TIDMPXC
RNS Number : 8151I
Phoenix Copper Limited
17 August 2021
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
17 August 2021
Phoenix Copper Limited
("Phoenix" or the "Company", together with subsidiaries the
"Group")
Interim Results
Phoenix Copper Limited (AIM: PXC; OTCQX: PXCLF), the AIM quoted
USA focused base and precious metals emerging producer and
exploration company, is pleased to announce its unaudited interim
results for the six months ended 30 June 2021 (the "period").
Year to date highlights
Corporate & Financial
- $26.75 million raised during the period
- The Company reports a profit for the period of $235,467 (2020:
loss of $265,976), and a consolidated Group loss of $199,481 (2020:
loss of $569,759)
- Net assets increased to $37.70 million (2020: $13.51 million),
including cash of $22.88 million (2020: $2.05 million)
- Investment in Empire Mine increased to $18.61 million (2020: $12.82 million)
- 65% decrease in administrative expenses to $295,368 (2020:
$540,391), including non-cash share based payments charge of
$90,953 (2020: 139,221)
- Company loan to Empire Mine operating subsidiary increased to
$15.33 million (2020: $9.65 million)
- $1.36 million of unsecured loan notes repaid during the
period, and $2.72 million repaid since the period end. Outstanding
loan notes now total $187,500
- Catherine Evans appointed as an Independent Non-Executive
Director, and as Chairman of newly created ESG & Sustainability
Committee
- Harry Kenyon-Slaney appointed to the Advisory Board
- BNY Mellon mandated to establish and maintain an American
Depositary Receipt Program, trading on New York's OTCQX Market
Operational
- Empire Mine open pit feasibility model completed:
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 / lb copper
price)
- Plan of Operations filed with the regulatory authorities for
review and approval for construction and operation of the Empire
Mine open pit
- Empire land holdings increased by 2,317 acres to 8,034 acres
(32.51 square kilometres), including an additional 1,157 acres at
the Navarre Creek gold zone
- Electro-magnetic surveys completed on Red Star silver-lead
deposit and Navarre Creek gold zone. Final geophysicist report
awaited
- Drilling programmes underway at Red Star, Navarre Creek and
the historically mined high grade Empire underground sulphide
copper deposit
- Earn-In Agreement signed with First Cobalt Corporation on
Redcastle Idaho Cobalt Belt project
Chairman's Statement
Dear Shareholders
I am delighted to announce our first ever Company profit since
Phoenix was formed.
Since I last reported to you on 4 May 2021 there have been a
number of positive developments on the various projects which your
funds have enabled us to embark upon. Our GBP18.4 million ($25.4
million) fundraise in March this year, which was significantly
larger than we had hoped for, has enabled us to move ahead with our
flagship project, the Empire heap leach SX-EW copper cathode oxide
open pit, and to accelerate the exploration of the historically
mined deeper high grade sulphides below the oxides at Empire.
Exploration programmes on the silver-rich Red Star property and
adjacent Horseshoe block, and the Carlin style gold project at
Navarre Creek, are also underway.
Thanks to your support we are now able to develop these projects
simultaneously, having been able to attract high-calibre technical
experts to the team in Idaho, and despite Covid-related delays to
the supply chain, particularly of spare parts for the drill rigs
and lead times for the return of assays, we are still on track to
add significant value to your assets in the coming months.
A case in point is our joint venture with TSX-listed First
Cobalt Corporation at our Redcastle cobalt property on the Idaho
Cobalt Belt, announced on 24 May 2021. We will most likely get to
production a lot sooner than if we had developed Redcastle
ourselves, but in keeping hold of Bighorn, our other property on
the Idaho Cobalt Belt, we retain optionality in the event of a
rising cobalt price, considered likely given the demand for metals
necessary to drive the global transition to clean energy.
At Empire, we have commenced a fresh drilling programme on the
underground sulphides, and eagerly await assay results from the
first drill core sent to the laboratory in late July. In our
announcement on 14 July 2021 we referred to a 12.6 metre section of
intense sulphide mineralisation, and we hope the next holes we plan
to drill there this summer give similar grounds for optimism. In
addition, we filed our Plan of Operations for the permitting of the
starter open pit mine, which should generate early cashflow to fund
the development of the sulphides and our other projects within our
Empire claim block, which now comprises over 8,000 acres or 32.5
square kilometres. Please see the CEO's report for more details on
this and the expansion of our claims at Navarre Creek.
ESG (Environmental, Social and Governance) is of ever increasing
importance, particularly in the mining sector. As announced, we
have a newly-formed ESG & Sustainability Committee, chaired by
Non-Executive Director Catherine Evans. I draw your attention to
her maiden report below.
We are also delighted to be working with The Bank of New York
Mellon who are mandated to establish and maintain an American
Depositary Receipt Program (the "Program") for us, trading on New
York's OTCQX Market. The Program will be non-dilutive, with the
ADRs being created from the acquisition and deposit of existing
ordinary shares trading on AIM. We hope that the Program will be
operational by the end of September 2021 and will significantly
increase our exposure to potential new US investors.
As a result of the March financing, your Company has a strong
balance sheet with sufficient cash to cover ambitious exploration
programmes for this year and next, as well as anticipated
operational and corporate costs into 2023, by which time we expect
to be in production from the initial open pit mine. As a result we
are not planning any new equity issues for cash as we look to
finance the construction of the mine from debt or debt-related
instruments.
I look forward to keeping you all abreast of the exciting
progress taking place in Idaho this summer. Thank you all for your
ongoing support.
Marcus Edwards-Jones
Chairman
Chief Executive Officer's Report
Principal activities and review of the business
The Company came into 2021 with sights fixed on the
much-improved metal prices, particularly copper, which reached
all-time highs in May. In the first six months of the year the
Company completed an over-subscribed $25.4 million financing. This
financing allowed the Company to begin executing the development
plans for the Empire Open-Pit Mine, as well as to continue
exploration at Red Star, Navarre Creek, the Empire Deep Sulphides,
and the Horseshoe-White Knob-Bluebird prospects. The timing of the
financing was ideal as it coincided with a new U.S. Administration
advocating for "clean energy" alternatives in electrification,
transportation, and manufacturing, and for large-scale
infrastructure projects nationwide, allowing the Company the means
with which to move closer to metal production on multiple
projects.
Konnex Resources Inc (the Company's 80% owned US subsidiary)
formally submitted a Plan of Operations to the U.S. Bureau of Land
Management ("BLM"), initiating the regulatory review process for
operational permitting at the Empire Open-Pit Mine. The
copper-oxide open-pit feasibility model shows pre-production
capital of $52 million with payback in less than two years; gross
revenue of $836 million over 10 years of mine life, and $43 million
post-tax cash flow in year 1 at $3.60/lb copper price.
The submission of the Plan of Operations was spearheaded by the
new Konnex General Manager of Operations, Zach Black. Zach helped
to build and direct the team on the ground in Idaho that was
responsible for preparing and submitting the Plan of Operations, as
well as directing the substantial exploration efforts at Red Star,
Horseshoe, and the Navarre Creek gold project, where assay results
from surface samples collected 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, and the Empire Deep Sulphide program,
which recently intercepted intense sulphide mineralization in the
first completed drill hole of the exploration program.
The Navarre Creek, Red Star, and Horseshoe area exploration
programs began in earnest in early summer with the completion of an
electromagnetic ("EM") survey designed to look for magnetite and
other iron-rich bodies below the cover of the volcanic flows at
Navarre Creek and the overburden at Red Star and Horseshoe. The
field surveys were completed and drill targeting of any recognised
magnetic anomalies will occur after receiving the final
geophysicist report later this month.
The Company's cobalt holdings at the Redcastle Idaho Cobalt Belt
property in Lemhi County, Idaho were signed to an earn-in agreement
with First Cobalt Corporation ("FCC"), the Toronto-based owner of
the Iron Creek Cobalt Mine, which shares a common border with the
Redcastle property. The earn-in agreement includes an initial
payment of cash and FCC shares to Phoenix, followed by two work
commitments of $1.5 million in years 1 -3, and in years 4 - 5, with
a joint venture agreement to follow, 25% to Phoenix and 75% to
FCC.
The variety and grade of mineralization encountered thus far on
the many claim blocks that make up the Empire group, as well as the
cobalt potential of our Redcastle and Bighorn properties in Lemhi
County, is providing Phoenix with the unique opportunity to exploit
a variety of metals at a time when all metal prices are performing
well and "green metals" like copper are exceeding market
expectations.
The Phoenix team accomplished the goals outlined for the first
half of 2021. We have recognised some interruptions to the supply
chain, particularly with parts and materials used in field
operations, and with laboratory supplies and laboratory turnaround
times. Additionally, the availability of some staff positions is
low. These shortages are not unique to our operations and are
causing delays industry wide. However, the Company has built solid
working relationships with our contractors, consultants, and the
local community and will continue to keep projects running smoothly
whilst accommodating for occasional business slowdowns and
interruptions as we bounce out of the global pandemic and return to
business as usual.
Empire Mine - Polymetallic Open Pit Oxide Deposit
An updated NI 43-101 compliant resource was completed by
Hardrock Consulting ("HRC") in October 2020, following the 2020
drilling program, and reported for the 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, with no critical issues identified.
Discussions are underway with potential debt financiers to
construct the project, and production is targeted for late
2022.
Empire Deep Sulphides
In July 2021, a core drilling program designed to target the
historically mined high grade sulphide vein system below the
open-pit copper oxide resource was initiated. The first drill hole
of the program that reached the design depth intercepted a
12.6-metre zone of strong to intense sulphide mineralization. Some
of the sulphide minerals identified by our geologists included
bornite, chalcocite, chalcopyrite, pyrite, galena, and pyrrhotite.
The assays for this intersection are pending. Additional drilling
is ongoing.
The 2021 deep sulphide drilling program is a carry-on from
previous work, including two deep diamond drill holes completed in
late 2017 that confirmed the presence of higher-grade sulphide
mineralization in the skarn structures at depth. Both of the core
holes intersected mineralized 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
mineralization. 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 up to 7.93 g/t gold and 256 g/t
silver. Further drilling into the underground sulphides is underway
this year.
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 open pit. Red Star was identified from a 20-metre wide
surface outcrop across a skarn structure. Surface mineralization 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
10-hole diamond drilling program was completed in 2020. The assay
results from that program 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 in Q2 2021 a
ground-based magnetics survey was completed, following which the
final geophysicist's report is due for completion in the coming
weeks. A diamond drilling program is scheduled to commence in Q3
2021.
Navarre Creek - Volcanic-Hosted Gold Project
The Navarre Creek claim block is located to the northwest 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 Navarre Creek property, which is located
approximately 8 kilometres west-northwest of Empire. 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 registered a gold value of 0.387 g/t in a magnetite skarn
sample. 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.
In June 2021 an electromagnetic survey was completed on the
Navarre Creek claim block. While the Company waits for a final
interpretive report an internal review of the EM data was completed
and determined the need for a claim block expansion. 56 unpatented
claims, staked contiguously on the northeast end of the Navarre
Creek claim block, were filed and added to the existing 121
unpatented claims making up the now 3,577-acre Navarre Creek
holding. An RC drilling program at Navarre Creek is planned for
Q3/Q4 2021.
Outlook
It has been an exciting and successful 2021 so far. The copper
and zinc markets continue to perform well, helped along by a
Washington D.C. Administration clearly pushing for a global "clean
energy" revolution of electric vehicles and alternative power
generation requiring the same copper metal in the resource at
Empire. Gold and silver have seen some ups and downs, but prices
are holding their own and certainly remain respectable. The cobalt
price also remains respectable in the mid-$30/lb range, helping
support exploration planning for our new earn-in partners at
Redcastle.
I expect to see the metals markets, particularly copper,
continue to perform well as the manufacturing and fabricating
sectors increase production on new and high demand. The recently
approved $1 trillion U.S. infrastructure bill, which includes
projects requiring significant quantities of metal, should also
keep prices on an upward trend as the projects are engineered and
get underway.
As I have mentioned many times before, the unique and positive
attribute at Empire is the polymetallic nature of the mineralized
systems. In other words, we have a variety of metal resources that
provide us significant optionality as metal prices fluctuate on
supply and demand. In addition to our open-pit copper oxide
resource, which is now officially moving through the permitting
process, we also have the high-grade silver and lead system of Red
Star and adjacent Horseshoe block, the deep sulphide system at
Empire, the very prospective volcanic-hosted gold system at Navarre
Creek, and two strategically located cobalt properties, one of
which, Redcastle, is located adjacent to the existing Iron Creek
cobalt mine and is being explored by the owner of Iron Creek, FCC.
The projects are all located in historically mined districts in
Idaho, USA, a geopolitically stable, pro-mining jurisdiction.
Since the beginning of the year, and having made it through the
challenges of 2020, our team successfully completed a $25.4 million
equity raise, and successfully compiled three years of
environmental data and pre-permitting studies into a Plan of
Operations, moving us into the final stages of the permitting
process for the open-pit copper mine. Our team also used the
geological knowledge and understanding of the mineralized systems
at Empire gained over the past four years to target and intersect
the deep sulphide vein system below the oxide open-pit resource. In
addition, we negotiated and signed the earn-in agreement with FCC
on our Redcastle cobalt project.
We have a very talented team, both at the operational and the
corporate level, from shareholders to dozer operators to mining
engineers, and everyone in between. My outlook for the Company is
quite simple, it is for continued success.
Conclusion
We are pleased to see the continued, global push for electric
vehicles, large-scale electrification projects, and infrastructure
projects requiring substantial quantities of metal, specifically
copper. We continue to be well positioned in terms of timing to
transition seamlessly into development, particularly with the
recent submittal of the Plan of Operations for the Empire Open Pit
mine.
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 considerable effort, and provide considerable support, to
ensure the Company's success. I look forward to reporting further
positive news as we continue our exploration and development
programs during 2021.
Ryan McDermott
Chief Executive Officer
ESG & Sustainability Committee Chairman's Report
It is my pleasure to report for the first time as Chair of the
Environmental, Social & Governance ("ESG") & Sustainability
Committee, an area of such key importance to the Company that we
ratified this Committee in July 2021, in anticipation of our
transition from exploration to production. Working with me on the
Committee are Roger Turner, Harry Kenyon-Slaney and Dennis Thomas.
We plan to meet a minimum of three times a year and will work
closely with Lenie Wilkie, our ESG Programme Coordinator, based in
Mackay, Idaho.
One of the Company's core values is the commitment to meeting
and exceeding the environmental, health and safety, and governance
standards required by law. We are extremely fortunate to have a
highly supportive local community, many of whom are descended from
the miners that previously worked in the area. The re-opening of
the Empire Mine will provide significant investment and employment
to Mackay and the surrounding towns in Custer County. Our
procurement and supply chain policies will further benefit our
neighbours as we buy and hire locally wherever possible and provide
supplier assurances.
We do not underestimate our extreme good fortune in our
location, where the rules of law and taxation are stable, fair and
clear. We are committed to contributing fully to the socio-economic
success of Custer County and are exploring ways to emulate Good
Neighbour Agreements which are in place elsewhere.
Since assuming operational control of the Empire Mine, we have
completed baseline environmental studies for both the Empire Mine
and Red Star, with no critical issues identified. This data is
required for the permitting process, as well as contributing to the
building blocks of our ESG and sustainability platform. This
includes protection of the environment, wildlife and water
management. Also included in our remit is the management of legacy
issues relating to historic activities and long-term plans for mine
closure liabilities. Our objective is to maintain, improve and have
a net positive impact upon the biodiversity of the land on which we
operate.
One of our top priorities is employee, contractor, and community
health and safety. We will continue to adhere to all of the
required health and safety procedures mandated by Federal and State
law. In addition to following these mandates, once in operation we
will go a step further by adopting and tracking performance
standards and best operating practices developed in-house that
further address the health, wellbeing, safety, hygiene and energy
management of our estimated initial team of 140 staff, plus
contractors, stakeholders and the local community. This will
improve our performance and ensure a safe, enjoyable, and
financially rewarding workplace. Since 2017, I am delighted that we
have maintained a record of zero recordable accidents and
injuries.
There are many other areas that fall within our range of
responsibility, including the monitoring and reporting of all
metrics mentioned above. As a Company, our culture is one of
openness to all stakeholders, and the Committee will continue in
this tradition. I am looking forward to providing further updates
on our ESG and sustainability activities as the Company progresses
ever closer to production.
Catherine Evans
Non-Executive Director
Financial Overview
The Company reports a profit for the six months ended 30 June
2021 of $235,467 (2020: loss of $265,976), and a consolidated Group
loss of $199,481 (2020: loss of $569,759). This includes a charge
of $90,953 (2020: $139,221) relating to non-cash share based
payments attributable to warrants and options granted during the
period, and which amount is simultaneously credited back to the
retained deficit.
Net assets at 30 June 2021 totalled $37.70 million (2020: $13.51
million), including cash of $22.88 million (2020: $2.05
million).
During the period the Company raised a further $25.39 million
(before expenses) through the issue of 52,567,518 new shares at 35
pence per share by way of a subscription, placing and open offer to
existing and new shareholders, and a further $2.72 million from the
issue of unsecured loan notes, which amount has been repaid since
the period end. The Company also repaid $1.36 million of existing
unsecured loan notes. Outstanding loan notes currently total
$187,500. The Company also issued a further 453,837 new shares
during the period, and 226,234 shares since the period end,
pursuant to the exercise of warrants. The outstanding share capital
of the Company is currently 116,554,336 shares.
During the period the Company charged its subsidiary entities
$405,000 (2020: $270,000) in respect of management services
provided, and $361,678 (2020: $262,074) in respect of interest at
6% per annum on the Company's inter-company loan to Konnex
Resources Inc, owner of the Empire Mine, the latter eliminating on
consolidation. At 30 June 2021 the Company's loan to Konnex
Resources stood at $15.33 million (2020: $9.65 million). This loan
will be repaid from Konnex's operating cash flow in due course, and
is intended to form a platform to return money to shareholders by
way of a dividend.
During the period the Company also received an initial $106,340
from First Cobalt Corporation in cash and shares as a signature fee
in respect of the Earn-In Agreement relating to the Redcastle Idaho
Cobalt Belt project.
The Directors recognise the importance of sound corporate
governance and have applied the Quoted Companies Alliance's
Corporate Governance Code 2018. The Company's Corporate Governance
Statement dated 6 July 2021 can be viewed on the Company's website
at https://phoenixcopperlimited.com.
Richard Wilkins
Chief Financial Officer
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
Condensed consolidated income 30 June 30 June 31 December
statement 2021 2020 2020
Note $ $ $
Continuing operations
Revenue 3 - - -
Exploration and evaluation
expenditure - - -
Gross loss - - -
------------ ------------ -------------
Administrative expenses 4 (295,368) (540,391) (922,647)
Other income 7 106,340 - -
Loss from operations (189,028) (540,391) (922,647)
Finance expenses (10,453) (29,368) (49,203)
Loss before taxation (199,481) (569,759) (971,850)
Taxation - - -
------------ ------------ -------------
Loss for the period (199,481) (569,759) (971,850)
------------ ------------ -------------
Loss attributable to:
* Owners of the parent company (185,550) (561,040) (956,656)
* Non-controlling interests (13,931) (8,719) (15,194)
------------ ------------ -------------
(199,481) (569,759) (971,850)
------------ ------------ -------------
Basic and diluted loss per
share - cents 5 (0.20) (1.08) (1.66)
------------ ------------ -------------
The revenue, expenditures and operating result for each period
is derived from acquired and continuing operations in North America
and the United Kingdom.
Condensed consolidated statement of
comprehensive income Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2021 2020 2020
$ $ $
---------- ---------- -------------
Loss for the period and total comprehensive
income for the period (199,481) (569,759) (971,850)
---------- ---------- -------------
Total comprehensive income for the
period attributable to:
Owners of the parent company (185,550) (561,040) (956,656)
Non-controlling interests (13,931) (8,719) (15,194)
---------- ---------- -------------
(199,481) (569,759) (971,850)
---------- ---------- -------------
Condensed consolidated statement
of
financial position Unaudited Unaudited Audited
30 June 30 June 31 December
Note 2021 2020 2020
$ $ $
------------ ------------ ------------
Non-current assets
Property, plant and equipment
- mining property 6 18,606,061 12,824,188 14,789,004
Intangible assets 7 310,665 261,895 276,895
Available-for-sale financial assets 8 56,340 - -
------------
Total non-current assets 18,973,066 13,086,083 15,065,899
------------ ------------ ------------
Current assets
Trade and other receivables 9 140,721 172,866 122,300
Cash and cash equivalents 22,875,013 2,052,544 1,146,490
------------
Total current assets 23,015,734 2,225,410 1,268,790
------------ ------------ ------------
Total assets 41,988,800 15,311,493 16,334,689
------------ ------------ ------------
Current liabilities
Trade and other payables 10 619,099 119,096 193,937
Borrowings 11 2,907,500 486,000 1,549,000
Total current liabilities 3,526,599 605,096 1,742,937
------------ ------------ ------------
Non-current liabilities
Borrowings 11 - 443,000 -
Provisions 12 757,702 757,702 757,702
------------ ------------ ------------
Total non-current liabilities 757,702 1,200,702 752,702
------------ ------------ ------------
Total liabilities 4,284,301 1,805,798 2,500,639
Net assets 37,704,499 13,505,695 13,834,050
------------ ------------ ------------
Equity
Share capital 13 - - -
Share premium account 42,981,253 19,007,487 19,251,964
Retained deficit (5,362,458) (5,607,902) (5,517,549)
Translation reserve (18,588) (18,588) (18,588)
Capital and reserves attributable
to the owners of the parent company 37,600,207 13,380,997 13,715,827
Non-controlling interests 104,292 124,698 118,223
Total equity 37,704,499 13,505,695 13,834,050
------------ ------------ ------------
Condensed consolidated statement of changes in equity
Share premium Retained Translation Total Non-controlling Total
deficit reserve interests Equity
$ $ $ $ $ $
Balance at 1 January 2020 15,627,730 (5,186,083) (18,588) 10,423,059 133,417 10,556,476
Loss for the period - (561,040) - (561,040) (8,719) (569,759)
Total comprehensive income
for
the period - (561,040) - (561,040) (8,719) (569,759)
-------------- ------------ ------------ ------------ ---------------- ------------
Shares issued in the period 3,664,000 - - 3,664,000 - 3,664,000
Share issue expenses (284,243) - - (284,243) - (284,243)
Share-based payments - 139,221 - 139,221 - 139,221
Total contribution by
owners 3,379,757 139,221 - 3,518,978 - 3,518,978
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 30 June 2020 19,007,487 (5,607,902) (18,588) 13,380,997 124,698 13,505,695
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (395,616) - (395,616) (6,475) (402,091)
Total comprehensive income
for
the period - (395,616) - (395,616) (6,475) (402,091)
-------------- ------------ ------------ ------------ ---------------- ------------
Shares issued in the period 244,477 - - 244,477 - 244,477
Share issue expenses - - - - - -
Share-based payments - 485,969 - 485,969 - 485,969
-------------- ------------ ------------ ------------ ---------------- ------------
Total contribution by
owners 244,477 485,969 - 730,446 - 730,446
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 31 December 2020 19,251,964 (5,517,549) (18,588) 13,715,827 118,223 13,834,050
-------------- ------------ ------------ ------------ ---------------- ------------
Loss for the period - (185,550) - (185,550) (13,931) (199,481)
------------ ------------ ------------ ---------------- ------------
Total comprehensive income
for
the period - (185,550) - (185,550) (13,931 (199,481
-------------- ------------ ---------------- ------------
Shares issued in the period 25,539,057 - - 25,539,057 - 25,539,057
Share issue expenses (1,809,768) - - (1,809,768) - (1,809,768)
Share-based payments - 340,641 - 340,641 - 340,641
Total contribution by
owners 23,729,289 340,641 - 24,069,930 - 24,069,930
-------------- ------------ ------------ ------------ ---------------- ------------
Balance at 30 June 2021 42,981,253 (5,362,458) (18,588) 37,600,207 104,292 37,704,499
-------------- ------------ ------------ ------------ ---------------- ------------
Condensed consolidated statement
of cash flows Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2020
2021 2020
$ $ $
------------ ------------ ----------------
Loss before taxation (199,481) (569,759) (971,850)
Adjustments for:
Depreciation
Share-based payments 90,953 139,221 229,904
Consideration shares in First Cobalt (56,340) - -
(164,868) (430,538) (741,946)
Changes in working capital
(Increase)/decrease in trade and
other receivables (18,421) 95,066 145,632
Increase/(Decrease) in trade and
other payables 425,162 (163,804) (88,963)
------------ ------------ ----------------
Cash (used in)/generated from operating
activities 241,873 (499,276) (685,277)
------------ ------------ ----------------
Investing activities
Purchase of intangible assets (33,770) (15,000) (30,000)
Purchase of property, plant and
equipment (3,567,369) (1,152,528) (2,722,058)
Net cash outflow from investing
activities (3,601,139) (1,167,528) (2,752,058)
------------ ------------
Cash flows from financing activities
Proceeds from the issuance of ordinary
shares 25,539,057 3,664,000 3,908,477
Share-issue expenses (1,809,768) (284,243) (284,243)
Proceeds from the issue of loan
notes 2,100,000 129,000 879,000
Repayment of loan notes- (741,500) - (130,000)
Net cash inflow from financing
activities 25,087,789 3,508,757 4,373,234
------------ ------------ ----------------
Net increase in cash and cash equivalents 21,728,523 1,841,953 935,899
Cash and cash equivalents at beginning
of period 1,146,490 210,591 210,591
Cash and cash equivalents at end
of period 22,875,013 2,052,544 1,146,490
------------ ------------ ----------------
Amounts of $249,688, 30 June 2020 $nil and 31 December 2020
$395,286 in respect of the charge for share-based payments were
capitalised into mining property.
1. Basis of preparation and principal accounting policies
This condensed consolidated interim financial information was
approved for issue by the Board on 16 August 2021.
This condensed consolidated interim financial information has
not been audited and does not include all of the information
required for full annual financial statements. While the financial
figures included within this interim report have been computed in
accordance with IFRS applicable to interim periods, this report
does not contain sufficient information to constitute an interim
financial report as set out in International Accounting Standard
34: Interim Financial Reporting.
Basis of consolidation
Basis of consolidation
This condensed consolidated financial information incorporates
the financial statements of the Company and entities controlled by
the Company (its subsidiaries) (together the "Group") for each
period. The results of subsidiaries acquired or disposed of during
the period are included in the consolidated income statement from
the effective date of acquisition, or up to the effective date of
disposal, as appropriate.
Control is achieved where the Company has the power to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities.
Non-controlling interests in the net assets of consolidated
subsidiaries are presented separately from the Group's equity.
Non-controlling interests consist of the amount of those interests
at the date of the original business combination and the
non-controlling interest's share of changes in equity since the
date of the combination.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra group
transactions, balances, income and expenses are eliminated on
consolidation.
2. Information on the Group
Phoenix Copper Limited is engaged in exploration and mining
activities, primarily precious and base metals, primarily in the
United States of America.
The Company is incorporated in the British Virgin Islands
(registered number 1791533), and is domiciled in the British Virgin
Islands. The address of its registered office is OMC Chambers,
Wickhams Cay 1, Road Town, Tortola VG1110, British Virgin
Islands.
3. Revenue
The Group is not yet producing revenues from its mineral
exploration and mining activities. During the period the Company
charged its subsidiary entities $405,000 (30 June 2020: $270,000);
(31 December 2020: $535,000) in respect of management services
provided.
4. Share-based payments
Total administrative expenses include share-based payments of
$90,953 (30 June 2020: $139,221; 31 December 2020: $229,904). The
related credits to equity are taken to the retained deficit.
5. Loss per share Unaudited Unaudited Audited
6 months 6 months 12 months
to to to 31 December
30 June 30 June 2020
2021 2020
$ $ $
------------------- ------------ -----------------
Loss for the period attributable
to equity holders of the parent
company (185,550) (561,040) (956,656)
------------------- ------------ -----------------
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 91,856,320 51,993,891 57,527,529
------------------- ------------ -----------------
Loss per share - basic and diluted
(cents) (0.20) (1.08) (1.66)
------------------- ------------ -----------------
Non-current assets
Mining Total
6. Property, plant and equipment - mining property Property
$ $
---------------- -------------
Cost or valuation
At 1 January 2020 11,671,660 11,671,660
Additions 1,152,528 1,152,528
At 30 June 2020 12,824,188 12,824,188
Additions 1,964,816 1,964,816
At 31 December 2020 14,789,004 14,789,004
Additions 3,817,057 3,817,057
At 30 June 2021 18,606,061 18,606,061
---------------- -------------
Depreciation
At 30 June 2020, 31 December 2020 and 30 June - -
2021
---------------- -------------
Net book value:
30 June 2020 12,824,188 12,824,188
---------------- -------------
31 December 2020 14,789,004 14,789,004
30 June 2021 18,606,061 18,606,061
---------------- -------------
Mining property relates to the past producing Empire Mine copper
- gold - silver - zinc - tungsten project in Idaho, USA. The Empire
Mine has not yet recommenced production and no depreciation has
accordingly been charged in the statement of comprehensive income.
There has been no impairment charged in any period due to the
current stage in the Company's project to reactivate the mine.
The property is owned by Konnex Resources Inc, an 80% owned
subsidiary of the parent company, registered and domiciled in
Idaho.
7. Intangible assets
Exploration
and evaluation
expenditure Total
$ $
---------------- --------
Cost or valuation
At 1 January 2020 246,895 246,895
Additions 15,000 15,000
---------------- --------
At 30 June 2020 261,895 261,895
Additions 15,000 15,000
---------------- --------
At 31 December 2020 276,895 276,895
Additions 33,770 33,770
---------------- --------
At 30 June 2021 310,665 310,665
---------------- --------
Exploration and evaluation expenditure in the period relates to
the Bighorn and Redcastle cobalt properties on the Idaho Cobalt
Belt in the USA. The properties are owned by Borah Resources Inc
($148,373) and Salmon Canyon Resources Inc ($162,292), both of
which are wholly owned subsidiaries of the parent company,
registered and domiciled in Idaho.
The Group has entered into an investment agreement with First
Cobalt Idaho, a wholly owned subsidiary of Toronto-based First
Cobalt Corporation, in respect of the Group's interest held by
Borah Resources Inc, under which First Cobalt Corporation paid
$50,000 and issued 200,000 unrestricted shares (valued at $56,340)
to Phoenix, a total initial consideration of $106,340.
First Cobalt can earn a 51% interest in Borah Resources Inc, the
owner of the Redcastle property, by spending no less than
US$1,500,000 in exploration and related work on Redcastle over an
initial three-year period, and by paying a further US$100,000 to
Phoenix on the third anniversary of the Agreement ("Phase 1").
Subject to the completion of Phase 1, First Cobalt may earn an
additional 24% interest in Borah Resources, for a total interest of
75%, by spending no less than a further US$1,500,000 in exploration
and related work on Redcastle over a further two year period, and
by paying a further US$150,000 to Phoenix in cash or the equivalent
in unrestricted First Cobalt shares, at Phoenix's option, on the
fifth anniversary of the Agreement, and by providing Phoenix with a
NI 43-101 compliant Preliminary Economic Assessment ("PEA") for the
Redcastle property ("Phase 2").
Upon completion of Phase 1 and Phase 2, Phoenix and First Cobalt
will enter into a joint venture agreement (the "JV"), with First
Cobalt as managers, and will share in the capital expenditures for
the ongoing development of Redcastle in accordance with their
respective ownership interests (First Cobalt 75%, Phoenix 25%). If
either party does not contribute pro-rata to its ownership
interest, that interest will be diluted accordingly. Should
Phoenix's interest in the JV be reduced to 10% or less, a 2.5%
royalty shall become payable to Phoenix. This royalty can be
acquired by First Cobalt for US$500,000 per each 0.5%.
8. Available-for-sale investments Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
$ $ $
---------- ---------- ------------
Equity shares 56,340 - -
---------- ---------- ------------
Equity shares represent shares in First Cobalt Corporation,
received as part-consideration for entering into an investment
agreement. See also note 7 above.
9. Trade and other receivables Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
$ $ $
---------- ---------- ------------
Other receivables 88,845 61,447 68,847
Prepayments 51,876 111,419 53,453
---------- ---------- ------------
140,721 172,866 122,300
---------- ---------- ------------
10. Trade and other payables Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
$ $ $
----------- ----------- ------------
Trade creditors 597,667 118,559 156,116
Other creditors - 537 8,355
Accrued expenses 21,432 - 29,466
----------- ----------- ------------
619,099 119,096 193,937
----------- ----------- ------------
11. Borrowings Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
$ $ $
----------- ----------- ------------
Loan notes due within one year 2,907,500 486,000 1,549,000
Loan notes maturing in one to - 443,000
two years -
----------- ----------- ------------
2,907,500 929,000 1,549,000
----------- ----------- ------------
The Company has issued loan notes with a total redemption value
of $2,907,500. $187,500 relates to 12% unsecured loan notes with a
final redemption date of 30 September 2021. $2,720,000 relates to
an unsecured loan note which has been repaid since the period end
plus a fixed rate coupon equivalent to 6.0% of principal value.
12. Provisions Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
$ $ $
---------- ---------- ------------
Decommissioning provision 100,000 100,000 100,000
Potential future royalties payable 657,702 657,702 657,702
---------- ---------- ------------
757,702 757,702 757,702
---------- ---------- ------------
The provision of $100,000 for decommissioning the Empire Mine is
based on the directors' estimate after taking into account
appropriate professional advice, and is included within mining
property.
The other provision of $657,702 arises from a business
combination in 2017 and comprises potential royalties payable in
respect of future production at the Empire Mine. This liability
will only be payable if the Empire Mine is successfully restored to
production and will be deducted from the royalties payable. The
amount of the provision will be reassessed as exploration work
continues and also on commencement of commercial production.
13. Share capital Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
Number Number Number
------------ ----------- ------------
Allotted and issued
Ordinary shares with no par value 116,328,102 62,462,522 63,306,747
------------ ----------- ------------
The Ordinary Shares rank pari passu.
On 25 March 2021 the Company issued 52,567,518 ordinary shares
at 35 pence per share pursuant to a subscription, placing and open
offer to existing and new shareholders. The Company also issued
453,837 ordinary shares during the period, and a further 226,234
shares since the period end, pursuant to the exercise of
warrants.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 which has been
incorporated into UK law by the European Union (Withdrawal) Act
2018. Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited Ryan McDermott Tel: +1 208 954
Dennis Thomas 7039
Richard Wilkins Tel: +44 7827
290 849
Tel: +44 7590
216 657
SP Angel (Nominated David Hignell / Caroline Rowe Tel: +44 20 3470
Adviser) 0470
------------------------------------ -----------------
Brandon Hill Capital Jonathan Evans / Oliver Stansfield Tel: +44 20 3463
(Joint Broker) 5000
------------------------------------ -----------------
WH Ireland (Joint Harry Ansell / Adam Pollock / Tel: +44 207
Broker) Katy Mitchell 2201666
------------------------------------ -----------------
Panmure Gordon (UK) John Prior / Hugh Rich / Ailsa Tel: +44 20 7886
Limited (Joint Broker) Macmaster 2500
------------------------------------ -----------------
EAS Advisors (US Matt Bonner / Rogier de la Rambelje Tel: +1 (646)
Corporate Adviser) 495-2225
------------------------------------ -----------------
Blytheweigh Tim Blythe / Megan Ray Tel: +44 20 7138
(Financial PR) 3204
------------------------------------ -----------------
Notes
Phoenix Copper Limited is a USA focused, base and precious
metals emerging producer and exploration company, initially
targeting copper and zinc production from an open pit mine from
late 2022.
Phoenix's primary operations are focused near Mackay, Idaho, in
the Alder Creek mining district, at the 80% owned Empire Mine
property, which historically produced copper at grades of up to 8%,
as well as gold, silver, zinc and tungsten, from an underground
mine.
Since 2017, Phoenix has carried our extensive drill programmes
which have defined a NI 43-101 compliant PEA (preliminary economic
assessment) for an open pit heap leach solvent extraction and
electrowinning ("SX-EW") mine, which was updated in October 2020.
The contained metal in all NI 43-101 compliant categories of
resources, measured, indicated and inferred, stand at 129,641
tonnes of copper, 355,523 ounces of gold, 10,133,772 ounces of
silver and 58,440 tonnes of zinc. Phoenix updated its economic
model in February 2021 to include the processing of all contained
metals through a two phased approach.
In addition to Empire, the district includes the historic
Horseshoe, White Knob and Blue Bird Mines, past producers of
copper, gold, silver, zinc, lead and tungsten from underground
mines. 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. Additionally, the district includes
Navarre Creek, a volcanic hosted, Carlin-type gold discovery which
hosts a 6.1 km gold strike length within a 14.48 km(2) area. The
Company's total land package at Empire comprises 8,034 acres (32.51
sq kms).
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. The stated aim of the Company is to fund this phased
exploration through free cashflow generated by its initial mine. A
Plan of Operations in respect of the initial open pit mine was
filed with the relevant regulatory authorities in June 2021.
Phoenix also has two wholly owned cobalt properties on the Idaho
Cobalt Belt to the north of Empire. An Earn-In Agreement has been
signed with First Cobalt Corporation, Toronto, in respect of one of
those properties.
More details on the Company, its assets and its objectives can
be found on PXC's website at https://phoenixcopperlimited.com.
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