TIDMXTR
RNS Number : 8958Q
Xtract Resources plc
30 June 2022
For immediate release
30 June 2022
Xtract Resources Plc
("Xtract" or the "Company")
Audited results for the 12 months ended 31 December 2021
The Board of Xtract Resources Plc ("Xtract" or the "Company")
announces its audited financial results for the 12 months ended 31
December 2021. The 2021 Audited Annual Report and Accounts
("Accounts") are in the process of being posted to shareholders and
will be available together with this announcement on the Company's
website www.xtractresources.com .
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 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").The person who arranged the release of this
announcement on behalf of the Company was Joel Silberstein,
Director.
Enquiries :
Colin Bird, Executive +44 (0) 203 416
Xtract Resources Plc Chairman 6471
Beaumont Cornish (Nominated Michael Cornish / Felicity +44 (0) 207 628
Adviser & Joint Broker) Geidt 3369
Email: corpfin@b-cornish.co.uk
Novum Securities (Joint +44 (0) 207 399
Broker) Jon Bellis/Colin Rowbury 9427
Corporate & Operational highlights
-- At Bushranger results from Phase-One drilling and an Induced
polarization (IP) MIMDAS survey have provided significant potential
to upgrade the known Inferred Mineral Resources at the Bushranger
copper-gold project within a world-class mining district in New
South Wales, Australia
-- The follow-up Phase-Two drilling programme succeeded in
defining a shallow high-grade 'crown' to the Racecourse deposit,
which will be modelled with a view to developing an open pit
mine
-- The Phase-Two drilling programme at Bushranger was also
successful in discovering a new deposit located to the south of
Racecourse, named Ascot. Initial holes and assays suggest that this
deposit has a higher gold tenor than Racecourse. Further drilling
is in progress to test the new discovery
-- At the Eureka copper project in Zambia completed drilling and
analysis of drill core confirmed the extension of the Eureka
mineralised zone to the north-west - beyond 300m and still open
-- Trial pilot-scale mining is under way at Eureka to test
copper recoveries with a view to supplying ore to a local
processor
-- Total of GBP10.50 million (before expenses) raised through equity placings
-- During the 2nd half of 2021 all of the alluvial and small
hard rock operations achieved highest production levels since
commencing mining in 2017
-- Total of 43.83kg (equivalent to 1,404 ounces) of production
attributable to Explorator (2020: 19.38kg (equivalent to 620
ounces)
-- Post year end the Company decided to withdraw from the
Kalengwa Project in Zambia and fully impair the carrying value with
a consequent charge to the income statement of GBP0.36 million
Financial highlights
-- Cash of GBP5.39m (2020: GBP0.92m)
-- Net assets of GBP11.93m (2019: GBP10.78m)
-- Revenue from gold sales of GBP0.69m (2020: GBP1.73m)
-- Administrative and operating expenses of GBP3.31m (2020: GBP2.09m)
Chairman's Statement
Dear Shareholder,
The period under review has again been positive for our group
activities. Our mission to work small scale mining operations and
conduct major exploration has advanced according to plan.
Starting with the Australian Lachlan Fold Belt project at
Bushranger, I am very pleased to report that in a short period we
have advanced the exploration to a much better understanding than
we had at the time of writing last year's report.
As of now, we have largely delineated the Racecourse project and
are busy modelling resource shape to determine tonnage and grade.
The Racecourse Project would most likely be planned to a surface
mine, with a high-grade component that can support mining for a
number of years, with typical porphyry ore grade thereafter. We
intend to rework the conceptual model, with the benefit of more
definitive grades, metallurgical test work results and tonnage
disposition.
We conducted further geophysics, which better assisted our
drilling programmes and pointed towards the potential for another
large-scale target towards the south of Racecourse, also
identifying other anomalous areas, with a similar signature as at
the Racecourse Project.
We drill tested a strong anomaly some 1.3km south of Racecourse
and identified large areas of mineralisation, with gold grades
being generally higher than Racecourse, as was the molybdenum. The
different chemistry and mineralisation distribution caused us to
give the occurrence its own name, and we named the area Ascot. We
have drilled a further 8 holes into the area, with varying results
and our last hole assays, at the time of writing this report, had
minimal copper intersections, but had very significant gold
intersections, with higher than previously experienced molybdenum
values. The lithology leads us to the opinion that the true
porphyry may be deeper, and we will therefore drill a further hole
to test this prognosis.
At the time of writing this report, we were embarking on a
limited drilling programme at the Footrot prospect to the south of
Racecourse-Ascot to test the veracity of the geophysics, which are
also similar to Racecourse, and where previous companies have had
some indication of porphyry style lithology.
In general, our exploration activities in Australia have been
extremely encouraging and without a doubt we have discovered a
major system, well beyond our original expectations. As with all
porphyries, however, a full understanding requires much drilling to
define the full potential and our projects are no exception. The
phase 2 exploration programme is about to be completed and when we
have modelled and evaluated all the raw information, we will be
well advanced on the value curve and able to position the project
in the global market.
Our alluvial gold production activities in Mozambique have
continued to be somewhat erratic, but no month has passed without
producing a surplus of income over expenditure. Towards the end of
2021 all of the alluvial and small hard rock operations produced
well and record results were achieved. The rains of course,
hampered operations, but nonetheless results were very
satisfactory, and the higher trend was maintained.
We expect alluvial and small gold operations to continue for the
remainder of the year and I am happy to report that the Fair Bride
hard rock operation has now commenced production. We expect a
production build up during the 3rd quarter 2022, with full
commercial production being achieved during the 4th quarter. On
this basis we expect earnings from our Mozambique gold operations
to be significant, with the Fair Bride operation continuing for
some five years. We intend with our partners to test drill the
area, since we are convinced of further discovery potential and
during next year will design plant additions, which will allow us
to treat all mineralisation gold types found in the area.
In Zambia we have identified and modelled a potentially mineable
resource at Eureka and are carrying out trial mining. The initial
trial mining produced a very high-grade ore, but metallurgical
testing proved to be very refractory. Further drilling and test
mining has shown this to be a local phenomenon and we intend to
commence operations during the 3rd quarter 2022.
The Company's aim is to identify small deposits of 1-5 years
production capability at a rate of about 50,000 tonnes per year. We
have been working one small deposit, known as Chongwe, to ascertain
its size and potential contribution. The projects have produced
satisfactory ore for a nearby processing capability, producing a
surplus of income over expenditure. It is however unlikely to be a
long-life proposition and we continue our efforts to identify other
resources in relatively close proximity to processing
capability.
The Kalengwa Project has been subordinated to our other
activities since it is remote to processing capability and
challenged by availability of power and the Company has therefore
impaired all costs relating to the project.
As a junior miner, we continue to be mindful of guarding the
Company's cash position. The awarding of options is considered a
crucial element in the Company's ability to incentivise the
Company's employees and directors and allows for the retention of
services and expertise. In March 2021, the Company awarded options
to directors and employees which resulted in a share-based payment
accounting charge of GBP1.47 million which has been included in our
administration and overhead expense.
The company is examining a number of exciting opportunities in
the small copper and gold sector and look forward to reporting
progress during the 3rd quarter.
I would like to thank my fellow directors and management team
for their untiring efforts to advance the company during the year
under review, against intense competition and challenging
circumstances.
Colin Bird
Executive Chairman
30 June 2022
Consolidated Income Statement
For the year ended 31 December 2021
Year ended
Year ended 31 December
31 December 2020
2021 GBP'000
Note GBP'000 (Restated)
----- -------------- -------------
Continuing operations
Revenue from gold sales 692 1,725
Other operating income 189 -
Operating and administrative expenses
-------------- -------------
Direct operating (569) (1,006)
Other operating (85) (45)
Administration (2,657) (1,040)
-------------- -------------
(3,311) (2,091)
Project expenses (432) (96)
-------------- -------------
Operating loss (2,862) (462)
Other gains and (losses) 6 - (164)
Finance (cost)/income 11 (194) (181)
-------------- -------------
(Loss) before tax 8 (3,056) (807)
-------------- -------------
Taxation 12 (76) (107)
(Loss) for the period (3,132) (914)
============== =============
Attributable to:
Equity holders of the parent (3,132) (914)
============== =============
Net (loss) per share
Basic (pence) 13 (0.40) (0.20)
============== =============
Diluted (pence) 13 (0.40) (0.20)
============== =============
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Group
----------------------------
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
------------- -------------
(Loss) for the year (3,132) (914)
Other comprehensive income:
Items that may be reclassified subsequently
to profit and loss - -
Exchange differences on translation of foreign
operations 242 (210)
------------- -------------
Other comprehensive income/(loss) for the
year 242 (210)
------------- -------------
Total comprehensive (loss) for the year (2,890) (1,124)
------------- -------------
Attributable to:
Equity holders of the parent (2,890) (1,124)
============= =============
Consolida ted and Company Sta tements of Financial Position
As at 31 December 2021 Group Company
---------------------------- ----------------------------
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------- ------------- ------------- -------------
Non-current assets
Intangible assets 14 16,752 11,978 828 438
Property, plant & equipment 15 25 19 - -
Loans to group companies - - 6,554 -
Investment in subsidiary 16 - - 9,823 9,823
Other financial assets - - - -
16,777 11,997 17,205 10,261
Current assets
Trade and other receivables 19 664 147 582 285
Loans receivable 18 - - - -
Inventories 20 177 8 - -
Loans to group companies - - 2,426
Cash and cash equivalents 5,389 919 4,205 253
------------- ------------- ------------- -------------
6,230 1,074 4,787 2,964
------------- ------------- -------------
Total assets 23,007 13,071 21,992 13,225
============= ============= ============= =============
Current liabilities
Trade and other payables 22 2,226 1,051 396 362
Current tax payable 22 121 93 - -
Loans from group companies 22 - - - 11,483
------------- ------------- ------------- -------------
2,347 1,144 396 11,845
============= ============= ============= =============
Net current assets/(liabilities) 3,883 (70) 4,391 (8,881)
============= ============= ============= =============
Non-current liabilities
Loans from group companies - - 11,518 -
Total liabilities 2,347 1,144 11,914 11,845
============= ============= ============= =============
Net assets 20,660 11,927 10,078 1,380
============= ============= ============= =============
Equity
Share capital 23 4,973 4,928 4,973 4,928
Share premium account 71,684 61,951 71,684 61,951
Warrant reserve 24 467 76 467 76
Share-based payments reserve 24 1,874 436 1,874 436
Fair Value reserve 24 - - - -
Foreign currency translation
reserve 24 308 66 - -
Accumulated losses (58,646) (55,530) (68,920) (66,011)
------------- ------------- ------------- -------------
Equity attributable to
equity
holders of the parent 20,660 11,927 10,078 1,380
------------- ------------- ------------- -------------
Total equity 20,660 11,927 10,078 1,380
============= ============= ============= =============
The financial statements of Xtract Resources Plc, registered
number 5267047, were approved by the Board of Directors and
authorised for issue. As permitted by Section 408 of the Companies
Act 2006, the income statement of the parent company is not
presented as part of these financial statements. The parent
company's profit for the financial year is disclosed in Note 3. It
was signed on behalf of the Company by:
Joel Silberstein
Director
30 June 2022
C onsolida ted Sta tement of Changes in Equity
Group
Sha Sha r W ar Sha r Fair Foreign Accumulated T o ta
r e e p r r a n e based value currency losses l E quity
Capital emium t r e p a yme r e ser translation GBP'000 GBP'00
GBP'00 a cc ou ser ve n ts v e reserve 0
N o t e 0 nt GBP'00 r e ser GBP'00 GBP'000
GBP'00 0 ve 0
0 GBP'00
0
As at 1 January
2020 4,892 59,884 54 397 - 276 (54,719) 10,784
A s at 31 December
2016 3,355 -
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
Comprehensive income
C omp r ehensi v
e in c ome
L o s s f or the (914
y e ar - - - - - - (914 ) )
F o r e x c ur r
ency t r ansl a
tion
Dif f e r en c e
s - - - - - (210) - (210)
Total comprehensive
T o tal comprehensive
income for the
y ear - - - - - (210) (914 ) (1,124)
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
Transactions with
owners
Issue of shares
I s su e of sha
r es 36 2,134 - - - - - 2,170
Share issue costs - (67) - - - - - (67)
Expiry of share
options - - - (103) - - 103 -
Issue of share options 24 - - - 142 - - - 142
I s su e of w ar
r ants 24 - - 22 - - - - 22
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
As at 31 December
2020 4,928 61,951 76 436 - 66 (55,530) 11,927
A s at 31 December
2016 4,955 -
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
Comprehensive income
C omp r ehensi v
e in c ome
L o s s f or the (3,132 (3,132
y e ar - - - - - - ) )
F o r e x c ur r
ency
t r ansl a tio n
dif f e r en ce - - - - - 242 - 242
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
Total comprehensive
T o tal comprehensive
income for the
y ear - - - - - 242 (3,132) (2,890)
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
Transactions with
owners
Issue of shares
I s su e of sha
r es 23 45 10,769 - - - - - 10,814
Sha r e issue costs - (664) - - - - - (664)
Issue of share options 24 - - - 1,473 - - - 1,473
Expiry of share
options - - - (16) - - 16 -
Exercise of share
options - 19 - (19) - - - -
I s su e of w ar
r ants 24 - (456) 456 - - - - -
Exercise of warrants - 65 (65) - - - - -
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
As at 31 December
2021 4,973 71,684 467 1,874 - 308 (58,646) (20,660)
A s at 31 December
2016 4,955 -
---------------------- ---- -------- -------- ------- -------- -------- ------------ ----------- ----------
S ta tement of Changes in Equity
Company
Share Share Warrant Share Fair Foreign Accumulated Total
Capital premium reserve based value currency losses Equity
GBP'000 account GBP'000 payments reserve translation GBP'000 GBP'000
GBP'000 reserve GBP'000 reserve
Note GBP'000 GBP'000
As at 1 January
2020 4,892 59,884 54 397 - - (64,803) 424
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Other Comprehensive
income
Other Comprehensive
income
Loss for the period - - - - - - (1,311) (1,311)
Other comprehensive - - - - - - - -
income
Total comprehensive
Total comprehensive
income for the year - - - - - - (1,311) (1,311)
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Issue of shares
Issue of shares 36 2,134 - - - - - 2,170
Share issue costs - (66) - - - - - (66)
Expiry of options 24 - - - (103) - - 103 -
Issue of share options - - - 142 - - - 142
Issue of warrants 24 - - 22 - - - - 22
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
As at 31 December
2020
As at 31 December
2016 4,928 61,951 76 436 - - (66,011) 1,380
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Other Comprehensive
income
Other Comprehensive
income
Loss for the period - - - - - - (2,925) (2,925)
Other comprehensive - - - - - - - -
income
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Total comprehensive
Total comprehensive
income for the year - - - - - - (2,925) (2,925)
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Issue of shares
Issue of shares 23 45 10,769 - - - - - 10,814
Share issue costs - (664) - - - - - (664)
Expiry of share
options - - - (16) - - 16 -
Issue of share options 24 - - - 1,473 - - - 1,473
Exercise of share
options - 19 - (19) - - - -
Issue of warrants 24 - (456) 456 - - - - -
Exercise of warrants - 65 (65) - - - - -
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
As at 31 December
2021
As at 31 December
2017 4,973 71,684 467 1,874 - - (68,920) 10,078
----------------------- --- -------- -------- -------- --------- -------- ------------ ----------- --------
Consolidated and Company Cash Flow Statement
Group Company
Y e ar ended Y e ar ended Y e ar ended Y e ar ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
No te GBP'000 GBP'000 GBP'000 GBP'000
Net cash generated from/(used
in) oper ating activities 25 (767) 189 (1,352) (234)
In v esting activities
Acquisition of subsidiary
undertaking - 36 - (9)
Acquisition of intangible
fixed assets 14 (5,009) (287) (751) (176)
Acquisition of tangible fixed
assets 15 (13) - - -
Loans advanced to group companies 19 - - (4,128) (213)
Net cash (used in)/from in
v esting activities (5,022) (251) (4,879) (398)
====================================== ===== ============ ============ ============ ============
Financing activities
Proceeds on issue of shar
es 10,149 636 10,149 636
Repayment of loans from group
companies - - 34 33
====================================== ===== ============ ============ ============ ============
Net cash (used in)/from financing
activities 10,149 636 10,183 669
====================================== ===== ============ ============ ============ ============
Net increase in cash and
cash equivalents 4,360 574 3,952 37
Cash and cash equivalents
at beginning of y ear 919 361 253 216
Effect of foreign e xchange
r a te changes 110 (16) - -
====================================== ===== ============ ============ ============ ============
Cash and cash equivalents
at end of y ear 5,389 919 4,205 253
====================================== ===== ============ ============ ============ ============
Significant Non Cash movements
No t es to the Financial Sta tements
Selected notes from the financial statements are set out below
without amendment to the note reference. The full notes are
contained in the Audited Annual Report and Accounts
1. General information
Xtract Resources Plc is a Public Company limited by shares
incorporated in England and Wales under the Companies Act 2006. The
address of the registered office is 7/8 Kendrick Mews, South
Kensington, London, SW7 3HG. The nature of the Group's operations
and its principal activities are set out in the Strategic Report on
pages 4 to 36.
The financial statements are presented in pounds sterling (GBP)
which is the functional currency of the Company Foreign operations
are included in accordance with the policies set out in note 3.
These annual financial statements were approved by the board of
directors on 30 June 2022.
2. Adoption of new and revised Standards
Basis of accounting
The consolidated annual financial statements have been prepared
in accordance with UK-adopted international accounting standards
and in conformity with the Companies Act 2006. The consolidated
annual financial statements have been prepared on the historical
cost basis, as modified by financial assets measured at fair value
through other comprehensive income. The principal accounting
policies are set out below.
On 31 December 2020 IFRS as adopted by the European Union were
brought into UK law and became UK-adopted international accounting
standards with future changes being subject to endorsement by the
UK Endorsement Board.
The financial statements of the Company have been prepared in
accordance with Financial Reporting Standard 101 "Reduced
Disclosure Framework" ('FRS 101') and the requirements of the
Companies Act 2006. The Company will continue to prepare its
financial statements in accordance with FRS 101 on an ongoing basis
until such time as it notifies shareholders of any change to its
chosen accounting framework.
In accordance with FRS 101, the Company has taken advantage of
the following exemptions:
-- Requirements of IAS 24, 'Related Party Disclosures' to
disclose related party transactions entered into between two or
more members of a group;
-- the requirements of paragraphs 134(d) to 134(f) and 135(c) to
135(e) of IAS 36 Impairments of Assets;
-- the requirements of IFRS 7 Financial Instruments: Disclosures;
-- the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B,
38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of
Financial Statements;
-- the requirements of paragraphs 134 to 136 of IAS 1
Presentation of Financial Statements;
-- the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors.
New and amended standards adopted by the Group
The most significant new standards and interpretations adopted,
none of which are considered material to the Group, are as
follows:
Application date of standards
Ref Title Summary (periods commencing)
========== =========================== ================================= =====================
IFRS9, Interest Rate Benchmark Amendments regarding measurement
IAS39 Reform Phase 2 and classification 1 January
and IFRS7 2021
========== =========================== ================================= =====================
IFRS 17 Insurance contracts 1 January
2021
========== =========================== ================================= =====================
IFRS 4 Amendments to Insurance 1 January
Contracts - deferral of 2021
IFRS 9 (issued on 25 June
2020)
========== =========================== ================================= =====================
New standards and interpretations not yet adopted
Unless material the Group does not adopt new accounting
standards and interpretations which have been published and that
are not mandatory for 31 December 2021 reporting periods.
No new standards or interpretations issued by the International
Accounting Standards Board ('IASB') or the IFRS Interpretations
Committee ('IFRIC') have led to any material changes in the
Company's accounting policies or disclosures during each reporting
period.
The most significant new standards and interpretations to be
adopted in the future are as follows:
Application date of standards
Ref Title Summary
(periods commencing)
IAS1 Presentation of Financial Statements Amendments regarding
the 1 January 2023
classification of liabilities
Amendments to defer effective 1 January 2023
date of the January 2020 amendments
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Company.
The directors are evaluating the impact that these standards
will have on the financial statements of the Group.
3. Significant accounting policies
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). These consolidated financial statements are
made up for the year ended 31 December 2021.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
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. 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.
Business combinations
The group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquire and the
equity interests issued by the group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The group recognises any non-controlling interest
in the acquire on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or
liability are accounted for in accordance with relevant IFRSs.
Contingent consideration is classified either as equity or as a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value, with changes in fair
value recognised in profit or loss.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are re- measured
to fair value at the acquisition date (i.e. the date the Group
attains control) and the resulting gain or loss, if any, is
recognised in profit or loss. Amounts arising from interests in the
acquiree prior to the acquisition date that have previously been
recognised in other comprehensive income are reclassified to profit
or loss, where such treatment would be appropriate if that interest
were disposed of.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
(2008) as amended, are recognised at their fair value at the
acquisition date.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition
date and is subject to a maximum of one year.
Going concern
The operations of the Group have been financed through operating
cash flows as well as through funds which have been raised from
shareholders. As at 31 December 2021, the Group held cash balances
of GBP5.39 million and an operating loss has been reported. Since
November 2017, the Group has been generating revenues, from its
Manica Alluvial operations, which have been covering the Manica
operating costs and not the costs for the rest of the Group. The
Directors anticipate net operating cash outflows for the Group for
the next twelve months from the date of signing these financial
statements.
The Directors have assessed the working capital requirements for
the forthcoming twelve months and have undertaken assessments which
have considered different scenarios based on exploration and mine
development spend along with a number of production forecasts until
June 2023.
Upon reviewing those cash flow projections for the forthcoming
twelve months, the directors consider that the Company is not
likely to require additional financial resources in the
twelve-month period from the date of approval of these financial
statements to enable the Company to fund its current operations and
to meet its commitments. The Group will continue to monitor
corporate overhead costs on an ongoing basis.
During 2019, the Company entered into a net profit share
agreement for it Fair Bride hard rock gold project in Manica,
Mozambique. The Company expects production build up during the 3rd
quarter 2022, with full commercial production being achieved during
the 4th quarter 2022. On this basis the Company expect earnings
from the Mozambique gold operations to be significant, with the
Fair Bride operation expected to continue for 3 years.
As is common with early producing companies, the Company raises
finance for its activities in discrete tranches to finance its
activities for limited periods only and further funding will be
required from time to time to finance those activities.
Nevertheless, after making enquiries and considering the above
and should the need arise the directors have a reasonable
expectation that the Company has adequate ability to raise
resources to continue in operational existence for the foreseeable
future. The Directors therefore continue to adopt the going concern
basis of accounting in preparing the annual financial
statements.
Parent only income statement
Xtract Resources Plc has not presented its own income statement
as permitted by section 408 of the Companies Act 2006. The loss for
the year ended 31 December 2021 was GBP2,925k (2020: loss
GBP1,311k).
Foreign currencies
The individual financial statements of each Group Company are
maintained in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group Company are expressed in Pound Sterling,
which is the functional currency of the Company, and the
presentational currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Foreign currency differences arising on retranslation into an
entity's functional currency are recognised in profit and loss.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in
equity.
On the disposal of a foreign operation (i.e. a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence
over an associate that includes a foreign operation), all of the
accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. The Group has
elected to treat goodwill and fair value adjustments arising on
acquisitions before the date of transition to IFRSs as Sterling
denominated assets and liabilities.
Taxation
The tax expense comprises current and deferred tax.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Intangible assets
Land acquisition rights and mine development costs
The costs of land acquisition rights in respect of mining
projects and mine development are capitalised as intangible assets.
These costs are amortised over the expected life of mine to their
residual values using the units-of-production method using
estimated proven and probable mineral reserves.
Intangible exploration and evaluation expenditure assets
The costs of exploration properties and leases, which include
the cost of acquiring prospective properties and exploration
rights, are capitalised as intangible assets. Exploration and
evaluation expenditure is capitalised within exploration and
evaluation properties until such time that the activities have
reached a stage which permits a reasonable assessment of the
existence of commercially exploitable reserves. Once the Company
has determined the existence of commercially exploitable reserves
and the Company decides to proceed with the project, the full
carrying value is transferred from exploration and development
costs to mining development. Capitalised exploration and evaluation
expenditure is assessed for impairment in accordance with the
indicators of impairment as set out in IFRS 6 Exploration for and
Evaluation of Mineral Reserves. In circumstances where a property
is abandoned, the cumulative capitalised costs relating to the
property are written off in the year. Capitalised exploration costs
are not amortised.
Property, plant and equipment
Tangible fixed assets represent mining plant and equipment,
office and computer equipment and are recorded at cost, net of
accumulated depreciation. Depreciation is provided on all tangible
fixed assets at rates calculated to write off the cost or valuation
of each asset on a straight-line basis over its expected useful
life, which is calculated on either a fixed period or the expected
life of mine using the unit of production method, as
appropriate.
The average life in years is estimated as follows:
Office and computer equipment 3-10
Plant and machinery 7-15
Until they are brought into use, fixed assets and equipment to
be installed are included within assets under construction and are
not depreciated.
The cost of maintenance, repairs and replacement of minor items
of tangible fixed assets are charged to the income statement as
incurred. Renewals and asset improvements are capitalised. Upon
sale or retirement of tangible fixed assets, the cost and related
accumulated depreciation are eliminated from the financial
statements. Any resulting gains or losses are included in the
income statement.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is
carried at a revalue amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
Financial instruments
Classification
The Group classifies its financial assets in the following
categories: at amortised cost including trade receivables and other
financial assets at amortised cost, at fair value through other
comprehensive income. The classification depends on the purpose for
which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
Trade receivables
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 30 days and are therefore all
classified as current. Trade receivables are recognised initially
at the amount of consideration that is unconditional, unless they
contain significant financing components, in which case they are
recognised at fair value. The group holds the trade receivables
with the objective of collecting the contractual cash flows, and so
it measures them subsequently at amortised cost using the effective
interest method.
Fair values of trade receivables
Due to the short-term nature of the current receivables, their
carrying amount is considered to be the same as their fair
value.
Other financial assets at amortised cost
Classification of financial assets at amortised cost
The group and parent company classify its financial assets as at
amortised cost only if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect the contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payments of principle and interest.
Other receivables
These amounts generally arise from transactions outside the
usual operating activities of the group. Interest could be charged
at commercial rates where the terms of repayment exceed six months.
Collateral is not normally obtained. The non-current other
receivables are due and repayable within three years from the end
of the reporting period.
Cash and cash equivalents comprise cash on hand and demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value. These are initially and
subsequently recorded at fair value.
Financial assets at fair value through other comprehensive
income
Classification of financial assets at fair value through other
comprehensive income
Financial assets at fair value through other comprehensive
income (FVOCI) comprise an investment held. These are carried in
the statement of financial position at fair value. Subsequent to
initial recognition, changes in fair value are recognised in the
statement of other comprehensive income.
Financial liabilities
Trade and other payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
Loans to/(from) Group companies
These include loans to and from subsidiaries are recognised
initially at fair value plus direct transaction costs.
Loans to Group companies are classified as financial assets at
amortised cost. Loans from Group companies are classified as
financial liabilities measured at amortised cost.
Inter-company loans are interest bearing.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at banks and on hand and short term highly liquid
deposits with a maturity of three months or less.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount
reported in the Statement of Financial Position when there is a
legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously. The legally enforceable
right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the company or the
counterparty.
Invetory
Inventories consist of the Company's share of gold dore bars
produced by the Alluvial Mining Contractors, which have been
smelted and are available for further processing. All inventories
are valued at the lower of cost of operations and net realisable
value. Costs include cost, which are closely related to the overall
alluvial operations including monitoring and compensation costs.
Net Realisable value is the estimated future sales price of the
product the Company is expected to realise after the product is
processed and sold less costs to bring the product to sale. Where
inventories have been written down to net realisable value, a new
assessment is made in the following period. In instances where
there has been change in circumstances which demonstrates an
increase in the net realisable value, the amount written down will
be reversed.
Share-based payments
Goods or services received or acquired in a share-based payment
transaction are recognised when the goods or as the services are
received. A corresponding increase in equity is recognised if the
goods or services were received in an equity-settled share-based
payment transaction or a liability if the goods or services were
acquired in a cash-settled share based payment transaction.
When the goods or services received or acquired in a share-based
payment transaction do not qualify for recognition as assets, they
are recognised as expenses.
For equity-settled share-based payment transactions the goods or
services received and the corresponding increase in equity are
measured, directly, at the fair value of the goods or services
received provided that the fair value can be estimated
reliably.
If the fair value of the goods or services received cannot be
estimated reliably, or if the services received are employee
services, their value and the corresponding increase in equity, are
measured, indirectly, by reference to the fair value of the equity
instruments granted.
Vesting conditions, which are not market, related (i.e. service
conditions and non-market related performance conditions) are not
taken into consideration when determining the fair value of the
equity instruments granted. Instead, vesting conditions which are
not market related shall be taken into account by adjusting the
number of equity instruments included in the measurement of the
transaction amount so that, ultimately, the amount recognised for
goods or services received as consideration for the equity
instruments granted shall be based on the number of equity
instruments that eventually vest. Market conditions, such as a
target share price, are taken into account when estimating the fair
value of the equity instruments granted. The number of equity
instruments are not adjusted to reflect equity instruments which
are not expected to vest or do not vest because the market
condition is not achieved.
If the share-based payments granted do not vest until the
counterparty completes a specified period of service, Group
accounts for those services as they are rendered by the
counterparty during the vesting period, (or on a straight- line
basis over the vesting period).
If the share-based payments vest immediately the services
received are recognised in full.
Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within
12 months after the service is rendered, such as paid vacation
leave and sick leave, bonuses, and non-monetary benefits such as
medical care), are recognised in the period in which the service is
rendered and are not discounted.
The expected cost of compensated absences is recognised as an
expense as the employees render services that increase their
entitlement or, in the case of non- accumulating absences, when the
absence occurs.
The expected cost of profit sharing and bonus payments is
recognised as an expense when there is a legal or constructive
obligation to make such payments as a result of past
performance.
Share-capital and equity
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Share Capital
Share capital represents the amount subscribed for shares at
nominal value.
Share Premium
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative amount
which has been expensed in the statement of comprehensive income in
connection with share-based payments, less any amounts transferred
to retained earnings on the exercise of share options.
Warrant Reserve
The warrant reserve presents the proceeds from issuance of
warrants, net of issue costs. Warrant reserve is non-distributable
and will be transferred to share premium account upon exercise of
warrants.
Finance Income
Finance income comprises interest income. Interest income is
recognised as it accrues in profit or loss, using the effective
interest method.
Revenue recognition
Revenue is recognised to the extent it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable, excluding discounts, rebates
and sales tax or duty. Revenue from sales of gold dore bars, is
recognised when control of the products has transferred, that is,
when the products are delivered to the customer. A receivable is
recognised when the goods are delivered, since this is the point in
time that the consideration is unconditional because only the
passage of time is required before the payment is due.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Executive Chairman who is
responsible for allocating resources and assessing performance of
the operating segments.
4. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The following are the critical judgements that the Directors
have made in the process of applying the Group's accounting
policies and that have the most significant effect on the amounts
recognised in the financial statements.
Financial Assets Fair Value through Comprehensive Income
The Group reviews the fair value of its unquoted equity
instruments at each statement of financial position date. This
requires management to make an estimate of the fair value of the
unquoted securities in the absence of an active market, which has
mainly been established by use of recent arm's length transactions,
as adjusted by a discount, where required. Uncertainty also exists
due to the early stage of development of corporate level
investments in subsidiaries.
Impairment of intangible assets
The assessment of intangible assets for any indications involves
judgement. Such assets have an indefinite useful life as the
Company has a right to renew exploration licences and the asset is
only amortised once extraction of the resource commences.
Management tests for impairment annually whether exploration
projects have future economic value in accordance with the
accounting policy stated in Note 14. Each exploration project is
subject to an annual review by either a consultant or a geologist
to determine if the exploration results returned during the period
warrant further exploration expenditure and have the potential to
result in an economic discovery. This review takes into
consideration long term metal prices, anticipated resource volumes
and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there
is no additional upside a decision will be made to discontinue
exploration; an impairment charge will then be recognised in the
Income Statement.
Share-based payments
The estimation of share-based payment costs requires the
selection of an appropriate valuation model and consideration as to
the inputs necessary for the valuation model chosen. The Group has
made estimates as to the volatility of its own shares, the probable
life of options granted and the time of exercise of those options.
The model used by the Group is the Black-Scholes model.
8. Expenses by nature
Pr ofit / (loss) from continuing oper ations and discontinued
oper ations for the y ear has been arrived at after charging the
following under administr ative and oper ating expenses:
Year ended Year ended
31 December 31 December
2021 2020
No te GBP'000 GBP'000
============================================== ===== ======================= ============
Depreciation of property, plant and equipment 15 11 -
Amortis ation of intangible fixed assets 14 - -
Inventory (160) 97
Auditors remuner ation 9 41 29
Directors remuner ation 10 1,317 309
Shar e-based payments expense 26 1,473 122
============================================== ===== ======================= ============
13. (Loss) per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
---------------------------------------------- ------------- -------------
(Loss) for the purposes of basic and diluted
earnings per share (EPS) being:
Net (loss) for the y ear from continuing
oper ation attributable to equity holders
of the parent (3,132) (914)
(3,132) (914)
---------------------------------------------- ------------- -------------
Number of Number of
shares shares
W eighted average number of ordinary shar
es for purposes of basic EPS 805,203,295 487,748,658
Effect of dilutive po tential ordinary shar - -
e s -options and warrants
W eighted average number of ordinary shar
es for purposes of diluted EPS 805,203,295 487,748,658
---------------------------------------------- ------------- -------------
In accordance with IAS 33, the share options and warrants do not
have a dilutive impact on earnings per shar e, which are set out in
the consolida ted income sta tement.
22. T rade and other pa yables
Group Company
As at As at As at As at
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------ ------------ ------------
Trade creditors and
accruals 2,226 1,051 396 362
Amounts due to subsidiaries - - - 11,483
Current tax payable 121 93 - -
2,347 1,144 396 11,845
----------------------------- ------------ ------------ ------------ ------------
31. Ultimate controlling party
The Directors believe there is no ultimate controlling
party.
32. E vents a f ter the balance sheet date
Issue of Equity
On 22 April 2022, the Company received notice to exercise
warrants over 4,416,665 ordinary shares of 0.02p each in the
Company at an exercise price of 1.20p per Ordinary Share, and a
further 833,333 Ordinary Shares at an exercise price of 1.85p per
Ordinary Share.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
ENDS
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END
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June 30, 2022 11:33 ET (15:33 GMT)
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