Arc Minerals Regulatory News (ARCM)

20 January 2021

Arc Minerals Ltd 

('Arc' or the 'Company')

Interim Results

The Company is pleased to announce its unaudited financial results for the six months ended 30 September 2020.

The Interim Results are set out on the following pages.

Conversion of Loan Notes

The Company also announces that the remaining Convertible Loan Note ("CLN") Lender has notified the Company that they are converting at the last equity financing price of 3.5 pence per share the remaining balance of the principal CLN debt plus accrued interest, totalling £220,275, resulting in the issuance of 6,293,572 ordinary shares of no par value in the Company ("Conversion Shares") to the CLN Lender. Following the conversion, the balance of the convertible loan note facility will be nil.

Application will be made for the Conversion Shares to be admitted to trading on the AIM market of the London Stock Exchange ("Admission"). The Conversion Shares will rank pari passu in all respects with the existing ordinary shares of no par value in the Company ("Ordinary Shares"). Admission is expected to occur on or around 26 January 2021.

Total voting rights

Following the issue of the Conversion Shares, the total issued share capital of the Company consists of 1,044,064,936 Ordinary Shares of no par value with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company is 1,044,064,936 and this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

**ENDS**

Contacts

For more information visit www.arcminerals.com.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Forward-looking Statements

This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterised by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the period ended 30 September 2020

Group Statement of Financial Position

as at 30 September 2020

GROUP STATEMENT OF CHANGES IN EQUITY

for the period ended 30 September 2020

GROUP CASH FLOW STATEMENT

for the period ended 30 September 2020

NOTES TO THE INTERIM FINANCIAL STATEMENTSfor the period ended 30 September 2020

1. Basis of preparation

The condensed consolidated interim financial statements have been prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS") and those parts of the BVI Business Companies Act applicable to companies reporting under IFRS.

The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts. In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period.

The Board of Directors approved this Interim Financial Report on 20 January 2021.

Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing these interim condensed consolidated interim financial statements. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2020, which have been prepared in accordance with IFRS as adopted by the European Union.

Accounting policies

The condensed consolidated interim financial statements for the period ended 30 September 2020 have not been audited or reviewed in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board. The figures were prepared using applicable accounting policies and practices consistent with those adopted in the statutory annual financial statements for the year ended 31 March 2020.

Associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The Group's investment in associates includes any goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group's share of post-acquisition profit or loss is recognised in the statement of comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in the other comprehensive income section of the statement of comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amounts of the associate and its carrying value and recognises the amount adjacent to 'share of profit/(loss) of associates' in the statement of comprehensive income.

Gains and losses resulting from upstream and downstream transactions between the group and its associates are recognised in the Group's financial statements only to the extent of unrelated investor's interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising in investments in associates are recognised in the statement of comprehensive income.

2. Financial Risk Management

Risks and uncertainties

The Board continually assesses and monitors the key risks of the business. The key risks that could affect the Group's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2020 Annual Report and Financial Statements, a copy of which is available from the Group's website: www.arcminerals.com. The key financial risks are market risk, including currency risk, and liquidity.

3. Loss per share

As the inclusion of the share options would result in a decrease in the earnings per share, they are considered to be anti-dilutive and, as such, a diluted loss per share is not included.

4. Investment in Associates

Set out below are the associates of the Group.

During the year ended 31 March 2020, Zaco Investments Limited became a subsidiary of the Company.

Zaco is a Zambian-registered company, owned 72.5% by Unico Minerals Limited (52.5% at 31 March 2020). Unico is a wholly-owned subsidiary of Arc. The Chairman of Arc has been appointed Chairman of Zaco. Zaco owns a mineral license adjacent to the license of Zamsort Limited. The Zaco license has been actively explored during the year to date.

5. Intangible Assets

6. Fixed Assets

7. Available for Sale Financial Investments

During the year ended 31 March 2019 the Company sold its interest in Andiamo.

During the year ended 31 March 2020 the Company sold its interests in Casa and Sturec.

8. Long Term Payables

The shareholder loan represents the aggregate of (i) a loan from the 34% minority shareholder to Zamsort Limited and (ii) a loan from the 27.5% minority shareholder to Zaco Investments Limited. The Company has also provided loans to these companies on similar terms which had a balance on the reporting date of £6,849,000.

9. Share Capital

The authorised share capital of the Company and the called up and fully paid amounts at 30 September 2020 were as follows:

(i) As announced on 15 May 2020, the Company issued a total of 218,878,549 shares at 1.7p per share pursuant to a placing to raise GBP 2.37 million (139,451,726 shares) and to certain convertible loan note lenders who converted USD 1.5 million (79,426,868 shares) of convertible loan note debt as part of the placing.

(ii) Issued pursuant to the Drill for Equity programme first announced on 29 July 2019 whereby the Company's drilling contractor in Zambia agreed to receive payment for 50% of total drilling costs by way of shares in Arc. This arrangement has ended.

(iii) Issued as consideration for the acquisition of an additional 20% equity stake in Zaco Ltd, increasing Arc's interest in Zaco from 52.5% to 72.5%.

(iv) Issued pursuant to an exercise of warrants for cash consideration of GBP 30,882.

(v) Issued pursuant to an exercise of warrants for cash consideration of GBP 23,824.

(vi) Issued pursuant to an exercise of warrants for cash consideration of GBP 8,824.

(vii) Issued pursuant to an exercise of warrants for cash consideration of GBP 48,618.

10. Post Balance Sheet Event

On 20 January 2021, the Company issued 6,293,572 shares in conversion to equity of the remaining balance of the convertible loan notes totalling GBP 220,275 at the last financing price. Subsequent to this conversion, the balance of convertible loan notes is nil.

11. Other Matters

The condensed consolidated interim financial statements set out above do not constitute the Group's statutory accounts for the period ended 30 September 2020 or for earlier periods but are derived from those accounts where applicable.

A copy of this interim statement is available on the Company's website: www.arcminerals.com