TIDMKEN
RNS Number : 0594O
Kendrick Resources PLC
29 September 2023
29 September 2023
Kendrick Resources Plc
("Kendrick" or the "Company")
Interim Results for the Six Months Ended 30 June 2023
Kendrick Resources Plc the Scandinavian focused new age mineral
exploration and development company with nickel and vanadium
projects in Norway, Sweden and Finland , announces its unaudited
interim results for the six months ended 30 June 2023.
OPERATIONAL, FINANCIAL CORPORATE and STRATEGY REVIEWS
Operational Review
During the period the Company's exploration activities focussed
on its Espedalen nickel project in Norway and its Airijoki vanadium
project in Sweden which are the Company's two most advanced
projects. Kendrick also announced on 31 January 2023 the
appointment of Martyn Churchouse as managing director and the
addition to its exploration team of Vassillios Carellas as
operations director and Edine Bakker as an exploration
geologist.
Technical review of Projects: Following the IPO in May 2022 and
having acquired its projects in Sweden and Finland and exercised
its option in relation to its Norwegian projects the Company
commenced technical reviews and exploration programmes focussing on
both nickel and vanadium in all three countries. Mining and
associated legislation in Scandinavia is well-established and
decisive enabling Kendrick to make rapid progress on a number of
projects.
Summary of Projects: The projects comprise a portfolio of early
to advanced stage exploration assets covering a combined area of
466.72 km2 in Scandinavia. The most advanced of these Projects are
the Airijoki and Koitelainen vanadium projects in Sweden and
Finland respectively and the Espedalen nickel project in
Norway.
The Airijoki and Karhujupukka vanadium and Espedalen nickel
projects all support defined mineral resources prepared in
accordance with the JORC Code (2012.) The remaining projects
largely represent brown and greenfield exploration opportunities
based on the results of historical activities, some with historical
mineral estimates that remain to be updated to the requirements of
the JORC Code (2012).
Norway Projects: Our review has led us to identify significant
opportunities with the nickel projects in Norway.
Our thorough review of historic exploration data combined with
nickel price forecasting results in Kendrick being extremely well
positioned with our Norwegian nickel assets. Our priority Norwegian
nickel target, the Espedalen Project (1.16Mt @ 1% Ni, 0.42% Cu
& 0.04% Co) and more specifically the Stormyra prospect was
drilled in March 2023 with 19 holes completed for a total of 1,650
metres of drilling over an initial 1,200m of strike length. The
results of the programme were announced on 20 April 2023, 4 May
2023 and 24 May 2023 including several drill intercept
highlights:
-- Hole ES2302 - 6.85% Ni Eq. over 1.25m from 38.20m
-- Hole ES2303 - 2.64% Ni Eq. over 3.75m from 44.45m
o incl. 9.28% Ni Eq. over 0.75m from 47.45m
o and 1.53% Ni Eq. over 5.80m from 51.80m
o incl. 5.33% Ni Eq. over 0.9m from 56.7m
-- Hole ES2305 - 1.30% Ni Eq. over 4.60m from 76.70m
o incl. 2.59% Ni Eq. over 2.10m from 79.20m
-- Hole ES2306 - 0.71% Ni Eq. over 10.6m from 96.50m
o Incl. 2.18% Ni Eq. over 1.70m from 99.20m
-- and 1.03% Ni Eq. over 2.65m from 104.45m
-- Hole ESP2308 - 3.39% Ni Eq. over 11.60m from 52.40m including
5.80% Ni Eq over 4.9m from 59.1m
-- Hole ESP2307 - 2.59% Ni Eq. over 3.65m from 37.80m including
4.85% Ni Eq. over 1.80m from 38.50m
-- Hole ESP2312 - 2.29% Ni Eq. over 4.15m from 92.35m
-- Hole ESP2313 - 1.98% Ni Eq. over 3.55m from 79.60m including
3.86% Ni Eq. over 1.70m from 79.60m
-- Hole ESP2317 - 2.18% Ni Eq. over 3.50m from 61.50m
-- Hole ESP2318 - 0.41% Ni Eq. over 9.20m from 31.50m incl. 1.15% Ni Eq. over 0.90m from 35.20m
-- Hole ESP2319 - 2.43% Ni Eq. over 2.10m from 53.60m incl.
5.53% Ni Eq. over 0.65m from 54.35m and 1.33% Ni Eq. over 2.70m
from 62.20m
Geophysics and interpretation of drilling indicates a further
extension to known mineralisation of approximately 500m along the
southern limit of the current orebody which is expected to increase
the mineral resource.
The drill programme over Stormyra was very successful with
impressive peak intercepts have provided all the motivation the
Company needs to both extend the Stormyra mineralised trend and
assess with further drilling multiple other targets (some of which
have been drilled and intersected Ni mineralisation) across the
Espedalen project area.
Thanks to our local team, we have managed to build a helathy
relationship with the local stakeholders and we will continue to
communicate with interested and affected parties and we are
sufficiently confident of the continuity of mineralisation to
formally engage external engineering advice for the review of
future plant design.
Swedish & Finnish Projects: The focus during the period was
the Airijoki vanadium project. In reviewing the Airijoki project we
have identified significant magnetic geophysical and copper in soil
anomalies and we have modelled the occurrences for future testing.
The various exploration programmes have confirmed:
-- Four new exploration targets identified outside the main Vanadium trend.
-- New targets are anomalous for copper, nickel, cobalt, gold,
and palladium and are coincident with underlying airborne
geophysical anomalism.
-- Two of the copper, Nickel, cobalt, gold, palladium targets
have been prioritised for immediate follow-up once weather
permits.
-- Two targets have estimated minimum strike lengths of approximately 2km and 1km.
-- The Airijoki licences remain highly prospective for vanadium.
Additional metalliurgical test work has been undertaken and
further tests will follow using fresh drill core from the most
recent drill programme.
Results of the current Airijoki drill programme are yet to be
received from the independent assay laboratory and these assays in
combination with the results of planned additional metallurgical
test work will determine the next steps for resource delineation
and further step-out exploration on the remaining licences where
historic soil geochemistry and geophysics indicates signatures
consistent with that which has generated mineral resources to
date.
Financial Review
Financial highlights:
-- GBP244K loss after tax (2022: GBP185K)
-- Approximately GBP791k cash at bank at the period end (Dec 2022: GBP1.82m).
-- The basic and diluted losses per share are summarised in the table below
Loss per share
(pence) 2023 2022
Note
Basic 3 (0.10)p (0.24)p
Note
Diluted 3 (0.10)p (0.15)p
======== ========
-- The net asset value as at 30 June 2023 was GBP 5.36m (31 December 2022 GBP5.56m )
Fundraisings and issues of shares during the period
On 24 April 2023 the Company announced the issue of 4,144,395
shares in the Company to settle the share consideration due to be
issued on or before 27 April 2023 in relation to the Company's
acquisition of the Espedalen, Hosanger, and Sigdal
nickel-copper-cobalt exploration projects in Norway (the "Norwegian
Projects") from EMX Scandinavia AB (previously named Eurasian
Minerals Sweden AB) ("EMX"). The Lock up arrangements for these
shares are that 50% of these shares shall be subject to a
three-month voluntary escrow and the balance of 50% subject to a
six-month voluntary escrow.
Corporate Review
Company Board: The Board of the Company comprises Colin Bird:
Executive Chairman, Martyn Churchouse: Managing Director, and Non-
executive directors Kjeld Thygesen, Evan Kirby and Alex
Borrelli.
Lock Up and Orderly Market arrangements:
At IPO the Directors and their related parties, in aggregate,
held 47,294,860 Ordinary Shares, representing 21.62% of the
Enlarged Share Capital. The Directors have agreed with the Company
and its brokers, except for certain standard exceptions, not to
dispose of any interest in the Ordinary Shares held by them for a
period of 12 months following Admission (Lock-In Period) and then
for the following 12 months not to dispose of their Ordinary Shares
without first consulting the Company and Novum in order to maintain
an orderly market for the Shares.
Strategy Review
The Company's short to medium term strategic objectives are to
enhance the value of its mineral resource projects through
exploration and technical studies conducted by the Company or in
conjunction with other parties with a view to establishing these
projects can be economically mined for profit. With a positive
global outlook for both base and precious metals, the Directors
believe that its projects provide a base from which the Company
will seek to add significant value through the application of
structured and disciplined exploration. The Company is looking to
build a long term energy metals business in Scandinavia which
delivers energy metals to Europe to help enable its renewable
energy transformation by building a top tier energy metals
production business focused on quality vanadium and nickel mineral
resources in Scandinavia.
The Company may in the future, if such opportunity arises,
acquire other mineral resource projects whose value can similarly
be enhanced. Further projects may be considered where assets in
strategic commodities are either: (i) geologically prospective but
undervalued; (ii) where technical knowledge and experience could be
applied to add or unlock upside potential; (iii) where the assets
may be synergistic to the current portfolio; or (iv) where project
diversification will add strategic growth opportunities within an
appropriate time frame.
Outlook
Our review of the Company's projects has given us confidence
that our north European assets are well located with significant
potential in the quickly emerging space of energy generation and
storage.
Until last year inflation and rising interest rates were seen as
distant issues but rising interest rates and the cost of living
were front and centre of financial headlines during the period.
This has already slowed down major stock markets but may be good
for the small mines sector since as in such times they have been
seen to outperform.
The Board remains confident they have assembled an enviable
portfolio of projects and look forward to advancing all our
projects in the second half of the year and providing our
shareholders with the prospects of enhanced value flowing into next
year.
Post Period Events
On 7 August 2023 the Company signed a Share Sale and Purchase
Agreement with EMX Royalty Corporation (EMX) to acquire 100% of EV
Metals AB a Swedish company that owns the Njuggtraskliden and
Mjovattnet exploration licences hosting drill-defined magmatic
nickel-copper-cobalt-platinum group metal mineralisation along the
Swedish "Nickel Line" ("Swedish Nickel Projects") .
The Company is acquiring EV Metals AB for SEK110,780 (approx.
GBP 8,200) and the issue of 15 million 5 year options to EMX to
acquire ordinary shares in the Company (Kendrick Shares) at 1.3
pence per Kendrick Share (EMX Options) which is at a premium of
approximately 67% to Kendrick's closing share price on 4 August
2023 of 0.7750 pence the last practical date prior to this
announcement. The EMX Options if exercised will allow EMX to
increase its Kendrick shareholding.
In light of the Company's exploration commitment in relation to
the Swedish Nickel Projects EMX has agreed that in relation to
Sigdal and Hosanger in lieu of the existing requirement to drill up
to one thousand meters on each project if it incurs Exploration
Expenditures of no less than USD $50,000 on each of these projects
in 2023 the Company will have met its 2023 expenditure requirements
for these two projects. The Company will have until 31 December
2023 to decide whether it continues with these two projects on the
terms of the existing agreements with EMX. If the Company fails to
incur the required USD $50,000 in Exploration Expenditures on these
projects, the shortfall of the exploration expenditures obligation
may be satisfied by a payment to the EMX of the shortfall in
cash.
These arrangements in relation to the Sigdal and Hosanger
projects do not affect the Company's Espedalen Project, which
currently contains the following two nickel deposits:
1. Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu &
0.04% Co and classified as Inferred in accordance with JORC
(2012)
2. Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu &
0.02% Co and classified as Inferred in accordance with JORC
(2012)
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authorities ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Directors
consider the preceding Operational, Financial, Corporate and
Strategy Review of this Half Yearly Financial Report provides
details of the important events which have occurred during the
period and their impact on the financial statements as well as the
outlook for the Company for the remaining six months of the year
ending 31 December 2023.
The following statement of the Principal Risks and
Uncertainties, the Related Party Transactions, the Statement of
Directors' Responsibilities and the Operational, Financial,
Corporate and Strategy Review constitute the Interim Management
Report of the Company for the six months ended 30 June 2023.
Principal Risks and Uncertainties
The principal risks that are specific to the Company were
detailed under this heading in Part 1 Summary of the Company's
prospectus which was published on 29 April 2022 (the "Prospectus")
which is available on the Company's website at
http://www.kendrickresources.com/ . Part II Risk factors of the
Prospectus provides more details of risk factors specific and
material to the Group and to the Natural Resources Sector. The
Strategic Report in the 2022 Annual Accounts also provided a
detailed summary of the principal risks and uncertainties faced by
the Company, a copy of the 2022 Annual Accounts are available on
the Company's website at http://www.kendrickresources.com/ .
The Board is of the opinion that these risk factors will
continue to remain unchanged for the forthcoming six month
period.
The principal risks and uncertainties facing the group are as
follows:
-- There are significant risks associated with any exploration
project and the ability of the company to explore, develop and
generate operational cashflows from its projects
-- No assurances can be given that minerals will be discovered
in economically viable quantities at the Company's projects
-- Adverse foreign exchange fluctuations
-- Volatility in financial markets and commodity markets
The Board has also reviewed emerging risks which may impact the
forthcoming six-month period and the main risk facing the Company
are any ongoing impact the Ukraine war and related sanctions. In
the period and to date these have not had a significant impact on
the Company's operations. The Ukraine war has however had a
significant impact on oil and gas prices which is feeding though
into concerns regarding inflation, interest rates and the outlook
for stockmarkets and short term commodity prices. Finland joined
NATO in 2023 and Sweden have announced their intention to join
NATO.
Related Party Transactions during the period
1. Directors' Letters of Appointment and Service Agreements as
disclosed in the Prospectus
(a) Pursuant to an agreement dated 29 April 2022 the Company
renewed the appointment of Colin Bird as a Director. The
appointment continues unless terminated by either party giving to
the other three months' notice in writing. Colin Bird is entitled
to director's fees of GBP18,000 per annum for being a director of
the Company plus reasonable and properly documented expenses
incurred during the performance of his duties. Colin Bird is not
entitled to any pension, medical or similar employee benefits. The
agreement replaces all previous agreements with Colin Bird in
relation to his appointment as a director of the Company.
(b) Pursuant to a consultancy agreement dated 29 April 2022, the
Company has, with effect from the date of the IPO, appointed Colin
Bird as a consultant to provide technical advisory services in
relation to its current and future projects including, but not
limited to, assessing existing geological data and studies,
existing mine development studies and developing exploration
programs and defining the framework of future geological and mine
study reports (the "Colin Bird Services"). The appointment
continues unless terminated by either party giving to the other
three months' notice in writing. Colin Bird is entitled to fees of
GBP2,500 per month for being a consultant to the Company plus
reasonable and properly documents expenses incurred during the
performance of the Colin Bird Services.
(c) Pursuant to an agreement dated 29 April 2022, renewed the
appointment of Kjeld Thygesen as a non-executive Director. The
appointment continues unless terminated by either party giving to
the other three months' notice in writing. Kjeld Thygesen is
entitled to director's fees of GBP18,000 per annum for being a
director of the Company plus reasonable and properly documented
expenses incurred during the performance of his duties. Kjeld
Thygesen is not entitled to any pension, medical or similar
employee benefits.
(d) Pursuant to an agreement dated 29 April 2022, Alex Borrelli
was appointed as a nonexecutive Director. The appointment continues
unless terminated by either party giving to the other three months'
notice in writing. Alex Borrelli is entitled to director's fees of
GBP18,000 per annum for being a director of the Company plus
reasonable and properly documented expenses incurred during the
performance of his duties. Alex Borrelli is not entitled to any
pension, medical or similar employee benefits.
(e) Pursuant to an agreement dated 29 April 2022, Evan Kirby was
appointed as a non-executive Director. The appointment continues
unless terminated by either party giving to the other three months'
notice in writing. Evan Kirby is entitled to director's fees of
GBP18,000 per annum for being a director of the Company plus
reasonable and properly documented expenses incurred during the
performance of his duties. Evan Kirby is not entitled to any
pension, medical or similar employee benefits.
(f) The Company entered into a licence agreement dated 1
February 2022 with Lion Mining Finance Limited (a company
controlled by Colin Bird, a director of the Company). Pursuant to
this agreement, the Company has been granted a licence to use the
premises at 7-8 Kendrick Mews, London, SW7 for a period of 12
months with effect from 1 December 2021 for a licence fee of
GBP1,000 per month. In addition, Lion Mining Finance Limited
provides basic administrative and support services as required by
the Company from time to time.
2. Related Party transactions described in the annual report to
31 December 2022
Other than disclosed above there have been no changes in the
related party transactions described in the annual report for the
year ended 31 December 2022 that could have a material effect on
the financial position or performance of the Company in the first
six months of the current financial year.
Responsibility Statement
The Directors, whose names and functions are set out in this
report under the heading Company Board, are responsible for
preparing the Unaudited Interim Condensed Consolidated Financial
Statements in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority ('DTR') and with International Accounting Standard 34 on
Interim Financial reporting (IAS34). The Directors confirm that, to
the best of their knowledge, this Unaudited Interim Condensed
Consolidated Report, which has been prepared in accordance with
IAS34, gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group and the interim
management report includes a fair review of the information
required by DTR 4.2.7 R and by DTR 4.2.8 R, namely:
-- an indication of key events occurred during the period and
their impact on the Unaudited Interim Condensed Consolidated
Financial Statements and a description of the principal risks and
uncertainties for the second half of the financial year; and
-- material related party transactions that have taken place
during the period and that have materially affected the financial
position or the performance of the business during that
period."
The interim results for the six months ended 30 June 2023 have
not been audited or reviewed by auditors pursuant to the Financial
Reporting Council guidance on Review of Interim Financial
Information.
For and on behalf of the Board of Directors
Colin Bird
Executive Chairman
29 September 2023
Kendrick Resources Plc Tel: +44 2039 616 086
Chairman Colin Bird
--------------------------- ---------------------------------
Novum Securities Tel: +44 7399 9400
Financial Adviser David Coffman / George Duxberry
Joint Broker Jon Bellis
--------------------------- ---------------------------------
Shard Capital Partners LLP Tel: +44 207 186 9952
Joint Broker Damon Heath / Isabella Pierre
--------------------------- ---------------------------------
or visit http://www.kendrickresources.com/
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
Group Statement of Profit and Loss
For the six months ended 30 June 2023
Notes Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
GBP GBP
Income
Realised loss on sale of investments - (10,872)
Unrealised (loss)/gain on investments - -
------------ ------------
Total income - (10,872)
Operating expenses (243,534) (173,828)
Group operating loss (243,534) (184,700)
Interest costs - -
Loss before taxation (244,534) (184,700)
Taxation - -
------------ ------------
Loss for the period (244,534) (184,700)
============ ============
Loss per share (pence)
Basic (0.10)p (0.24)p
Diluted 3 (0.10)p (015)p
Group Statement of Other Comprehensive Income
For the six months ended 30 June 2023
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
GBP GBP
Other comprehensive income :
Loss for the period (243,534) (184,700)
Items that may be reclassified to profit
or loss:
Foreign currency reserve movement - -
------------ ------------
Total comprehensive loss for the period (243,534) (184,700)
============ ============
GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Share Share Merger Accumulated Total
capital Premium reserve losses equity
GBP GBP GBP GBP GBP
Unaudited - six months
ended 30 June 2023
Balance at 29 December (5,567,
2022 22,998,307 31,810,107 1,824,000 (51,064,741) 673)
Current period loss - - - (243,534) (243,534)
----------- ----------- ---------- ------------- ----------
Total comprehensive
loss for the period - - - (243,534) (243,534)
----------- ----------- ---------- ------------- ----------
Exercise of option
over Norwegian projects 1,244 35,021 - - 36,265
Balance at 30 June
2023 22,999,551 31.845,128 1,824,000 (51,308,275) 5,360,404
=========== =========== ========== ============= ==========
Unaudited - six months
ended 30 June 2022
Balance at 29 December
2021 22,929,743 25,027,278 1,824,000 (50,017,384) (236,363)
Current period loss - - - (184,700) (184,700)
----------- ----------- ---------- ------------- ----------
Total comprehensive
loss for the period - - - (184,700) (184,700)
----------- ----------- ---------- ------------- ----------
Net proceeds from shares
issued 30.773 2,743,107 - - 2,773,880
Acquisition of subsidiaries 23,357 2,201,643 - - 2,225,000
Loan notes converted
into shares 8,366 671,134 - - 679,500
Balance at 30 June
2022 22,992,239 30.643,162 1,824,000 (50,202,084) 5,257,317
=========== =========== ========== ============= ==========
Group Balance Sheet
As at 30 June 2023
Unaudited Audited
30 31
June December
2023 2022
Notes GBP GBP
ASSETS
Non-current assets
Property, plant and equipment - -
Exploration and evaluation assets 6 4,647,910 3,932,973
Total non-current assets 4,647,910 3,932,973
------------- -------------
Current assets
Current asset investment 8,174 8,174
Trade and other receivables 72,356 92,758
Cash and cash equivalents 790,839 1,817,706
------------- -------------
Total current assets 871,369 1,918,638
-------------
TOTAL ASSETS 5,519,279 5,851,611
-------------
LIABILITIES
Current liabilities
Trade and other payables 158,875 247,673
EMX Deferred Share Consideration - 36,265
Total liabilities 158,875 283,938
------------- -------------
NET ASSETS/(LIABILITIES) 5,360,404 (5,567,673)
============= =============
EQUITY
Share capital 8 22,999,551 22,998,307
Share Premium 31,845,128 31,810,107
Merger reserve 1,824,000 1,824,000
Retained earnings (51,308,275) (51,064,741)
------------- -------------
Total equity 5,360,404 5,567,673
============= =============
Group Statement of Cash Flows
For the six months ended 30 June 2023
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
Notes GBP GBP
Cash flows from operating activities
Loss before tax (243,534) (184,700)
Adjustments for:
Depreciation of property, plant and equipment - 1,025
Loss on sale of investments - 10,872
Unrealised loss on investments - -
Decrease/(Increase) in receivables 20,402 (245,933)
(Decrease) in payables (125,063) (284,488)
Net cash inflow from operating activities (348,195) (703,224)
------------ ------------
Cash flows from/(used) in investing activities
Proceeds of sale of Investment shares - 78,572
Investment in Nordic Projects and related
transaction costs - (82,584)
Purchase of Exploration and Evaluation
assets (714,937) (2,135,803)
------------ ------------
(714,937) (2,139,815)
------------ ------------
Cash flows from financing activities
Proceeds from Issue of shares, net of
issue costs - 2,773,880
Shares issued to acquire subsidiaries - 2,225,000
Shares issued to acquire options 36,265 -
------------ ------------
36,265 4,998,880
------------ ------------
(Decrease)/Increase in cash (1,026,867) 2,155,841
Cash and cash equivalents at beginning
of period 1,817,706 16,871
Cash and cash equivalents at end of period 790,839 2,172,712
============ ============
Notes to the interim financial information
For the six months ended 30 June 2023
1. General information
This financial information is for Kendrick Resources Plc ("the
Company") and its subsidiary undertakings. The principal activity
of Kendrick Resources Plc (the 'Company') and its subsidiaries
(together the 'Group') is the development of natural resources
exploration projects in Scandinavia. The Company is a public
limited company and was listed on to the Official List (Standard
Segment) and commenced trading on the Main Market for listed
securities of the London Stock Exchange on 6 May 2022. The 'Company
is incorporated and domiciled in the United Kingdom with company
registration number 02401127. The address of the registered office
is 7/8 Kendrick Mews, London SW7 3HG.
2. Basis of preparation
The unaudited interim financial information set out above,
which incorporates the financial information of the Company
and its subsidiary undertakings (the "Group"), has been prepared
using the historical cost convention and in accordance with
International Financial Reporting Standards ("IFRS").
These interim results for the six months ended 30 June 2023
are unaudited and do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. The financial
statements for the year ended 31 December 2022 were audited
and the auditors' report on those financial statements was
unqualified and contained a material uncertainty pertaining
to going concern.
The same accounting policies, presentation and methods of
computation have been followed in these unaudited interim
financial statements as those which were applied in the preparation
of the company's annual financial statements for the year
ended 31 December 2022.
The interim consolidated financial information incorporates
the financial statements of Kendrick Resources Plc and its
subsidiaries.
Going concern basis of accounting
The Group made a loss from all operations for the six months
ended 30 June 2023 after tax of GBP244,000 (2022: GBP185,000),
had negative cash flows from operations and is currently not
generating revenues. An operating loss is expected in the
year subsequent to the date of these accounts and as a result
the Company will need to raise funding to provide additional
working capital to finance its ongoing activities. Management
has successfully raised money in the past, but there is no
guarantee that adequate funds will be available when needed
in the future.
Based on the Board's assessment that the Company will be able
to raise additional funds, as and when required, to meet its
working capital and capital expenditure requirements, the
Board have concluded that they have a reasonable expectation
that the Group can continue in operational existence for the
foreseeable future. For these reasons the financial statements
have been prepared on the going concern basis, which contemplates
continuity of normal business activities and the realisation
of assets and discharge of liabilities in the normal course
of business.
The management team has successfully raised funding for exploration
projects in the past, but there is no guarantee that adequate
funds will be available when needed in the future.
There is a material uncertainty relating to the conditions
above that may cast significant doubt on the Group's ability
to continue as a going concern and therefore the Group may
be unable to realise its assets and discharge its liabilities
in the normal course of business.
This financial report does not include any adjustments relating
to the recoverability and classification of recorded assets
amounts or liabilities that might be necessary should the
entity not continue as a going concern.
3. Earnings per share
Unaudited Unaudited
30 30
June June
2023 2022
GBP GBP
(Loss) attributable to equity holders of
the Company (243,534) (184,700)
Weighted average number of shares 241,203,794 75,643,347
Weighted average number of shares and warrants 249,177,275 75,643,347
Basic loss per ordinary share (0.10)p (0.24)p
Diluted loss per ordinary share (0.10)p (0.15)p
The use of the weighted average number of shares in issue in
the period recognises the variations in the number of shares
throughout the period and is in accordance with IAS 33.
4. Investments
The company has adopted the provisions of IFRS9 and has
elected to treat all available for sale investments at fair
value with changes through the profit and loss.
Available-for-sale investments under IFRS9 are initially
measured at fair value plus incidental acquisition costs.
Subsequently, they are measured at fair value in accordance
with IFRS 13. This is either the bid price or the last traded
price, depending on the convention of the exchange on which
the investment is quoted. All gains and losses are taken
to profit and loss.
The Company's intention following its Listing is not to
purchase any new investments and to hold its residual portfolio
as realisable investments as a source of liquidity when
required.
5. Acquisition of subsidiaries
5.1 Acquisition of Northern X Group (Swedish
& Finnish projects)
On 6 May 2022 the Company completed the acquisition of;
(a) 100% of Northern X Finland Oy ("Northern X Finland"),
which owns in Finland the Koitelainen vanadium projects
which hosts a defined Mineral Resource as defined by the
JORC Code (2012) and the Karhujupukka vanadium-magnetite
exploration project ("Finnish Projects"); and
(b) 100% of Northern X Scandinavia AB ("Northern X Scandinavia")
which owns in Sweden the Airijoki and vanadium project (the
"Airijoki Project") which hosts a defined Mineral Resource
as defined by the JORC Code (2012) and the Kramsta, Kullberget,
Simesvallen and Sumåssjön exploration projects
in Sweden (collectively known as the "Central Sweden Projects")
(the Airijoki Project and the Central Sweden Projects are
collectively the "Swedish Projects")
Collectively the Northern X Group
The acquisition price was as follows:
GBP
Consideration
Equity consideration
* Ordinary shares (issued) 2,225,000
Cash consideration 224,126
---------------
2,449,126
---------------
5.2 Acquisition of Caledonian Minerals AS (Norwegian Projects)
On 13 May 2022 to facilitate the smooth transfer of the
Norwegian Project Licences to the Company after the exercise of the
EMX Option the Company acquired Caledonian Minerals AS for GBP
6,186 a Norwegian company established by EMX as a clean special
purpose vehicle on 8 November 2021 which at the date of acquisition
had not carried out any business and had no assets or
liabilities.
Consideration GBP
Cash consideration 6,186
-------
Total consideration 6,186
Fair value of assets acquired
Exploration assets 6,186
-------
6,186
-
-------
Exploration and evaluation assets
6.
Swedish Finnish Norwegian
Project Projects projects Total
GBP GBP GBP GBP
Opening Balance 1 January
2022 - - - -
Transfer from Investment
in Nordic Projects & Related
Transactions Costs * 254,871 82,386 119,961 457,218
Additions in 2022 184,438 4,355 160,745 349,538
Northern X Group Acquisition
(Note 5.1):
Share issues 1,357,473 703,990 163,537 2,225,000
Cash consideration 136,739 70,913 16,474 224,126
Acquisition of Norwegian
Projects
Share issues (Note 7) 566,349 566,349
Cash consideration 74,477 74,477
EMX Deferred Share Consideration 36,265 36,265
Balance 29 December 2022 1,933,521 861,644 1,137,808 3,932,973
========== ========== ========== ==========
Swedish Finnish Norwegian
Project Projects projects Total
GBP GBP GBP GBP
Balance 29 December 2022 1,933,521 861,644 1,137,808 3,932,973
Additions in period 229,986 1,060 483,891 714,937
Balance 30 June 2023 2,163,507 862,704 1,621,699 4,647,910
-------------------------- ========== ========== ========== ==========
6.1. Exploration assets
Summary of Projects:
The Swedish & Finnish projects are a portfolio of early to
advanced stage exploration projects covering a combined area of
466.72 km2 in Scandinavia. The most advanced of these Projects are
the Airijoki and Koitelainen vanadium projects in Sweden and
Finland respectively.
However, the projects to be acquired include several exploration
projects in the Nordic region, namely:
* Finland - the Karhujupukka vanadium-magnetite exploration
project
* Sweden - the Kramsta, Kullberget, Simesvallen and Sumåssjön
exploration projects in Sweden (collectively known as the Central
Sweden Project)
The Karhujupukka project also support defined mineral resources
prepared in accordance with the JORC Code (2012.) However, these
remain subject to further techno-economic assessment. The remaining
projects represent brownfield to greenfields exploration
opportunities based on the results of historical activities, some
with historical mineral estimates that remain to be updated to the
requirements of the JORC Code (2012).
The Norwegian Projects comprise:
o The Espedalen Project consisting of 16 contiguous exploration
permits covering a combined area of 139.89 km(2) currently contains
two nickel deposits
o The Sigdal Project consisting of three exploration licences
totalling 30 km(2) containing a geophysical conductor associated
with historical mine workings, which has only been tested with two
short drill holes, returning gold grades over 10g/t with
encouraging nickel and copper mineralisation
o The Hosanger Project consisting of a coherent tenure package
of four exploration licences covering 40 km(2) and contains the
historical Litland nickel mine
The Espedalen nickel project which is the primary Norwegian
project supports defined mineral resources prepared in accordance
with the JORC Code (2012).
6.2. Exploration assets accounting policy
Exploration, evaluation and development expenditure incurred is
accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage which
permits reasonable assessment of the existence of economically
recoverable reserves. Accumulated costs in relation to an abandoned
area are written off in full in the year in which the decision to
abandon the area is made. When production commences, the
accumulated costs for the relevant area of interest are transferred
to development assets and amortised over the life of the area
according to the rate of depletion of the economically recoverable
reserves. A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
7. Investment in Norwegian Projects
On 13 May 2022 the Company exercised its option to conditionally
acquire the Espedalen, Hosanger, and Sigdal nickel-copper-cobalt
exploration projects in Norway (the "Norwegian Projects") (the
"Acquisition") from EMX Scandinavia AB (previously named Eurasian
Minerals Sweden AB) ("EMX") by the issue of 20,226,757 new ordinary
shares in the Company to EMX or its nominee, 50% of these shares
shall be subject to a three-month voluntary escrow and the balance
of 50% subject to a six-month voluntary escrow. Kendrick has also
made a payment of US$81,949 to EMX. This payment was to meet a
shortfall of this amount in the exploration expenditure to be
incurred during the option period.
The Acquisition is conditional upon the Norweg ian Directorate
for Mineral Administration approving the transfer of the licences
to a wholly owned subsidiary of Kendrick. Subsequent to the period
end the Company on 12 August 2022 announced this process was
completed, and the Company applied for the 20,226,757 new ordinary
shares to be admitted to trading on the Standard Segment of the
London Stock Exchange on 17 August 2022.
The Norwegian Projects comprise:
o The Espedalen Project consisting of 16 contiguous exploration
permits covering a combined area of 139.89 km(2) currently contains
two nickel deposits
o The Sigdal Project consisting of three exploration licences
totalling 30 km(2) containing a geophysical conductor associated
with historical mine workings, which has only been tested with two
short drill holes, returning gold grades over 10g/t with
encouraging nickel and copper mineralisation
o The Hosanger Project consisting of a coherent tenure package
of four exploration licences covering 40 km(2) and contains the
historical Litland nickel mine
8. Share Capital
June 2023 December 2022
Number Number GBP
GBP
Issued equity share capital
Is sued and fu l ly pa
id
Ordinary shares of GBP0.0003
each 243,882,767 73,165 239,738,373 71,921
Deferred shares of GBP0.00999
each (1) 335,710,863 3,353,752 335,710,863 3,353,752
Deferred shares of GBP0.009
each (2) 1,346,853,817 12,121,684 1,346,853,817 12,121,684
Deferred shares of GBP0.01 1 9 , 57 1 9 5 , 1 9 , 57 9 1 9 5 , 7
each (2) 9 , 9 2 5 7 9 9 , 9 2 5 9 9
1 81 , 3
D e f e r r e d s h a r 7 8 , 7 6 7 , 2 5 1 81 , 3 7 7 , 2 5 5
es of GBP 0. 04 e ach (3) 6 5 , 15 1 8 , 7 6 6 , 15 1
=========== ===========
22,999,551 22,998,307
=========== ===========
30 June 2023
Number Share
of Ordinary Share Premium
Group shares capital
GBP GBP
------------------------------------------------------------ ---------------- ---------- ----------
As at 1 January 2023 239,738,373 71,921 31,810,107
Shares issued during the period 4,144,395 1,244 35,021
Share issue costs - - -
---------------- ---------- ----------
As at 30 June 2023 243,882,768 73,165 31,845,128
---------------- ---------- ----------
Movement in shares issued during the period
Shares issued to acquire options 4,144,395 1,244 35,021
Total 4,144,395 1,244 35,021
Notes:
(1) The deferred shares of GBP0.00999 have no voting rights and
have no rights as to dividends and only very limited rights on
a return of capital. They will not be admitted to trading or listed
on any stock exchange and will not be freely transferable. The
holders of the 2020 Deferred Shares are not entitled to any further
right of participation in the assets of the Company. As such,
the 2020 Deferred Shares effectively have no value.
(2) The deferred shares of GBP0.01 each and GBP0.009 each confer
no rights to vote at a general meeting of the Company or to a
dividend. On a winding-up the holders of the deferred shares are
only entitled to the paid-up value of the shares after the repayment
of the capital paid on the ordinary shares and GBP5,000,000 on
each ordinary share.
(3) The deferred shares of GBP0.04 each have no rights to vote
or to participate in dividends and carry limited rights on return
of capital. No shares were issued during the year.
On 24 April 2023 the Company announced it had issued 4,144,395
new ordinary shares to settle the share consideration due to be
issued on or before 27 April 2023 in relation to the Company's
acquisition of the Espedalen, Hosanger, and Sigdal nickel-copper-cobalt
exploration projects in Norway from EMX Scandinavia AB. 50% of
these shares are subject to a three-month voluntary escrow and
the balance of 50% subject to a six-month voluntary escrow. 3,683,906
of the new ordinary shares will be issued to EMX Scandinavia AB
which will increase the combined shareholding of EMX Scandinavia
AB and EMX Royalty Corporation to 21,663,284 shares representing
8.9% of the enlarged share capital on the Company.
On 2 February 2023 the Company announced that in aggregate, 22,550,000
options over ordinary shares of GBP0.0003 par value in the capital
of the Company ("Ordinary Shares") have been granted fully vested
pursuant to the Executive Share Option Scheme (the "Options").
Of the 22,550,000 Options, 13,750,000 have been awarded to directors
of the Company, as detailed further below and the balance of 8,800,000
to other eligible participants. The Company has not previously
issued any Options.
Directors No. of Options
Colin Bird Executive Chairman 6,000,000
Martyn Churchouse 5,000,000
Alex Borrelli 1,000,000
Evan Kirby 1,000,000
Kjeld Thygesen 750,000
Total Directors 13,750,000
9. Subsequent events
On 7 August 2023 the Company signed a Share Sale and Purchase
Agreement with EMX Royalty Corporation (EMX) to acquire 100% of EV
Metals AB a Swedish company that owns the Njuggtraskliden and
Mjovattnet exploration licences hosting drill-defined magmatic
nickel-copper-cobalt-platinum group metal mineralisation along the
Swedish "Nickel Line".
The Company is acquiring EV Metals AB for SEK110,780 (approx.
GBP 8,200) and the issue of 15 million 5 year options to EMX to
acquire ordinary shares in the Company (Kendrick Shares) at 1.3
pence per Kendrick Share (EMX Options) which is at a premium of
approximately 67% to Kendrick's closing share price on 4 August
2023 of 0.7750 pence the last practical date prior to this
announcement. The EMX Options if exercised will allow EMX to
increase its Kendrick shareholding.
Other than the matters above no significant events have occurred
subsequent to the reporting date that would have a material impact
on the consolidated financial statements.
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END
IR PPUAABUPWGAR
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