------- ----------- ----------
As at 1 January 2018 13,574 28,945 19,228 61,747
Charge for the year 1,652 14,748 6,692 23,092
Disposals - - - -
Disposals on deconsolidation (15,553) (6,271) (5,810) (27,634)
Exchange differences 327 112 112 551
----------------------------------- ---------- ----------- ----------- ----------
As at 31 December 2018 - 37,534 20,222 57,756
----------------------------------- ---------- ----------- ----------- ----------
Charge for the year - 13,250 2,910 16,160
As at 31 December 2019 - 50,784 23,132 73,916
----------------------------------- ---------- ----------- ----------- ----------
Net book value as at 31 December
2018 - 28,719 5,323 34,042
----------------------------------- ---------- ----------- ----------- ----------
Net book value as at 31 December
2019 - 15,469 2,413 17,882
----------------------------------- ---------- ----------- ----------- ----------
9. Intangible Assets
Exploration & Evaluation Assets at Cost 2019 2018
and Net Book Value GBP GBP
----------------------------------------- ------ ------------
Balance as at 1 January - 10,472,718
Additions - 287,245
Disposal on deconsolidation - (7,857,313)
Impairment - (3,125,702)
Foreign currency differences - 223,052
As at 31 December - -
----------------------------------------- ------ ------------
As part of the acquisition of GMC Investments Limited, the Group
entered into a Shareholder Agreement with Caucasian Mining Group
Limited ("CMG"), the partner in JSC Georgian Copper and Gold. The
details of the agreement were such that CMG would transfer the
exploration and mining licenses for the Georgian sites into
Georgian Copper and Gold, which were considered to have a fair
value of US$6m, while the Group would commit to paying the
expenditure requirements on the operations over a two year period
from the date of the licence transfer date of December 2015, which
is also US$6m. As a result, the Group recognised the fair value of
the licenses of US$6m, which translated to GBP4.2m, as an
exploration and evaluation asset.
Exploration projects Georgia are at an early stage of
development as at 31 December 2019, although a JORC (Joint Ore
Reserves Committee) compliant resource estimate is available at
Kvemo Bolnisi East, much of the licence area is still subject to
further early stage exploration. The Directors therefore 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 application for the extension to the current exploration
permit within the 30 year Mining Licence held by Georgian Copper
and Gold JSC, was submitted in June 2018 and the renewal was still
pending as at 31 December 2019. The Group, along with its JV
partner Caucasian Mining Group, have continued to try to resolve
the delay in being granted the exploration permit extension within
our 30-year mining concession in Georgia. As a result, as at 31
December 2018, the Directors concluded that the Georgian
exploration assets no longer fully meet the capitalisation criteria
under IFRS 6 and an impairment provision was recognised against
these assets.
As at 31 December 2019, given the Group was still awaiting an
outcome on the exploration extension, the Directors determined it
was reasonable to impair the asset in full until further notice.
Loans totalling GBP97,907 were forwarded to GMC Investments during
the year. These were written off as an impairment as at 31 December
2019.
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. As the
confirmation of tenure over Kvemo Bolnisi East and Dambludi was
received post period end and as such, the impairment has not been
adjusted as at year end however, it is expected that a partial
write back will be reflected in the Group's interim accounts for
the half year ended 30 June 2020.
10. Trade and Other Receivables
2019 2018
GBP GBP
------------------- -------- --------
Trade receivables 109,188 39,748
VAT receivable 25,465 9,610
Prepayments 21,314 36,569
Other receivables 12,004 55,178
------------------- -------- --------
167,971 141,105
------------------- -------- --------
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.
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2019 2018
GBP GBP
-------------------------------------------- ----------- -------------
UK Pounds 167,756 138,811
Euros 215 2,294
Georgian Lari - -
-------------------------------------------- ----------- -------------
167,971 141,105
-------------------------------------------- ----------- -------------
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.
11. Cash and Cash Equivalents
2019 2018
GBP GBP
-------------------------- ------- --------
Cash at bank and in hand 50,840 525,354
-------------------------- ------- --------
All of the Group's cash at bank is held with institutions with
an AA credit rating.
12. Trade and Other Payables
2019 2018
GBP GBP
------------------ ------- --------
Trade payables 55,889 110,205
Other payables 2,277 2,682
Accrued expenses 33,025 129,814
------------------ ------- --------
91,191 242,701
------------------ ------- --------
13. 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 2018 114,574,491 38,880,612 38,880,612
---------------------------------------- ------------ -------------- -----------
Exercise of warrants - 26 January 2018 182,500 23,725 23,725
At 31 December 2018 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
---------------------------------------- ------------ -------------- -----------
(1) Net of issue costs of GBP18,700
On 23 May 2019 the Company issued and allotted 19,000,000 new
Ordinary Shares at a price of 2 pence per share for gross proceeds
of GBP380,000.
14. Other reserves
2019 2018
GBP GBP
-------------------------------------- ---------- ----------
Foreign currency translation reserve (231,682) (225,384)
-------------------------------------- ---------- ----------
Share option Reserve 369,696 361,404
-------------------------------------- ---------- ----------
138,014 136,020
-------------------------------------- ---------- ----------
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 15 outlines the share based
payments made in the year.
15. Share Based Payments
Warrants and options outstanding at 31 December 2019 have the
following expiry dates and exercise prices:
Shares
--------------------------
Exercise
price
in GBP
Grant date Expiry date per share 2019 2018
----------------- -------------- ----------- ----------- -----------
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 -
----------------- -------------- ----------- ----------- -----------
15,576,553 12,200,000
-------------------------------- ----------- ----------- -----------
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
--------------------------- -------------- -------------- --------------
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
2019 is shown below:
2019 2018
----------------------- -----------------------
Weighted Weighted
average average
exercise exercise
price price
Number (GBP) Number (GBP)
------------------------------- ----------- ---------- ----------- ----------
As at 1 January 12,200,000 0.15 10,608,366 0.15
Granted 3,376,553 0.013 2,000,000 0.17
Exercised - - (182,500) 0.13
Expired - - (225,866) 0.18
------------------------------- ----------- ---------- ----------- ----------
Outstanding as at 31 December 15,576,553 0.12 12,200,000 0.15
------------------------------- ----------- ---------- ----------- ----------
Exercisable at 31 December 15,576,533 0.12 12,200,000 0.15
------------------------------- ----------- ---------- ----------- ----------
2019 2018
--------------------------------------------------- --------------------------------------------------
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 0.12 15,576,533 2.7384 2.7384 0.15 12,200,000 3.252 3.252
------------- ---------- ----------- ------------ ------------ ---------- ----------- ----------- ------------
The total fair value charged to the statement of comprehensive
income for the year ended 31 December 2019 and included in
administrative expenses was GBP8,292 (2018: GBP12,446).
16. Other (losses)/gains - Net
Group
---------------------
2019 2018
GBP GBP
---------------------------------------- --------- --------
Net foreign exchange gains / (losses) (14,849) 468,850
Deconsolidation of Georgian Copper and
Gold - 397,228
Written off directors fees (note 18) 47,313 -
Other gains/losses (3,097) 560
---------------------------------------- --------- --------
29,367 866,638
---------------------------------------- --------- --------
17. Employees
Group
-------------------
2019 2018
Staff costs (excluding Directors) GBP GBP
----------------------------------- ------- --------
Salaries and wages 77,489 181,251
Social security costs 6,769 12,367
Pensions 795 1,154
85,053 194,772
----------------------------------- ------- --------
The average monthly number of employees during the year was 3
(2018: 4). 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 .
18. Directors' Remuneration
For the year ended 31 December 2019
---------------------------------------------------
Short term Post-Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ------------- ---------------- ------------ ----------
Executive Directors
Gregory Kuenzel - - - -
Michael Struthers 63,030 - - 63,030
Non-executive Directors - - - -
Neil O'Brien - - - -
Peter Damouni - - - -
Laurence Mutch - - - -
63,030 - - 63,030
------------------------- ------------- ---------------- ------------ ----------
For the year ended 31 December 2018
---------------------------------------------------
Short term Post-Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ------------- ---------------- ------------ ----------
Executive Directors
Gregory Kuenzel 30,618 350 - 30,968
Martyn Churchouse 3,730 14 - 3,744
Michael Struthers 66,935 - 12,447 79,382
Non-executive Directors
Neil O'Brien 33,500 - - 33,500
Peter Damouni 8,333 82 - 8,415
Laurence Mutch 10,000 - - 10,000
153,116 446 12,447 166,009
------------------------- ------------- ---------------- ------------ ----------
Of the above director fees, GBPnil (2018: GBP53,000) has been
capitalised in accordance with IAS 38 as exploration and evaluation
related costs and are shown as an intangible addition in the
year.
For the year ended 31 December 2018, GBP47,313 in directors fees
were accrued. During the current year the Board agreed these
accrued fees were to be written off in full and not payable by the
Company. The reversal of this accrual has been included in other
gains and losses as per Note 16.
19. 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
2019 2018
GBP GBP
Loss before tax (675,592) (8,785,533)
---------- ------------
Tax at the weighted average rate of 19.08%
(2018: 9.05%) (128,905) (795,091)
Expenditure not deductible for tax purposes 19,636 410,573
Net tax effect of losses carried forward
on which no deferred tax asset is recognised 109,269 384,518
---------- ------------
Income tax for the year - -
---------- ------------
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 19.08% (2018: 9.05%)
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
GBP5,940,000 (2018: GBP3,789,000 ) 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.
20. Earnings per Share
The calculation of the total basic loss per share of 0.535 pence
(2018: loss 7.647 pence) is based on the loss attributable to
equity owners of the group of GBP675,592 (2018: GBP8,774,021 ) and
on the weighted average number of ordinary shares of 126,365,211
(2018: 114,744,492) 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.
21. 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 2019. 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.
(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.
22. 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
2019 2018
$ $
----------------------------------------------------- ----------- ------------
Opening balance - -
Recognised on deconsolidation of subsidiary - 3,994,585
Share of loss in joint venture - (3,994,585)
- -
------------------- ------------
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
SI 2017/980
Georgian Copper 6 Saakadze Descent, 50 As above Equity
& Gold JSC 2(nd) Fl.
Tbilisi 0171, Georgia
Summarised financial information of joint venture
31 December 31 December
2019 2018
GBP
----------------------------------- ------------ ------------
Property, plant and equipment 53,933 89,371
Cash 2,591 18,589
Intangibles 4,364 4,030
Other receivables 53,376 81,537
------------------------------------ ------------ ------------
Total assets 114,264 193,527
------------------------------------ ------------ ------------
Trade and other payables 210,830 82,773
Loan with GMC Investments Limited 955,222 975,679
------------------------------------ ------------ ------------
Total liabilities 1,166,052 1,058,452
------------------------------------ ------------ ------------
The joint venture did not generate any revenue in the year.
Total costs of GBP305,122 (2018: GBP7,989,170) were incurred during
the year. Total losses incurred by the joint venture entity and
attributable to the Company but not recognised in the Company
profit and loss are GBP152,556 (2018: GBP3,994,585).
23. 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 GBP111,457 (2018: GBP255,428 ) to JSC Georgian Copper and
Gold, the joint venture entity.
Loan from Empire Metals Ltd to Kibe No.2 Investments Limited
As at 31 December 2019 there were amounts receivable of GBP6,016
(2018: GBP4,706) from Kibe No.2 Investments Limited. No interest
was charged on the loans.
Loan from Empire Metals Ltd to European Mining Services
Limited
As at 31 December 2019 there were amounts receivable of
GBP694,186 (2018: GBP525,028) from European Mining Services
Limited.
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 GBP32,500 (2018: GBP62,440) for
accounting services to the Group. At the year-end there was an
outstanding balance of GBP6,155 (2018: GBP6,449).
Michael Struthers received GBP63,030 (2018: GBP66,935) through
his service company, MS Mining Consulting LDA, as disclosed in Note
18.
24. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling
party.
25. Events after the Reporting Date
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.
On 28 February 2020, the Company issued and allotted 60,000,000
new Ordinary Shares at a price of 1 pence per share raising a total
of GBP600,000.
On 27 April 2020, the Company entered a binding heads of terms
agreement with ASX-listed Artemis Resources Ltd to acquire a 41%
interest in the Munni Munni palladium project in Pilbara,
Australia. Should the acquisition be completed, the Company will
pay consideration of GBP950,000 through the issue of 95 million
shares at a price of 1p per share.
The outbreak of the coronavirus pandemic is considered to be a
non-adjusting event. As outlined in Note 2.4, the Group is
continuing to report on a going concern basis, and whilst this may
cause difficulty in raising further funding, has not had a material
impact on the Group. The unknown length of the outbreak is a source
of uncertainty and the Board will continue to monitor events and to
provide updates as the situation develops.
**ENDS**
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 FLMLTMTMTBAM
(END) Dow Jones Newswires
June 30, 2020 02:00 ET (06:00 GMT)
Empire Metals (AQSE:EEE.GB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Empire Metals (AQSE:EEE.GB)
Historical Stock Chart
From Jul 2023 to Jul 2024