("First Tin" or "the Company")
Final Audited Results for the year ended
Highlights
- Activities undertaken during the period under review created the platform for the Company's successful IPO on the Standard List of the
London Stock Exchange inApril 2022 raising £20 million (before expenses) of new equity capital which it intends to use to complete further resource drilling and feasibility studies on both its core Tellerhäuser and Taronga assets. - The material activities undertaken during the period under review include:
- Significant strengthening of the Board and executive management team which now benefits from over 150 years of combined experience in the exploration, development, mining, and processing of tin.
- Conversion of all outstanding debt and completion of a £6m equity placement leaving the Company debt free with significant available cash resources for investment.
- The signing of a Sale and Purchase agreement to acquire the advanced staged Taronga tin asset in
Australia , a deal that was completed post period end alongside the IPO. - Successful application for a significant amount of new exploration ground in
Germany called the Auersberg license, which sits directly between the Company's Tellerhäuser and Gottesberg assets, meaning that First Tin currently holds a single contiguous land package of over 23,000 hectares in a highly under-explored tin district inSaxony, Germany .
- Significant strengthening of the Board and executive management team which now benefits from over 150 years of combined experience in the exploration, development, mining, and processing of tin.
- The Company also completed CPRs on both its Tellerhäuser tin asset in
Germany and its Taronga tin asset inAustralia , which included a review of the underlying economic models of both mining projects and reported attractive economic returns assuming a price ofUS$30,000 per tonne of tin as follows:- Tellerhäuser's NPV
US$265 million at 8% discount rate and IRR of 58%; - Taronga's NPV
US$169 million at 8% discount rate and IRR of 59%.
- Tellerhäuser's NPV
"We are delighted to present our maiden set of preliminary results following an exciting and busy period for the Company which culminated post period end in our successful IPO, £20m fundraising and the acquisition of the advanced Taronga tin asset in
"We enter life as a listed company with a portfolio of high value, low capex tin assets located in Tier 1 jurisdictions with near term production and exploration upside potential. Both assets are ideally located to deliver a sustainable answer to the ongoing supply shortage currently facing many industrial users of tin.
"Moving into 2022, we have made an encouraging start to the new financial year and expect to provide regular updates to shareholders regarding the exploration and development activities currently underway as we push both of our core assets towards completion of their respective feasibility studies. With a strong balance sheet and experienced management team, we are well positioned to take advantage of the sizeable, rapidly growing tin market."
The Company's Annual General Meeting ("AGM") will be held at
Enquiries:
First Tin | Via SEC Newgate below |
020 7389 5016 | |
020 7220 1670 | |
SEC Newgate (Financial PR) | |
07900 248 213 |
Notes to Editors
First Tin is an ethical, reliable, and sustainable tin production company led by a team of renowned tin specialists. The Company is focused on becoming a tin supplier in conflict-free, low political risk jurisdictions through the rapid development of high value, low capex tin assets in
Tin is a critical metal, vital in any plan to decarbonise and electrify the world, yet
First Tin's goal is to use best-in-class environmental standards to bring two tin mines into production in three years, providing provenance of supply to support the current global clean energy and technological revolutions.
Chairman's Statement
I am delighted to report the first full year results of
In this regard, the Company successfully closed a £6m equity financing in
Furthermore, during the period under review, the Company initiated plans to list on the Main Market of the LSE and also signed a Sale and Purchase agreement with ASX listed Aus Tin Mining Limited ("Aus Tin") to acquire 100% of their Australian tin asset called Taronga. The acquisition was contingent on a minimum £20m equity fundraising and a successful IPO and I am delighted to be able to report that both these conditions were completed post period end meaning that First Tin now holds mature, tin assets located in the low-risk, conflict-free jurisdictions of
During the period, First Tin also refreshed the Board, appointing
Following the activities undertaken during 2021, on which Thomas will provide further detail in his Chief Executive Officer's Report, we are proud to commence life as a publicly listed company in a cash-rich, debt-free position, with quality assets in Tier 1 jurisdictions. To have been able to close a £20 million equity fundraising in early April, in what were extremely adverse macro-economic conditions reflects both the quality of our tin portfolio and also the ever-growing demand for new environmentally sensitive sources of tin production from
The next year will be an incredibly busy time for First Tin as we develop our German and Australian tin assets towards production, and we look forward to updating all shareholders with positive news flow as we begin our life on the Main Market.
Mr C Cannon Brookes
Non-executive Chairman
Chief Executive's Statement
Introduction
This has been a very busy period for the Company, primarily focused on getting First Tin ready to become a publicly listed company that can successfully develop its high value, low capex German and Australian tin assets. I am delighted to have joined First Tin at such an exciting time for the Company.
Having previously worked as Chief Operating Officer and Chief Technical Officer and on the Board at Aurubis AG,
The period under review saw us undertake a thorough refinancing of the business including converting the Baker Steel Resources Trust Limited ("Baker Steel") convertible loan note, the completion of a £6 million equity funding round, and the disposal of the Company's equity investment in Panthera Resources, all of which enabled the Group to become a cash-rich, debt-free business, poised for future growth.
This financing enabled us to undertake activities to build value within our portfolio. In our German assets, we undertook a Competent Persons Report ("CPR") and optimisation study at Tellerhäuser, commenced exploration drilling at Gottesberg, and successfully secured a new exploration licence which has enabled us to secure a large, strategic land package in a highly prospective, Tier 1 jurisdiction. In conjunction, we completed milestones towards the purchase of our late stage Taronga tin project in
First Tin's German and Australian tin assets are ideally located to deliver sustainable and conflict-free tin production in the future, and we are committed to best-in-class environmental responsibility with a 'leave no trace' philosophy including using low carbon and low waste production methods. Our aim is become a leading global tin producer that will supply fully traceable and verifiable tin units into fast-growth global industries which have a high requirement for tin.
Tellerhäuser -
Our Tellerhäuser project forms part of the Rittersgrün license and is one of the world's most advanced tin deposits with an exceptionally long history of mining and an active
Located within a tin district in
During the period, we undertook economic analysis to Scoping Study level, which showed the Tellerhäuser project is financially robust. The project's proximity to infrastructure means that it has a very low projected start-up capital expenditure of
In addition to the Mining Licence, First Tin also holds two Exploration Licences ("EL") in
First Tin intends to continue active drilling programmes at each of its German project areas.
At the Tellerhäuser project, we will undertake both surface and underground diamond drilling targeting both existing, and potential extensions to the known mineralisation. At Gottesberg, whose drill program commenced in Q4 2021, surface diamond drill holes will be completed to target shallower parts of the existing resource but also to explore areas outside the known deposit where there is evidence of historical mining activities. The Auersberg EL will also be drilled around various historical tin workings and will be targeting vein style greisens which were historically mined to a maximum depth of approximately 50m due to water ingress.
Taronga -
Our Taronga asset, which we acquired alongside our successful IPO last month, is also an asset which has had over one century of development, including extensive drilling, tunnelling, and mining.
Like with Tellerhäuser, Taronga is surrounded by excellent existing infrastructure and abundant underexplored tin showings, providing major exploration upside potential. Significant exploration work was undertaken by BHP in 1933, 1958, and 1964, and by the Newmont Joint Venture from 1979 to 1982. Between 2012 and 2018, the former owners of Taronga completed a Mineral Resource and Ore Reserve estimates as well as completing a pre-feasibility study ("PFS") on the asset and were granted a mining lease over part of the deposit.
Based on a mine production schedule that called for a total production of 23.2 million tonnes at 0.16% Sn, the PFS showed robust economics, at
A rapidly growing market
Global demand for tin is currently strong with tin prices hovering near ten-year highs on the back of the accelerating use for tin as a solder in electronics and in electromobility products. The
Supply is currently constrained following production disruptions in
Furthermore, as consumers increasingly opt for traceable, conflict-free and Environmental, Social and Governance ("ESG") compliant sources of tin, an opportunity exists for responsible mining companies such as First Tin whose operations and assets are located within
ESG
First Tin is supporting a decarbonised future and is committed to best-in-class environmental responsibility. The impacts of climate change are increasingly being felt around the world and First Tin is committed to being a zero-carbon emissions company as agreed to by nations participating in the Paris Agreement of 2015. As we progress towards production in the next three years, it is important to note that First Tin's operations will be designed to be as low-waste and low carbon as possible.
The Group applies stringent environmental controls and procedures to minimise and mitigate its impact on land, water, air quality, climate, and biodiversity and complies with the requirements of all applicable legislation, regulation, and rules. In that regard, First Tin has formed an internal ESG committee which will ensure that the Company is meeting its ESG key performance indicators ("KPIs") and the Group is also undertaking a third party independent ESG audit to provide an independent assessment of its operations and development plans.
IPO and near-term activities
After the year end, the Company's successful IPO and admission to trading on the Main Market of the LSE was a significant milestone in our history, raising £20 million of new funds to support the Group's growth strategy and we are delighted to welcome our new shareholders, both institutional and retail, to the register. We will use the net proceeds of the fundraise to execute the necessary steps to obtain the operational permits for both the Taronga and Tellerhäuser projects, as well as to conclude definitive feasibility studies ("DFS") for both projects. As part of this DFS work, further drilling programmes will be completed both to further prove up existing tin resources but also to undertake exploration drilling on new exploration targets of the Group.
Outlook
Looking forward, First Tin will continue to rapidly develop both its German and Australian tin assets, with the aim to create shareholder value while also delivering a sustainable answer to the ongoing supply shortage currently facing many industrial users of tin.
With a strong balance sheet and experienced management team comprising of renowned tin specialists, the Group is well positioned to take advantage of the sizeable, rapidly growing tin market. As a result, the Board looks forward to the future with great confidence.
Mr T Buenger
Chief Executive Officer
Strategic Report
Principal activity
The Company owns two advanced tin projects, one in
The Company's aim is to become a global tin producer supplying fully traceable and verifiable tin units into global industries with high tin usage needs.
Review of the business
A review of the business is set out in the Chief Executive Officer's report.
Financial review
The Group reported a loss after tax of £1,212,677 (2020: £682,289) and a net asset value of £7,569,316 (2020: £1,552,297) for the year ending
The Group completed the following material financial transactions during the year:
- In
April 2021 , 27,691,781 Ordinary Shares were issued at 8p each to Baker Steel as part of the conversion of their outstanding £2,200,000 convertible loan notes, realising an overall gain of £167,795 for the year. Post conversion the Group was in a debt free position; - In
April 2021 , 40,000,000 Ordinary Shares were issued at 15p each to complete a £6,000,000 equity funding round; - In
June 2021 , the Company sold its AIM listed equity investment in Panthera Resources Plc for £333,000 cash, realising an overall loss of £582,750 for the year; - In
November 2021 , the Company entered into an agreement with Aus Tin Mining Limited ("Aus Tin") to acquire its wholly owned subsidiary,Taronga Mines Pty Ltd ("Taronga") and its tin mining licences on a debt-free cash-free basis, paying an initial cash consideration of £734,182 (AUD$1,350,000) with a subsequent issue of 60,000,000 ordinary shares in the Company. The acquisition completed after the Company's year end on8 April 2022 at the same time as the Company's IPO on the Standard List of theLondon Stock Exchange ("LSE"); and - During November and
December 2021 , prior to the closing of the Taronga acquisition, the Company advanced £813,762 (AUD$1,505,000) to Taronga as an unsecured interest free loan to provide working capital to fund a strategic land acquisition which will assist the efficient future development of the Taronga asset.
During the year, the Group also completed CPRs on both its Tellerhäuser tin asset in
- Tellerhäuser's NPV
US$265 million at 8% discount rate and IRR of 58%; - Taronga's NPV
US$169 million at 8% discount rate and IRR of 59%.
At the year end, the Group had considerably improved its balance sheet position:
- Overall net assets increased by £6,017,019 to £7,569,316 (2020: £1,552,297);
- Cash reserves increased by £2,257,974 to £2,503,714 (2020: £245,740); and
- Current liabilities decreased by £2,364,748 to £301,452 (2020: £2,666,200).
Financial review (continued)
The Group completed its IPO on the Standard List of the LSE in
For the year under review, the Group's financial objectives under its key performance indicators were to secure additional funding, reduce debt, divest of non-core assets, improve its balance sheet and secure the further acquisition of another core asset as outlined above in preparation for the IPO in 2022.
Principal risks and uncertainties
The Directors consider the following to be the key risks and uncertainties applicable to the Group's activities:
Dependence on two projects
At the date of the Company's admission to the
Licences and permissions
The ability of the Group to progress its projects is highly dependent on it maintaining existing licences, successfully applying for extensions to such licences and acquiring future necessary licences and permissions. In the event that the Company does not do so its results of operations will be materially adversely affected.
On
SME filed an appeal on
Requirement for further capital
Whilst the Company has sufficient working capital for its plans in the short-medium term, to bring both of its projects into production, it will need to raise additional capital. Such capital could be by way of equity financing, which will dilute existing shareholders or by way of debt funding which could see the Company subject to various banking covenants.
Commodity prices
The Company's future value and its potential future revenues will be highly dependent on global tin prices. Although tin is, as at the date of these financial statements, at record highs, there can be no guarantee that the tin price will remain at such price levels. A depressed tin price will adversely affect the Company's revenues.
Nature of mineral exploration and development
Mineral exploration and development can be highly speculative in nature and involve a high degree of risk. The economics of developing mineral properties are affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of minerals, costs of development, infrastructure and processing equipment and such other factors as government regulations, including regulations to royalties, allowable production, importing and exporting of minerals and environmental protection.
Litigation risk
The Company may face litigation from third parties aimed at delaying or stopping the Company's operations or could potentially be impact by a third party attempting to litigate against a licensing authority. Such litigation could be brought by environmental pressure groups or competitors and could result in the Company having to spend management time and cash on dealing with such proceedings.
Mining industry risks and hazards
The Company's operations will be subject to typical hazards and risks present in exploiting natural resources. This includes accidents, industrial disputes and litigation from third parties. Any such events could materially impact the Company's financial condition.
Foreign exchange risk
The Company will be exposed to foreign exchange risk as it is domiciled in the
Environmental, social and governance considerations
First Tin is committed to the environmentally sensitive development of advanced hard rock tin projects in conflict free, low political risk jurisdictions. The Company's goal is to develop and operate zero carbon sustainable tin mines that support the current global clean energy and technological revolutions.
First Tin is also supporting a decarbonised future and is committed to best-in-class environmental responsibility. The impacts of climate change are increasingly being felt around the world and First Tin is committed to being a zero-carbon emissions company as agreed to by nations participating in the Paris Agreement of 2015. The Company applies stringent environmental controls and procedures to minimise and mitigate its impact on land, water, air quality, climate and biodiversity and complies with the requirements of all applicable legislation, regulation and rules. First Tin is currently in the process of undertaking a third party independent ESG audit assessment and is a qualified candidate for
Events after the reporting date
On
On
Also on
This report was approved by the board on
Mr C Cannon Brookes
Director
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED
Notes | 2021 | 2020 | ||||
£ | £ | |||||
Administrative expenses | (1,321,977 | ) | (589,002 | ) | ||
Operating loss | 6 | (1,321,977 | ) | (589,002 | ) | |
Other gains and losses | 8 | 167,795 | 110,321 | |||
Finance costs | 9 | (58,495 | ) | (203,608 | ) | |
Loss on ordinary activities before taxation | (1,212,677 | ) | (682,289 | ) | ||
Income tax expense | 10 | - | - | |||
Loss after taxation | (1,212,677 | ) | (682,289 | ) | ||
Other comprehensive income: | ||||||
Exchange differences on translation of foreign operations | (117,093 | ) | 112,557 | |||
Changes in the fair value of equity instruments at fair value through other comprehensive income | 16 | (582,750 | ) | 749,250 | ||
Total comprehensive (loss)/income for the year | (1,912,520 | ) | 179,518 | |||
Loss per share | ||||||
Basic (pence) | 11 | (1.02 | ) | (1.02 | ) | |
| ||||||
Diluted (pence) | 11 | (1.02 | ) | (1.02 | ) | |
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
Notes | 2021 | 2020 | ||||
Assets | £ | £ | ||||
Non-current assets | ||||||
Intangible assets | 13 | 3,380,913 | 2,950,227 | |||
Investments deposit and long-term receivables | 14 | 1,543,670 | - | |||
Property, plant and equipment | 15 | 28,851 | 10,930 | |||
Financial assets at fair value through other comprehensive income | 16 | - | 915,750 | |||
4,953,434 | 3,876,907 | |||||
Current assets | ||||||
Trade and other receivables | 17 | 413,620 | 95,850 | |||
Cash and cash equivalents | 2,503,714 | 245,740 | ||||
2,917,334 | 341,590 | |||||
Total assets | 7,870,768 | 4,218,497 | ||||
Liabilities | ||||||
Current liabilities | ||||||
Convertible loan notes | 18 | - | (2,478,479 | ) | ||
Trade and other payables | 19 | (301,452 | ) | (187,721 | ) | |
(301,452 | ) | (2,666,200 | ) | |||
Net current assets/(liabilities) | 2,615,882 | (2,324,610 | ) | |||
Total assets less current liabilities | 7,569,316 | 1,552,297 | ||||
Net assets | 7,569,316 | 1,552,297 | ||||
Equity | ||||||
Called up share capital | 22 | 138,868 | 70,177 | |||
Share premium account | 22 | 17,931,296 | 10,264,409 | |||
Share to be issued | 23 | - | 50,411 | |||
Warrant reserve | 24 | 95,372 | - | |||
Retained earnings | 24 | (10,507,856 | ) | (8,861,429 | ) | |
Translation reserve | 24 | (88,364 | ) | 28,729 | ||
Total equity | 7,569,316 | 1,552,297 |
The notes below form part of these financial statements.
The financial statements were approved and authorised for issue by the board on
Mr C Cannon Brookes
Director
Company number 07931518
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
Share capital | Share premium account | Shares to be issued | Warrant reserve | Retained earnings | Translation reserve | Total equity | ||||||
£ | £ | £ | £ | £ | £ | £ | ||||||
At | 63,702 | 9,686,028 | 50,411 | - | (8,928,390 | ) | (83,828 | ) | 787,923 | |||
Comprehensive income: | ||||||||||||
Loss for the year | - | - | - | - | (682,289 | ) | - | (682,289 | ) | |||
Other comprehensive income | - | - | - | - | 749,250 | 112,557 | 861,807 | |||||
Total comprehensive income | - | - | - | - | 66,961 | 112,557 | 179,518 | |||||
Transactions with owners: | ||||||||||||
Accrued interest on convertible loan notes | - | - | 200,548 | - | - | - | 200,548 | |||||
Issuance of shares | 6,475 | 578,381 | (200,548 | ) | - | - | - | 384,308 | ||||
6,475 | 578,381 | - | - | - | - | 584,856 | ||||||
At | 70,177 | 10,264,409 | 50,411 | - | (8,861,429 | ) | 28,729 | 1,552,297 | ||||
Comprehensive income: | ||||||||||||
Loss for the year | - | - | - | - | (1,212,677 | ) | - | (1,212,677 | ) | |||
Other comprehensive income | - | - | - | - | (582,750 | ) | (117,093 | ) | (699,843 | ) | ||
Total comprehensive income | - | - | - | - | (1,795,427 | ) | (117,093 | ) | (1,912,520 | ) | ||
Transactions with owners: | ||||||||||||
Accrued interest on convertible loan notes | - | - | 54,247 | - | - | - | 54,247 | |||||
Issuance of shares | 68,691 | 7,747,650 | (104,658 | ) | - | - | - | 7,711,683 | ||||
Share based payments | - | (80,763 | ) | - | 95,372 | 149,000 | - | 163,609 | ||||
68,691 | 7,666,887 | (50,411 | ) | 95,372 | 149,000 | - | 7,929,539 | |||||
At | 138,868 | 17,931,296 | - | 95,372 | (10,507,856 | ) | (88,364 | ) | 7,569,316 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
Note | 2021 | 2020 | ||||
£ | £ | |||||
Cash flows from operating activities | ||||||
Operating loss | (1,321,977 | ) | (589,002 | ) | ||
Adjustments for: | ||||||
Depreciation | 8,845 | 9,575 | ||||
Share based payment expense | 163,609 | - | ||||
Increase in trade and other receivables | (317,770 | ) | (7,642 | ) | ||
Increase in trade and other payables | 113,731 | 64,165 | ||||
Cash used in operations | (1,353,562 | ) | (522,904 | ) | ||
Interest paid | (4,248 | ) | (3,060 | ) | ||
Net cash used in operating activities | (1,357,810 | ) | (525,964 | ) | ||
Cash flows from investing activities | ||||||
Purchase of intangible fixed assets | (588,255 | ) | (286,779 | ) | ||
Purchase of property, plant and equipment | (28,165 | ) | - | |||
Initial consideration to acquire Taronga | (734,182 | ) | - | |||
Loan advanced to Taronga | (813,762 | ) | - | |||
Proceeds from sale of investment | 333,000 | 100,000 | ||||
Net cash used in investing activities | (1,831,364 | ) | (186,779 | ) | ||
Cash flows from financing activities | ||||||
Proceeds from issue of shares | 5,601,000 | 384,308 | ||||
Proceeds from issue of convertible loans | - | 200,000 | ||||
Interest paid in respect of convertible loans | (200,000 | ) | - | |||
Net cash generated from financing activities | 5,401,000 | 584,308 | ||||
Net increase/(decrease) in cash and cash equivalents | 2,211,826 | (128,435 | ) | |||
Cash and cash equivalents at beginning of year | 245,740 | 363,264 | ||||
Currency translation | 46,148 | 10,911 | ||||
Cash and cash equivalents at the end of year | 2,503,714 | 245,740 | ||||
The notes below form part of these financial statements.
As disclosed in note 22, the material non-cash transactions relate to the equity conversion of convertible loan notes and the issued of new shares to Mr T Buenger.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
1 General Information
The Company is a public company limited by shares, incorporated in
On
The financial statements comprise of financial information of the Company and its subsidiary (the "Group"). The principal activities of the Company and the Group and the nature of their operations are disclosed elsewhere in these financial statements.
2 Presentation of financial statements
The financial statements are presented in pounds sterling, as this is the currency of the primary economic environment that the Group operates in.
3 Significant accounting policies
3.1 Basis of preparation
These financial statements have been prepared on the going concern basis in accordance with International Financial Reporting Standards as adopted by the
3.2 Going concern
The Group currently has no income and meets its working capital requirements through raising development finance. In common with many businesses engaged in exploration and evaluation activities prior to production and sale of minerals the Group will require additional funds and/or funding facilities in order to fully develop its business plan. Ultimately the viability of the Group is dependent on future liquidity in the exploration period and this, in turn, depends on the availability of funds.
During the year the Company raised net proceeds of £5.6 million from a private placing of new shares. Subsequent to the year end, the Company's shares were admitted to trading on the
The Directors have prepared financial projections and plans for a period of at least 12 months from the date of approval of these financial statements. Based on the current management plan, management believes that these funds are sufficient for the expenditure to date as well as the planned forecast expenditure for the forthcoming twelve months.
The Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors consider it appropriate for the Group and the Company to adopt the going concern basis in preparing these financial statements.
3 Significant accounting policies (continued)
3.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has power over the investee, is exposed or has rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns.
Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
The results of subsidiaries acquired or disposed of are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
3.4 Intangible assets other than goodwill
Exploration and evaluation assets
The Group capitalises costs which directly relate to exploration and evaluation activities in areas for which it has obtained appropriate legal rights and there is a high degree of confidence in the feasibility of the project.
Capitalised exploration and evaluation costs include acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploration drilling, sampling and activities in relation to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource. General and administrative costs directly associated with such activities are also capitalised.
Exploration and evaluation costs are carried at cost less any impairment and are not amortised prior to the conclusion of the appraisal activities. If the appraisal activities establish the existence of commercial reserves and the decision is made to develop the site, then the carrying value of the associated exploration and evaluation assets is tested for impairment and subsequently reclassified as development and production assets. If commercial reserves have not been found, or exploration and evaluation activities have been abandoned, then the associated exploration and evaluation assets are fully impaired.
Impairment charges and exploration costs incurred prior to obtaining legal rights are expensed in the profit and loss as incurred.
3.5 Property, plant and equipment
Items of property, plant and equipment that do not form part of the exploration and evaluation assets are carried as cost less accumulated depreciation and are depreciated on a straight-line basis over the following expected useful economic lives:
Motor vehicles 3 years
Fixtures and fittings 3 - 15 years
Computer equipment 5 years
3 Significant accounting policies (continued)
3.6 Impairment of non-financial assets
At each reporting date, the Directors assess whether there is any indication that a Group's asset, other than deferred tax assets, may be impaired. Where an indicator of impairment exists, the Directors make an estimate of the recoverable amount. An impairment loss is recognised in profit and loss whenever the carrying amount of the asset or cash generating unit exceeds its recoverable amount.
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 (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss, 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 (or 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 (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit and loss, unless the relevant asset is carried at a revalued amount greater than cost, in which case the reversal of the impairment loss is treated as a revaluation increase.
3.7 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.
3.8 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
3.9 Financial assets
Financial assets are recognised in the Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows. Financial assets are initially measured at fair value plus transaction costs, other than those classified as "fair value through profit or loss" or "fair value through other comprehensive income", which are measured at fair value.
3 Significant accounting policies (continued)
3.9 Financial assets (continued)
Loans and receivables
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. They are subsequently measured at amortised cost using the effective interest method less loss allowance.
Loans and other receivables that have fixed or determinable payments and are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost using the effective interest method less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Financial assets at fair value through "other comprehensive income"
Financial assets at fair value through "other comprehensive income" comprise of equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.
Changes in the fair value of these assets are recognised in "other comprehensive income".
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit loss associated with its receivables carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, resulting in trade receivables recognised and carried at original invoice amount less an allowance for any uncollectible amounts based on expected credit losses.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at "fair value through other comprehensive income". The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
3 Significant accounting policies (continued)
3.10 Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
Other financial liabilities
Other financial liabilities, including trade and other payables, are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the Group's obligations are discharged, cancelled, or they expire.
3.11 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.
3.12 Derivative financial instruments
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit and loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit and loss depends on the nature of the hedge relationship.
Embedded derivatives
An embedded derivative is a component of a hybrid contract that also includes a non-derivative host - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. The convertible loan is measured at amortised cost and the conversion option is subsequently measured at fair value. The Group's policy is to offset the financial asset and liability in relation to the single hybrid instrument and show them on a single line.
3.13 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
3 Significant accounting policies (continued)
3.13 Taxation (continued)
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 goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting 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 period when the liability is settled, or the asset is realised. Deferred tax is charged or credited in the profit and loss, 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 the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
3.14 Foreign exchange
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in pound sterling, which is the Group's functional and presentation currency.
Transactions and balances
Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Gains and losses arising on translation are included in profit or loss for the period.
Group companies
For the purpose of presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for each period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transaction are used. All resulting exchange differences are recognised in "other comprehensive income" and accumulated in equity.
3.15 Leases
The Directors assess whether a Group's contract is, or contains, a lease at inception of the contract.
Payments associated with short-term leases or leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease-term of 12 months or less without a purchase option.
3 Significant accounting policies (continued)
3.16 Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 12 to these financial statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Directors' estimate of the number of equity instruments that will eventually vest. At each reporting date, the Directors revises their estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
3.17 New and amended standards adopted by the Group
The Group has applied the following amendments for the first time for the annual reporting period commencing
- Covid-19-Related Rent Concessions - amendments to IFRS 16; and
- Interest Rate Benchmark Reform - Phase 2 - amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
3.18 New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for
4 Critical accounting estimates and judgements
The preparation of the Group's financial statements under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Details of the Group's significant accounting judgements used in the preparation of these financial statements include:
Recoverability of intangible exploration and evaluation assets
Where a project is sufficiently advanced, the recoverability of intangible exploration and evaluation assets is assessed by comparing the carrying value to internal and operator estimates of the net present value of projects. Intangible exploration assets are inherently judgemental to value. The amounts for intangible exploration and evaluation assets represent active exploration projects. These amounts will be written-off to the profit and loss as exploration costs unless commercial reserves are established, or the determination process is completed and there are no indications of impairment.
5 Segmental analysis
In the opinion of the Board of Directors the Group has one operating segment, being the exploitation of mineral rights.
Non-current assets by region are summarised below:
2021 | 2020 | |||
£ | £ | |||
3,409,764 | 3,876,907 | |||
1,543,670 | - | |||
4,953,434 | 3,876,907 |
6 Operating loss
The operating loss for the year is stated after charging the following:
2021 | 2020 | ||||
£ | £ | ||||
Depreciation | 8,845 | 9,575 | |||
Expenses relating to short-term leases | 44,586 | 36,398 | |||
Auditor's remuneration: | |||||
Fees payable to the Company's auditor for the audit of the Company and consolidated financial statements | 35,000 | - | |||
Fees payable to the Company's auditor for other services: Other transaction work | 130,800 | - | |||
Less: amounts reclassified as prepayments | (130,800 | ) | - | ||
35,000 | - |
7 Staff costs and Directors' remuneration
2021 | 2020 | |||||
£ | £ | |||||
Wages and salaries | 309,857 | 171,415 | ||||
Social security costs | 52,298 | 11,015 | ||||
Total staff cost | 362,155 | 182,430 | ||||
Less: amount capitalised as intangible asset | (117,548 | ) | (82,147 | ) | ||
Total staff cost recognised in the profit and loss | 244,607 | 100,283 | ||||
The average number of staff employed by the Group, including Directors, is detailed below: | ||||||
2021 | 2020 | |||||
No. | No. | |||||
Management and administration | 3 | 3 | ||||
Geology and environment | 3 | 3 | ||||
6 | 6 |
Directors' remuneration and fees are disclosed in note 21.
The Directors are regarded as the key management personnel.
8 Other gains and losses
2021 | 2020 | ||||||
£ | £ | ||||||
Gain on fair value of conversion option | (167,795 | ) | (60,462 | ) | |||
Profit on disposal of subsidiary | - | (49,859 | ) | ||||
(167,795 | ) | (110,321 | ) | ||||
9 Finance costs
2021 | 2020 | |||
£ | £ | |||
Interest on convertible loan notes | 54,247 | 200,548 | ||
Bank charges and other finance costs | 4,248 | 3,060 | ||
58,495 | 203,608 |
10 Income tax expense
2021 | 2020 | |||||
£ | £ | |||||
Current tax | - | - | ||||
Deferred tax | - | - | ||||
- | - | |||||
2021 | 2020 | |||||
£ | £ | |||||
Loss before taxation on continued operations | (1,212,677 | ) | (682,289 | ) | ||
Loss on before taxation multiplied by standard rate of | (230,409 | ) | (129,635 | ) | ||
Difference in overseas tax rate | (61,154 | ) | (45,824 | ) | ||
Expenses not deductible for tax | 31,519 | 16,605 | ||||
Income and gains not subject to tax | - | (9,473 | ) | |||
Effect of tax losses not recognised as deferred tax assets | 260,044 | 168,327 | ||||
Total tax charge for the year | - | - |
The Group has tax losses carried forward of approximately £7.4 million (2020: £5.9 million). The unutilised tax losses have not been recognised as a deferred tax asset due to uncertainty over the timing of future profits and gains.
11 Loss per Ordinary Share
2021 | 2020 | |||||
Loss for the year attributable to the ordinary equity holders of the Company (£) | (1,212,677 | ) | (682,289 | ) | ||
Basic: | ||||||
Weighted average number of Ordinary Shares issued (No.) | 118,813,650 | 66,291,393 | ||||
Adjustment for accrued shares to be issued for interest on convertible loan notes (note 17) (No.) | - | 727,199 | ||||
Total weighted average number of Ordinary Shares issued used in basic and diluted loss per Ordinary Share calculation (No.) | 118,813,650 | 67,018,593 | ||||
Basic loss per Ordinary Share | (1.02 | ) | (1.02 | ) | ||
Diluted: | ||||||
Weighted average number of Ordinary Shares issued (No.) | 122,593,003 | 66,291,393 | ||||
Adjustment for accrued shares to be issued for interest on convertible loan notes (note 17) (No.) | - | 727,199 | ||||
Total weighted average number of Ordinary Shares issued used in basic and diluted loss per Ordinary Share calculation (No.) | 122,593,003 | 67,018,593 | ||||
Diluted loss per Ordinary Share | (1.02 | ) | (1.02 | ) |
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive warrants, options and convertible loans over ordinary shares. Potential ordinary shares resulting from the exercise of warrants, options and the conversion of convertible loans have an anti-dilutive effect due to the Group being in a loss position. As a result, diluted loss per share is disclosed as the same value as basic loss per share.
12 Share based payments
Share options
On
2021 | 2020 | |||||
No. of options | No. of options | |||||
Outstanding at beginning of year | 2,210,000 | 2,275,000 | ||||
Expired during the period | (650,000 | ) | (65,000 | ) | ||
Outstanding at the end of the year | 1,560,000 | 2,210,000 | ||||
Exercisable at the end of the year | 1,560,000 | 2,210,000 |
The options outstanding at
Share warrants
2021 | 2020 | ||||
No. of warrants | No. of warrants | ||||
Outstanding at beginning of year | 2,407,048 | 2,407,048 | |||
Granted during the period | 3,168,000 | - | |||
Lapsed during the period | (2,407,048 | ) | - | ||
Outstanding at the end of the year | 3,168,000 | 2,407,048 | |||
Exercisable at the end of the year | 3,168,000 | 2,407,048 |
The warrants outstanding at
Impact on the statement of comprehensive income
Share options
The Group did not recognise a charge in profit or loss for the year ended
Share warrants
The Group recognised a charge of £14,609 in profit or loss for the year ended
Shares issued
The Group recognised a charge of £149,000 in profit or loss for the year ended
13 Intangible assets
Exploration and evaluation assets | |||||
£ | |||||
Cost | |||||
At | 2,602,707 | ||||
Additions | 286,779 | ||||
Disposals | (50,000 | ) | |||
Currency translation | 110,741 | ||||
At | 2,950,227 | ||||
Additions | 588,255 | ||||
Currency translation | (157,569 | ) | |||
As at | 3,380,913 |
The intangible assets relate to the Tellerhäuser and Gottesberg tin projects located in southern
The Directors assess for impairment when facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount. In making this assessment, the Directors have regard to the facts and circumstances noted in IFRS 6 paragraph 20. In performing their assessment of each of these factors, at
a) reviewed the time period that the Group has the right to explore the area and noted no instances of expiration, or licences that are expected to expire in the near future and not be renewed;
b) determined that further E&E expenditure is either budgeted or planned for all licences;
c) not decided to discontinue exploration activity due to there being a lack of quantifiable mineral resource; and
d) not identified any instances where sufficient data exists to indicate that there are licences where the E&E spend is unlikely to be recovered from successful development or sale.
On the basis of the above assessment, the Directors are not aware of any facts or circumstances that would suggest the carrying amount of the E&E asset may exceed its recoverable amount.
14 Investments deposit and long-term receivables
Investment deposit | Long-term receivables | Total | ||||||||
£ | £ | £ | ||||||||
Cost | ||||||||||
At | - | - | - | |||||||
Additions | 734,182 | 813,762 | 1,547,944 | |||||||
Currency translation | - | (4,274 | ) | (4,274 | ) | |||||
At | 734,182 | 809,488 | 1,543,670 |
In
No provision for impairment was recognised as at
The table below sets out the Company's subsidiaries. The subsidiaries have share capital consisting solely of ordinary shares and the proportion of ownership interests held equals the voting rights. The registered office address is also their principal place of business:
Place of operation | Principal activity | Shareholding | ||
(incorporated in | Platz der Oktoberopfer 1A 09599 Freiberg | Mineral exploration | 100 | % |
In
15 Property, plant and equipment
Motor vehicles | Fixtures and fittings | Total | |||||||
£ | £ | £ | |||||||
Cost | |||||||||
At | 15,550 | 41,957 | 57,507 | ||||||
Additions | 24,842 | 3,323 | 28,165 | ||||||
Currency translation | (1,589 | ) | (7,483 | ) | (9,072 | ) | |||
At | 38,803 | 37,797 | 76,600 | ||||||
Accumulated depreciation | |||||||||
At | 8,650 | 29,374 | 38,024 | ||||||
Charge for the year | 5,209 | 4,366 | 9,575 | ||||||
Currency translation | (341 | ) | (681 | ) | (1,022 | ) | |||
At | 13,518 | 33,059 | 46,577 | ||||||
Charge for the year | 4,811 | 4,034 | 8,845 | ||||||
Currency translation | (762 | ) | (6,911 | ) | (7,673 | ) | |||
At | 17,567 | 30,182 | 47,749 | ||||||
Net book value | |||||||||
At | 2,032 | 8,898 | 10,930 | ||||||
At | 21,236 | 7,615 | 28,851 | ||||||
16 Financial assets at fair value through other comprehensive income
2021 £ | 2020 £ | |||
Shares held in AIM listed company | - | 915,750 |
The Group's equity investment consists of a minority shareholding in Panthera Resources Plc, a company listed on the AIM market of the
17 Trade and other receivables
2021 | 2020 | |||
£ | £ | |||
Trade receivables | - | 7,800 | ||
Prepayments and other receivables | 311,549 | 11,425 | ||
Amounts due from related parties | - | 69,818 | ||
Recoverable value added taxes | 102,071 | 6,807 | ||
413,620 | 95,850 |
18 Convertible loan note
2021 £ | 2020 £ | |||
Convertible loan note | - | 2,478,479 | ||
In 2018, the Group issued 5-year convertible loan note ("CLN") for £1,000,000, being tranches 1-3 and in 2019 a further £1,000,000, being tranche 4 was issued. In 2020, the Group issued a further £200,000 CLN, being tranche 5 and repayable in 3 years. The notes carry an interest rate of 10% per annum, payable in a fixed number of Ordinary Shares. On maturity, the CLN are converted into Ordinary Shares at a fixed price, unless the Company exercises its option to redeem the CLN at par in cash. There are further conversion provisions in the event of an IPO or a change of control and the noteholders have the option to convert the CLN into Ordinary Shares early.
The Company's conversion option to redeem the CLN in cash instead of Ordinary Shares is a non-closely related embedded derivative so is accounted for separately at "fair value through profit and loss" and the host contract is initially measured at fair value and subsequently carried at amortised cost. The Company's policy is to offset the financial asset and liability in relation to the single hybrid instrument and show them in a single line in the Statement of Financial Position.
The host contract is a financial liability, and the interest payments are in fixed number of Ordinary Shares, and thus represent an equity instrument recognised directly in equity in the "shares to be issued" reserve.
In
The gain on fair value of the CLN of £167,795 is included within other gains and losses in profit or loss.
The movement in the embedded derivative financial asset is shown below:
2021 | 2020 | ||||
£ | £ | ||||
Opening balance | (569,512 | ) | (439,727 | ) | |
Fair value of option at inception - tranche 5 | - | (69,323 | ) | ||
Gain on fair value of option - tranches 1-3 | (338,265 | ) | (5,667 | ) | |
Gain on fair value of option - tranche 4 | (340,178 | ) | (56,095 | ) | |
(Gain)/loss on fair value of option - tranche 5 | (103,512 | ) | 1,300 | ||
Convertible loan conversion | 1,351,467 | - | |||
Closing balance | - | (569,512 | ) |
The movement in the debt host contract liability is shown below:
2021 | 2020 | |||
£ | £ | |||
Opening balance | 3,047,991 | 2,778,668 | ||
Cash subscription - tranche 5 | - | 200,000 | ||
Fair value of option at inception - tranche 5 | - | 69,323 | ||
Redemption | (3,047,991 | ) | - | |
Closing balance | - | 3,047,991 |
The convertible loan note balance of £nil (2020: £3,047,991) is the net of the financial asset and liability, shown in the tables above.
19 Trade and other payables
2021 | 2020 | |||
£ | £ | |||
Trade payables | 210,521 | 82,184 | ||
Accruals | 79,449 | 86,445 | ||
Other payables | 11,482 | 19,092 | ||
301,452 | 187,721 |
20 Financial instruments
The principal financial instruments used by the Group from which financial instrument risk arises are as follows:
Financial assets
2021 £ | 2020 £ | |||
Fair value through the profit and loss account | ||||
Convertible loan option | - | 569,512 |
2021 | 2020 | |||
£ | £ | |||
Measured at amortised cost | ||||
Cash and cash equivalents | 2,503,714 | 245,740 | ||
Amount due from related parties | - | 69,818 | ||
Trade and other receivables | 67,736 | 13,121 | ||
2,571,450 | 328,679 |
2021 £ | 2020 £ | |||
Fair value through other comprehensive income | ||||
Shares held in AIM listed company | - | 915,750 |
Fair value hierarchy
Some of the Groups financial assets are measured at fair value at the end of each reporting period.
There were no transfers between fair value hierarchies during 2021 or 2020.
Quoted market prices - Level 1
Fair value is determined by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available, and the price represents actual and regularly occurring market transactions on an arm's length basis. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis.
The following financial assets are recognised in the financial statements at fair value through other comprehensive income and are classified within the level 1 category:
2021 £ | 2020 £ | |||
Financial assets at fair value through other comprehensive income | ||||
Shares held in AIM listed companies | - | 915,750 |
20. Financial instruments (continued)
Fair value hierarchy (continued)
Valuation technique using observable inputs - Level 2
Fair value is calculated using inputs other than quoted prices as described for Level 1 but which are observable for the asset or liability, either directly or indirectly.
Valuation technique using significant unobservable inputs - Level 3
Fair value of level 3 financial instruments incorporates significant inputs for the asset or liability that are not based on observable market data (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. These inputs are generally determined based on observable inputs of a similar nature, historic observations on the level of the input or analytical techniques.
The following financial asset are recognised in the financial statements at FVTPL and are classified within the level 3 category:
2021 £ | 2020 £ | |||
Financial assets at fair value through profit and loss | ||||
Convertible loan option | - | 569,512 |
The movement includes the conversion of the convertible loan option into the Company's share capital.
Financial liabilities
2021 | 2020 | |||
£ | £ | |||
Liabilities measured at amortised cost | ||||
Convertible loan note | - | 3,047,991 | ||
Trade and other payables | 301,451 | 187,721 | ||
301,451 | 3,235,712 |
All financial assets and liabilities are due within one year.
The main risks arising from the Group's activities are market risk, credit risk and liquidity risk.
Market risk
Market risk is the risk that the fair value of future cash flows will fluctuate because of changes in market price. This risk is primarily comprised of interest risk and foreign currency risk. Interest rate risk is deemed minimal due to the fixed element of interest on intercompany loans.
Foreign currency risk management
As highlighted earlier in these financial statements, the presentation currency of the Group is pound sterling. The Group has foreign currency denominated assets and liabilities. Exposures to exchange rate fluctuations therefore arise. The Group pays for invoices denominated in a foreign currency in the same currency as the invoice therefore suffers from a level of foreign currency risk. The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.
20. Financial instruments (continued)
Foreign currency risk management (continued)
The carrying amount of the Group's foreign currency denominated monetary assets and monetary liabilities as at
Australian dollars | |||||
2021 £ | 2020 £ | ||||
Long-term receivables | 809,488 | - |
As at
Strengthened by 10% increase in post-tax loss £ | Weakened by 10% decrease in post-tax loss £ | ||||
2020 | - | - | |||
2021 | 75,583 | (89,932 | ) | ||
The rate of 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonable possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. A positive number above indicates an increase in loss (increase in profit) or other equity where the pound sterling strengthens by 10% against the relevant currency. For a 10% weakening of the pound sterling against the relevant currency, there would be an equal and opposite impact on the profit or loss and other equity.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises principally from the Group's cash balances and other receivables.
The Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. The Group considers the banks and financial institutions have low credit risks. Therefore, the Group is of the view that the loss allowance is immaterial and hence no provision is required.
The concentration of the Group's credit risk is considered by counterparty, geography and currency. The Group does not have any significant concentrations of credit risk at the reporting date related to external third parties. The Group is exposed to credit risk in relation to a loan to Taronga but, as this became a wholly owned and controlled subsidiary subsequent to the year end, the credit risk is deemed to be low.
As at
20. Financial instruments (continued)
Credit risk (continued)
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. Management considers the above measures to be sufficient to control the credit risk exposure.
The Group recognises a loss allowance for expected credit losses in debt instruments at each reporting date. As at
Liquidity risk
Liquidity risk is the risk that an entity may not be able to generate sufficient cash resources to settle its obligations as they fall due. The Directors monitor cash flow requirements regularly and adopt a prudent liquidity risk management approach to ensure sufficient cash is available for operational expenses.
The following tables detail the Group's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
2021 | 2020 | |||
£ | £ | |||
Due within 1 month | ||||
Trade and other payables | 301,452 | 187,721 |
Fair values
The Directors consider that the carrying amount of loans and receivables and other financial liabilities approximates to their fair value because of the short-term nature of such assets the effect of discounting is negligible.
21 Related party transactions
Directors' remuneration and fees
The table below sets out the Directors' remuneration and fees:
2021 | Fees £ | Share based payments £ | Total £ |
Mr M E Thompson | 12,000 | - | 12,000 |
Mr A J Truelove | 52,640 | - | 52,640 |
Mr A M J Collette | 12,000 | - | 12,000 |
Mr G D Stanley1 | 94,806 | - | 94,806 |
Mr S L Fabian | 72,000 | 14,609 | 86,609 |
Mr C Cannon Brookes2 | 9,000 | - | 9,000 |
Mr T Buenger | 96,564 | 149,000 | 245,564 |
349,010 | 163,609 | 512,619 |
1 Includes £50,000 paid as compensation for loss of office.
2 Fees relating to Mr C Cannon Brookes are paid to
2020 | Fees £ | Share based payments £ | Total £ |
Mr M E Thompson | 12,000 | - | 12,000 |
Mr A J Truelove | 38,944 | - | 38,944 |
Mr A M J Collette | 12,000 | - | 12,000 |
Mr G D Stanley | 23,919 | - | 23,919 |
Mr S L Fabian | 120,000 | - | 120,000 |
Mr C Cannon Brookes | - | - | - |
Mr T Buenger | - | - | - |
206,863 | - | 206,863 |
The following amounts were due to the Directors' in respect of Director's fees:
2021 | 2020 | |||
£ | £ | |||
Mr M E Thompson | 6,000 | 4,500 | ||
Mr A J Truelove | 4,885 | - | ||
Mr A M J Collette | 6,000 | 3,000 | ||
Mr G D Stanley | - | 10,000 | ||
Mr S L Fabian | 2,000 | 50,000 | ||
Mr C Cannon Brookes | 1,000 | - | ||
Mr T Buenger | - | - | ||
19,885 | 67,500 |
21 Related party transactions (continued)
Other fees and transactions
Mr C Cannon Brookes was a director of
Mr M E Thompson and Mr S L Fabian were directors of Tungsten West Plc ("Tungsten") for the reporting period. During the year, Tungsten invoiced and was paid £8,000 (2020: £6,000) in respect of shared office rental charges.
Mr M E Thompson was a director of
22 Share capital
Ordinary share capital | 2021 | 2020 | |
£ | £ | ||
Issued and fully paid | |||
138,868,305 (2020: 70,176,522) ordinary £0.001 shares | 138,868 | 70,177 | |
The shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.
In
During the year, a further 40,000,002 Ordinary Shares were issued at 15p each to complete a gross proceeds of £6,000,000 equity funding round.
In
Share premium account | 2021 | 2020 | |
£ | £ | ||
Share premium account | 17,931,296 | 10,264,409 |
23 Shares to be issued
2021 | ||
£ | ||
As at | 50,411 | |
Interest accrued in the year (see note 18) | 54,247 | |
Shares issued for interest payment | (104,658 | ) |
As at | - |
24 Reserves
The warrant reserve is used to hold the fair value of warrants issued but not yet exercised.
The retained earnings reserve contains the accumulated losses of the Group.
The translation reserve is used to hold the accumulated gains and losses on translation of overseas subsidiaries.
25 Events after the reporting period
In
On
On
In
At the time of authorising these financial statements, the Group was still in the process of finalising the valuation of certain assets and liabilities acquired in connection to the acquisition of Taronga. The finalisation of these valuations will be reflected in the Company's next set of financial statements for the year ended
26 Net debt reconciliation
The table below sets out an analysis of net debt and the movements in net debt for each of the years presented:
Net debt | 2021 | 2020 | |||
£ | £ | ||||
Cash and cash equivalents | 2,503,714 | 245,740 | |||
Convertible loan note | - | (2,478,479 | ) | ||
Net debt | 2,503,714 | (2,232,739 | ) |
Cash and cash equivalents £ | Convertible loan note £ | Total £ | |||||||
Net debt as at | 363,264 | (2,338,941 | ) | (1,975,677 | ) | ||||
Cash flows | (128,435 | ) | (200,000 | ) | (328,435 | ) | |||
Currency translation | 10,911 | - | 10,911 | ||||||
Movement in fair value | - | 60,462 | 60,462 | ||||||
At | 245,740 | (2,478,479 | ) | (2,232,739 | ) | ||||
Cash flows | 2,211,826 | - | 2,211,826 | ||||||
Currency translation | 46,148 | - | 46,148 | ||||||
Movement in fair value | - | 781,955 | 781,955 | ||||||
Shares issued on redemption of loan | - | 1,696,524 | 1,696,524 | ||||||
At | 2,503,714 | - | 2,503,714 |
27 Ultimate controlling party
In the opinion of the Directors, there is no controlling party.
This information is provided by RNS, the news service of the
![](https://ml.globenewswire.com/media/OGEwOWY3ZTItM2YxNy00YWRkLTgxOTQtMTg4NzlmNDgxYzU2LTUwMDEwMjg1Ng==/tiny/First-Tin-PLC.png)
© OMX, source