TIDMPOW
RNS Number : 5292N
Power Metal Resources PLC
20 May 2020
20 May 2020
Power Metal Resources plc ("POW" or "the Company")
Audited Results for the Year Ended 30 September 2019
Power Metal Resources plc (LON:POW), the AIM listed mineral
resources exploration and development company, is pleased to
announce its consolidated audited results for the year ended 30
September 2019 for the Company and its subsidiaries, Cobalt Blue
Holdings ("CBH"), Regent Resources Interests Corp. ("RRIC"), and
Power Metal Resources SA, ("PMR"), (together the "Group").
Highlights from the year under review:
Operational
-- Business restructuring and refinancing undertaken and
approved by shareholders in February 2019, raising
GBP1 million (before issue costs) in the financial year to
support a reinvigorated business model (and a further GBP700,000
raised in December 2019) and a restructured Company Board;
-- Operational work undertaken on the Company's Cameroon and the
DRC projects, with notable success at the Kisinka Project in the
DRC through a termite mound sampling programme highlighting an
unexpected 6.8km long copper anomaly requiring further
investigation;
-- New operating joint investment project interests acquired in Tanzania and Botswana;
-- In Tanzania an agreement was signed with AIM Listed Katoro
Gold plc (LON:KAT) ("KAT") to acquire a shareholding in KAT and to
enter a joint investment whereby Power Metal Resources ("POW")
secured 25% interest in KAT's Haneti Project, a polymetallic
exploration project, with advanced high profile nickel sulphide
targets. POW may increase its project to 35% through a payment to
KAT of GBP25,000 by 31 May 2020;
-- In Botswana an Acquisition and Earn-In Agreement was signed
with Kalahari Key Mineral Exploration Pty Ltd ("KKME") to acquire a
shareholding in KKME and a right to earn into a 40% interest in
KKME's single project, the Molopo Farms Complex project (the "MFC
Project") in south west Botswana, by expending US$500,000 on a
drilling programme at the MFC Project in 2020. (POW exercised that
right to earn in on 31 December 2019);
-- As part of the Tanzania and Botswana transactions POW
acquired strategic shareholdings in KAT and KKME. In respect of KAT
the company acquired, and still holds 10 million shares at 1.0p,
and 10 million warrants to subscribe for KAT shares, granted in two
tranches of 2.5 million in March 2019 at 1.25p with a 3 year life
to expiry, and 7.5 million granted in May 2019 at 1.25p with a 3
year life to expiry, all at a total cost of GBP100,000 and at the
completion of the transaction equating to 5.95% of KAT issued share
capital. In KKME POW acquired 3,542 shares at a total cost of
US$194,810 or circa GBP153,000, equating to 18.26% of KKME issued
share capital; and
-- Including the above KAT and KKME financial instruments at the
year end 30 September 2019 the Company therefore held a
shares/warrants portfolio worth circa GBP310,000.
Financial
-- Loss for the year to 30 September 2019 of GBP1.6 million (2018: GBP6.6 million);
-- Pre non-controlling interest total equity of GBP1.8 million
at the year end (2018: GBP2.1 million); and
-- Raised GBP1 million (before issue costs) in new equity
financing during the financial year, from a combination of new and
existing shareholders, including the Directors.
Post-year end
-- On 3 December 2019, the Company entered into an agreement
providing an opportunity to acquire a right to earn in to 60% of
the Alamo project based in Arizona, USA over a four-year period.
The project is prospective for gold and precious metals. Subject to
a 45-day due diligence period which was subsequently extended to 30
June 2020 due to restrictions imposed by Covid-19;
-- On 10 December 2019, the Company announced it had raised
GBP700,000 (before costs), through a placing and subscription of
175,000,000 new ordinary shares at a price of 0.40 pence per share,
GBP400,000 of which was allocated to enable the Company to exercise
the option to earn-in to the Molopo Farms Complex project as part
of the existing agreement with Kalahari Key Exploration Pty
Limited;
-- On 31 December 2019, the Company gave written confirmation to
Kalahari Key Exploration Pty Limited to elect to earn in to a 40%
interest in the Molopo Farms Complex. Combined with the existing
18.26% interest held in Kalahari Key, upon completion, the Company
will hold a 50.96% interest in the project;
-- In December 2019, the Company announced First Equity Limited
were appointed as joint brokers to the Company. As at 30 September
2019 and at the date of this report, Power Metal Resources plc
("POW", the "Company" or the "Group") had two wholly owned
subsidiaries, Cobalt Blue Holdings ("CBH") and Regent Resources
Interests Corp. ("RRIC"), as well as a 70% shareholding in Power
Metal Resources SA (formerly ABM Kobald SAS), which holds the
interest in the Kisinka licence ("Kobald");
-- The Company also holds interest in Katoro Gold Plc
("Katoro"), Kibo Nickel Limited ("Kibo"), Kalahari Key Exploration
Pty Limited ("Kalahari") and Kavango Resources Plc ("Kavango");
-- In late Q4 2019 the first case of Covid-19 virus was
discovered in China and the disease has since been designated
pandemic status by the World Health Organisation spreading to a
large number of countries around the world. The impact of the
Covid-19 virus has seen significant societal dislocation in many
countries with normal patterns of life and work notably effected as
large numbers of people have been limited to home based working and
other restrictions to limit the spread of the virus and enable
health providers to manage serious cases within their
resources;
-- The impact of the Covid-19 virus also affected financial
markets around the world impacting the AIM market where POW is
listed and initially caused a fall in junior resource equity share
prices and reduced confidence of investors in the junior resource
sector. That said, at the time of writing this report, there has
been a significant rebound in the financial markets generally, on
the AIM market and in the junior resource equity sector. The
outcome of the Covid-19 virus has therefore been to create
significant market volatility and there is a reasonable expectation
that such volatility may well continue for some time; and
-- The majority of POW's active operations are in Africa, where
to date the impact of the virus has been less disruptive, however
there is potential for increasing disruption depending on the
spread of the virus. As with most of our peers, the future impact
of Covid-19 on POW operations is not fully understood at this point
or indeed the extent to which the toughened market conditions will
persist and potentially impact the Company's ability to operate
efficiently and secure cash for operations from market financings
should this be needed. That said at the time of writing we have
just safely concluded an active field exploration programme in the
DRC and in Botswana where our next field exploration is expected
and the government has just published plans to undertake a
controlled lifting of the virus lockdown during the course of May.
The impact of the virus on operations is clearly country specific
and POW is keen to manage its field exploration programmes
reflective of each operating environment and the local
circumstances at the time. Should field activities prove
challenging or impractical to undertake, POW has a portfolio of
interests where material work can be done to advance the business
interests through office based activities to improve geological
understanding and to effect corporate transactions in respect of
existing or new opportunities.
Paul Johnson, Chief Executive Officer of Power Metal Resources
commented:
The audited results for the year ended 30 September 2019 cover a
period of significant change for the Company with the financial and
managerial restructuring in February 2019 providing an opportunity
for a fresh start and new ideas.
In the year to September 2019 we progressed the Cameroon and DRC
projects, with notable success in the DRC with the discovery of a
6.8km copper anomaly that is now under further examination. In the
year we also announced new strategic project opportunities in
Tanzania with the Haneti Polymetallic project and Botswana with the
Molopo Farms Complex project.
Since the year end we have added to the portfolio with a
significant Australian gold joint venture and due diligence
underway in respect of a gold opportunity in the USA and a rare
earths project in Botswana.
The pace of growth in our business has been rapid, and this has
been underpinned with a careful financing strategy to ensure the
Company is robustly financed and may, if our objective is
fulfilled, enable us to build our balance sheet toward financial
self sufficiency.
The team at POW thank shareholders for their support and with
board members and connected parties currently holding around 14% of
the Company's shares we are aligned with all shareholders. Success
comes primarily with a large scale metal discovery, and we have a
portfolio of interests where we believe that is possible."
Notice of Annual General Meeting and Distribution of Accounts to
Shareholders
The Company's Annual General Meeting will take place at 9.00 am
on 19 June 2020 at Abbey House, 282 Farnborough Road, Farnborough,
Hampshire, GU14 7NA. The Company's Annual Report and Accounts for
the year ended 30 September 2019 will be posted to shareholders
this week. Copies of the Notice of AGM and the Annual Report and
Accounts will also be available on the Company's website at
www.powermetalresources.com in due course.
Power Metal Resources plc
Paul Johnson (Chief Executive Officer) +44 (0) 20 7583 8304
SP Angel Corporate (Nominated Adviser and Broker)
Ewan Leggat +44 (0) 20 3470 0470
SI Capital Ltd (Broker)
Nick Emerson +44 (0) 1483 413 500
First Equity (Joint Broker)
+44 (0) 20 7330
David Cockbill/Jason Robertson 1883
Chairman's Statement
As at 30 September 2019 and the date of this results statement,
Power Metal Resources plc ("POW", the "Company" or the "Group") had
two wholly owned subsidiaries, Cobalt Blue Holdings ("CBH") and
Regent Resources Interests Corp. ("RRIC"), as well as a 70%
shareholding in Power Metal Resources SA, which holds the interest
in the Kisinka licence ("PMR").
Introduction
The business restructuring and refinancing in February 2019 was
undertaken on the premise that the Company would have a
reinvigorated drive and direction. It has indeed achieved this in
respect of certain existing interests and new opportunities.
We have carried out exploration programmes in both Cameroon and
the DRC and achieved in a cost-effective manner outcomes that
advanced our understanding in both countries. The 6.8km copper
anomaly identified in the DRC was an exciting and positive outcome
on which we can build future programmes.
We have secured new operational interests in two new African
countries; a nickel-copper-PGM exploration project in Botswana and
a polymetallic exploration project in Tanzania. The potential scale
of both opportunities led us to take a dual project holding company
and project level interest, providing increased exposure for
shareholders in these new interests.
We also have a burgeoning pipeline of new opportunities in
existing commodities and jurisdictions, and also in new areas. This
has been evidenced by the transactional options we have announced
to the market to date, and subject to ongoing work and discussions,
further transactions may occur.
Company costs are controlled and are modest overall, both in
terms of corporate costs and also investment in exploration. POW
pays modest board compensation compared to our market peers and our
exploration work is carefully chosen to maximise return on modest
spend programmes. This will continue and whilst we have comfortably
raised GBP1.7million in calendar year 2019 we will seek to preserve
working capital and minimise shareholder dilution wherever
possible.
We have diverse business interests, a strong balance sheet
versus our operational costs and a wide array of opportunity, from
what appears to be at or near the bottom in the typical junior
resource company cyclical sector pullback. Much has been achieved
already, but there is a lot more to do and POW looks forward to
announcing developments to the market in 2020.
Operations Review
Projects
Botswana
On 13 May 2019 POW entered into an Acquisition and Earn-In
Agreement with Kalahari Key Mineral Exploration Pty Ltd ("KKME" or
"Kalahari Key") to acquire 3,542 new ordinary shares equating to an
18.26% shareholding in Kalahari Key. This transaction was completed
through two transactions:
- POW acquired 3,157 new ordinary shares in Kalahari Key at
US$55 per share for cash consideration of US$173,635.
- In addition, POW acquired 385 existing ordinary shares in
Kalahari Key held by Value Generation Limited ("VGL"), a company
beneficially owned by Paul Johnson, Executive Director of POW at
US$55 per share for cash consideration of US$21,175. Given the
planned active participation of POW and Paul Johnson in the
management and operations of Kalahari Key and the MFC Project, the
Board concluded it appropriate for the Company to acquire the VGL
holding in Kalahari Key and thereby remove any potential conflict
of interest going forward.
At the time Kalahari Key's sole asset was a 100% interest in the
Molopo Farms Complex nickel-copper-PGM exploration project (the
"MFC Project").
Alongside the share acquisition POW had the right by 31 December
2019 to elect to earn into a 40% direct project interest in the MFC
project by investing US$500,000 in the Project by 31 December 2020
(the "Earn-in").
POW elected to Earn-In on 31 December 2019 and based on Kalahari
Key's current issued share capital will, on completion of the
Earn-In, hold an effective economic interest of 50.96% in the
Project.
As a result of the election to Earn-In and in accordance with
the Agreement, in January 2020, Paul Johnson (POW CEO) joined the
board of Kalahari Key and Andrew Bell (POW Chairman) joined the MFC
Project Operating Committee.
At the time of the Acquisition and Earn-In Agreement the MFC
Project consisted of three licences covering an area of 2,725
square kilometres considered prospective for nickel-copper-PGMs
mineralisation and were 100% owned by KKME.
Originally, in November 2016 Kalahari Key acquired two mineral
exploration licences (PL310/2016 and PL311/2016) from the Botswana
Government. The licences cover the eastern and central parts of a
shear/feeder zone through the centre of the Bushveld-related Molopo
Farms Complex in southern Botswana. A third licence (PL202/2018)
was acquired in early 2018 immediately to the south of
PL311/2016.
The investment made in Kalahari Key of US$194,810 was, along
with other KKME working capital, deployed principally into a ground
geophysics programme at the MFC Project to follow up on a
successful Helicopter Airborne Electromagnetic project which has
identified 17 subsurface conductor targets. The ground geophysics
programme proved very successful with 11 subsurface targets
confirmed and 5 or 6 high profile targets.
A gravity survey was then conducted post year end which
confirmed all targets to be sulphides rather than graphite and an
environmental management plan was prepared in Q4 2019 and submitted
for local regulatory approvals in January 2020, prior to drilling
commencement in 2020 over principal targets.
Interest in the MFC Project has been shown by a number of large
mining companies and also by financiers looking to provide funding
to Kalahari Key and/or at project level. POW has an anti-dilution
right within its shareholding in Kalahari Key and thus may maintain
its 18.26% corporate stake should it wish to do so. It also has
fund or dilute protection on its 40% direct MFC Project
interest.
The POW team are working with Kalahari Key to assess interest
shown in the company and the MFC Project.
Cameroon
In Cameroon a pitting and sampling programme was conducted which
confirmed the exploration undertaken successfully intersected the
distinct laterite profile that is most likely to be mineralised at
average depths of 5m and deeper, which is consistent with depths in
the mineralized zones at the adjacent Nkamouna project.
The initial emphasis of the project was to identify cobalt
mineralisation and the work conducted indicated that cobalt
exploration is best focused on the thicker lateritic cover and
POW's consultants recommended concentration of future work at
higher elevations where these thicker profiles are more likely to
occur. The sampling programme also highlighted elevated levels of
titanium and vanadium requiring further investigation.
In conjunction with its POW consultants the Company is
considering the various options with regard to this project,
ensuring as with all project interests the most optimal allocation
of Company working capital.
Note : With respect to Nkamouna, Geovic published an NI 43-101
compliant Mineral Resource (1) on the Nkamouna deposit with a total
Measured, Indicated and Inferred Mineral Resource of 323mt of 0.21%
cobalt, 0.61% nickel and 1.26% manganese .
(1) Source: NI 43-101 Technical Report, Geovic Mining Corp by
SRK Consulting, 02 June 2011 (viewable at Edgar Online)
T he Democratic Republic of the Congo
At the Company's Kisinka Copper-Cobalt project POW conducted a
termite mound sampling programme through which it confirmed the
presence and potential significance of copper mineralisation along
the Undifferentiated Roan horizons within the license.
Undifferentiated Roan represents Roan rocks of the Roan 1, Roan
2 and Roan 3 Subgroups and the Neoproterozoic Roan Group of central
Africa which are host to some of the world's largest and
highest-grade sedimentary rock-hosted copper-cobalt deposits the
copper belts of Zambia and the DRC.
Given the substantial 6.8km length and size of the copper
anomalous area and the presence of rocks from the important
mineral-bearing R2 stratum in a licence along strike, there were
sufficient indications that the tenement may be host to a
significant copper target to justify further exploration.
A further exploration programme, to include pitting and sampling
within the mineralised area, is to be undertaken.
Ivory Coast
No further work was undertaken at the Lizetta-II project in the
Ivory Coast in the year ended 30 September 2019 and the current
expectation is that the Company will focus its working capital on
other project interests. This situation has been primarily driven
by working capital constraints and notably the need to allocate
working capital to more advanced exploration interests where the
prospect of a large scale discovery, in line with the Company's
objectives, is nearer term and more obviously identifiable. There
is evidence that the thesis of an emerging and previously barely
exposed base metal province has investor credibility, the Company
needs to reset its relationship with its local partner through
renewed activity. However, there are no budget or substantive
expenditure plans currently, therefore the Directors have deemed it
appropriate to impair the asset by 100% in the year ended 30
September 2019, as detailed in Note 14.
Should any further developments corporately or from an
exploration perspective arise, the Company will inform the market
accordingly.
Tanzania
POW announced an Investment and Option Agreement with London AIM
listed Katoro Gold ("Katoro") (LON:KAT) in March 2019.
Under the Agreement POW was able to acquire up to 10 million new
ordinary shares of 1.0 pence each in the capital of Katoro ("Katoro
Ordinary Shares"), together with up to 10 million warrants over
Ordinary Shares, and an option to acquire, subject to the
completion of due diligence by POW, up to a 35% interest in
Katoro's 100% owned Haneti Nickel Project ("Haneti" or the "Haneti
Project") in Tanzania (the "Option") for a total consideration of
up to GBP125,000. To date two of three stages of this acquisition
have been completed as outlined below.
In March 2019 for a consideration of GBP25,000, POW acquired
2,500,000 new Katoro Ordinary Shares (the "Tranche 1 Shares"),
equating to an issue price of 1.0 pence per share. POW was then
granted 2,500,000 warrants to subscribe for 2,500,000 new ordinary
shares at a price of 1.25 pence per share with a three year expiry
term to 15 March 2022 and the Option to acquire a further 7,500,000
Katoro Ordinary Shares and warrants on the same terms, and up to
35% of the Haneti Project held by KAT.
In May 2019 POW exercised its option to invest a further
GBP75,000 to acquire an additional 7,500,000 new Katoro Ordinary
Shares at a price of 1.0 pence per share (the "Tranche 2 Shares").
POW was also granted a further 7,500,000 warrants to subscribe for
7,500,000 new Katoro Ordinary Shares at a price of 1.25 pence per
share with a three-year life to expiry term to 15 May 2022 (the
"Warrants").
Of the Tranche 2 Shares and Warrants, 6,100,000 Tranche 2 Shares
("Initial Instalment Shares") were issued immediately and the
remaining 1,400,000 Tranche 2 Shares ("Second Instalment Shares")
and Warrants were issued following Katoro's Annual General Meeting,
which was held in June 2019 and where additional authority to issue
new ordinary shares of 1.0p was approved by shareholders.
Overall, at the time of transaction completion POW held
10,000,000 Katoro Ordinary Shares and 10,000,000 Katoro Warrants,
representing a 5.95% holding in KAT's then issued share
capital.
By subscribing for the tranche 2 shares POW also acquired a 25%
direct interest in the Haneti Project, with Katoro holding the
remaining 75% interest. POW's holding is subject to a fund or
dilute clause whereby the Company must fund its 25% share of costs
or dilute in line with standard industry fund or dilute principles.
In addition, by subscribing for the Tranche 2 shares POW has a
right, by 15 May 2020 to acquire a further 10% interest in the
Haneti Project, increasing its interest to 35%, by paying Katoro
GBP25,000.
The Haneti Project covers a large scale polymetallic system with
identified potential for nickel (sulphide and laterite), Platinum
Group Metals ('PGMs'), copper, gold, lithium and rare earth
elements ("REEs").
The principle target zone is an 80 km long ultramafic belt with
grades from surface sampling of up to 13.6% nickel and 2.33 g/t
combined platinum and palladium.
During the year POW has worked with its partner KAT to formulate
the way forward for the project, including exploration planning and
implementation, a process that has been punctuated by external
interest in the project and addressing that interest, which
continues at present.
Corporate Social Responsibility ("CSR")
The Company maintains a focus on CSR through internal policies
and our approach to external operational activities.
The Company will continue to prudently invest in the regions we
have business activities, in support of the communities where we
operate. As an early stage Company, POW is keen to employ workers
from the areas in which we operate projects, and to operate in a
safe, responsible and reasonable manner.
As certain projects mature, we would expect our community
engagement to become more extensive in line with the level of
operational activities.
Financial Review
The Group recorded an audited loss after tax for the year to 30
September 2019 of GBP 1.6 million (2018: GBP6.6 million). The loss
per share from continuing activities was 0.55p (2018: 1.83p).
The Group's exploration activities during the financial year
under review were funded through the issue of shares to either
raise cash or in lieu of fees. In aggregate, new ordinary shares
were issued during the financial year, raising a total of
approximately GBP 1.2 million before placement costs (2018: GBP3.9
million).
We ended the financial year with a cash balance of GBP 0.17
million (2018: GBP0.15 million), which was enhanced post financial
year end by a further equity issue of approximately GBP0.7 million
(before costs) in December 2019.
Targets for 2020
Our operational targets for the remainder of 2020 are:
-- To focus on applying working capital diligently, with
controlled corporate costs and focused investment in operating
projects that demonstrably have the best potential to deliver a
large scale metal discovery;
-- To continue to build our internal resources and external
network and to develop our managerial and operational teams to
provide confidence in the market of our abilities to achieve our
strategic business objective of a large scale metal discovery;
-- To continue to review new opportunities and where financially
and operationally practical to acquire additional interests within
the power metal commodity suite in Africa and where appropriate in
other commodities and jurisdictions.
Board Changes
In February 2019 former CEO Roger Murphy stepped down as part of
the business restructuring and refinancing exercise. Following
publication of the Annual Results for 30 September 2018 in March
2019, Matt Wood also stepped down as Finance Director.
As part of the shareholder approved business restructuring and
refinancing in February 2019, Andrew Bell joined as Executive
Chairman and Paul Johnson as Executive Director. Paul Johnson
became CEO of the Company in August 2019.
Ed Shaw was appointed to the Board as Non-Executive Director in
February 2020.
Outlook
2019 was a year of reconstruction for the Company, with existing
interests as at February 2019 reviewed and work undertaken in
Cameroon and the DRC. We had some notable success in our initial
exploration, notably in respect of the discovery of a 6.8km copper
anomaly in the exploration work undertaken at the Kisinka project
in the DRC.
As a business, and in a challenging junior resource sector
market we had new opportunities all around and took the business
forward with new additional operating interests in Botswana and
Tanzania, working with new joint investment partners.
As a business we now have three clear strategic interests in
Botswana, the DRC and Tanzania, and we have a robust working
capital position and a demonstrable ability to access working
capital on reasonable terms as and when required.
As we continue to see what we expect will be a recovering junior
resource climate we are well positioned and look to the future with
some confidence. The impact of Covid-19 has in recent months caused
material disruption and we are justifiably noting that disruption
again and highlighting that its continuing impact could impact our
plans, operations and aspirations as noted elsewhere. However what
should also be highlighted is that the uncertainty in the world
that exists today, as in disruptive times past, could drive
increasing investment demand for precious metals for portfolio
security and base metals through the extensive infrastructure
programmes that are being discussed as part of government stimuli
in various countries around the world.
Aside from Covid-19 factors, there has been an underinvestment
in exploration and new mine development across multiple areas in
the resource sector. Given the availability of supply is a key
factor in the supply/demand dynamic that governs metal prices and
the valuation of resource projects, we consider supply attrition
over many years, and especially of late, to be a contributing
feature to rising metal prices in the years ahead.
The future is all the brighter with strong shareholder support
and a growing shareholder register. We know that the Company has
more work to do to restore investor and shareholder confidence and
we are committed to work hard in this area. For those who have
helped our business in the last year, we are grateful. We trust by
actions rather than merely words on a page, we can show the wider
investing world that Power Metal Resources plc is an exciting and
investable proposition, whereby the negative events of the past, in
a number of respects, are surpassed by the potential of the
future.
Andrew Bell
Executive Chairman
20 May 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2019
2019 2018
Notes GBP'000 GBP'000
Revenue
Cost of - -
sales
--------- ---------
Gross profit - -
--------- ---------
Operating expenses 4 (668) (1,146)
Impairment 7 (954) -
Fair value gains through profit or 36 -
loss
Loss from operating activities (1,586) (1,146)
--------- ---------
Loss before tax (1,586) (1,146)
Taxation - -
--------- ---------
Loss for the year from continuing operations (1,586) (1,146)
Discontinued operations
Loss from discontinued
operations 5 - (5,494)
------------- -------------
Net loss for the year (1,586) (6,640)
Other comprehensive income
Items that will or may be reclassified
to profit or loss;
Exchange translation 63 (39)
Exchange differences arising on translation
of discontinued operation 5 - (531)
------------- -------------
Total other comprehensive income/(expense) 63 (570)
------------- -------------
Total comprehensive expense for the year (1, 523) (7,210)
============= =============
Loss for the period
attributable to:
Owners of the parent (1,539) (6,494)
Non-controlling interests (47) (146)
------------- -------------
(1,586) (6,640)
============= =============
Total comprehensive loss attributable to:
Owners of the parent (1,466) (7,059)
Non-controlling interests (57) (151)
------------- -------------
(1,523) (7,210)
============= =============
Loss per share from continuing operations
attributable to the ordinary equity holder
of the parent:
------------- -------------
Basic and diluted loss per
share (pence) 10 (0.55) (1.83)
------------- -------------
Loss per share from discontinued operations
attributable to the ordinary equity holder
of the parent:
Basic and diluted loss per
share (pence) 10 - (8.78)
------------- -------------
Total basic and diluted loss
per share (pence) 10 (0.53) (10.61)
------------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
2019 2018
GBP'000 GBP'000
Notes
Assets
Intangible assets 7 1,126 2,082
Financial assets 309 -
---------
Non-current assets 1,435 2,082
--------- ---------
Trade and other receivables 8 32 39
Cash and cash equivalents 171 147
Current assets 203 186
--------- ---------
Total assets 1,638 2,268
========= =========
Equity
Share capital 9 6,843 6,606
Share premium 13,228 12,453
Capital redemption reserve 5 5
Share based payment reserve 1,195 1,086
Exchange reserve 39 (34)
Accumulated losses (19,530) (17,991)
--------- ---------
Total 1,780 2,125
---------
Non-controlling interests (208) (151)
--------- ---------
Total equity 1,572 1,974
--------- ---------
Liabilities
Trade and other payables 11 66 279
Deferred consideration - 15
--------- ---------
Current liabilities 66 294
--------- ---------
Total liabilities 66 294
--------- ---------
Total equity and liabilities 1, 638 2,268
========= =========
The financial statements of Power Metal Resources plc, company
number 07800337, were approved by the board of Directors and
authorised for issue on 20 May 2020.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2018
Share
Capital based
Share Share redemption payment Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2017 6,330 9,049 - 1,013 531 (11,497) 5,426 - 5,426
-------- -------- ----------- -------- --------- ------------ -------- ---------------- --------
Loss for the year - - - - - (6,494) (6,494) (146) (6,640)
Reclassification
arising on
subsidiary
disposal - - - - (531) - (531) - (531)
Total other
comprehensive
expense - - - - (34) - (34) (5) (39)
----------- -------- --------- -------- ----------------
Total
comprehensive
expense for the
year - - - - (565) (6,494) (7,059) (151) (7,210)
-------- -------- ----------- -------- --------- ------------ -------- ---------------- --------
Issue of ordinary
shares 212 1,783 - - - - 1,995 - 1,995
Issue of ordinary
shares for
acquisitions 64 1,847 - - - - 1,911 - 1,911
Costs of share
issues - (154) - - - - (154) - (154)
Repurchase of own
shares - - 5 - - - 5 - 5
Share-based
payments - (72) - 73 - - 1 - 1
----------- -------- ---------
276 3,404 5 73 - - 3,758 - 3,758
-------- -------- ----------- -------- --------- ------------ -------- ---------------- --------
Balance at 30
September 2018 6,606 12,453 5 1,086 (34) (17,991) 2,125 (151) 1,974
======== ======== =========== ======== ========= ============ ======== ================ ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2019
Share
Capital based
Share Share redemption payment Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2018 6,606 12,453 5 1,086 (34) (17,991) 2,125 (151) 1,974
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Loss for the
year - - - - - (1,539) (1, 539) (47) (1,586)
Total other
comprehensive
expense - - - - 73 - 73 (10) 63
----------- -------- --------- --------- ----------------
Total
comprehensive
expense for
the year - - - - 73 (1,539) (1,466) (57) (1,523)
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Issue of
ordinary
shares 237 950 - - - - 1,187 - 1,187
Costs of share
issues - (93) - - - - (93) - (93)
Share-based
payments - (82) - 109 - - 27 - 27
----------- -------- ---------
237 775 - 109 - - 1,121 - 1,121
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Balance at 30
September
2019 6,843 13,228 5 1,195 39 (19,530) 1,780 (208) 1,572
======== ======== =========== ======== ========= ============ ========= ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 SEPTEMBER 2019
2019 2018
GBP'000 GBP'000
Notes
Cash flows used in operating
activities
Loss for the year (1,586) (6,640)
Adjustments for:
- Fair value adjustment (36) -
- Impairment 7 954 5,713
- Expenses settled in shares 186 307
- Finance expense - 5
- Share-based payment expense 27 73
* Foreign exchange differences 65 (623)
* Loss on disposal of fixed assets - 141
---------
(390) (1,024)
Changes in working capital:
- Decrease in trade and other
receivables 8 8 71
- Decrease in trade and other
payables 11 (209) (240)
--------- ---------
Net cash used in operating
activities (591) (1,193)
--------- ---------
Cash flows from investing
activities
Purchase of intangibles 7 (15) (206)
Purchase of financial assets (273) -
at fair value through profit
or loss
Cash acquired with subsidiary - 50
Net cash outflows from investing
activities (288) (156)
--------- ---------
Cash flows from financing
activities
Proceeds from issue of share
capital 9 1,000 1,689
Issue costs 9 (93) (226)
Repayment of short term loans - (15)
Repayment of loan under equity
agreement - (133)
--------- ---------
Net cash inflows from financing
activities 907 1,315
--------- ---------
Increase/(decrease) in cash
and cash equivalents 28 (34)
Cash and cash equivalents at
beginning of year 147 180
Exchange (loss)/gain on cash
and cash equivalents (4) 1
Cash and cash equivalents at
30 September 171 147
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 30 SEPTEMBER 2019
1. Reporting entity
Power Metal Resources plc is a public company limited by shares
which is incorporated and domiciled in England and Wales. The
address of the Company's registered office is 201 Temple Chambers,
3-7 Temple Avenue, London EC4Y 0DT. The consolidated financial
statements of the Company as at and for the year ended 30 September
2019 include the Company and its subsidiaries. The Group is
primarily involved in the exploration and exploitation of mineral
resources in Africa.
2. Going concern
The financial statements are prepared on a going concern basis.
In assessing whether the going concern assumption is appropriate,
the Directors have taken into account all relevant available
information about the current and future position of the Group,
including current level of resources, additional funding raised in
February 2020 and the required level of spending on exploration and
drilling activities. As part of their assessment, the Directors
have also taken into account the ability to raise new funding whist
maintaining an acceptable level of cash flows for the Group to meet
all commitments.
In the current business climate, the Directors acknowledge the
COVID-19 pandemic and has implemented logistical and organisational
changes to underpin the Group's resilience to COVID-19, with the
key focus being minimising the impact on critical work streams,
ensuring business continuity and conserving cash flows. COVID-19
may impact the Group in varying ways leading to the Group reducing
all non-essential expenditure, the potential impairment of assets
held, the Group's ability to finance exploration and drilling
activities and meet commitments relating to its investments,
including for transactions entered into after the financial
reporting date (note 27) The inability to gauge the length of such
disruption further adds to this uncertainty. For these reasons, the
preservation of cash flows is a primary focus for the
Directors.
The Directors have stress tested the Group's cash projections,
which involves preserving cash flows and adopting a policy of
minimal cash spending for a period of at least 12 months from the
date of approval of these financial statements. The Directors
believe the measures they have put in place together with the funds
raised in February 2020 (note 27), and a planned fundraising in
November 2020 will result in sufficient working capital and cash
flows to continue in operational existence, assuming that all
exploration and drilling activities are managed carefully and
curtailed if necessary. For the Group to carry out the desired
levels of exploration and drilling activities, the Directors
believe that it needs to secure further funding either from a
strategic partner or subsequent equity raisings in the next
financial year, which the Group has succeeded in completing over
recent years. Taking these matters in consideration, the Directors
continue to adopt the going concern basis of accounting in the
preparation of the financial statements.
The need to complete a fundraising in November 2020 indicates
that a material uncertainty exists which may cast significant doubt
on the Group's and Parent Company's ability to continue as a going
concern and therefore its ability to settle it debts and realise
its assets in the normal course of business.
The financial statements do not include the adjustments that
would be required should the going concern basis of preparation no
longer be appropriate.
3. Intangible assets Prospecting and exploration rights
Rights acquired with subsidiaries are recognised at fair value
at the date of acquisition. Other rights acquired and development
expenditure are recognised at cost.
Exploration and evaluation costs arising following the
application for the legal right, are capitalised on a
project-by-project basis, pending determination of the technical
feasibility and commercial viability of the project. When a project
is deemed not feasible, related costs are expensed as incurred.
Costs incurred include any costs pertaining to technical and
administrative overheads. Administration costs that are not
directly attributable to a specific exploration area are expensed
as incurred, and subsequently capitalised if it is reasonably
certain that a resource will be defined.
Capitalised development expenditure will be measured at cost
less accumulated amortisation and impairment losses.
4. Operating expenses
Operating expenses include: 2019 2018
GBP'000 GBP'000
Staff costs (note 9) 184 465
Foreign exchange gain (4) (8)
Share based payment expense 28 -
Auditor's remuneration - audit
services 27 23
======== ===================
Auditor's remuneration in respect of the Company amounted to
GBP27,000 (2018: GBP23,000).
5. Discontinued operations
On 27 September 2018, the Group agreed to place Blue Horizon
(SL) into voluntary liquidation.
The results of the discontinued operations, which have been
included in the consolidated income statement, were as follows;
2019 2018
GBP'000 GBP'000
Expenses - (622)
--------------------- -------------------
Loss of discontinued operation (622)
Loss on disposal of subsidiary - (4,872)
--------------------- -------------------
Loss from discontinued operations - (5,494)
===================== ===================
Reclassification of translation reserve of
discontinued operations - (531)
--------------------- -------------------
Total comprehensive expense from discontinued
operations - (6,025)
===================== ===================
Loss per share relating to discontinued operations
(pence) (8.78)
Net cash outflows from operating activities (332)
Net cash outflows from investing activities - -
-------------------- -------------------
Net cash decrease incurred by subsidiary - (332)
===================== ===================
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation:
2019 2018
GBP'000 GBP'000
Carrying amount of net assets disposed - (3,950)
--------------------- -------------------
Loss on disposal before income tax and reclassification
of foreign currency translation reserve - (3,950)
--------------------- -------------------
Reclassification of foreign exchange currency
reserve - 531
Write off of loan balances and realised exchange
losses - (1,453)
--------------------- -------------------
Loss on disposal after income tax - (4,872)
===================== ===================
The tax losses to be forfeited as a result of the
discontinuation and subsequent disposal of Blue Horizon are
GBP9,994,420 comprising of GBP622,000 for the loss to 30 September
2018 and the brought forward losses attributable to the subsidiary
of GBP9,372,420.
6. Property, plant and equipment
Land and Plant and Fixtures
buildings equipment and fittings Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 October 2017 159 595 44 798
Disposals (159) (595) (43) (797)
Balance at 30 September 2018 - - 1 1
----------- ----------- -------------- ----------
Balance at 1 October 2018 - - 1 1
Additions - - - -
Balance at 30 September 2019 - - 1 1
----------- ----------- -------------- ----------
Depreciation
Balance at 1 October 2017 97 518 42 657
Disposals (97) (518) (41) (656)
Balance at 30 September 2018 - - 1 1
----------- ----------- -------------- ----------
Balance at 1 October 2018 - - 1 1
Disposals - - - -
Balance at 30 September
2019 - - 1 1
----------- ----------- -------------- ----------
Carrying amounts
At 30 September 2018 - - - -
=========== ============== ==========
At 30 September 2019 - - - -
=========== =========== ============== ==========
7. Intangible assets
Prospecting
and exploration
rights
GBP'000
Cost
As at 1 October 2017 5,661
Additions 2,082
Effect of movements in exchange
rate 52
Balance at 30 September 2018 7,795
-----------------
As at 1 October 2018 7,795
Effect of movements in exchange
rate (2)
Balance at 30 September 2019 7,793
-----------------
Impairment
As at 1 October 2017 -
Charge 5,713
Balance at 30 September 2018 5,713
-----------------
As at 1 October 2018 5,713
Charge 954
Balance at 30 September
2019 6,667
-----------------
Net book value
At 30 September 2018 2,082
=================
At 30 September 2019 1,126
=================
The opening balance of intangible assets was initially
recognised on the acquisition of the three subsidiaries, Power
Metal Resources SA (formerly ABM Kobald SAS), (PMR), Cobalt Blue
Holdings (CBH) and Regent Resources Interests Corporation
(RRIC).
The Directors regularly assess the carrying value of the Group's
assets, including its prospecting and exploitation rights, and
write off any exploration expenditure that they believe to be
unrecoverable.
PMR
The Company holds the rights to a licence held by PMR, in the
Democratic Republic of Congo. The two phases of exploration carried
out since acquisition in December 2017 of the Kisinka licence is
now being followed up by as recently announced by a third programme
of pitting, geology, and sampling in order to define better the
significant 6.8km copper anomaly identified in the first programme,
as well as to test for cobalt. As a licence in a prospective area
and close to existing discoveries, with a significant apparent
discovery awaiting confirmation, this license in the Board's view
is likely to have a value greatly in excess of sums expended, and
the carrying value is not subject to any impairment.
CBH
At the reporting date, the Group held four Cameroon-based
nickel-cobalt exploration licences through two 100% owned
subsidiaries of CBH. Through one of these subsidiaries CBH has also
applied for two further Cameroon-based nickel-cobalt exploration
licences. These licences expire in the first quarter of 2021,
unless renewed. The licences may be renewed three times for periods
of two years provided that obligations have been met by the
licensee.
The locations of the four licences held and the Ntam Est licence
applied for are either adjacent to, or within 50km of the
Nkamouna/Mada Cobalt Project ("Nkamouna/Mada") in Cameroon,
formerly owned by ex-TSX-
listed Geovic Mining Corp ("Geovic"), where in 2011 SRK
Consulting (US) Inc. reported a giant NI 43-101 compliant
cobalt/nickel resource.
The results of the exploration carried out in early 2019
confirmed that the licences contain tropical laterite material,
like Nkamouna/Mada, but the exploration to date has not identified
cobalt or nickel mineralisation. The work undertaken has identified
a need to move exploration to higher elevations to target enhanced
cobalt mineralisation.
Further exploration, though not currently budgeted, is planned
and an assessment of this next stage will be carried out in due
course. The long time horizon and very large scale of the target
mineralisation make this a strategic asset where the Company could
well recover its investment through sale or joint venture. The
directors believe the carrying value of the should not in be
subject to impairment.
RRIC
The Company also held the right to earn into 70% of the Lizetta
II chrome, nickel, cobalt exploration licence ("Lizetta-II") in
Côte d'Ivoire by expending a total of USD 850,000 on the project
over the period to June 2021, through RRIC. RRIC entered into the
above agreement with Regent Resources Capital Corporation (RRCC).
Lizetta-II is located 77km NW of Bouake, which is 342km north of
Abidjan, the commercial capital of Côte d'Ivoire , and covers
approximately 380 sq. km. Local infrastructure includes road
access, the proximity of major river creeks and electric networks
sufficient for any industrial operations on the property.
Historical data shows anomalous concentrations of nickel, cobalt
and chromite mineralisation in the ultramafic rocks of the
Marabadiassa-Alekro area. An independent assessment commissioned by
RRCC confirmed the potential to host cobalt, nickel and chrome
mineralisation of economic potential and proposed an initial field
programme consisting of historical data compilation, geological
mapping, geophysical surveys, trenching and RC drilling. The
proposed follow-up phase would be extensive drilling to allow the
definition of a JORC/NI 43-101 code compliant resource.
During the year under review, no exploration activities relating
to the Group's exploration activities on the Lizetta-II have been
capitalised. As at the end of the year ended 30 September 2019, the
Directors believe that a
100% impairment charge in relation to the asset, amounting to
GBP954,000 is prudent due to the cease of exploration. The high
valuation on Sama provides evidence that the thesis of an emerging
and previously barely explored base metal province has investor
creditability, but the lack of recent activity by them of other
parties along trend means the Company needs to reset its
relationship with its local partner through renewed activity. There
is no budget or plan that currently exists in relation to this.
Intangible assets are not pledged as security or held under any
restriction of title.
8. Trade and other receivables
2019 2018
GBP'000 GBP'000
Other receivables 11 20
Prepayments 21 19
--------------------
32 39
==================== ====================
9. Share capital
Number of ordinary shares
2019 2018
Ordinary shares in issue
at 1 October 136,579,143 31,187,691
Issued for cash 200,000,000 41,716,667
Issued in settlement for
expenses 36,258,958 5,308,722
Company buy back - (5,324,384)
Issued in relation to
acquisitions - 63,690,447
------------------ ------------------
In issue at 30 September - fully paid (par
value 0.1p) 372,838,101 136,579,143
================== ==================
Ordinary
share capital
2019 2018
GBP'000 GBP'000
Balance at beginning of
year 6,606 6330
Share issues 237 281
Consolidation - (5)
---------
Balance at 30 September 6,843 6,606
========= =========
All ordinary shares rank equally with regard to the Company's
residual assets.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time, and are entitled to one vote per
share at meetings of the Company.
Both classes of deferred shares (Deferred and Deferred A), do
not entitle the holders thereof to receive notice of or attend and
vote at any general meeting of the Company or to receive dividends
or other distributions or to participate in any return on capital
on a winding up unless the assets of the Company are in excess of
GBP1,000,000,000,000. The Company retains the right to purchase the
deferred shares from any shareholder for a consideration of one
penny in aggregate for all that shareholder's deferred shares. As
such, the deferred shares effectively have no value. Share
certificates will not be issued in respect of the deferred
shares.
Issue of ordinary shares
On 28 January 2019, the Company completed, subject to
shareholder approval, a refinancing and business strategic update,
including the placing and subscription of 200,000,000 new Ordinary
Shares of 0.5 pence each, raising GBP1,000,000.
On the same day, the Company announced that Red Rock Resources
plc, a company associated with the incoming Executive Chairman, and
Paul Johnson, the incoming Executive Director, were each awarded
5,000,000 new Ordinary Shares at 0.5 pence each as payment for
restructuring fees; GBP50,000 of costs were settled by this share
issue.
The Company also issued 13,402,938 ordinary shares at 0.5 pence
each for the settlement of creditor balances and 3,056,020 ordinary
shares at 0.5 pence each to Roger Murphy and Matthew Wood in lieu
of Directors fees, GBP82,295 of costs were settled by these share
issues. Roger Murphy and Matthew Wood resigned as directors of the
company on 15 February 2019 and 29 March 2019, respectively.
In August 2019, the Company announced the payment of certain
cash fees through an issue of 9,800,000 ordinary shares at a price
of 0.55p per share. The fees payable amounted to a cash value of
GBP53,900.
10. Loss per share
Basic and diluted loss per share
The calculation of basic and diluted loss per share is based on
the loss attributable to ordinary shareholders of GBP1,539,176
(2018: GBP6,642,581), and a weighted average number of ordinary
shares in issue of 278,814,166 (2018: 62,547,951).
No Directors exercised options or warrants in the year ended 30
September 2019 (2018: Nil).
11. Trade and other payables
2019 2018
GBP'000 GBP'000
Trade payables 20 127
Accrued expenses 46 152
---------
66 279
========= =========
12. Subsequent events
On 3 December 2019, the Company entered into an agreement in
respect of the Alamo project in Arizona, USA. The Alamo project is
a package of mining claims covering an area of approximately 340
acres in west-central Arizona. The project is prospective for gold,
and precious and base metals, with regional mines that have
produced silver, lead, gold, zinc and copper. The Company has
signed an agreement providing an opportunity to acquire a right to
earn in to a 60% interest over a four-year period in the Alamo
project, subject to a 45-day due diligence period.
On 10 December the Company announced it had raised GBP700,000
(before costs) through a placing and subscription at a price of
0.40 pence per share through the issue of 175,000,000 new ordinary
shares of 0.1 pence each. Each placing and subscription share had
an attaching warrant which was issued on the same day. The warrants
are exercisable at 0.70 pence per new ordinary share, which are
subject to an acceleration clause whereby should the volume
weighted average share price exceed 2.25 pence for 10 consecutive
working days, the Company may write to warrant holders providing 10
working days' notice of accelerated exercise. Paul Johnson and
Andrew Bell subscribed for GBP25,000 each on the same terms as the
other investors.
Additionally, the Company announced First Equity Limited are to
be appointed as joint brokers to the Company with effect from
admission of the Placing and Subscription shares to trading on the
AIM market of the London Stock Exchange.
On the 31 December 2019, the Company confirmed written
confirmation had been made to Kalahari Key Mineral Exploration Pty
Limited to elect to earn in to a 40% interest in the Molopo Farms
Complex. To earn in to the 40%, the Company must expend $500,000 on
project related expenditure to support drilling of key
nickel-copper-PGM targets in 2020. The spend requirement is fully
covered by the Company's existing cash resources following the
fundraising in December 2019, GBP400,000 of which was allocated to
enable the Company to exercise the option to earn-in to this
project. The Company holds 18.26% of Kalahari Key Exploration Pty
Limited, therefore upon completion, the Company will hold 50.96% of
the project. The change in control is a non-adjusting event as at
the end of the financial year, the exploration work had not been
conducted and the Company did not have a practical ability to
exercise substantive rights. As the exploration work carried out
post-year end was favourable, and the Company have elected to earn
in to the 40% additional interest in the project, this has resulted
in the Company gaining significant influence and control over
Kalahari Key.
In January 2020, an outbreak of a corona virus, now classified
as COVID--19, was detected in China's Hubei province. During the
following months, COVID--19 has spread steadily throughout the
World and on 11 March 2020, The World Health Organisation ("WHO")
declared the outbreak a global pandemic. In order to stem the
spread of the virus, Governments around the World are taking
drastic steps which include compulsory closure of various
businesses, shops and schools and are also heavily restricting of
movement of people with lock down. Due to the rapid development of
COVID--19, the degree of uncertainty involved and the unprecedented
nature of the challenges posed by the coronavirus situation, the
Directors' are of the opinion that it is too soon to quantify what
financial impact that the COVID--19 pandemic will be, but are
monitoring the situation closely
In February 2020, the Company announced the appointment of Ed
Shaw as a non-executive director, and was granted options over 5
million ordinary shares of 0.1 pence each at an exercise price of
1.0 pence per ordinary share, vesting immediately, in line with the
previous grant of share options to directors.
On 15 April 2020, the Company entered into an agreement
providing an opportunity to acquire a 51% interest in the Ditau
project, currently held 100% by Kavango Resources plc. The project
is prospective for rare earth metals. The acquisition is subject to
a due diligence period ending 1 September 2020 at the latest.
In April 2020, POW announced the commencement of a new joint
venture with Red Rock Resources Plc to build a strategic gold
exploration portfolio in Australia.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EBLFLBELFBBV
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