TIDMPXC
RNS Number : 5319X
Phoenix Copper Limited
05 May 2021
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
5 May 2021
Phoenix Copper Limited
("Phoenix" or the "Company")
Final audited results for the year ended 31 December 2020
Notice of AGM
Phoenix Copper Ltd (AIM: PXC, OTCQX: PXCLF), the AIM quoted USA
focused base and precious metals emerging producer and exploration
company, is pleased to announce its audited results for the year
ended 31 December 2020. All references to $ are United States
dollars.
Highlights
Corporate & Financial:
- $4.65 million raised during the year
- $26.75 million raised since the year-end
- Investment in Empire Mine in Idaho, USA increased to $14.79 million (2019: $11.67 million)
- Net assets increased to $13.83 million (2019: $10.56 million)
- 14% decrease in net loss to $0.97 million (2019: $1.13 million)
- Phoenix loan to operating subsidiary increased to $11.28 million (2019: $8.29 million)
- Ryan McDermott appointed as Chief Executive Officer
- In 2021, Catherine Evans appointed as an Independent Non-Executive Director, and
- Harry Kenyon-Slaney appointed to the Advisory Board
Empire Mine, Idaho, USA:
- Updated Measured & Indicated open pit resource increased
by 51% over the 2019 resource, containing 87,543 tonnes of copper
(+19% over 2019 resource), 43,871 tonnes of zinc (+47%), 238,400
ounces of gold (+72%) and 7.6 million ounces of silver (+26%)
- Open pit Measured & Indicated resource in-situ value of
$1.4 billion, plus $0.6 billion of Inferred resource
- Open pit mine pre-production capital expenditure of $52
million, payback less than two years; gross revenue of $836 million
over 10 years, $43 million post-tax cash flow in year 1 (at $3.60
copper price)
- Completion of environmental base line studies for both the
open pit and Red Star silver-lead deposit, with no critical issues
identified
- Environmentally friendly non-toxic processing technology to recover precious metals
- 2021 drilling programme at Red Star silver-lead deposit,
Navarre Creek gold zone, and historically mined high grade Empire
underground sulphide copper deposit
- ESG Programme Coordinator appointed
The Company also announces that the Annual General Meeting
("AGM") will be held by webinar at 16.00 BST on 24 May 2021.
Details of how to access the webinar platform and vote by proxy
will be set out in the Notice of AGM.
The Notice of AGM and Forms of Proxy will be despatched to
shareholders on 6 May 2021 and will be available on the Company's
website at www.phoenixcopperlimited.com .
The Company's Annual Report and Consolidated Financial
Statements for the year ended 31 December 2020 will also be
available on the website from 6 May 2021, as will the new
Memorandum & Articles of Association, proposed to be adopted at
the AGM.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Ryan McDermott Tel: +1 208
Limited Dennis Thomas 954 7039
Richard Wilkins Tel: +44 7827
290 849
Tel: +44 7590
216 657
SP Angel (Nominated David Hignell / Caroline Tel: +44 20
Adviser) Rowe 3470 0470
----------------------------------- ---------------
Brandon Hill Jonathan Evans / Oliver Stansfield Tel: +44 20
Capital (Joint 3463 5000
Broker)
----------------------------------- ---------------
WH Ireland (Joint Harry Ansell / Adam Pollock Tel: +44 207
Broker) / Katy Mitchell 2201666
----------------------------------- ---------------
Panmure Gordon John Prior / Hugh Rich / Tel: +44 20
(UK) Limited Ailsa Macmaster 7886 2500
(Joint Broker)
----------------------------------- ---------------
EAS Advisors Matt Bonner / Rogier de la Tel: +1 (646)
(US Corporate Rambelje 495-2225
Adviser)
----------------------------------- ---------------
Blytheweigh Tim Blythe / Megan Ray Tel: +44 20
(Financial PR) 7138 3204
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Notes
Phoenix Copper Limited is a USA focused, base and precious metal
emerging producer and exploration company, which has carried out a
drilling programme and generated a copper, gold, silver and zinc
resource on which it is carrying out a feasibility study to bring
the historically producing Empire Mine in Idaho, USA, back into
production. It is also evaluating the silver and gold resources
around three other past producing mines within the 23 km (2) Empire
claims block as well as cobalt in two claims blocks north of Empire
in Idaho.
Phoenix's primary operations are focused near Mackay, Idaho in
the Alder Creek mining district. This district includes the
historical Empire, Horseshoe, White Knob and Blue Bird Mines, past
producers of copper, gold, silver, zinc, lead and tungsten from
underground mines in the first half of the twentieth century.
Additionally, the district includes Navarre Creek a Carlin-trend
gold discovery which hosts a 6.1 km gold strike length within a 9.8
km(2) area.
Phoenix acquired an 80% interest in the historical Empire Mine
property in 2017 and, based on a total of 320 drill holes, an oxide
resource was completed in late 2017. A NI 43-101 compliant PEA
(preliminary economic assessment) for an open pit heap leach
solvent extraction and electrowinning ("SX-EW") mine was completed
in April 2018. In 2018 a further 8,600 metres in 93 holes was
completed to upgrade the oxide resources, provide samples for
ongoing metallurgical test work, geotechnical and hydrological
studies and condemnation drilling for the heap leach pad site,
waste dump and plant site. An updated NI 43-101 compliant resource
was completed in early May 2020 and October 2020 for all metals.
Present contained metal in all NI 43-101 compliant categories of
resources, measured, indicated and inferred, stand at 355,523
ounces of gold, 129,641 tonnes of copper, 10,133,772 ounces of
silver and 58,440 tonnes of zinc. Following the latest NI 43-101
compliant resource, Phoenix updated its economic model in February
2021 to include the processing of all contained metals through a
two phased approach.
Since acquiring the Empire project, Phoenix has increased the
claim area from 818 acres (3.3 sq km) to 6,877 acres (27.8 sq km),
mainly to the northwest and west, and in so doing has increased the
potential for additional oxide and sulphide copper resources, as
well as the potential for stand-alone gold and silver resources,
along a strike length of approximately 5.4 km towards the other
brownfield mines of the Horseshoe, White Knob and Blue Bird Mines
now within the property boundary. In particular, a new discovery at
Red Star, 330 metres north west of the Empire Mine proposed open
pit, has revealed high grade silver / lead sulphide ore and from
three shallow exploration drill holes a NI 43-101 compliant maiden
resource of 1.6 million silver equivalent ounces was reported.
At Empire, it is estimated that less than 1% of the potential
ore system has been explored to date and, accordingly, there is
significant opportunity to increase the resource through phased
exploration.
More details on the Company, its assets and its objectives can
be found on PXC's website at www. phoenixcopperlimited.com
CHAIRMAN'S STATEMENT
Dear Shareholders
It is with a mixture of pleasure, and relief, not to mention a
large quantity of gratitude, that I present our fourth annual
report as a public company. Reading through last year's statement I
see copper was trading at $4,716/tonne ($2.14/lb.) in April 2020,
compared with its recent peak at over $9,300 ($4.22/lb.). On an
annualized basis, this is tantamount to an $82 billion swing in the
aggregated revenues of copper miners. Similarly, silver is now
trading at $25/oz compared with $11, as the Covid-19 panic set in
over a year ago - a $12 billion swing in global silver mining
income. Although it has been a year of unprecedented volatility,
our Company has nonetheless survived and strengthened its
position.
Thanks to your support, and the skills and efforts of our
technical team, we were able to make substantial increases in the
values of contained metal across all categories. Our October 2020
resource update shows a 51% increase on 2019 in the Measured and
Indicated category at the Empire open pit project, with the value
of contained metals rising by $350 million, in what has been a
transformational year for Phoenix. With the new resource, as
announced in February 2021, which utilizes copper, gold and silver,
we have a robust economic model showing a pre-tax 7.5% NPV of $105
million and an IRR of 57%, using a $7,934/tonne ($3.60/lb) copper
price. This gives us a clear path to go into production at the
Empire open-pit project at the end of next year.
We expect to be going into production just as the surge in
demand for copper, created by incremental demand from the
transition to green energy, builds momentum. The Goldman Sachs
Commodities Research team in their excellent recent note, "Copper
is the new oil," see incremental annual demand for copper,
generated by the construction of wind and solar energy power
plants, electric vehicles, charging stations and such like, rising
to between 5.4 million and 8.7 million tonnes per annum by 2030,
compared with total global annually-mined production of some 22
million tonnes, and total consumption, including scrap, of 30
million tonnes in 2020, ushering in the strongest phase of growth
in copper demand ever seen. If they are correct, and copper rises
to $15,000/tonne ($6.80/lb.), our economic model would show
life-of-mine, post-tax cashflow of $548 million, generating a
post-tax 7.5% NPV of $370 million and an IRR of 198%. Reducing the
discount rate to 5%, a number now widely used by North American
miners, increases the NPV to $419 million. This is at the Empire
starter pit alone. The $50 million capital required for
construction would be repaid in less than one year in such a
scenario, and we are already in discussions with several project
finance funders with a view to providing this, with no further
recourse to the equity markets.
Recent valuable work by Jefferies and Deutsche Bank analysts on
copper supply points out that much of the future supply will come
from projects located in countries not noted for the ease of their
operating conditions or stable tax regimes. The increasing
importance of ESG also means that permitting takes longer, and is
more difficult. The concerns being aired regarding the outcome of
the current elections in Peru, which supplies 11% of the world's
copper, are a case in point.
Astute planning by our technical team meant that Covid-19 did
not affect us as badly as initially feared, in that we were able to
practice social distancing without reducing the numbers of drillers
and geologists, who usually work in small teams. However, later in
the year, we began to experience severe delays at the assay
laboratories and the metallurgical test work facilities, which we
estimate delayed operations by some three to six months.
Nonetheless, we managed to demonstrate successful use of ammonium
thiosulphate ("ATS") - the environmentally-friendly alternative to
cyanide, to recover the gold and silver at Empire, with gold
recoveries exceeding 97% in the laboratory. This is a major
positive for us in terms of permitting and keeping capital spending
down. We also managed to process 90 surface samples at our gold
exploration project at nearby Navarre Creek. Over 50% of these
showed detectable gold grades of up to 0.569 g/t, and we look
forward to an exciting exploration campaign there, as well as at
the adjacent Red Star deposit for silver, starting next month.
Successful aero-magnetic surveys, followed up by drilling campaigns
on these two properties, will increase further our "optionality" in
terms of near-term production decisions and strategy.
Since our year-end, we have completed an GBP18.4 million ($25.4
million) over-subscribed share placing and open offer at 35p, which
we hope will be our last equity raise for quite some time. I would
like to thank all of you who participated and welcome several new
institutional and individual shareholders from both sides of the
ocean. These funds will enable us to make significant progress on
all our projects - the Empire open pit, Red Star high-grade
silver/lead, Navarre Creek gold, the cobalt projects, and - the
ultimate prize, our high-grade copper sulphides underneath the open
pit. With production at Empire and Red Star planned to be funded
for the most part with debt-related instruments and/or metal
offtake finance, we are now several steps closer to our goal of
proving up a world-class deposit of metals essential to the green,
carbon-emission free economy, in a friendly, first world
jurisdiction.
Your support in the recent financing has enabled us to expand
the operations team in Mackay, Idaho as we prepare to submit the
Plan of Operations for the final stages of mine-permitting. In
particular, we welcome Zach Black as General Manager of Konnex
Resources, our Idaho registered operating subsidiary.
I would also like to welcome Ms. Catherine Evans as an
independent non-executive director. Catherine has over twenty years
of experience in institutional investment sales in the UK, Europe,
Hong Kong and South Africa. She started her career with a US
brokerage firm, before joining Pictet Asset Management. She then
spent ten years working in alternatives, specifically hedge funds,
before joining the founding team of Fundsmith as Institutional
Sales Director prior to the launch of the highly successful
Fundsmith Equity Fund.
As we expand and look to develop several of our projects
simultaneously, the necessity of having high quality advice becomes
increasingly important. To this end we have formed an advisory
board, to which we can appoint persons whose input we would value.
Our founder, former CEO and Head of Investor Relations, Dennis
Thomas, has kindly agreed to be one of the first members, while
continuing his executive role as head of IR.
We are also delighted that Harry Kenyon-Slaney has joined our
newly formed advisory board. He is Chairman of Gem Diamonds
Limited, a non-executive director of Sibanye-Stillwater Ltd, a
member of the advisory board of Schenck Process AG and a senior
advisor to McKinsey & Co. Harry, who is a geologist by
training, has more than 37 years of experience in the mining
industry, principally with Rio Tinto PLC. As a member of Rio
Tinto's Group Executive committee, he held the roles of Chief
Executive - Energy, and before that, Chief Executive - Diamonds and
Minerals.
Finally, I would like to thank the citizens of Mackay, Idaho for
their continued support and enthusiasm as we move into the
development phase at Empire.
I look forward to updating you all as another exciting year
unfolds for our Company.
Marcus Edwards-Jones
Executive Chairman
4 May 2021
CHIEF EXECUTIVE OFFICER'S REPORT
Principal activities and review of the business
The Company entered 2020 with a renewed enthusiasm for the suite
of metals at the Empire Mine and surrounding properties. The
decline in copper price throughout 2019 and early 2020 focused our
attention on the gold, silver, lead, and zinc resources that had
been significantly increased in the 2019 resource update and were
the subject of our consulting geologist Nigel Maund's in-depth
study and subsequent report. Our increased focus on the
polymetallics at Red Star and Empire led to successful drilling
programmes at both projects. The Empire drilling programme resulted
in the October 2020 open pit resource update adding over $350
million in gross metal value from the May 2019 resource, and the
Red Star drilling programme confirming the orientation and
continuation of the high-grade silver and lead system discovered by
Phoenix geologists in 2018.
This focus on the upgraded gold and silver resources, and the
need to develop a process design for their recovery, ultimately led
to successful recovery testing using the non-toxic and
environmentally friendly cyanide alternative ammonium thiosulfate
("ATS"). Initial ATS gold recoveries exceeded 97% in the
laboratory. These positive results have advanced the testing
programme to include larger sample volumes and sample frequencies
and continues as we move toward feasibility and development. An
updated open pit economic model was developed using the 2020
drilling and metallurgical data. The model shows an impressive
"starter" operation containing 14.3 million tonnes of Measured
& Indicated ore processed in an initial copper and zinc phase
followed by a gold and silver processing phase over a 10-year
operating life that delivers revenue of $784 million with a pre-tax
7.5% NPV of $105 million and an IRR of 57%, using a $3.60 copper
price. This is a significant increase in the NPV from the previous
August 2019 model and is a testament to the efforts of the Phoenix
team to understand and develop the polymetallic system from the
exploration stage to the pre-development stage.
In order to transition the Empire Mine oxide open pit from the
exploration stage to the pre-development stage, the Company filled
a key position by appointing Zach Black as General Manager of
Operations, to help build and direct the team on the ground in
Idaho as we prepare to submit the Plan of Operations for mine
permitting, and also continue with substantial exploration efforts
at Red Star, Horseshoe, and in particular at the Company's latest
significant accomplishment, the recently mapped and sampled Navarre
Creek gold project. Assay results from surface samples collected at
Navarre Creek in 2020 showed gold values above detection limits in
53 of 90 samples collected and a high of 0.569 grams/tonne ("g/t")
gold in a volcanic-hosted geological terrane similar to the
volcanic terranes of the Carlin Trend in Nevada, USA.
The variety and grade of mineralization encountered thus far on
the many claim blocks that make up the Empire group is providing
Phoenix with the unique opportunity to exploit metals other than
just copper, allowing us some flexibility as metals markets
fluctuate. 2020 was witness to copper prices ranging from near
$2.00/lb to the current $4.00/lb, gold swinging from $1600/oz to
above $2,000/oz, and silver climbing from $14.00/oz to over
$26.00/oz. Even zinc had a bull run from $0.85/lb to nearly
$1.30/lb. We believe the mix of metals at Empire puts us in a good
position to weather any fluctuating market. With that in mind, the
Company continues to optimise and refine the engineering and design
aspects of the project in preparation for submitting the Plan of
Operations this year and moving into development and then
production, targeted for late next year.
The Company is well positioned, with a variety of metallic
resources with early production and exploration potential. Careful
logistical planning and the team's strict adherence to the
Company's Covid-19 protocols were successful in keeping the
projects running smoothly and minimizing interruptions, allowing
the team to accomplish the goals outlined for the year. In March
2021 the Company completed an over-subscribed $25.4 million
financing and is now poised to join the ranks of global metal
producers at a time when U.S. Administration backed initiatives in
electrification and manufacturing, and the desire for non-toxic
manufacturing methods, are at the forefront.
Empire Mine - Polymetallic Open Pit Oxide Deposit
In October 2020, an updated NI43-101 compliant resource was
completed by Hardrock Consulting (HRC) and reported for the
polymetallic Empire Mine open pit oxide deposit. The updated
resource showed a 51% increase in the Measured and Indicated
category from the previous year's resource. Including the Inferred
resources, the Empire open-pit oxide deposit now contains 129,641
tonnes of copper, 58,440 tonnes of zinc, 10,133,772 ounces of
silver and 355,523 ounces of gold.
Mineral Resource Statement for Empire Mine, after Hard Rock Consulting
October 2020
------------------------------------------------------------------------------------------------------
CLASS Tonnes Cu Average Grade Metal Content
Equiv
%
----------- ----------- ------- --------------------------- -------------------------------------------------
Cu Zn Ag Au Cu Zn Ag Au Cu Equiv
----------- ----------- -------
% % g/t g/t tonnes tonnes ozs ozs Tonnes
----------- ----------- -------
Measured 8,289,719 0.81 0.42 0.22 11.4 0.327 34,655 18,160 3,031,791 87,036 67,013
----------- ----------- ----- ----- ------- ----------
Indicated 14,619,340 0.72 0.36 0.18 9.7 0.322 52,888 25,711 4,563,407 151,370 105,899
M+I 22,909,059 0.75 0.38 0.19 10.3 0.324 87,543 43,871 7,595,198 238,406 172,912
----------- ----- ----- ------- ----------
Inferred 10,612,556 0.75 0.4 0.14 7.4 0.343 42,098 14,569 2,538,574 117,117 79,296
----------- ----------- ----- ----- ------- ---------- ---------
Phoenix is continuing down the feasibility and permitting
pathways with the polymetallic resource, most recently completing
two years of environmental studies directly applicable to the
permitting and mine planning. Discussions are underway with
potential debt financiers to construct the project, and production
is targeted for late 2022.
Red Star - High-grade Silver
Red Star is a high-angle silver-lead vein system hosted in
andradite-magnetite and located 330 metres north-northwest of the
Empire oxide pit. Red Star was identified from a 20-metre wide
surface outcrop across a skarn structure. Surface mineralisation is
a mix of copper and iron oxides and sulphides, with strong
chrysocolla and bornite showings, exposed in a heavily timbered
canyon. In 2018, three reverse circulation ("RC") drill holes were
drilled on the target and assay results reported the presence of
high-grade lead and silver sulphides including intercepts of 20%
lead and 1,111 g/t silver. In early May 2019, the Company announced
a small maiden Inferred sulphide resource of 103,500 tonnes,
containing 577,000 ounces of silver, 3,988 tonnes of lead, 957
tonnes of zinc, 338 tonnes of copper, and 2,800 ounces of gold.
Class Tons Ag Ag Au Au Pb Pb Zn Zn Cu Cu
(x1000) g/t Oz g/t oz % lb % lb % lb
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
(x1000) (x1000) (x1000) (x1000) (x1000) % (x1000)
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
Inferred 114.13 173.4 577.3 0.851 2.8 3.85 8,791.20 0.92 2,108.80 0.33 745
-------- ------ -------- ------ -------- ----- --------- ----- --------- ----- --------
Following the estimation of the Inferred resource, a second
ten-hole diamond drilling programme was completed in 2020. The
assay results from that programme confirmed the presence of the
high-grade silver and lead veins drilled in 2018, but also
confirmed the need for greater understanding of the structural
geology in order to direct further exploration. An extensive review
of the structural geology of Red Star was conducted in 2020 and a
ground-based magnetics survey will be performed in Q2 2021 prior to
a 2021 diamond drilling programme.
Navarre Creek - Volcanic-Hosted Gold Project
The Navarre Creek claim block is located to the north west of
the Empire Mine and was acquired in 2019 as a gold exploration
project with geology similar to the volcanic-hosted gold fields on
the Carlin Trend in Nevada, home to several multimillion- ounce
gold deposits.
During the summer of 2020, the Phoenix exploration team mapped
and sampled the Company's Navarre Creek property, which is
comprised of 9.79 square kilometres (2,420 acres) of unpatented
mining claims and is located approximately five kilometres
north-northwest of the Empire Mine. 90 rock chip and grab samples
were collected in the hydrothermally altered volcanic rocks that
make up the Navarre Creek claims and sent to ALS Laboratories in
Reno, Nevada for geochemical analysis.
Of the 90 samples, 53 were above the detection limit for gold
with a high of 0.569 g/t, and 25 above the detection limit for
silver. There was also a strong correlation between elevated gold
values and elevated antimony values, typical in Carlin-type
epithermal gold systems. With the exception of one sample, all
samples with a gold value greater than 0.1 g/t occur within the
same alteration type, that being predominantly a jasperoid-hosted
quartz stockwork and micro-veining system. This provides valuable
information for future sampling and drill targeting. The quartz
stockworking and micro-veining appear to occur predominantly in
felsic volcanic tuff units in the Navarre Creek area. One anomalous
sample, 32519, registered a gold value of 0.387 g/t, in a magnetite
skarn sample located on the southern end of the Navarre Creek claim
block where the skarn body occurs as subcrop through the surface
volcanics tuffs. Additionally, the presence of limestone in surface
float near the skarn sample location is evidence that the Paleozoic
sedimentary rocks that occur at the Empire Mine may be near the
surface. The Empire orebody is partly comprised of a magnetite
skarn body hosted in Paleozoic limestone. Additional sampling is
planned to be conducted in the area around sample 32519, as well as
a ground magnetics survey. It was also noted that volcanic
outcropping across the Navarre Creek area is strongly weathered and
highly leached to depths of two to four metres.
A sampling of the assay results from rock chip and channels from
the 2020 exploration season is presented in the table below:
SAMPLE Gold Silver Antimony
ID g/t g/t g/t
------ ------- ---------
32452 0.31 4.2 119
------ ------- ---------
32453 0.1 3.9 3160
------ ------- ---------
32477 0.139 2.6 45
------ ------- ---------
32482 0.256 7 36
------ ------- ---------
32483 0.181 4.4 39
------ ------- ---------
32485 0.569 7.3 85
------ ------- ---------
32499 0.049 10.9 9
------ ------- ---------
32510 0.047 2.8 101
------ ------- ---------
32511 0.09 2.6 933
------ ------- ---------
32519 0.387 ND 87
------ ------- ---------
32532 0.21 ND 11
------ ------- ---------
32539 0.077 ND 15
------ ------- ---------
32540 0.115 3.2 70
------ ------- ---------
An initial RC drilling programme at Navarre Creek is planned for
Q3 2021.
Empire Mine Expansion - Horseshoe, Whiteknob, and Windy
Devil
We have made a point of focusing our efforts on our flagship
Empire Mine projects. However, we have also increased our land
position from time-to-time as our geologists recognize prospective
and strategic opportunities. At the time of the Company's IPO in
mid-2017, our Empire Mine property consisted of 818 acres. Since
then, we have increased the core Empire claim group to 3,297 acres
by expanding north to the former Horseshoe and Whiteknob Mines and
onto Windy Devil. This expansion covers approximately 30 historic
adits, shafts and prospects, which exhibit geology and mineralogy
similar to Red Star.
Empire Mine - Polymetallic Sulphide Potential
The Red Star vein system appears to be a distal, near-surface
expression of a deeper, copper rich sulphide vein system that lies
below the oxide-copper open pit and was mined extensively
underground until the 1940s. Two deep diamond drill holes drilled
in late 2017 confirmed the presence of higher-grade sulphide
mineralisation in the skarn structures at depth. Both of the core
holes intersected mineralised skarn over much of their length and
the analytical data from both drill holes intersected numerous
significant intervals of copper, gold, silver, zinc, lead, and
tungsten throughout their depths. The tungsten values were
particularly interesting as they positively reinforced the
Company's consulting geologist's predictions of the Empire system
being the uppermost horizon of a larger molybdenum-tungsten
porphyry. In 2018 five drill holes intercepted copper sulphide
mineralisation. One hole returned 5.53% copper, 7.67 g/t gold, and
120 g/t silver, and was further north of any historical underground
mining, whilst another returned 5.19% copper adjacent to historical
underground workings. The gold and silver grades generally are
major considerations, ranging to 7.93 g/t gold and 256 g/t silver.
Further drilling into the underground sulphides is planned for Q3
2021.
Borah Resources - Idaho Cobalt Belt
Borah Resources is a 100% Idaho registered subsidiary of the
Company. Comprised of two strategically located properties,
Redcastle and Bighorn, the Company believes that they are an
important asset in a time of global electrification and the rarity
of cobalt resources from first world jurisdictions, as well as
being strategically located in the USA's only prospective cobalt
region, the Idaho Cobalt Belt, approximately 100 miles north of the
Empire Mine. In 2018 we announced the results of our 2017
reconnaissance programme of 46 surface grab samples which gave
cobalt values ranging from 2 ppm to 0.31% cobalt.
The Company continues to keep the claim blocks in good standing
whilst we consider the optimal way forward to develop these
properties, including perhaps cooperation with a third party.
Outlook
Despite the challenges that we have all faced this year, my
outlook on the Company has never been brighter or more positive.
The Phoenix team embraced these challenges and managed to
accomplish everything in the year's operational plan. The updated
economic model for the Empire open pit is coinciding with elevated
copper and silver markets, a stable zinc market, and a respectable
gold price. The new administration in Washington D.C. is actively
encouraging the clean energy revolution which would include the
development of metals essential for electrification projects. Our
Empire copper resources are ideal for that initiative, and our use
of environmentally friendly ATS for the processing of precious
metals shows our desire to align with safe and responsible
processing practices.
I expect to see these positive trends continue as we move
further away from the challenges of 2020. The completion of our
latest economic model provides us with a clear path through
feasibility and development, and the variety of metals in our
Empire resource provides some optionality as we move forward. The
exploration potential of our other projects, including the Red Star
high-grade silver vein system, the Empire polymetallic sulphide
vein system, the very prospective volcanic-hosted gold system at
Navarre Creek, and two strategically located cobalt properties, all
within the same geopolitically stable, pro-mining jurisdiction, add
significant future value beyond our flagship Empire Mine.
It is also important to mention as we move into the Plan of
Operations permitting stage at Empire, that we have collected three
years of extensive baseline environmental data, including the
research of flora, wildlife, hydrological, and archaeological
studies, which indicate that we have no critical habitat for
threatened or endangered plant and wildlife species, including Sage
Grouse. The studies also concluded that no legacy impacts to
surface or groundwater occurred as a result of any historical
mining operations on the Empire Mine properties. Archaeological
studies were also unable to identify any significant cultural
artefacts on the Empire property. These findings are important as
they clear the path to permitting of Red Star, the Empire
oxide-copper deposit, and the deeper sulphide system. That is three
metal-rich systems with favourable environmental conditions.
Our successes thus far are related directly to the local
community support we receive from the citizens of Custer County,
Idaho. We are fortunate to work in an area rooted so deeply in
mining and with a population understanding of the economic benefits
of the industry and so incredibly supportive of our efforts.
Key performance indicators ('KPIs')
To date the Group has been focused on the delivery of the
project evaluation work programmes to assess the available mineral
resources and the extraction methods to apply, each within the
available financial budgets. This work will continue until the
relevant feasibility studies are completed, and construction
commences.
At that stage the Group will consider and implement appropriate
operational performance measures and related KPIs as the objective
of recommencing commercial production at the Empire Mine nears
fruition.
Conclusion
We are especially motivated by the upward trend in the copper
price, and the positive effect it has had on our project. With the
successful rollout of vaccination programs, the global interest in
electrification and green metals, and what appears to be the signs
of a return to "normal", Phoenix is well positioned in terms of
timing to transition seamlessly into development. We are also well
financed as a result of the recent equity fund raising.
In conclusion I would like to thank the dedicated and highly
motivated team of professional staff, consultants and advisers,
community liaisons, shareholders, and directors who continue to put
forth a significant amount of effort, often away from home and
family, in order to ensure the Company's success. I look forward to
providing further updates as we continue our exploration and
development programmes during 2021.
On behalf of the board
Ryan McDermott
Chief Executive Officer
4 May 2021
Consolidated income statement Year Year
Ended Ended
31 December 31 December
2020 2019
Continuing operations Note $ $
Revenue 4 - -
Exploration & evaluation expenditure - (3,429)
------------- -------------
Gross loss - (3,429)
------------- -------------
Administrative expenses (922,647) (1,101,811)
Loss from operations (922,647) (1,105,240)
Finance income - -
Finance costs (49,203) (22,911)
Loss before taxation (971,850) (1,128,151)
Tax on loss on ordinary activities - -
------------- -------------
Loss for the year (971,850) (1,128,151)
------------- -------------
Loss attributable to:
Owners of the parent (956,656) (1,116,563)
Non-controlling interests (15,194) (11,588)
------------- -------------
(971,850) (1,128,151)
------------- -------------
Loss per share attributable to owners
of the parent:
Basic and diluted EPS expressed in
cents per share 5 (1.66) (2.76)
------- -------
Consolidated statement of comprehensive income Year Year
Ended Ended
31 December 31 December
2020 2019
$ $
Loss for the year (971,850) (1,128,151)
------------- -------------
Total comprehensive income attributable
to:
Owners of the parent (956,656) (1,116,563)
Non-controlling interests (15,194) (11,588)
---------- ------------
(971,850) (1,128,151)
---------- ------------
Consolidated statement of financial position
31 December 31 December
2020 2019
Note $ $
Non-current assets
Property, plant and equipment -
mining property 6 14,789,004 11,671,660
Intangible assets 7 276,895 246,895
------------ ------------
15,065,899 11,918,555
------------ ------------
Current assets
Trade and other receivables 8 122,300 267,932
Cash and cash equivalents 1,146,490 210,591
------------ ------------
1,268,790 478,523
------------ ------------
Total assets 16,334,689 12,397,078
------------ ------------
Current liabilities
Trade and other payables 9 193,937 282,900
Borrowings 10 1,549,000 -
------------ ------------
1,742,937 289,900
------------ ------------
Non-current liabilities
Borrowings 10 - 800,000
Provisions for other liabilities 11 757,702 757,702
------------ ------------
752,702 1,557,702
------------ ------------
Total liabilities 2,500,639 1,840,602
------------ ------------
Net assets 13,834,050 10,556,476
------------ ------------
Equity
Ordinary shares 12 - -
Share Premium 19,251,964 15,627,730
Retained loss (5,517,549) (5,186,083)
Foreign exchange translation reserve (18,588) (18,588)
Equity attributable to owners of
the parent 13,715,827 10,423,059
Non-controlling interests 118,223 133,417
------------ ------------
Total equity 13,834,050 10,556,476
------------ ------------
Consolidated Foreign
statement of exchange
changes Ordinary Share Retained Translation Non-controlling Total
in equity shares premium loss reserve Total interest equity
$ $ $ $ $ $ $
At 1 January
2019 - 13,362,353 (4,338,436) (18,588) 9,005,329 145,005 9,150,334
Loss for the
year - - (1,116,563) - (1,116,563) (11,588) (1,128,151)
Total
comprehensive
income for
the year - - (1,116,563) - (1,116,563) (11,588) (1,128,151)
--------- ------------ ------------ ------------ ------------ ---------------- ------------
Shares issued
in the period - 2,540,200 - - 2,540,200 - 2,540,200
Share issue
expenses - (274,823) - - (274,823) - (274,823)
Share-based
payments - - 268,916 - 268,916 - 268,916
Total
transactions
with owners - 2,265,377 268,916 - 2,534,293 - 2,534,293
--------- ------------ ------------ ------------ ------------ ---------------- ------------
At 31 December
2019 - 15,627,730 (5,186,083) (18,588) 10,423,059 133,417 10,556,476
--------- ------------ ------------ ------------ ------------ ---------------- ------------
At 1 January 2020 - 15,627,730 (5,186,083) (18,588) 10,423,059 133,417 10,556,476
Loss for the year - - (956,656) - (956,656) (15,194) (971,850)
------------ --------- ----------- --------- -----------
Total comprehensive income for
the year - - (956,656) - (956,656) (15,194) (971,850)
----------- ------------ --------- ----------- --------- -----------
Shares issued in the period - 3,908,477 - - 3,908,477 - 3,908,477
Share issue expenses - (284,243) - - (284,243) - (284,243)
Share-based payments - - 625,190 - 625,190 - 625,190
Total transactions with owners - 3,624,234 625,190 - 4,249,424 - 4,249,424
----------- ------------ --------- ----------- --------- -----------
At 31 December 2020 - 19,251,964 (5,517,549) (18,588) 13,715,827 118,223 13,834,050
----------- ------------ --------- ----------- --------- -----------
Consolidated statement of cash flows 31 December 31 December
2020 2019
$ $
Cash flows from operating activities
Loss before tax (971,850) (1,128,151)
Adjustments for:
Share-based payments 229,904 268,916
(741,946) (859,235)
Decrease/(increase) in trade and other receivables 145,632 (55,416)
Decrease in trade and other payables (88,963) (218,402)
------------ ------------
Net cash (used)/generated from operating activities (685,277) (1,133,053)
------------ ------------
Cash flows from investing activities
Purchase of intangible assets (30,000) (39,735)
Purchase of property, plant and equipment (2,722,058) (1,794,962)
(2,752,058) (1,834,697)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares 3,908,477 2,540,200
Share-issue expenses (284,243) (274,823)
Proceeds from the issue of loan notes 879,000 800,000
Repayment of loan notes (130,000) -
Net cash generated from financing activities 4,373,234 3,065,377
------------ ------------
Net increase in cash and cash equivalents 935,899 97,627
Cash and cash equivalents at the beginning of
the year 210,591 112,964
Cash and cash equivalents at the end of the
year 1,146,490 210,591
------------ ------------
Significant non-cash transactions:
During the year the Directors capitalised $109,770 of fees into
shares (2019: $180,960), and an amount of $395,286 (2019: $nil) in
respect of share-based payments charge was capitalised into mining
property.
1 General information
Phoenix Copper Limited (formerly Phoenix Global Mining Limited)
is engaged in exploration and mining activities, primarily precious
and base metals, primarily in North America. The Company is domiciled
and incorporated in the British Virgin Islands on 19 September
2013 (registered number 1791533). The address of its registered
office is OMC Chambers, Wickhams Cay 1, Road Town, Tortola VG1110,
British Virgin Islands. The Company is quoted on London's AIM (ticker:
PXC) and trades on New York's OTCQX Market (ticker: PXCLF).
2 Going concern
The Group has no income and meets its working capital requirements
through raising development finance. In common with many businesses
engaged in exploration and evaluation activities prior to production
and sale of minerals the Group will require additional funds and/or
funding facilities in order to fully develop its business plan.
The directors believe that such funds are likely to come from a
combination of further equity issues and the arrangement of appropriate
debt and/or offtake finance arrangements. Ultimately the viability
of the Group is dependent on future liquidity in the development
period and this, in turn, depends on the availability of funds.
Discussions are ongoing to secure appropriate structured finance
for the development of the Empire Mine and, as set out in note
24, since the year end the Company has raised a further $25.39
million before expenses by way of a subscription, placing and open
offer to new and existing shareholders, and a further $2.72 million
from the issue of unsecured loan notes.
The Covid-19 pandemic has had a significant, immediate impact on
the operations and funding of many businesses both in the USA and
globally. However, the Group has recently raised funds, has very
few operational employees in Idaho, and the Empire Mine is geographically
remote from areas significantly currently impacted by the pandemic.
The directors prepare annual budgets and forecasts in order to
ensure that they have sufficient liquidity in place and that they
comply with the terms and conditions of their obligations in relation
to the ongoing development of the mining assets and the Group's
environmental and other commitments.
In addition, in response to the rapidly evolving Covid-19 situation,
the directors, in formulating the plan and strategy for the future
development of the business, have considered a period beyond that
for which formal budgets and forecasts are prepared.
At the date of approval of these financial statements it is not
clear how long the current circumstances are likely to last and
what the long-term impact will be. However, having regard to the
above, and based on funds recently raised and their latest assessment
of the budgets and forecasts for the business of the Group, the
directors believe it appropriate to adopt the going concern basis
of accounting in preparing the financial statements.
3 Basis of preparation
This preliminary information does not comprise full financial statements.
The significant accounting policies and other information contained
within this preliminary announcement has been extracted from the
Company's audited financial statements a copy of which is available
on the Company's website: www.pgmining.com.
The financial information is presented in US dollars.
4 Revenue
The Group is not yet producing revenues from its mineral exploration
and mining activities. The Company charged its subsidiary entities
$535,000 (2019: $563,476) in respect of management services provided.
5 Loss per share 31 December 31 December
2020 2019
$ $
Loss attributable to the parent used in calculating
basic and diluted loss per
Share (956,656) (1,116,563)
------------ ------------
Number of shares
Weighted average number of shares for the purpose
of basic earnings
per share 57,527,529 40,862,399
------------ ------------
Weighted average number of shares for the purpose
of diluted earnings
per share 57,527,529 40,862,399
------------ ------------
Basic loss per share (US cents per share) (1.66) (2.76)
------------ ------------
Diluted loss per share (US cents per share) (1.66) (2.76)
------------ ------------
Basic earnings per share amounts are calculated by dividing net
loss for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the year.
Where the Group has incurred a loss in a year or period the
diluted earnings per share is the same as the basic earnings per
share as the loss has an anti-dilutive effect.
The Company has potentially issuable shares of 11,264,978 (2019:
10,265,195) all of which relate to the potential dilution in
respect of warrants and share options issued by the Company.
6 Non-current assets Mining Total
Property
$ $
At 1 January 2019 9,876,697 9,876,697
Additions 1,794,963 1,794,963
------------ ------------
At 31 December 2019 11,671,660 11,671,660
------------ ------------
At 1 January 2020 11,671,660 11,671,660
Additions 3,117,344 2,952,009
------------ ------------
At 31 December 2020 14,789,004 14,623,669
------------ ------------
Net book value
At 1 January 2019 9,876,697 9,876,697
------------ ------------
At 31 December 2019 11,671,660 11,671,660
------------ ------------
At 31 December 2020 14,789,004 14,789,004
------------ ------------
Mining property assets relate to the past producing Empire Mine
copper - gold - silver - zinc project in Idaho, USA. The Empire
Mine has not yet recommenced production and no depreciation has
been charged in the statement of comprehensive income. There has
been no impairment charged in any period due to the early stage in
the Group's project to reactivate the mine.
7 Intangible assets
Exploration
and evaluation
expenditure
$
At 1 January 2019 207,160
Additions 39,735
----------------
At 31 December 2019 246,895
----------------
At 1 January 2020 246,895
Additions 30,000
----------------
At 31 December 2020 276,895
----------------
Exploration and evaluation expenditure relates to the Bighorn
and Redcastle properties on the Idaho Cobalt Belt in Idaho, USA.
The properties are owned by Borah Resources Inc, a wholly-owned
subsidiary of the parent entity, registered and domiciled in
Idaho.
8 Trade and other receivables
31 December 31 December
2020 2019
$ $
Other receivables 68,847 243,928
Prepaid expenses 53,453 24,004
122,300 267,932
------------- -------------
There were no receivables that were past due or considered to be
impaired. There is no significant difference between the fair value
of the other receivables and the values stated above.
9 Trade and other payables
31 December 31 December
2020 2019
$ $
Trade creditors 156,116 178,093
Other creditors 8,355 100,270
Accrued interest 29,466 4,537
------------ ------------
193,937 282,900
------------ ------------
All liabilities are payable on demand or have payment terms of
less than 90 days. The Company is not exposed to any significant
currency risk in respect of its payables.
10 Borrowings
31 December 31 December
2020 2019
$ $
Current liabilities
Loan notes 1,549,000 -
1,549,000 -
------------- ------------
Non-current liabilities
Loan notes - 800,000
---------------- ------------
The Company has outstanding loan notes with a total redemption
value of $1,549,000 (2019: $800,000).
$929,000 relates to 12% unsecured loan notes, with a final
redemption date of 30 September 2021. Andre Cohen, a director of
the Company, is the beneficial owner of $75,000 of these loan
notes. Since the year end $741,500 of loan notes have been repaid,
including $50,000 due to Andre Cohen..
The Company has also issued an unsecured loan note in the amount
of $620,000 (GBP500,000), repayable on 31 March 2021 plus a fixed
rate coupon equivalent to 6.5% of principal value. Since the year
end this amount has been repaid, and the Company has issued a new
unsecured loan note in the amount of $2.72 million (GBP2 million),
repayable on 9 November 2021 plus a fixed rate coupon equivalent to
6.0% of principal value.
11 Provisions
31 December 31 December
2020 2019
$ $
Decommissioning provision 100,000 100,000
Royalties payable 657,702 657,702
------------ ------------
757,702 757,702
------------ ------------
There has been no change to provisions in the year ended 31
December 2020.
The provision of $100,000 for decommissioning the Empire Mine is
based on the directors' estimate after taking into account
appropriate professional advice.
The other provision of $657,702 arises from a business
combination in 2017 and comprises potential royalties payable in
respect of future production at the Empire Mine. This liability
will only be payable if the Empire Mine is successfully restored to
production and will be deducted from the royalties payable. The
amount of the provision will be reassessed as exploration work
continues and also on commencement of commercial production.
12 Share capital
Group and Group and
Company Company
Number Number
2020 2019
Number of ordinary shares of no par value
At the beginning of the year 44,784,881 33,078,999
Issued in the year 18,521,866 11,705,882
At the end of the year 63,306,747 44,784,881
--------------- -----------
The Company does not have an authorised capital and is
authorised to issue an unlimited number of no par value shares of a
single class.
In the year the Company issued 18,521,866 ordinary shares at an
average issue price of $0.21 per share to raise $3.9 million before
expenses of issue. All issued shares were fully paid.
Since the year end the Company has issued a further 52,567,518
shares at $0.49 (GBP0.35) per share by way of a subscription,
placing and open offer to new and existing shareholders. The
Company currently has 116,313,396 ordinary shares in issue.
The ordinary shares in the Company have no par value. All
ordinary shares have equal voting rights in respect of shareholder
meetings. All ordinary shares have equal rights to dividends and
the assets of the Company.
The Company has issued warrants to subscribe for additional
shares to existing shareholders and loan note holders. Each warrant
provides the right to the holder to convert one warrant into one
ordinary share of no-par value at exercise prices ranging from
GBP0.16 to GBP0.60. At 31 December 2020 the number of warrants in
issue was 7,589,978 (2019: 7,115,195).
Since the year end a further 4,812,396 warrants have been issued
with an exercise price of GBP0.385, and 439,132 warrants have been
exercised.
The Company has issued options to subscribe for additional
shares to the directors and senior management of the Group. Each
option provides the right to the holder to subscribe for one
ordinary share of no par-value, subject to the vesting conditions,
at exercise prices of GBP0.17 and GBP0.30. At 31 December 2020 the
number of options in issue was 3,675,000 (2019: 3,150,000).
13 Share-based payments
The Company has issued 7,589,978 (2019: 7,115,195) warrants to
subscribe for additional share capital of the Company. Each warrant
entitles the holder to subscribe for one ordinary equity share in
the Company. The right to convert each warrant is
unconditional.
Additionally, the Company has issued 3,675,000 (2019: 3,150,000)
share options to directors and senior employees of the Company.
Each share option entitles the holder to subscribe for one ordinary
equity share in the Company once the vesting conditions have been
satisfied. The right to subscribe for ordinary shares in the
Company is subject to a minimum 6 month holding period for 50% of
the share options and up to 24 months holding period for the
balance of 50% of the share options.
In the periods presented the Company has settled remuneration
liabilities by the issue of equity in lieu of cash payments for
services but has not operated any equity-settled share based
incentivisation schemes for employees.
Equity-settled share-based payments are measured at fair-value
(excluding the effect of non-market-based vesting conditions) as
determined through use of the Black-Scholes technique, at the date
of issue. The warrants were issued as exercisable from the date
they were issued and there are no further vesting conditions
applicable.
Warrants issued Weighted 31 December 31 December
Average 2020 2019
Exercise
price Number Number
At the beginning of the year GBP0.30 7,115,195 1,896,206
Issued in the year GBP0.16 386,000 -
Issued in the year GBP0.18 905,467 -
Issued in the year GBP0.20 - 800,000
Issued in the year GBP0.28 159,541 4,418,989
Exercised in the year GBP0.18 (375,000) -
Exercised in the year GBP0.20 (100,000) -
Exercised in the year GBP0.28 (369,225) -
Lapsed GBP0.20 (132,000) -
At the end of the year GBP0.29 7,589,978 7,115,195
------------ ------------
Share options issued Weighted 31 December 31 December
average 2020 2019
Exercise
price Number Number
At the beginning of the year GBP0.28 3,150,000 1,225,000
Issued in the year GBP0.30 1,750,000 1,925,000
Lapsed in the year GBP0.45 (1,225,000) -
------------ ------------
At the end of the year GBP0.23 3,675,000 3,150,000
------------ ------------
The total share-based payment charge for all warrants and
options in the year was $625,190 of which $229,904 has been charged
to profit and loss and $395,286 allocated to Mining Property (2019:
$268,916 and $nil respectively). The share-based payment charge was
calculated using the Black-Scholes model. All warrants issued vest
immediately on issue. Share options vest up to a 24-month period
from the date of issue.
Volatility for the calculation of the share-based payment charge
in respect of both the warrants and the share-options issued was
determined by reference to movements in the Company's quoted share
price on AIM.
The inputs into the Black-Scholes model for the warrants and
share options issued and warrants modified in 2020 were as
follows:
31 December 31 December
2020 2020
Warrants Share options
issued issued
Weighted average share price at grant date GBP0.26 GBP0.28
Weighted average exercise prices GBP0.19 GBP0.30
Expected volatility 133.99% 140.97%
2.65 0.46 to
Expected life in years 0.96
Weighted average contractual life in years 2.65 0.71
Risk-free interest rate 1.5% 1.5%
Expected dividend yield 0% 0%
Fair-value of warrants and options granted GBP0.18 GBP0.11
(pence)
------------ --------------
The warrants were issued in eight placements. The share prices
at the date of grant were between GBP0.11 to GBP0.32. The warrant
exercise prices at the date of grant were between GBP0.16 to
GBP0.28. Additionally, the exercise dates for 1,196,462 existing
warrants with exercise prices between GBP0.21 to GBP0.40, and
expiring during the year, were extended to 30 June 2022. These
extensions have been valued as new instruments as at 24 June 2020
and the fair-values included in the charge for the year. The share
options were issued on the same date in two equal tranches with
lives of 0.46 and 0.96 years respectively, the share price at the
date of grant was GBP0.28 and the exercise price for both tranches
was GBP0.30.
The expected volatility ranged from 53.37% to 144.93%. The
fair-values of warrants issued in the year were from GBP0.02 to
GBP0.29. The expected life of the outstanding warrants and options
ranged from 0.46 to 3.09 years.
Share-based payments allocation of
charge 31 December 31 December
2020 2019
$ $
On issue of share options 210,924 38,622
On issue of warrants 331,701 229,736
On modification of warrants 82,565 558
------------ ------------
Total charge 625,190 268,916
------------ ------------
Allocation:
Mining property 395,286 -
Administrative expenses 229,904 268,916
------------ ------------
625,190 268,916
------------ ------------
14 Events after the reporting date
Since the year end the Company has raised a further $25.39
million before expenses by way of a subscription, placing and open
offer to new and existing shareholders, and a further $2.72 million
from the issue of unsecured loan notes. The Company has also repaid
$1.36 million of existing unsecured loan notes.
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