TIDMARG
RNS Number : 9319V
Argos Resources Ltd
15 August 2022
15 August 2022
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2022 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
2022.
Highlights
-- US$105 thousand loss for the period (H1 2021: loss of US$200 thousand);
-- US$132 thousand cash reserves at 30 June 2022 (YE 2021: US$304 thousand);
-- The current Second Phase of the Licence was extended until December 2022;
-- 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; and
-- Ownership changes in the adjacent Sea Lion oilfield and
surging oil prices enhance outlook for the Company.
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 and Managing Director's review
The Company's PL001 Licence currently expires on 31 December
2022. The Company has submitted a formal application to extend the
Licence by a further 2 years beyond this date to 31 December 2024
to undertake new technical work and to market the results of that
work to potential industry partners. The technical work planned
involves special reprocessing of some of the 3D seismic data on
Licence PL001. The results of a pilot study undertaken in 2021 to
determine the effectiveness of the special processing technique
have been positive and sufficiently encouraging that the Company
intends to extend that work across the main prospects identified in
the eastern half of Licence PL001. The Company believes this
additional work should further de-risk those prospects and enhance
the farmout potential of the Licence.
Financial overview
The Group loss for the six months to 30 June 2022 was US$105
thousand (2021: loss of US$200 thousand) giving an undiluted loss
per share of 0.04 cents (2021: 0.09 cents loss per share).
Administrative expenses were US$90 thousand compared to US$205
thousand for the same period in 2021.
Net assets of US$29.3 million is a decrease of US$105 thousand
since December 2021 as a result of the loss for the period.
Financial outlook
In June 2022 Argos' Chairman agreed to fund a drawdown loan
facility of GBP110,000 to provide short-term financial support to
the Company. Any offer of a licence 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. The granting of an extension is
therefore likely to be dependent on the Company raising significant
further funds in Q3/Q4 2022.
In order to continue as a going concern the Company will need to
raise further finance and the going concern comments in Note 1
contain further information.
Ian Thomson OBE
Chairman
Consolidated statement of comprehensive income
Period ended 30 June 2022
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
unaudited unaudited audited
Note $'000 $'000 $'000
Administrative expenses ( 90) (205) ( 355)
Foreign exchange gains/(losses) ( 15) 5 ( 1)
------------------------------------- ------ ----------- ----------- -------------
(Loss) from operations attributable
to owners of the parent ( 105) (200) ( 356)
------------------------------------- ------ ----------- ----------- -------------
Total comprehensive loss
for the period
attributable to owners of
the parent ( 105) (200) ( 356)
------------------------------------- ------ ----------- ----------- -------------
(Loss) per share (cents):
Basic and diluted 2 ( 0.04) (0.09) (0.15)
------------------------------------- ------ ----------- ----------- -------------
Consolidated statement of financial position
As at 30 June 2022
As at As at As at
30 June 30 June 31 December
2022 2021 2021
unaudited unaudited audited
Note $'000 $'000 $'000
Assets
Non-current assets
Capitalised exploration expenditure 29,174 28,903 29,135
Current assets
Other receivables 59 83 43
Cash and cash equivalents 132 641 304
------------------------------------- ------ ----------- ----------- -------------
Total current assets 191 724 347
------------------------------------- ------ ----------- ----------- -------------
Total assets 29,365 29,627 29,482
------------------------------------- ------ ----------- ----------- -------------
Liabilities
Total and current liabilities
Other payables (42) (43) (54)
Total net assets 29,323 29,584 29,428
------------------------------------- ------ ----------- ----------- -------------
Capital and reserves attributable
to
equity holders of the company
Share capital 3 7,095 7,096 7,095
Share premium 30,222 30,221 30,222
Retained losses (7,994) (7,733) (7,889)
------------------------------------- ------ ----------- ----------- -------------
Total shareholders' equity 29,323 29,584 29,428
------------------------------------- ------ ----------- ----------- -------------
Consolidated statement of cash flows
Period ended 30 June 2022
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
unaudited unaudited audited
$'000 $'000 $'000
Cash flows from operating activities
(Loss) for period (105) (200) (356)
Adjustments for:
Foreign exchange losses/(gains) 15 (5) 1
Net cash (outflow) from operating
activities
before changes in working capital (90) (205) (355)
(Increase) in other receivables (2) (4) (3)
(Decrease) in other payables (13) (16) (5)
----------------------------------------- ----------- ----------- -------------
Net cash (outflow) from operating
activities (105) (225) (363)
----------------------------------------- ----------- ----------- -------------
Investing activities
Exploration and development expenditure (52) (127) (320)
Net cash used in investing activities (52) (127) (320)
----------------------------------------- ----------- ----------- -------------
Financing activities
Issue of ordinary shares - 550 550
----------------------------------------- ----------- ----------- -------------
Net cash from financing activities - 550 550
Net (decrease) /increase in cash
and cash equivalents (157) 198 (133)
Cash and cash equivalents at beginning
of period 304 438 438
Exchange (losses)/gains on cash
and cash equivalents (15) 5 (1)
----------------------------------------- ----------- ----------- -------------
Cash and cash equivalents at end
of period 132 641 304
----------------------------------------- ----------- ----------- -------------
Consolidated statement of changes in equity - unaudited
Period ended 30 June 2022
Retained
Share earnings/ Total
Share
capital premium (deficit) equity
$'000 $'000 $'000 $'000
At 1 January 2021 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
---------------------------------- ---------- --------- ------------ -------------
Total comprehensive
income for period to
31 December 2021 - - (156) (156)
Adjustment due to rounding (1) 1 - -
At 31 December 2021 7,095 30,222 (7,889) 29,428
---------------------------------- ---------- --------- ------------ -------------
Total comprehensive
income for period to
30 June 2022 - - (105) (105)
At 30 June 2022 7,095 30,222 (7,994) 29,323
---------------------------------- ---------- --------- ------------ -------------
Notes to the interim report - unaudited
Period ended 30 June 2022
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 12 August 2022.
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
2021 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 2022.
The comparative financial information for the year ended 31
December 2021 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 2021 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 securing an offer of a licence extension
and raising sufficient funds to meet the conditions of such an
offer. 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 2022. 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 Group and Parent Company's ability to continue in
operational existence is, however, subject to the following
uncertainties:
Notes to the interim report - unaudited
Period ended 30 June 2022
1 Accounting policies (continued)
The Company's PL001 Licence currently expires on 31 December
2022. The Company has submitted a formal application to extend the
Licence by a further two years beyond this date to undertake new
technical work and to market the results of that work to potential
industry partners.
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. The granting 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 secured, 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 oil and gas sector shows signs of greater stability but
is hopeful that the drivers behind the current situation will
improve the chances of achieving a successful farm-down.
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.
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:
Notes to the interim report - unaudited
Period ended 30 June 2022
1. Accounting policies (continued)
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.
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 2022
2. (Loss) per share
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
unaudited unaudited audited
Number Number Number
Shares in issue brought forward
(2 pence shares) 235,141,206 220,713,205 220,713,205
Shares issued in period - 14,428,001 14,428,001
Shares in issue carried forward
(2 pence shares) 235,141,206 235,141,206 235,141,206
------------------------------------- -------------- -------------- --------------
Weighted average number of ordinary
shares in issue during the period 235,141,206 225,177,116 230,279,167
------------------------------------- -------------- -------------- --------------
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
2022 2021 2021
unaudited unaudited audited
(Loss) for the period ( $'000) (105) (200) (356)
Weighted average number of ordinary
shares in issue during the period 235,141,206 225,177,116 230,279,167
------------------------------------- -------------- -------------- --------------
(Loss) per ordinary share (cents)
Basic and diluted (0.04) (0.09) (0.15)
------------------------------------- -------------- -------------- --------------
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 2021 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 2022
3. Share Capital
Authorised: $'000
500,000,000 ordinary shares of
2 pence each
At 1 January 2020, 31 December
2020 and
30 June 2022 14,960
Allotted, issued and fully paid: Number
Ordinary shares of 2 pence each
At 1 January 2021 220,713,205
Issued during the six months
ended 30 June 2021 14,428,001
------------------------------------------------------------- ----------------
At 30 June 2021, 31 December
2021
and 30 June 2022 235,141,206
Allotted, issued and fully paid: $'000
Ordinary shares of 2 pence each
At 1 January 2021 6,696
Issued during the six months
ended 30 June 2021 400
------------------------------------------------------------ -----------
At 30 June 2021 7,096
Adjustment due to rounding (1)
------------------------------------------------------------ -----------
At 31 December 2021 and 30 June
2022 7,095
4 Events after the reporting date
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 on 1 July 2022, pending publication of the FY21
Accounts.
The FY21 results were subsequently published via RNS on 25 July
2022, and a full copy of the accounts were made available for
download from the website. The Company's securities resumed trading
on AIM on 25 July 2022.
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