TIDMARG
RNS Number : 8336M
Argos Resources Ltd
24 September 2021
24 September 2021
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2021 Interim Financial Results
Argos Resources Limited (AIM: ARG.L), the Falkland Islands based
company focused on the North Falkland Basin, is pleased to announce
its interim financial results for the six months ended 30 June
2021.
Highlights
-- $200 thousand loss for the period (H1 2020: loss of $192 thousand);
-- $550 thousand successful fund raise in May 2021;
-- $641 thousand cash reserves at 30 June 2021 (YE 2020: $438 thousand);
-- The current Second Phase of the Licence was extended until May 2022;
-- The Company continues to work on de-risking the North
Falklands basin for drilling and seek partners to participate in
drilling on its Licence.
For further information:
Argos Resources Limited (+500 22685) Cenkos Securities plc
(Nomad & Broker)
www.argosresources.com Derrick Lee (+44 131 220 9100)
Ian Thomson, Chairman Neil McDonald (+44 131 220 6939)
John Hogan, Managing Director
Chairman's Statement
During the reporting period of the first half of the year there
has been a significant stabilisation of the oil markets following a
turbulent year in 2020. Brent crude oil prices have traded in the
range of US$43 per barrel at the beginning of the year, increasing
to over US$75 per barrel by the end of June 2021. This fairly
steady rise in prices has been driven by increasing demand,
although still below pre-Covid 19 pandemic levels, and reduced
production by OPEC+.
The industry was hit hard by the unexpected sharp drop in demand
and commodity prices in 2020 and responded by reducing costs,
cutting capital expenditure and delaying projects. The industry is
cautiously increasing activity in response to the recovery in oil
prices in the first half of 2021, albeit still being hampered by
operational and logistical difficulties caused by the continuing
Covid-19 restrictions. Acknowledging this slowdown in activity, the
Company requested an extension to the term of Licence PL001, a
production licence covering an area of approximately 1,126 square
kilometres in the North Falkland Basin (the "Licence"), 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 a subscription
for new shares by certain new shareholders and Ian Thomson,
Executive Chairman of the Company. Shareholder approval for this
fundraise was obtained at a General Meeting on 30(th) April. The
net proceeds of the fundraise, 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. A pilot study has been commissioned to
reprocess some of the 3D seismic data which, if successful, would
help to further de-risk the prospects mapped within the Company's
Licence area and enhance its farmout potential.
The Company notes the decision announced on 23rd September by
Harbour Energy plc, the current 60% owner and operator of the Sea
Lion oilfield, to explore the options to exit the project and its
other license interests in the Falkland Islands. Any impact this
decision may have on the Company's activities is being
assessed.
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.
Financial overview
The Group loss for the six months to 30 June 2021 was $200
thousand (2020: loss of $192 thousand) giving an undiluted loss per
share of 0.09 cents (2020: 0.09 cents loss per share).
Administrative expenses were $205 thousand compared to $148
thousand for the same period in 2020.
Net assets of $29.6 million is an increase of $350 thousand
since December 2020 as a net result of the loss for the period and
a fund raise of $550 thousand.
Financial outlook
The Group has sufficient cash resources to continue for the
period of the current licence term, which expires on 1 May 2022. In
order to continue as a going concern beyond that point the Company
will need to raise further finance, either through a farmout
partner or by raising funds in an equity issue.
The going concern comments in Note 1 contain further
information.
Ian Thomson OBE
Chairman
Consolidated statement of comprehensive income
Period ended 30 June 2021
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
unaudited unaudited audited
Note $'000 $'000 $'000
Administrative expenses (205) (148) (303)
Finance income - 1 1
Foreign exchange gains/(losses) 5 (45) 3
------------------------------------- ------ ----------- ----------- -------------
(Loss) from operations attributable
to owners of the parent (200) (192) (299)
------------------------------------- ------ ----------- ----------- -------------
Total comprehensive income
for the period
attributable to owners of
the parent (200) (192) (299)
------------------------------------- ------ ----------- ----------- -------------
(Loss) per share (cents):
Basic and diluted 2 (0.09) (0.09) (0.14)
------------------------------------- ------ ----------- ----------- -------------
Consolidated statement of financial position
As at 30 June 2021
As at As at As at
30 June 30 June 31 December
2021 2020 2020
unaudited unaudited audited
Note $'000 $'000 $'000
Assets
Non-current assets
Capitalised exploration expenditure 28,903 28,776 28,815
Current assets
Other receivables 83 48 40
Cash and cash equivalents 641 560 438
------------------------------------- ------ ----------- ----------- -------------
Total current assets 724 608 478
------------------------------------- ------ ----------- ----------- -------------
Total assets 29,627 29,384 29,293
------------------------------------- ------ ----------- ----------- -------------
Liabilities
Total and current liabilities
Other payables (43) (43) (59)
Total net assets 29,584 29,341 29,234
------------------------------------- ------ ----------- ----------- -------------
Capital and reserves attributable
to
equity holders of the company
Share capital 3 7,096 6,696 6,696
Share premium 30,221 30,071 30,071
Retained losses (7,733) (7,426) (7,533)
------------------------------------- ------ ----------- ----------- -------------
Total shareholders' equity 29,584 29,341 29,234
------------------------------------- ------ ----------- ----------- -------------
Consolidated statement of cash flows
Period ended 30 June 2021
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
unaudited unaudited audited
$'000 $'000 $'000
Cash flows from operating activities
(Loss) for period (200) (192) (299)
Adjustments for:
Finance income - (1) (1)
Foreign exchange gains/(losses) (5) 47 (3)
Net cash (outflow) from operating
activities
before changes in working capital (205) (146) (303)
(Increase)/decrease in other receivables (4) (1) 1
(Decrease) in other payables (16) (15) 1
------------------------------------------ ----------- ----------- -------------
Net cash (outflow)/inflow
from operating activities (225) (162) (301)
------------------------------------------ ----------- ----------- -------------
Investing activities
Interest received - 1 1
Proceeds from share issue 550 - -
Exploration and development expenditure (127) - (33)
Net cash inflow/(outflow)
from investment activities 423 1 (32)
------------------------------------------ ----------- ----------- -------------
Net increase/(decrease) in cash
and cash equivalents 198 (161) (333)
Cash and cash equivalents at beginning
of period 438 768 768
Exchange gains/(losses) on cash
and cash equivalents 5 (47) 3
------------------------------------------ ----------- ----------- -------------
Cash and cash equivalents at end
of period 641 560 438
------------------------------------------ ----------- ----------- -------------
Consolidated statement of changes in equity - unaudited
Period ended 30 June 2021
Retained
Share earnings/ Total
Share
capital premium (deficit) equity
$'000 $'000 $'000 $'000
At 1 January 2020 6,696 30,071 (7,234) 29,533
Total comprehensive
income for period to
30 June 2020 - - (192) (192)
At 30 June 2020 6,696 30,071 (7,426) 29,341
------------------------------- ---------- --------- ------------ -------------
Total comprehensive
income for period to
31 December 2020 - - (107) (107)
At 31 December 2020 6,696 30,071 (7,533) 29,234
------------------------------- ---------- --------- ------------ -------------
Total comprehensive
income for period to
30 June 2021 - - (200) (200)
Shares issued during
period to 30 June 2021 400 150 - 550
At 30 June 2021 7,096 30,221 (7,733) 29,584
------------------------------- ---------- --------- ------------ -------------
Notes to the interim report - unaudited
Period ended 30 June 2021
1 Accounting policies
General information
Argos Resources Limited is a limited liability company
incorporated and domiciled in the Falkland Islands under
registration number 10605. The address of its registered office is
Argos House, H Jones Road, Stanley, Falkland Islands.
This consolidated interim report was approved for issue by the
directors on 23 September 2021.
Basis of preparation
The financial information included within this interim report
has not been reviewed nor audited and is based on the consolidated
financial statements of Argos Resources Limited and its subsidiary
Argos Exploration Limited ("the Group"). The consolidated financial
statements are prepared in compliance with the recognition and
measurement requirements of International Financial Reporting
Standards as adopted by the European Union (IFRSs) and
interpretations of those standards as issued by the International
Accounting Standards Board (IASB). They do not include all
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the
2020 annual report. These accounts have been prepared in accordance
with the accounting policies that are expected to be applied in the
report and accounts of Argos Resources Limited for the year ending
31 December 2021.
The comparative financial information for the year ended 31
December 2020 has been derived from the full statutory financial
statements for that period which were prepared in compliance with
IFRSs. The Independent Auditors' Report on the annual report and
financial statements for 2020 was unqualified but did draw
attention to note 1 of these financial statements which explains
that the Group and Parent Company's ability to continue as a going
concern is dependent on the finding of an exploration partner and
obtaining further funding. As stated in note 1, these conditions
indicate the existence of a material uncertainty which may cast
significant doubt over the Group's and Parent Company's ability to
continue as a going concern. The audit opinion was not however
modified in respect of this matter.
The IASB has issued some new and revised standards, amendments
and interpretations to existing standards, which are effective for
the financial year ending 31 December 2021. The directors have made
an assessment of the impact of these standards and they are not
expected to have a material impact on the financial statements.
Going concern
The interim report has 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.
The Company's ability to achieve its long term strategy of
developing its exploration projects is dependent on finding an
exploration partner. The advent of Covid-19 caused an unexpected
sharp drop in energy demand, suppressing commodity prices, and the
industry responded by reducing costs, cutting capital expenditure
and delaying projects.
Notes to the interim report - unaudited
Period ended 30 June 2021
1 Accounting policies (continued)
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 1st May 2022.
In April 2021 the holding company, Argos Resources Limited,
raised $550,000 through the placing of new shares. The fund raise,
when added to existing cash reserves, is sufficient to fund the
Group'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 farmout efforts.
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 Company's ability to
continue as a going concern. The financial statements do not
include the adjustments that would result if the Company was unable
to continue as a going concern.
Significant accounting judgements, estimates and assumptions
T he Group makes certain estimates and assumptions regarding the
future in relation to intangible assets and impairment of these
assets. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial period are discussed as follows:
Intangible assets - capitalised exploration expenditure,
impairment and royalty interests
Evaluation and exploration (E&E) expenditure
The Group believes that the most appropriate method of
accounting for E&E expenditure is to capitalise any costs
incurred, including appropriate technical and administrative
expenses but not general overheads, as intangible assets pending
determination of feasibility of the project, as permitted under
IFRS 6.
Notes to the interim report - unaudited
Period ended 30 June 2021
1. Accounting policies (continued)
If an exploration project is successful, the related
expenditures are transferred to tangible assets and amortised over
the estimated life of the commercial reserves. Where a licence is
relinquished, a project is abandoned, or is considered to be of no
further value to the Group, the related costs are written off.
Impairment
E&E assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed the
recoverable amount.
In accordance with IFRS 6 the Group firstly considers the
following facts and circumstances in their assessment of whether
the Group's exploration and evaluation assets may be impaired:
-- whether the period for which the Group has the right to
explore in a specific area has expired during the period or will
expire in the near future, and is not expected to be renewed;
-- whether substantive expenditure on further exploration for
and evaluation of mineral resources in a specific area is neither
budgeted nor planned;
-- whether exploration for and evaluation of hydrocarbons in a
specific area have not led to the discovery of commercially viable
quantities of hydrocarbons and the Group has decided to discontinue
such activities in the specific area; and,
-- whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be
recovered in full from successful development or by sale
If any such facts or circumstances are noted the Group must
perform an impairment test in accordance with the provisions of IAS
36, assessing the recoverable amount of the E&E assets together
with all development and production assets, as a single cash
generating unit (CGU). The aggregate carrying value is compared
against the expected recoverable amount of the CGU. The recoverable
amount is the higher of value in use and the fair value less costs
to sell.
Any E&E impairment loss would be recognised in the income
statement and separately disclosed.
Notes to the interim report - unaudited
Period ended 30 June 2021
2. (Loss) per share
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
unaudited unaudited audited
Number Number Number
Shares in issue brought forward
(2 pence shares) 220,713,205 220,713,205 220,713,205
Shares issued in period 14,428,001 - -
Shares in issue carried forward
(2 pence shares) 235,141,206 220,713,205 220,713,205
------------------------------------- ------------- ------------- -------------
Options not exercised brought
forward 6,705,818 6,705,818 6,705,818
Options not exercised carried
forward 6,705,818 6,705,818 6,705,818
------------------------------------- ------------- ------------- -------------
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
unaudited unaudited audited
(Loss) for the period ($'000) (200) (192) (299)
Weighted average number of ordinary
shares in issue during the period 225,177,116 220,713,205 220,713,205
------------------------------------- ------------- ------------- -------------
(Loss) per ordinary share (cents)
Basic and diluted (0.09) (0.09) (0.14)
------------------------------------- ------------- ------------- -------------
Basic loss per share has been computed by dividing the loss by
the weighted average number of shares in issue during the
period.
In accordance with IAS 33 as the Group is reporting a loss for
this period, the preceding interim period and the year to 31
December 2020 the share options are not considered dilutive because
the exercise of share options would have the effect of reducing the
loss per share.
Notes to the interim report - unaudited
Period ended 30 June 2021
3. Share Capital
Authorised: $'000
500,000,000 ordinary shares of
2 pence each
At 1 January 2020, 31 December
2020 and
30 June 2021 14,960
Allotted, issued and fully paid: Number
Ordinary shares of 2 pence each
At 1 January 2020 and 31 December
2020 220,713,205
Issued during the six months
ended 30 June 2021 14,428,001
------------------------------------------------ --------------
At 30 June 2021 235,141,206
Allotted, issued and fully paid: $'000
Ordinary shares of 2 pence each
At 1 January 2020 and 31 December
2020 6,696
Issued during the six months
ended 30 June 2021 400
At 30 June 2021 7,096
4 Events after the reporting date
There were no reportable events occurring after the balance
sheet date.
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