Empire Metals : Final Results

RNS Number : 8008V

Empire Metals Limited

19 April 2021

Empire Metals Limited / AIM: EEE / Sector: Natural Resources

19 April 2021

Empire Metals Limited ('Empire' or the 'Company')

Final Results

Empire Metals Limited, the AIM-quoted exploration and resource development company, announces its final results for the year ended 31 December 2020.

The annual report and accounts for the year ended 31 December 2020 will be posted to shareholders today and will be available for download on the Company's website, www.empiremetals.co.uk, later today.

Chairman's Statement

2020 was a significant year in so many ways, but for Empire Metals it was a year of significant forward momentum and marked the emergence of a new and reenergised strategy, a new flagship asset and a new jurisdiction of focus. These fresh dimensions to our company have clearly resonated with investors and from both an operational and corporate perspective, I am delighted with the progress that we made during the year.

The decisions made over the past 14 months have resulted in Empire now holding a 75% interest in a highly prospective gold asset which is poised for rapid advancement up the exploration and development curve. With the Eclipse Gold Project, I am confident that we are in the right place, at the right time and in the right commodity.

As investors may be aware, we are bearing witness to a modern-day gold rush in Western Australia. Exploration activity in the region hit a five-year high in 2020 despite initial fears earlier that it would be severely impacted due to the COVID-19 pandemic. Mines Minister Bill Johnson reported in H2 2020 that gold projects accounted for 70% of applications, prompted in part by the strong gold price performance during 2020 and forecasts for further gains in 2021 and beyond.

There have certainly been some notable winners in the gold exploration and development industry in the region, with junior miners and majors alike jostling for prime positions in Western Australia, which is set to become one of the largest gold producing regions globally. The combination of security of tenure, exceptionally mineralised terrane and increasing metals prices has triggered a review of both greenfield and brownfield projects alike. Additionally, working in Western Australia has been far less affected by Covid-19 restrictions than most regions of the world, and coupled with its world-class gold potential and its top 5 ranking over past 5 years in the Fraser Institute survey of best mining investment jurisdictions, Western Australia is clearly a great address for value creative mineral exploration and mine development.

Thanks to our acquisition of the Eclipse Gold Project, we believe Empire is ideally placed to be among the winners in the region. Located 55km north-east of Kalgoorlie, in a prime gold district of Western Australia, the Eclipse Gold Project produced 954 tonnes @ 24.6 g/t Au for 754.25 oz Au from the Eclipse shaft which operated up to 1910. In addition to the known mineralisation at and surrounding the Eclipse old workings, recent geophysics and geochemistry work has highlighted further potential mineralisation at two additional targets north-west of Eclipse, the Houdini and Easy prospects. The licence has been held by one private individual for the past 30 years, during which time only cursory modern exploration had been applied to a very small part of the entire ~300ha licence area, highlighting the significant opportunity to prove up known gold occurrences and make new gold discoveries.

Having announced the acquisition of a controlling interest in the Eclipse option in August 2020, Empire quickly set to work applying modern exploration programmes to this large, high-grade and previously producing mining licence. To date, the Company has conducted two phases of drilling at Eclipse and consistently encouraging results have been returned. A total of 2,578 metres of RC drilling was completed at the Eclipse and Houdini prospects in October and November 2020, with a second round of drilling commencing in January 2021. Highlights from this programme included 14m at 3.78 g/t gold ('Au') from 22m, including 1m @ 21.4 g/t Au, and 1m @ 16.65 g/t Au. This hole includes three different clusters of quartz veining mainly associated with the higher grades, confirming there is more than one mineralised structure.

A total of 4,589m of RC drilling was completed in this second phase, which was concluded in February 2021. Importantly, this programme confirmed the existence of a number of parallel veins in addition to the main Eclipse vein, including a different stockwork style of near-surface mineralisation in the vicinity of the Jack's Dream old workings, and including one intercept of 24m

• 1.44 g/t Au from 46m downhole (containing 2m @ 2.86 g/t Au; and 3m @ 5.08 g/t Au). The interpretation of these results is underway, and a further work programme will be announced shortly which is likely to include preparation of a JORC compliant resource and initial pit optimisation studies.

Outside of the Company's activities at Eclipse, the Board has made progress on various corporate developments principally concerning Empire's legacy interest in the Bolnisi Project in Georgia. A Sale and Purchase Agreement was agreed in October 2020 with TSXV-listed Candelaria Mining Corporation to acquire Empire's interest in the joint venture in Georgia, but the offer was subject to a right-of-first-refusal ("ROFR") on behalf of Empire's joint venture partner in Georgia. A long period of

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negotiations with the partner then ensued, and at the time of writing this is approaching a resolution. Throughout this period the Company has focussed on achieving the best possible outcome for shareholders and the Board is confident the Company will soon be able to put the frustrations of the Georgian joint venture behind us and focus the majority of our efforts on building on the new platform for growth in the Western Australian gold mining industry.

Financial Results

As an exploration and development group which has no revenue we are reporting a loss for the twelve months ended 31 December 2020 of £572,989 (31 December 2019: loss of £675,592).

The Group's cash position at the date of signing this report (16 April 2021) is £1.23 million.

Corporate

In keeping with the Company's focus on Western Australia, Mike Struthers, who has led the Company as CEO since January 2018, stepped down from his executive role in February 2021. I am delighted that Mike will remain a key Empire team member through his position as a Non-Executive Director of the Company, as well as being engaged as a Technical Consultant, providing technical guidance on the development of the Company's projects across its portfolio. At the same time, Non-Executive Director David Ajemian also resigned from the Empire board. The Board has an active search underway for a new CEO.

Outlook

Empire has made significant progress during 2020 and we are not breaking our stride as we move into 2021. The Eclipse Gold Project has demonstrated its potential as a standalone mine development, and we are now focussed on moving our exploration activities through to resource definition and into the feasibility phase. The project, region and commodity continue to generate significant interest in the market, and we are confident that we have a highly valuable asset poised for rapid value accretion. We will also be on the lookout for additional value-accretive acquisitions in 2021.

Our genesis as a value-drivenAustralian-focussed resource company will be cemented on the appointment of a new CEO, which we anticipate in the coming weeks, as we look forward to what we believe is a very bright future in this region.

I would like to thank shareholders and my board colleagues, both past and present, as we advance our strategy in Western Australia and look to deliver further high impact news flow throughout 2021.

Neil O'Brien

Non-Executive Chairman

16 April 2021

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

For further information please visit www.empiremetals.co.ukor contact:

			Tel:
Mike Struthers	Empire Metals Ltd	Company	020
7907
			9327
			Tel:
Ewan Leggat	S. P. Angel Corporate Finance	Nomad & Broker	020
LLP	3470
			0470
			Tel:
Adam Cowl	S. P. Angel Corporate Finance	Nomad & Broker	020
LLP	3470
			0470
			Tel:
Damon Heath	Shard Capital Partners LLP	Joint Broker	020
7186
			9950
			Tel:

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Susie Geliher	St Brides Partners	PR	020
	Ltd		7236
			1177
	St Brides Partners		Tel:
Cosima		020
Ltd	PR
Akerman	7236
			1177

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		Group
	Note	2020	2019
		£	£
Non-Current Assets
Property, plant and equipment	9	1,423	17,882
Investment in joint venture	24	-	-
Intangible assets	10	31,673	-
Total Non-current assets		33,096	17,882
Current Assets
Trade and other receivables	11	294,366	167,971
Financial assets at fair value through profit or loss	12	427,314	-
Cash and cash equivalents	13	2,289,638	50,840
Assets classified as held for sale	24	425,562	-
Total current assets		3,436,880	218,811
Total Assets		3,469,976	236,693
Current Liabilities
Trade and other payables	14	82,340	91,191
		82,340	91,191
Total Liabilities		82,340	91,191
Net Assets		3,387,636	145,502
Equity attributable to owners of the Parent
Share capital	15	-	-
Share premium	15	43,065,981	39,265,637
Reverse acquisition reserve		(18,845,147)	(18,845,147)
Other reserves	16	152,793	138,014
Accumulated losses		(20,985,991)	(20,413,002)
Total equity attributable to owners of the Parent		3,387,636	145,502
Non-controlling interest		-	-
Total Equity		3,387,636	145,502

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2020

			Group
		Note	Year ended 31	Year ended 31
			December 2020	December 2019
Continuing Operations		£	£
Revenue		6	1,204	111,457
Cost of sales		-	-
Gross profit		1,204	111,457
Administration expenses	7	(958,694)	(718,509)
Other gains / (losses)	18	3,721	29,367
Impairment of intangible assets	10	-	(97,907)
Operating Loss		(953,769)	(675,592)
Loss before Taxation		(953,769)	(675,592)
Income tax	8	(1,555)	-
Loss for the year from continuing operations		(955,324)	(675,592)
Profit from discontinued operations (attributable to	24	382,335	-
equity holders of the Company)
Loss for the year		(572,989)	(675,592)
Loss attributable to:
-	owners of the Parent		(572,989)	(675,592)
			(572,989)	(675,592)

Other Comprehensive Income:

Items that may be subsequently reclassified to profit or loss

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Exchange differences on translating foreign operations		661	(6,298)
Total Comprehensive Income		(572,328)	(681,890)
Attributable to:
- owners of the Parent		(572,328)	(681,890)
Total Comprehensive Income		(572,328)	(681,890)
-	Total comprehensive income attributable to		382,335	-
	discontinued operations
-	Total comprehensive income attributable to		(954,663)	-
	continued operations
				-
Earnings per share (pence) from continuing
operations attributable to owners of the Parent -	21	(0.456)	(0.535)
Basic & Diluted
Earnings per share (pence) from discontinued
operations attributable to owners of the Parent -	21	0.183	-
Basic & Diluted

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the year ended 31 December 2020

Attributable to Equity Shareholders

	Share	Reverse	Other	Retained
	acquisition	Total	Total equity
	premium	reserve	reserves	losses
	£	£	£	£	£	£
As at 1 January	38,904,337	(18,845,147)	136,020	(19,737,410)	457,800	457,800
2019
Loss for the year	-	-	-	(675,592)	(675,592)	(675,592)
Other
comprehensive
income
Exchange	-	-	(6,298)	-	(6,298)	(6,298)
differences on
translating foreign
operations
Total	-	-	(6,298)	(675,592)	(681,890)	(681,890)
comprehensive
income for the
year
Transactions with
owners
Issue of ordinary	380,000	-	-	-	380,000	380,000
shares	(18,700)	-	-	-	(18,700)	(18,700)
Share issue charge
Share option charge	-	-	8,292	-	8,292	8,292
Total transactions	361,300	-	8,292	-	369,592	369,592
with owners
As at 31	39,265,637	(18,845,147)	138,014	(20,413,002)	145,502	145,502
December 2019
As at 1 January	39,265,637	(18,845,147)	138,014	(20,413,002)	145,502	145,502
2020
Loss for the year	-	-	-	(572,989)	(572,989)	(572,989)
Other
comprehensive
income
Exchange	-	-	661	-	661	661
differences on
translating foreign
operations
Total	-	-	661	(572,990)	(572,328)	(572,328)
comprehensive
income for the
year
Transactions with
owners
Issue of ordinary	4,014,288	-	-	-	4,014,288	4,014,288
shares
Share issue charge	(213,944)	-	-	-	(213,944)	(213,944)
Share option charge	-	-	14,118	-	14,118	14,118
Total transactions	3,800,344	-	14,118	-	3,814,462	3,814,462
with owners
As at 31	43,065,981	(18,845,147)	152,793	(20,985,991)	3,387,636	3,387,636
December 2020

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2020

	Group
Note
2020	2019
	£	£
Cash flows from operating activities
Loss after taxation	(572,989)	(675,592)
Adjustments for:
Finders fees satisfied by issue of shares	82,144	8,292
Finders fees satisfied by issue of warrants	14,118	-
Share of profit on joint venture	(382,335)	-
Income tax expense	1,555	-
Depreciation and amortisation	9,183	16,160
Impairment of assets	-	97,907

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Loss/(gain) on sale of PP&E		(12,724)	-
Decrease/ (increase) in trade and other receivables		(7,158)	(26,866)
Increase in trade and other payables		(8,595)	(151,510)
Foreign exchange		-	(6,298)
Net cash used in operating activities		(876,801)	(737,907)
Cash flows from investing activities
Loans granted to subsidiaries and joint venture		(44,164)	(97,907)
partners
Purchase of financial asset		(345,170)	-
Additions to exploration and evaluation intangible		(31,673)	-
asset
Sale of property, plant & equipment		20,000	-
Net cash used in investing activities		(401,007)	(97,907)
Cash flows from financing activities
Proceeds from issue of shares		3,730,550	380,000
Cost of share issue		(213,944)	(18,700)
Net cash generated from financing activities		3,516,606	361,300
Net decrease in cash and cash equivalents		2,238,798	(474,514)
Cash and cash equivalents at beginning of		50,840	525,354
year
Cash and cash equivalents at end of year	13	2,289,638	50,840
Non-cash investing and financing activities
Purchase of financial asset - share based		164,288	-
payment1

• Comprises of 4,693,954 shares at 1.75p in respect of consideration payable and 4,693,954 shares at 1.75p in respect of finders' fees related to the Eclipse Option.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2020

ACCOUNTING POLICIES

1. General Information

The principal activity of Empire Metals Limited (formerly Georgian Mining Corporation) ("the Company") and its subsidiaries (together "the Group") is to implement its mineral exploration strategy to advance projects towards defining a sufficient in-situ mineral resource to support a detailed feasibility study towards mine development and production.

The Company's shares are traded on AIM, a market operated by the London Stock Exchange. The Company is incorporated in the British Virgin Islands and domiciled in the United Kingdom. The Company changed its name to Empire Metals Limited on 10 February 2020.

The address of its registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, BVI.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1 Basis of Preparation of Financial Statements

The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union applicable to companies under IFRS. The Group Financial Statements have been prepared under the historical cost convention.

The Financial Statements are presented in UK Pounds Sterling rounded to the nearest pound.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.

2.2 Changes in accounting policy and disclosures

(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 January 2020

As of 1 January 2020, the Company adopted IAS 1 (amendments) definition of material, IAS 8 (amendments) definition of material, IFRS 3 (amendments) definition of material and Amendments to References to the Conceptual Framework in IFRS Standards. The adoption of these standards did not have a material impact on the financial statements.

Of the other IFRSs and IFRICs, none are expected to have a material effect on the Group financial statements.

b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

Standard	Impact on initial application	Effective date
IFRS 16 (Amendments)	Property, plant, and equipment	*1 January 2022
IAS 1 (Amendments)	Classification of Liabilities as Current or Non- 1 January 2022
IAS 37 (Amendments)	Current.	and*1 January 2022
Provisions, contingent liabilities
	contingent assets

• Subject to endorsement

The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on future Group financial statements.

2.3 Basis of Consolidation

The Group Financial Statements consolidate the Financial Statements of Empire Metals Limited and the financial statements of all of its subsidiary undertakings made up to 31 December 2020.

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