TIDMARG

RNS Number : 2972A

Argos Resources Ltd

01 June 2021

1 June 2021

ARGOS RESOURCES LIMITED

("Argos" or "the Company")

2020 Financial Results

Highlights

Argos Resources Ltd (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, is pleased to announce its financial results for the year ended 31 December 2020.

 
 *    US$299,000 loss (2019: loss of US$401,000) 
 
 
   *    US$438,000 cash reserves at 31 December 2020 (31 
        December 2019: US$768,000) 
 
   *    In April 2021 the Falkland Islands Government agreed 
        to a 12 month extension of the Second Phase of the 
        Licence, with no additional work commitments. The 
        licence now expires on 1 May 2022 
 
   *    $550,000 fund raising in April 2021 means the Group 
        is fully funded for at least 12 months from sign-off 
        of these accounts 
 

The full Annual Report and Consolidated Financial Statements can be read and downloaded from the Company website: http://www.argosresources.com/news.php?page=regulatory-news

Argos Resources Limited (+500 22685)

www.argosresources.com

Ian Thomson, Chairman

John Hogan, Managing Director

Cenkos Securities plc (Nomad & Broker)

Derrick Lee (+44 131 220 9100)

Neil McDonald (+44 131 220 6939)

Joint Chairman's statement and Managing Director's review

During the reporting period Brent crude oil prices plummeted from over $65 per barrel at year-end 2019 to a low of $20 per barrel in April 2020. The fall in prices was driven initially by competition from OPEC for market share and then exacerbated later by the significant drop in global energy demand as a result of the Covid-19 pandemic supressing oil and gas consumption globally.

The industry was hit hard by this unexpected sharp drop in demand and commodity prices, and responded by reducing costs, cutting capital expenditure and delaying projects. Acknowledging this slowdown in activity, the Company requested an extension to the Licence term as more time will be required to recover from this downturn. In April 2021 the Falkland Islands government agreed to a twelve month extension to the Second Phase of the Licence to 1(st) May 2022.

In April 2021 the Company also announced that, subject to shareholder approval, it had raised $550,000 through the placing of new shares. Shareholder approval was obtained at a General Meeting on 30(th) April. The fund raise, when added to existing cash reserves, is sufficient to fund the Company's working capital requirements through the term of the Licence extension as well as costs expected to be incurred in technical work in furthering the Company's farmout efforts.

By the end of 2020 Brent crude oil prices had recovered to $50 per barrel and had fully recovered to the $65 per barrel range by April 2021. The oil industry is cautiously increasing activity in response to this recovery albeit still being hampered by operational and logistical difficulties caused by the continuing Covid-19 restrictions.

The Company continues to seek partners to participate in drilling on its Licence and is currently engaged with a number of counterparties who have expressed interest. Given the current challenging environment the Company believes it may be some time before any expressions of interest are translated into commitments.

Results and dividend

The results for the year and the Group's financial position as at the year-end are shown in the attached financial statements. The directors have not recommended a dividend for the year (2019: $nil).

Business review

The Group has returned a loss for the year ended 31 December 2020 of $299,000 (2019: loss of $401,000) which equates to a loss per share of 0.14 cents (2019: loss per share of 0.18 cents).

Administration expenses were $303,000 in 2020 compared to $433,000 in 2019. The difference is due largely to a one off $88,000 share-based payment charge for the extension of the options scheme in 2019 and the slowdown and reduced travel in 2020, experienced by the sector due to Covid-19.

Shareholders' equity has decreased from $29.5 million to $29.2 million in the year since 31 December 2019, reflecting the administration costs. Cash in the year decreased from $768,000 to $438,000.

Outlook for the next financial year

The Group carried out a successful fund raise in April 2021 which will fund the continuing search for a farmout partner and means that the Group is fully funded for the period of the licence extension, and at least 12 months from sign-off of these accounts.

Going concern

The financial statements have been prepared on the going concern basis as, in the opinion of the directors, there is a reasonable expectation that the Group and the Company will continue in operational existence for the foreseeable future.

On 7 April 2021 the Company announced that it had conditionally raised US$550,000 through a subscription by certain new shareholders and Ian Thomson, Executive Chairman of the Company and the Fundraise was ratified by the passing of the required Resolutions at a General Meeting held on 30 April 2021.

On 20 April 2021 the Falkland Islands Government agreed an extension the second term of the Company's PL001 Licence by twelve months, to 1 May 2022.

Following the successful fund raise in April 2021 the Group has sufficient cash resources to continue for at least 12 months from sign-off of these accounts.

The Group's ability to achieve its long term strategy of developing its exploration projects is dependent on finding an exploration partner. The Group continues to seek partners to participate in drilling on its Licence and is currently engaged with a number of counterparties who have expressed interest. However, given the current challenging environment the Group believes it may be some time before any expressions of interest are translated into commitments and further extensions to the Licence term may be required.

In order to continue as a going concern beyond the current Licence term, which expires on 1 May 2022, the Company will need to raise further finance, either through a farmout partner or by raising funds in an equity issue.

Should the Directors be unable to raise sufficient funds, find an exploration partner, or negotiate further Licence extensions the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

These factors indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Consolidated statement of comprehensive income

Year ended 31 December 2020

 
                                                         Year            Year 
                                                        ended           ended 
                                                  31 December     31 December 
                                                         2020            2019 
                                                        $'000           $'000 
 Administrative expenses                                (303)           (433) 
 
 Finance income                                             1               4 
 Foreign exchange gains                                     3              28 
---------------------------------------------  --------------  -------------- 
 
 (Loss) for the year attributable 
  to owners of the parent                               (299)           (401) 
---------------------------------------------  --------------  -------------- 
 
 Total comprehensive (loss) 
  for the 
 period attributable to owners 
  of the parent                                         (299)           (401) 
 
 Basic and diluted (loss) per 
  share (cents)                                        (0.14)          (0.18) 
---------------------------------------------  --------------  -------------- 
 

Consolidated statement of financial position

As at 31 December 2020

 
                                           2020      2019 
                                          $'000     $'000 
 Assets 
 Non-current assets 
 Exploration intangible assets           28,815    28,737 
                                         28,815    28,737 
 Current assets 
 Other receivables                           40        86 
 Cash and cash equivalents                  438       768 
-------------------------------------  --------  -------- 
 
 Total current assets                       478       854 
-------------------------------------  --------  -------- 
 
 Total assets                            29,293    29,591 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                    59        58 
 
 Total liabilities                           59        58 
 
 Total net assets                        29,234    29,533 
-------------------------------------  --------  -------- 
 
 
 Capital and reserves attributable 
  to 
 equity holders of the Company 
 Share capital                            6,696     6,696 
 Share premium                           30,071    30,071 
 Retained losses                        (7,533)   (7,234) 
 
 Total shareholders' equity              29,234    29,533 
-------------------------------------  --------  -------- 
 

Consolidated statement of cash flows

Year ended 31 December 2020

 
                                                            Year            Year 
                                                           ended           ended 
                                                     31 December     31 December 
                                                            2020            2019 
                                                           $'000           $'000 
 Cash flows from operating activities 
 (Loss) for period before taxation                         (299)           (401) 
 
 Adjustments for: 
 Finance income                                              (1)             (4) 
 Foreign exchange (gains)                                    (3)            (28) 
 Share based remuneration expensed                             -              89 
 
 Net cash (outflow) from operating 
  activities 
 before changes in working capital                         (303)           (344) 
------------------------------------------------  --------------  -------------- 
 
 Decrease in other receivables                                 1             377 
 Increase/(Decrease) in other payables                         1             (3) 
------------------------------------------------  --------------  -------------- 
 
 Net cash outflow from operating 
  activities                                               (301)              30 
------------------------------------------------  --------------  -------------- 
 
 Investing activities 
 Interest received                                             1               4 
 Exploration and development expenditure                    (33)            (82) 
 
 Net cash (used) in investment activities                   (32)            (78) 
------------------------------------------------  --------------  -------------- 
 
 Net (decrease) in cash and cash 
  equivalents                                              (333)            (48) 
 Cash and cash equivalents at beginning 
  of period                                                  768             788 
 Exchange gains on cash and cash 
  equivalents                                                  3              28 
------------------------------------------------  --------------  -------------- 
 
 Cash and cash equivalents at end 
  of the year                                                438             768 
------------------------------------------------  --------------  -------------- 
 

Consolidated statement of changes in equity

Year ended 31 December 2020

 
 
                                      Share      Share   Retained     Total 
                                    capital    premium     losses    equity 
                                      $'000      $'000      $'000     $'000 
 At 1 January 2019                    6,696     30,071    (6,899)    29,868 
 Total comprehensive 
  income for the year                     -          -      (401)     (401) 
 Share based income expense               -          -         89        89 
 Share based income adjustment 
  for expired options                     -          -       (23)      (23) 
 
 At 31 December 2019 
  and 1 January 2020                  6,696     30,071    (7,234)    29,533 
--------------------------------  ---------  ---------  ---------  -------- 
 
 Total comprehensive 
  income for the year                     -          -      (299)     (299) 
 
 At 31 December 2020                  6,696     30,071    (7,533)    29,234 
--------------------------------  ---------  ---------  ---------  -------- 
 

In preparing the financial information in this statement the Group, which consists of the Company Argos Resources Ltd, and its wholly owned subsidiary Argos Exploration Ltd, has applied policies in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The financial information has been prepared under the historical cost convention.

The financial information set out above does not constitute the company's statutory accounts for 2019 or 2020. Statutory accounts for 2019 and 2020 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2019 and 2020 were unqualified with an emphasis of matter paragraph included highlighting the material uncertainty relating to going concern .

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END

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