Ascent Resources Regulatory News (AST)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

9 September 2021

Ascent Resources plc

("Ascent" or "the Company")

Interim results for the period ended 30 June 2021

Ascent Resources plc (LON:AST), the AIM quoted onshore Caribbean, Hispanic American and European energy and natural resources focussed company ("Company") is pleased to report its interim results for the six months ended 30 June 2021.

Highlights:

· Launch of ESG Metals Strategy as a new target sector within its natural resource focussed business with maiden deal expected in H2 2021.

· Signing of a non-binding head of terms with Enyo Law LLP, a specialist arbitration and litigation legal firm, to advance a fully funded non-recourse damages-based agreement for the arbitration proceedings against the Republic of Slovenia.

· Raised £1m before expenses by way of an oversubscribed subscription and placement with existing and new investors.

Enquiries:

Chairman and CEO's statement

Despite the continuing global pandemic, Ascent has advanced across multiple fronts following the restructuring of its Board, strategy, and portfolio last year. The business's new strategic platform is now taking shape, with the opportunities that brings.

First, the Company has made a significant step forward in securing funding for its international arbitration proceedings against the Republic of Slovenia with the signature of non-binding heads of terms with Enyo Law LLP. These heads define the terms under which the specialist arbitration and litigation legal firm shall represent the Company on a fully contingent basis through a damages-based agreement for the pursuit of the claim in arbitration in relation to breaches of relevant investment treaties arising out of and in connection with the Notice of Dispute sent on 23 July 2020. The Company is currently negotiating final binding documentation for this funding.

Secondly, the Company broadened its strategy to include the ESG Metals asset class and is now in the process of originating and negotiating its maiden transaction. The Directors believe this is a new exciting and burgeoning target sector to grow the Company.

Slovenia

As announced in March, the Company is advancing towards initiating international arbitration proceedings against the Republic of Slovenia under the Energy Charter Treaty and UK-Slovenia Bilateral Investment Treaty. In June, the Company announced that it had signed a non-binding, heads of terms with Enyo Law LLP, a specialist arbitration and litigation legal firm (the "Firm"). This agreement intends to engage the Firm to pursue the Company's claims on a success-only fee arrangement. Upon completion of definitive documentation, the Firm will only be paid out of the proceeds of the arbitration in the event of a successful damages award or execution of a binding settlement agreement if achieved sooner. This non-equity dilutive, non-recourse and full funding proposal is the preferred solution from the Company's perspective, notwithstanding that the Company has other alternative offers also under discussion.

ESG Metals Strategy

As announced in February, the Company has broadened its natural resources mandate to include a focus on ESG Metals, which it sees as a new and burgeoning target sector to grow the Company. ESG Metals includes secondary mining and re-treatment and recovery opportunities which the Company sees as being consistent with Environmental, Social and Governance ("ESG") principles. Typically, these involve the reclassification, through highly efficient recovery techniques, of stockpiled surface mining waste (previously viewed as a liability for mining companies) as a valuable asset for reprocessing and commercial sale to industry, governments and metals traders.

The Company sees waste management, remediation and restoration of land impacted by historic and ongoing mining activities as a critical element in the global ESG agenda and integral to the transition to a low carbon economy. The Company is looking at a number of potential projects in Hispanic and Latin Americas, the Caribbean, and South Africa, as well as Europe. In particular, the Company believes there are good opportunities in gold, silver, platinum, base metals and ferrochrome, where the economics are especially attractive and the opportunity set has the ability of delivering lowest cost quartile sustainable metal production from legacy mining tailings, with low geological risk. Such opportunities have the potential to provide strong cash returns without exploration risk and only require modest upfront capital outlay.

Cuba Market Entry

The Company continues to retain optionality to enter the Cuban Oil and Gas industry, once COVID 19 restrictions are lifted and possibly after the outcome of recent civil unrest is clarified. As announced in August last year, the Company transmitted the draft documentation in relation to its operating credentials to Union Cuba-Petroleo ("CUPET"), Cuba's national oil company, and the Oficina Nacional de Recursos Minerales ("ORNM") and since then has received positive initial feedback towards accreditation as an onshore operator subject to funding.

Corporate

During the period in review the Company raised £1 million at an issue price of 10.1 pence per share by way of an oversubscribed subscription and placing of new shares to institutional investors and existing shareholders to fund the Company's general working capital and ESG Metals business development activity.

Outlook

The team continue to work diligently across our key corporate priorities which include funding the Slovenia ECT claim and delivering a maiden ESG metals transaction. We look forward to delivering success for our shareholders at Ascent Resources plc and to re-engaging face to face with them now that COVID restrictions in Europe have eased.

James Parsons Andrew Dennan

Executive Chairman Chief Executive Officer

8 September 2021 8 September 2021

CEO's report

Financial performance

Revenue for the first six month of 2021 was £nil, as per the prior period. Closing cash at 30 June 2021 was £766,000 compared to £304,000 in the prior period.

During the period the Company raised £1m before costs in an equity placing in February 2021. There was a cash outflow from operations of £824,000 and an inflow of £1,475,000 from financing, resulting in net cash flow of £651,000.

Operational performance

Total production for the six months to 30 June 2021 was 751.14 thousand cubic metres of gas and 33,512 litres of condensate.

Gas sales to INA remain suspended as wellhead pressure is below the export pipeline pressure. The sales contract remains valid and should the Company increase production gas sales may be able to be resumed. The Company produced gas in the year to date which was sold locally to an industrial buyer through a low-pressure pipeline, however the revenue from this is less than the fixed costs of the field and pursuant to a deal agreed in Q4 2019 the Company is not currently receiving any revenue from this declining production, with the proceeds being retained by the operating service provider to pay towards their fixed costs.

Consolidated Income Statement

for the Period ended 30 June 2021

Consolidated Statement of Comprehensive Income

for the Period ended 30 June 2021

Consolidated Statement of Changes in Equity

for the Period ended 30 June 2021

Consolidated Statement of Financial Position

As at 30 June 2021

Consolidated Statement of Cash Flows

for the six months ended 30 June 2021

Notes to the Interim Financial Statements

For the six months ended 30 June 2021

1. Accounting Policies

Reporting entity

Ascent Resources plc ('the Company') is a company domiciled in England. The address of the Company's registered office is 5 New Street Square, London EC4A 3TW. The unaudited consolidated interim financial statements of the Company as at 30 June 2021 comprise the Company and its subsidiaries (together referred to as the 'Group').

Basis of preparation

The interim financial statements have been prepared using measurement and recognition criteria based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU. The interim financial information has been prepared using the accounting policies which were applied in the Group's statutory financial statements for the year ended 31 December 2020.

New Standards adopted as at 1 January 2021

Accounting pronouncements which have become effective from 1 January 2021 are:

· IFRS 3 Business Combinations - definition of a business

· IAS 1 and IAS 8 - definition of material

· IFRS 9, IFRS 7 and IAS 39 - interest rate benchmark

· IFRS 7 - Insurance contracts

These accounting pronouncements do not have a significant impact on the Group's financial results or position.

All amounts have been prepared in British pounds, this being the Group's presentational currency.

The interim financial information for the six months to 30 June 2021 and 30 June 2020 is unaudited and does not constitute statutory financial information. The comparatives for the full year ended 31 December 2020 are not the Group's full statutory accounts for that year. The information given for the year ended 31 December 2020 does not constitute statutory financial statements as defined by Section 435 of the Companies Act. The statutory accounts for the year ended 31 December 2019 have been filed with the Registrar and are available on the Company's web site www.ascentresources.co.uk. The auditors' report on those accounts was unqualified. It did not contain a statement under Section 498(2)-(3) of the Companies Act 2006.

Going Concern

The Financial Statements of the Group are prepared on a going concern basis.

COVID-19 has had limited direct impact on Ascent's assets in Slovenia but there may be delays in obtaining the necessary governmental approvals and processes. Production operations in Slovenia have been unaffected to date.

The forecasts are sensitive to the timing and cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing on the ESG Metals Strategy through acquisition and advancing the Cuban initiative, including deferred consideration that would become payable if the Company elects to enter a PSC for Block 9b. As such, the Company will need to raise new capital within the forecast period to fund such discretionary spend.

Based on historical and recent support from new and existing investors the Board believes that such funding, if and when required, could be obtained through new debt or equity issuances.

However, there can be no guarantee over the outcome of these options and as a consequence there is a material uncertainty of the Group's ability to raise the necessary finance, which may cast doubt on the Group's ability to operate as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

Principal Risks and Uncertainties:

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 11-12 of the Annual Review 2020, a copy of which is available on the Company's website at www.ascentresources.co.uk. 

2. Operating loss is stated after charging

3. Earnings per share

4. Property, plant & equipment and Exploration and Evaluation assets

5. Trade & other receivables

6. Trade & other payables

7. Borrowings

The non-current borrowings relate to the loan arrangement with Riverfort Global opportunities that was refinanced in February 2020. The outstanding loan of £375,020 as at February 2020 was re-negotiated to a two-year coupon free bullet with conversion rights for the lender at 7.5 pence per share. No conversion can occur until the share price exceeds 10 pence per share for five consecutive days. The Group made convertible loan note repayments in the year of £105,000 to Riverfort Global opportunities, resulting in an ending convertible loan note balance of £270,000, comprising £197,000 recognised as the debt component and a further £73,000 recognised in Equity Reserve.

The current borrowings relate to the loan facility arrangement with Align Research. The outstanding loan of £307,500, of which £57,500 was received subsequent to the period end.

8. Contingent consideration due on acquisitions

The fair value of contingent consideration was based on the present value of cash flows and the market value of the shares to be issued.

9. Share Capital

The deferred shares have no voting rights and are not eligible for dividends.

Shares issued during the year

Issuance of equity throughout the year:

· On 6 January 2021, the Company issued 208,991 ordinary shares ('Consultancy Shares'), to a supplier for financial modelling and business development services rendered in the months of November and December, at an average issue price of 5.74 pence per share being calculated as the monthly volume weighted average price calculations for the respective months in which the services were rendered.

· On 11 January 2021, the Company received a Warrant Exercise notice over 833,333 new ordinary shares for a consideration of £62,500. The Warrants are being exercised by Align Research in consideration for surrendering an equivalent value of loan notes. Additionally, the Company has agreed to issue 66,667 new shares at 7.5 pence, being the coupon conversion price, in lieu of the 8% cash coupon that is incurred on the converted loan amount.

· On 4 February 2021, the Company received a warrant exercise notice over 1,000,000 new ordinary shares for a consideration of £55,000.

· On 4 February 2021, the Company received a Warrant Exercise notice over 833,333 new ordinary shares for a consideration of £62,500. The Warrants are being exercised by Align Research in consideration for surrendering an equivalent value of loan notes. Additionally, the Company has agreed to issue 66,667 new shares at 7.5 pence, being the coupon conversion price, in lieu of the 8% cash coupon that is incurred on the converted loan amount.,

· On 4 February 2021, the Company received a Warrant Exercise notice over 900,000 new ordinary shares for a consideration of £67,500. The Warrants are being exercised by Align Research and the Company has therefore today issued 900,000 new shares.

· On 10 February 2021, the Company received a warrant exercise notice over 187,500 new ordinary shares for a consideration of £7,500.

· On 11 February 2021, the Company issued 9,997,032 new ordinary shares of 0.5p at a price of 10.1p through an oversubscribed placing, raising gross proceeds of £1,009,700.

10. Share based payments

The Company has provided the Directors, certain employees and institutional investors with share options and warrants ('options'). Options are exercisable at a price equal to the closing market price of the Company's shares on the date of grant. The exercisable period varies and can be up to seven years once fully vested after which time the option lapses.

Details of the share options outstanding during the year are as follows:

The value of the options is measured by the use of a binomial pricing model. The inputs into the binomial model made in 2020 were as follows.

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 5 years. The expected life is the expiry period of the options from the date of issue.

Options outstanding at June 2020 have an exercise price in the range of 2.9p and 778p (and a weighted average contractual life of 4.5 years.

Details of the warrants outstanding during the year are as follows:

11. Events after the reporting period

There have been no significant events subsequent to the reporting period.