TIDMARG
RNS Number : 5232T
Argos Resources Ltd
25 July 2022
25 July 2022
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2021 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
2021.
* US$356,000 loss (2020 loss of US$299,000).
* US$304,000 cash reserves at 31 December 2021 (31
December 2020: US$438,000).
* In April 2022 the Falkland Islands Government agreed
to extend the licence from 1 May 2022 until 31
December 2022, with no additional work commitments.
* A loan provided by the Chairman in June 2022 provides
additional working capital and t he Company plans to
raise additional capital to support a further
extension of the Licence beyond its current expiry
date of 31 December 2022
* Ownership changes in the adjacent Sea Lion oilfield
and surging oil prices enhance outlook for the
Company.
The full Annual Report and Consolidated Financial Statements are
available for download from the Company's website:
http://www.argosresources.com/news.php?page=regulatory-news
The full Annual Report will also be sent to those shareholders
who have indicated that they wish to receive it by post on 29 July
2022. Postal and electronic notification of availability will also
be sent to shareholders the same day.
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)
Chairman's statement and Managing Director's review
The Company noted in its 2021 Interim Report the decision
announced on 23rd September by Harbour Energy plc, the then 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. Since then, Navitas Petroleum LP has committed to acquire
Harbour's interest and the operatorship of the field and has
already commenced work focussed on streamlining the development and
reducing front-end capital costs. This is a positive development
for Argos Resources as a commitment by Navitas to develop Sea Lion
will attract industry attention to the North Falkland Basin and
significantly increase the likelihood of the Company securing a
farm-in partner. This positive development, coupled with the surge
in oil prices in 2022 and the recognition that energy security has
been an overlooked critical issue enhance the future prospects for
the Company.
The Company also announced last year that a pilot study had been
commissioned to reprocess some of the 3D seismic data on Licence
PL001. The results of this work have been positive and sufficiently
encouraging that the Company intends to extend that work across the
main prospects identified in Licence PL001. The Company believes
this additional work should further de-risk those prospects and
enhance its farmout potential. The results of the pilot study have
been shared with the Falkland Island Government and its technical
advisers and the Company has informed them of its intention to seek
a further two year licence extension to 31st December 2024 to allow
sufficient time for this work to be undertaken and presented to the
industry. Additional capital will need to be raised to meet the
costs of this technical work and to fund the Company's working
capital requirements should a licence extension be offered.
Results and dividend
The results for the year to 31 December 2021 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 (2020: $nil).
Business review
The Group has returned a loss for the year ended 31 December
2021 of US$356,000 (2020: loss of US$299,000) which equates to a
loss per share of 0.15cents (2020: loss per share of 0.14
cents).
Administration expenses were US$355,000 in 2021 compared to
US$303,000 in 2020.
Shareholders' equity increased from US$29.2 million to US$29.4
million in the year since 31 December 2020, reflecting the fund
raise less administration costs and investment in the licence area.
Cash in the year decreased from US$438,000 to US$304,000.
Outlook for the next financial year
The Group carried out a successful fund raise in April 2021
which funded the Company until mid-2022. In June 2022 the Chairman
agreed a drawdown facility of GBP110,000 to enable the Group to
continue beyond that point. The Group intends to seek a licence
extension of a further two years to take the licence to December
2024 and funding in support of a work programme which will be
required under any licence extension.
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 Company will continue in operational
existence for the foreseeable future.
The Group and Parent Company's ability to continue in
operational existence is, however, subject to a number of
uncertainties as follows:
The Company's PL001 Licence currently expires on 31 December
2022. The Company has already advised the Falkland Islands
Government of its wish to extend the Licence by a further 2 years
beyond this date to undertake new technical work and to market the
results of that work to potential industry partners. A formal
application for this Licence extension cannot be submitted before
the Falkland Islands Government completes a review of its
relationship with the oil and gas sector which is currently
underway and expected to be completed in Q3 2022. Assuming a
favourable outcome to that review, the Company intends at that time
to submit a formal application for the extension to the
Licence.
Any offer of such an extension is likely to be conditional on
the Company demonstrating that it has sufficient funding to carry
out a work programme and cover administration costs during the
Licence term. Grant of an extension is therefore likely to be
dependent on the Company raising significant further funds in Q3/Q4
2022.
Failure to secure an offer of a licence extension or to raise
sufficient funds to meet the conditions of such an offer will
result in the Company being unable to continue as a going concern
in the near term.
If a licence extension and funding are forthcoming then the
Group's ability to achieve its long term strategy of developing its
exploration projects remains dependent on finding an exploration
partner and the Group continues to seek partners to participate in
drilling on its Licence. As at the date of sign off on these
financial statements the oil and gas markets continue to be in a
state of considerable turmoil with very high prevailing prices. The
company does not anticipate making progress on finding a partner
until the markets show signs of greater stability but is hopeful
that the drivers behind the current situation will improve the
chances of success.
If the Group is unable to find an exploration partner, raise
funds or obtain further licence extensions then it may be unable to
realise its assets and discharge its liabilities in the normal
course of business.
All the above factors indicate the existence of material
uncertainties which cast significant doubt over the Group and
Parent Company's ability to continue as a going concern, some of
which may crystalise before the end of 2022. 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 2021
Year Year
ended ended
31 December 31 December
2021 2020
$'000 $'000
Administrative expenses (355) (303)
Finance income - 1
Foreign exchange (losses)/gains (1) 3
--------------------------------------------- -------------- --------------
Loss for the year attributable
to owners of the parent (356) (299)
--------------------------------------------- -------------- --------------
Total comprehensive loss
for the
period attributable to owners
of the parent (356) (299)
Basic and diluted loss per
share (cents) (0.15) (0.14)
--------------------------------------------- -------------- --------------
Consolidated statement of financial position
As at 31 December 2021
2021 2020
$'000 $'000
Assets
Non-current assets
Exploration intangible assets 29,135 28,815
29,135 28,815
Current assets
Other receivables 43 40
Cash and cash equivalents 304 438
------------------------------------- -------- --------
Total current assets 347 478
------------------------------------- -------- --------
Total assets 29,482 29,293
Liabilities
Current liabilities
Trade and other payables 54 59
Total liabilities 54 59
Total net assets 29,428 29,234
------------------------------------- -------- --------
Capital and reserves attributable
to
equity holders of the Company
Share capital 7,095 6,696
Share premium 30,222 30,071
Retained losses (7,889) (7,533)
Total shareholders' equity 29,428 29,234
------------------------------------- -------- --------
Consolidated statement of cash flows
Year ended 31 December 2021
Year Year
ended ended
31 December 31 December
2021 2020
$'000 $'000
Cash flows from operating activities
Loss for period before taxation (356) (299)
Adjustments for:
Finance income - (1)
Foreign exchange losses/(gains) 1 (3)
Net cash outflow from operating
activities
before changes in working capital (355) (303)
------------------------------------------------- -------------- ----------------
(Increase)/decrease in other receivables (3) 1
(Decrease)/increase in other payables (5) 1
------------------------------------------------- -------------- ----------------
Net cash outflow from operating
activities (363) (301)
------------------------------------------------- -------------- ----------------
Investing activities
Interest received - 1
Exploration and development expenditure (320) (33)
Net cash used in investment activities (320) (32)
------------------------------------------------- -------------- ----------------
Financing activities
Issue of ordinary shares 550 -
------------------------------------------- ---- -------------- --------------
Net cash from financing activities 550 -
------------------------------------------- ---- -------------- --------------
Net decrease in cash and cash equivalents (133) (333)
Cash and cash equivalents at beginning
of period 438 768
Exchange (losses)/gains on cash
and cash equivalents (1) 3
------------------------------------------------- -------------- ----------------
Cash and cash equivalents at end
of the year 304 438
------------------------------------------------- -------------- ----------------
Consolidated statement of changes in equity
Year ended 31 December 2021
Share Share Retained Total
capital premium losses equity
$'000 $'000 $'000 $'000
At 1 January 2020 6,696 30,071 (7,234) 29,533
Total comprehensive
loss for the year - - (299) (299)
At 31 December 2020
and 1 January 2021 6,696 30,071 (7,533) 29,234
----------------------- --------- --------- --------- --------
Total comprehensive
loss for the year - - (356) (356)
Shares issued during
year 399 151 - 550
At 31 December 2021 7,095 30,222 (7,889) 29,428
----------------------- --------- --------- --------- --------
Notes
1. Basis of preparation
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 does not constitute the
company's statutory accounts for 2020 or 2021. Statutory accounts
for 2020 and 2021 have been reported on by the Independent
Auditors. The Independent Auditors' Reports on the Annual Report
and Financial Statements for 2020 and 2021 were unqualified with an
emphasis of matter paragraph included highlighting the material
uncertainty relating to going concern .
2. Events after the reporting date
The Licence
Argos announced on 11 April 2022 that the Falkland Islands
Government ("FIG") had extended the second term of the Company's
PL001 Licence from 1 May 2022 to 31 December 2022, with no
additional work commitments.
The Company is currently in discussions with FIG regarding the
terms on which a further extension of the PL001 Licence may be
granted, to enable Argos to undertake the necessary technical work
to progress the project. The Board expects that any extension
beyond 31 December 2022 would be subject to certain technical
commitments from the Company, which would require Argos to raise
additional capital.
Loan Facility
Mr Ian Thomson, OBE, Chairman of Argos, has agreed to provide a
loan facility of up to GBP110,000 to the Company (the "Loan
Facility"). Drawdown from the Loan Facility can be made at the
Company's request. The Loan Facility is available until 31 January
2023 with no interest accruing on borrowed amounts. If the Company
carries out a share issue by way of fund-raising, the lender shall
be entitled to convert the loan then outstanding into new shares
issued on the same terms as those available to other participants
in the issue.
The Loan Facility, along with the Company's existing resources
of approximately GBP100,000 as of 24 June 2022, will provide the
Company with sufficient working capital until July 2023.
The provision of the Loan Facility is deemed to be a related
party transaction for the purposes of the AIM Rules for Companies.
The Independent Directors consider, having consulted with the
Company's nominated adviser, Cenkos Securities plc, that the terms
of the Loan Facility are fair and reasonable insofar as the
Shareholders are concerned.
Publication of Results
As a result of the Company's extended discussions regarding its
funding position, and the associated impact on the timing for the
FY21 Accounts, the Company was not in a position to publish its
2021 Financial Statements by the deadline of 30 June 2022.
Consequently, the Company's shares were temporarily suspended from
trading on AIM as of 7.30 a.m. on 1 July 2022, pending publication
of the FY21 Accounts.
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END
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