Last checked at 3 Apr 2023 07:00
3 April 2023
ECR MINERALS plc(“ECR Minerals”, “ECR” or the “Company”)
AUDITED FINANCIAL RESULTS FOR YEAR ENDED 30 SEPTEMBER 2022
ECR Minerals plc is pleased to announce its audited financial statements for the twelve months ended 30 September 2022 (“FY 2022”). The information presented below has been extracted from the Company’s Annual Report and Accounts for FY2023.
Copies of the Annual Report and Accounts for FY2022 with the notice of annual general meeting have been posted to shareholders and are available on the Company’s website www.ecrminerals.com. The Company intends to hold its annual general meeting at 9am on 24 April 2023 at Hurlingham Studios, Ranelagh Gardens, London SW6 3PA.
Market Abuse Regulations (EU) No. 596/2014
This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
FOR FURTHER INFORMATION, PLEASE CONTACT:
ECR Minerals plc | Tel: +44 (0)20 7929 1010 | |
David Tang, Non-Executive Chairman |
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Andrew Haythorpe, Chief Executive Officer | ||
Adam Jones, Executive Director |
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Dr Trevor Davenport, Independent Non-Executive Director | ||
Andrew Scott, Non-Executive Director | ||
Email: info@ecrminerals.com |
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Website: www.ecrminerals.com |
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WH Ireland Ltd | Tel: +44 (0)207 220 1666 | |
Nominated Adviser |
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Katy Mitchell/Andrew de Andrade |
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SI Capital Ltd | Tel: +44 (0)1483 413500 | |
Joint Broker |
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Nick Emerson |
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Novum Securities Limited | Tel: +44 (0)2073 999400 | |
Joint Broker |
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Jon Belliss | ||
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Brand Communications | Tel: +44 (0)7976 431608 | |
Public & Investor Relations | ||
Alan Green |
ABOUT ECR MINERALS PLC
ECR Minerals is a mineral exploration and development company. ECR’s wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”) has 100% ownership of the Bailieston and Creswick gold projects in central Victoria, Australia, has six licence applications outstanding which includes one licence application lodged in eastern Victoria. (Tambo gold project). MGA is currently drilling at the Bailieston Blue Moon Project (EL5433) and undertaking geochemical exploration on the Creswick (EL6148) project and has an experienced exploration team with significant local knowledge in the Victoria Goldfields and wider region.
ECR also owns 100% of an Australian subsidiary LUX Exploration Pty Ltd (“LUX”) which has three approved exploration permits covering 946 km2 over a relatively unexplored area in Queensland, Australia.
Following the sale of the Avoca, Moormbool and Timor gold projects in Victoria, Australia to Fosterville South Exploration Ltd (TSX-V: FSX) and the subsequent spin-out of the Avoca and Timor projects to Leviathan Gold Ltd (TSX-V: LVX), Mercator Gold Australia Pty Limited has the right to receive up to A$2 million in payments subject to future resource estimation or production from projects sold to Fosterville South Exploration Limited.
ECR holds a 90% interest in the Danglay gold project; an advanced exploration project located in a prolific gold and copper mining district in the north of the Philippines, which has a 43-101 compliant resource. ECR also holds a royalty on the SLM gold project in La Rioja Province, Argentina and can potentially receive up to US$2.7 million in aggregate across all licences.
FORWARD LOOKING STATEMENTS
This announcement may include forward looking statements. Such statements may be subject to numerous known and unknown risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations. There can be no assurance that such statements will prove to be accurate and therefore actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements. Any forward-looking statements contained herein speak only as of the date hereof (unless stated otherwise) and, except as may be required by applicable laws or regulations (including the AIM Rules for Companies), the Company disclaims any obligation to update or modify such forward-looking statements because of new information, future events or for any other reason.
The Directors of ECR Minerals plc (the “Directors” or the “Board”) present their report and audited financial statements for the year ended 30 September 2022 for ECR Minerals plc (“ECR”, the “Company” or the “Parent Company”) and its subsidiaries on a consolidated basis (the “Group”)
Chairman’s Statement
Although the year to September 2022 has been a year of significant operational progress, it was overshadowed for the most part by the untimely and tragic death of long serving CEO Craig Brown. Craig was a close personal friend and confidant of mine, and his death in October 2021 was a profound shock to us all. A year on and his family are still with us as enthusiastic supporters and shareholders, keen to see his legacy fulfilled.
As a result of Craig’s death, an interim management committee was set up to oversee the continued smooth running of the Company, including the ongoing drill campaigns underway in Victoria. This was not without its challenges, but thanks to an experienced operational team on the ground in Victoria, our now Technical Director Adam Jones oversaw the continued smooth running and restart of diamond drilling activities at Bailieston.
The search for a CEO to replace Craig started at the end of 2021, and by April 2022, Andrew Haythorpe’s experience as a board member with numerous listed mining companies put him in pole position as our clear favoured candidate. Since his arrival, Andrew has adopted a structured and methodical approach in assessing our existing assets and as we have seen post year end, he is now bringing his own ideas and projects into the fold. The most significant manifestation of this was the announcement post year end that ECR had been granted a conditional option to acquire the entire issued share capital of Placer Gold Pty Ltd, the beneficial holder of three granted mining tenements (EPM 27518, EPM 25855 and EPM 19437) located in NE Queensland, together known as the Hurricane Project. Following a fundraise announced post year end, the Company is now in a position to potentially complete on the option acquisition once the steps outlined in the agreement have been undertaken. Hurricane is a late-stage exploration project that offers three tenements all highly prospective for gold and antimony.
ECR’s operational hub is currently centred in the state of Victoria in Australia, and through our wholly owned Australian subsidiary Mercator Gold Australia Pty Ltd (“MGA”) we have continued to develop our projects at Bailieston and Creswick. Through our other wholly owned subsidiary LUX Exploration Pty Ltd (“LUX”) we are continuing to develop potential gold and battery metals assets in the Lolworth Range area in Northern Queensland and following the grant of exploration licences there in February 2022, our field team have undertaken a comprehensive stream sediment sampling campaign, with some impressive results announced post year end.
In Victoria, following the discovery of the highest-grade gold intercept yet revealed at the Historic Reserve #3 (HR3) prospect, the MGA team completed a series of intensive diamond drilling campaigns at HR3, including the prospective Byron, Dan Genders, Scoulars and Maori Reefs, plus numerous cross-structures. In August 2022, despite delays in receiving assay results from the labs, results from several holes led to the discovery of two mineralisation corridors within the Maori Anticline at Historic Reserve 3 (HR3). Post year end, we announced final gold results from the 2022 HR3 drill programme and, along with the earlier results, the full dataset is now undergoing evaluation prior to announcing our next steps for 2023. Also post year end, a further two exploration licences were granted to MGA at Bailieston, bringing our total land package there to 179 square km, including our own property at Nagambie Rushworth Road, acquired in summer 2021.
Of all the Bailieston projects, it was Blue Moon that piqued our new CEO’s interest due to its unusual geology. Blue Moon was finally drilled at the end of the year in focus, and post year end an encouraging grade from the first Blue Moon drill hole was reported.
Historically, a lot of investor interest has centred on our Creswick project, where ECR also owns a second property at Springmount. Following a visit to the Creswick tenements with Technical Director Adam Jones earlier this year, Andrew Haythorpe took the decision that the Company should re-assay the Creswick diamond drill core. This proved to be a master stroke, with high grade results revealed including 0.7m @47.75 g/t Au (see announcement dated [19 October 2022] for the full details of these results). Our key licence there was renewed during the year for a further 5 years, and along with the grant of the adjacent Ballarat East Nerrina Goldfield licence, our team are gearing up for a new focus on Creswick in 2023.
ECR (through MGA) also owns two exploration licences in eastern Victoria, known as the Tambo project. Licence EL007484 covering the Tambo River and Swifts Creek region was granted in December 2021, and this territory will also be in focus for exploration in 2023.
In December 2021, ECR formalised its 25% shareholding in Cordillera Tiger Gold Resources, owner of Exploration Licence EP-006 at the Danglay Gold Project, N Philippines. April 2022 saw ECR acquire further shares from an existing shareholder to take a majority 70% stake in the project, bringing the nascent value at Danglay back to the fore on our balance sheet. With our focus very much on Australia, several options are being explored to crystallize value here.
In maintaining intensive drilling campaigns and exploration activities, ECR’s capital position has reduced during the year, and now stands at £612,582. Following the previously mentioned post year end fundraising, and the sale of the Bendigo property announced in August 2022. With further asset disposals under consideration, the costs of our scheduled activities for the coming year are in hand.
We have significantly advanced the value of our assets across the group during the year, and now with Andrew’s leadership I believe we have never been better positioned to deliver transformative value to our shareholders.
Weili (David) TangChairman31 March 2023
Chief Executive Officer Report
In my first report to you as your CEO, I must first pay tribute to my predecessor Craig Brown. I am under no illusions that his are big shoes to fill, but it is my sincere hope that with his family seeking fulfilment of his legacy, I and your Board can bring some of these key assets to fruition.
I would also like to express my gratitude to the Interim Committee of Chairman David Tang, Technical Director Adam Jones, and Non-Executive Director’s Andrew Scott and Trevor Davenport for overseeing the day to day running of the business before my arrival.
The early part of the year saw the gold price continue to build, pushing back over US$2,000oz in March, nearly reaching the highs of US$2,067 oz in March 2020. That was the best performance segment of the year however, as rising interest rates and hawkish outlooks from the US Fed and the European Central Bank saw the gold price slide lower to close out the ECR financial year at US$1,618 oz. It should be remembered that although gold is considered a hedge against rising inflation, higher rates raise the opportunity cost of holding non-yielding bullion, which will invariably weigh on the gold price. Post year end we have seen a resurgence in value, which we believe is due to gold’s compelling safe-haven status set against a highly uncertain macro picture.
Since my arrival in April 2022 I have focussed on ECR’s existing drilling operations in Victoria, Australia. I took time to get to know the projects at Bailieston and Creswick so I could form a judgement on how these assets could fit into an expanding gold exploration Company. I was very impressed with what I found. I spent time exploring the locations with Adam Jones, and as a geologist I was highly impressed with both the work he’d overseen to date and also his ideas on further developing each project.
With my knowledge of Northern prior experience exploring in North Queensland, I was already aware of the history and relatively unexplored nature of Lolworth Range near to the Charters Towers region, and, along with Adam Jones, I am equally enthusiastic over the opportunity and visible gold observed in the field with assays now returning from the initial field campaign. I also look forward to exploring and possibly developing the Hurricane project, on which ECR announced a conditional option to buy 100% for cash and shares in 2023 just after the financial year end.
Victoria Work Overview:
Bailieston:
The Bailieston area is sited 47 km east of Kirkland Lake Gold’s prolific Fosterville gold mine, which produced 509,601 ounces in 2021, with head grades approaching 23.7g/t. To date, ECR has drilled 9,485m at Bailieston across several projects since Jan 2021. Following the discovery of the highest-grade gold intercept yet revealed at the Historic Reserve #3 (HR3) prospect, the team completed a series of intensive diamond drilling campaigns at HR3, and in August 2022, results from several holes led to the discovery of two mineralised corridors within the Maori Anticline at HR3. Post year end, we announced final gold results from the 2022 HR3 drill programme and, along with the earlier results, this full dataset is now being evaluated by our geology team. Also post year end, a further two exploration licenses were granted at Bailieston, bringing our total land package there to 179 square km, including our own property at Nagambie Rushworth Road, acquired in summer 2021.
Of particular interest is the Blue Moon project due to its unusual geology and mineralization style. It offers unusually broad width and consistency (true width up to 7m). RC drilling in 2019 revealed 11m @ 5.13 g/t Au and 21m @ g/t Au, with mineralisation open to the east, west and down-dip. Once all the results are received, we can then make decisions on next steps.
Creswick:
During the summer of 2022, the management team came to London where I presented our investment case at the Proactive One 2 One event. Post year end I returned to London to attend 121 Mining Investment and Mines and Money. On each visit I was struck by how much investor interest was centred around Creswick in the wake of works and drilling undertaken there since 2019. It is also here at Springmount that ECR owns a second property with some historical mine workings on the land. Following my initial visit to the Creswick tenements with Technical Director Adam Jones earlier this year, we decided re-assay the Creswick diamond drill core. This proved to be a good decision, and just after our year end, the re assay revealed high grade results including 0.7m @47.75 g/t Au. Our key license there was renewed during the year for a further 5 years, and along with the grant of the adjacent Ballarat East Nerrina Goldfield license, armed with the re assay data our team are gearing up for a new focus on Creswick in 2023.
Tambo:
There are two exploration licences one still in application and the other now granted in eastern Victoria, known as the Tambo project. Licence EL007484 covering the Tambo River and Swifts Creek region was granted in December 2021, and this territory will also be in focus for exploration in 2023. The territory covers portions of the historic Swifts Creek/Omeo and Tambo River Goldfields that have recorded historical gold production totalling 225,000 oz (Geological Survey of Victoria). Tambo is considered to be prospective for orogenic reef gold and additionally for intrusion-related gold and base metal systems.
N Queensland Work Overview:
Lolworth Range
The Lolworth Range area in North Queensland has been closely monitored by ECR’s Head Geologist Adam Jones for at least eight years and is considered prospective for gold. In February 2022, exploration licences for tenements EPM27901, EPM27902 and EPM27903 were granted (they will expire in five years on 31 January 2027). ECR has a commitment expenditure of AUD$650,000 for the first three years across the three licence areas, and our team wasted no time in getting on the ground there, undertaking a comprehensive stream sediment sampling campaign, with some impressive results announced post year end with visible gold in 14% of the first 125 stream sediment samples. This is very encouraging. Further anomalies with tin and tungsten, plus multiple pegmatites (potential lithium sources) were observed and we are now putting together a follow up plan of action.
Hurricane Project (Post Year End)
Post year end, ECR was granted a conditional option to acquire the entire issued share capital of Placer Gold Pty Ltd, the beneficial holder of three granted mining tenements (EPM 27518, EPM 25855 and EPM 19437) located in NE Queensland, together known as the Hurricane Project. Hurricane was discovered 5 years ago by a geologist who followed the Hodgkinson River tributaries to their source and discovered numerous gold veins at surface with grades ranging from 1- 20g/t over widths of 0.5-7m. Here ECR has a conditional option to buy outright for cash and shares in 2023, and with a modest A$200,000 spend commitment, we now have a drilling campaign planned there for July 2023. The acquisition will complete subject to those results. We consider Hurricane to be a late-stage exploration project with three tenements all highly prospective for gold and antimony.
Overview of Exploration Licence Portfolio
At the end of the financial year under review, ECR held three granted mineral exploration licences in Victoria (EL005433, EL006148 and EL006907). The granting of Creswick license EL006907 to the south of EL006148 links Creswick to the Ballarat East-Nerrina Goldfield. ECR holds granted exploration licence EL5433 at Bailieston and post year end has been granted Bailieston licenses EK006911 and EL 006912. At Tambo ECR owns granted exploration licence EL007484 covering Swifts Creek and the Tambo River.
ECR holds three exploration licences (EPM27901, EPM27902 and EPM27903) in the Lolworth area, North Queensland, and subject to exercise of the option to acquire Placer Gold Ltd (Hurricane Project), will own granted exploration licenses EPM 27518, EPM 25855 and EPM 19437.
These are augmented by exploration licence application EL007296 at Bailieston, exploration licence application EL006713 at Creswick and exploration license EL007486 at Tambo.
In November 2020, ECR lodged exploration licence application EL007537 for an area which surrounds mining licences MIN5396 and MIN4847. These mining licences, which are not held by ECR, contain the operating Ballarat gold mine. The area of EL007537 includes the southern extension of the Dimocks Main Shale, which is the principal target of exploration at the Creswick gold project located a short distance to the north, the northern extension of the Ballarat East line and the depth extensions of the Ballarat West line. EL007537 is in a competitive bid with three other applicants.
Danglay Gold Project, Philippines
In December 2021, ECR formalised its 25% shareholding in Cordillera Tiger Gold Resources, owner of Exploration License EP-006 at the Danglay Gold Project, N Philippines. The project is located in a prolific gold and copper mining district in the north of the Philippines. April 2022 saw ECR acquire further shares from an existing shareholder to take a majority 70% stake in the project, bringing the nascent value at Danglay back to the fore on the ECR balance sheet. With our focus very much on Australia, several options are being explored to crystallize value here. We will report back to the markets in due course.
Avoca and Timor Exploration Licence Royalties
In April 2020 MGA entered into an agreement for the sale of Avoca and Timor exploration licences EL5387, EL006280, EL006913 and EL006278 in Victoria to Currawong Resources Pty Ltd, a wholly owned subsidiary of Fosterville South Exploration Ltd. A cash payment of US$500,000 was received, and ECR is entitled to:
1. A further payment of A$1 for every ounce of gold or gold equivalent of measured resource, indicated resource or inferred resource estimated within the area of one or more of the licences in any combination or aggregation of the foregoing, up to a maximum of A$1,000,000 in aggregate; and
2. A further payment of A$1 for every ounce of gold or gold equivalent produced from within the area of one or more of the licences, up to a maximum of A$1,000,000 in aggregate.
SLM Gold Project Royalties
In February 2020, the Company sold its wholly owned Argentine subsidiary Ochre Mining SA, which holds the SLM gold project in La Rioja, Argentina. The sale allows ECR to focus on its core gold exploration activities in Australia. The purchaser, Hanaq Argentina SA (“Hanaq”), is a Chinese-owned company engaged in lithium, base and precious metals exploration in Northwest Argentina including Salta, Jujuy and La Rioja, with a highly experienced management team.
ECR retains an NSR royalty of up to 2% to a maximum of USD 2.7 million in respect of future production from the SLM gold project, owned by Hanaq Argentina SA (Hanaq). The Directors believe that Hanaq has the operational capabilities and access to Chinese investment capital necessary to put the SLM project into production, subject to the usual prerequisites such as further exploration and feasibility studies being successfully completed (if deemed necessary by Hanaq) and to the necessary permits for production being obtained.
FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2022
As a Group which is not generating revenue from operations, means that profit and loss is a metric of less utility than in many other businesses. For the year to 30 September 2022 the Group recorded a total comprehensive loss of £2,272,658 compared with £1,113,870 for the year to 30 September 2021. This increase is reflected principally in the impairment of Danglay Gold project.
The Group’s net assets at 30 September 2022 were £5,871,625 in comparison with £7,657,684 at 30 September 2021.
We have taken measures to preserve cash going forward, including asset disposals. ECR currently owns two properties in Victoria at Nagambie-Rushworth Road, Bailieston and at Brewing Lane, Springmount in Creswick. A third property close to Bendigo was disposed of during the year in question, raising a further A$950,000 (£550,000) toward our project exploration campaigns. Further disposals are under consideration, and post year end, the Company raised a further £900,000 before expenses. The Group expect further disposal in 2023, potential fundraising and exercising of outstanding warrants can cover our scheduled exploration costs for the foreseeable future.
Finally I would like to put on record my thanks to ECR shareholders for their continued support, and secondly for the welcome I have received from so many I have met at events and shows throughout the year. I fully expect to deliver some meaningful results from our key projects in the coming year, along with some real shareholder value.
Andrew HaythorpeCEO31 March 2023
Independent Auditor’s Report
For the year ended 30 September 2022
Independent Auditor’s Report to the Members of ECR Minerals Plc
Opinion
We have audited the financial statements of ECR Minerals Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30 September 2022 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2022 and of the group’s loss for the year then ended;the group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards in conformity with the requirements of theCompanies Act 2006;the parent company financial statements have been properly prepared in accordance with UK adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; andthe financial statements have been prepared in accordance with the requirements of the Companies Act 2006.Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which states that the group’s and company’s ability to continue as a going concern is dependent on the ability to secure additional funding and the Directors consider they have various options to do so, including the issue of equity and asset disposals. As stated in note 2, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group’s and company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included a review of budgets and cash flow forecasts covering a period of at least 12 months from the date of approval of the financial statements, including challenge of management on the basis of preparation, together with ascertaining the most recent cash position of the group and company, and identifying subsequent events impacting the going concern position.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. Group materiality was £100,000 (2021: £55,000) based upon approximately 1.5% of gross assets. We consider gross assets to be the main driver of the business as the group is still in the exploration stage and therefore no revenues are currently being generated, and that current and potential investors will be most interested in the recoverability of the exploration and evaluation assets. The parent company materiality was £75,000 (2021:£50,000), based upon 1.5% of gross assets and capped to be below group materiality.
Whilst materiality for the financial statements as a whole was set at £100,000, each significant component of the group was audited to an overall materiality ranging between £5,000 to £75,000 (2021: between £3,500 to £50,000) with performance materiality set at 60% for all entities.
We agreed with the audit committee that we would report to the committee all audit differences identified during the course of our audit in excess of £5,000 (2021: £2,750) as well as differences below these thresholds that, in our view, warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas requiring the directors to make subjective judgements, for example in respect of significant accounting estimates including the carrying value of intangible assets and the consideration of future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
An audit was performed on the financial information of the group’s operating entities which for the year ended 30 September 2022 were located in the United Kingdom, Australia and the Philippines. The audit work on each significant component was performed by us as group auditor based upon materiality or risk profile, or in response to potential risks of material misstatement to the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter | How our scope addressed this matter |
Recoverability of intangible assets – exploration and evaluation assets (refer to note 10)
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The group as at 30 September 2022 had ongoing early stage exploration projects in the Philippines and Australia.
There is a risk that the expenditure is not correctly capitalised in accordance with IFRS 6. There is also a risk that the capitalised exploration costs are not recoverable and should be impaired. The carrying value of intangible exploration and evaluation assets as at 30 September 2022, which are tested annually for impairment, is £4,957,218. Comprising early stage exploration projects, the impairment assessment requires management judgement and estimation of a range of applicable factors. Relevant disclosures in the financial statements are made in Note 2 surrounding critical accounting judgements, and in Note 10 for Intangible assets. |
Our work in this area included: Sample testing of exploration and evaluation expenditure to assess their eligibility for capitalisation under IFRS 6 by corroborating to the original source documentation.Inspection of the current exploration licences to verify they remained valid and that the group held good title.Review of correspondence (where applicable) with licensing authorities to ensure compliance and assess the risk of non-renewal. We assessed the sampling results and progress of the projects and whether they indicate the existence of commercially viable projects.Review and challenge of management’s documented consideration of impairment by individual project.Establishing the intention of the Board to undertake future exploration work.Review of any internal / external resource estimates produced during the year.Discussion of status of all projects with management.
The exploration permit for the Danglay project is due to expire in July 2023. This was considered an indicator of impairment under IFRS 6. The Board have determined to impair the carrying value down to nil as they are not seeking to develop the project themselves and are, since the year end, seeking to dispose of the project. Given the lack of an identified purchaser and the timeframe to the expiry of the licence we consider this an appropriate treatment.
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Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; andthe strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; orthe parent company financial statements are not in agreement with the accounting records and returns; orcertain disclosures of directors’ remuneration specified by law are not made; orwe have not received all the information and explanations we require for our audit.Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, application of cumulative audit knowledge and experience of the sector.We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from international accounting standards, the Companies Act 2006, tax laws and regulations, local employment law and conditions stipulated in the exploration licenses.We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to:Enquiries of managementReview of Board minutesReview of legal and regulatory correspondenceWe also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the judgements and estimates made by management in their assessment of the recoverability of intangible assets represented the most significant risk of material misstatement. Refer to the key audit matter above.We addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor) | 15 Westferry Circus |
For and on behalf of PKF Littlejohn LLP | Canary Wharf |
Statutory Auditor | London E14 4HD |
31 March 2023 |
Consolidated Income Statement
For the year ended 30 September 2022
| Year ended | Year ended | ||||
30 September 2022 | 30 September 202120 | |||||
| Note | £ | £ | |||
|
|
|
| |||
Continuing operations |
|
|
| |||
Other administrative expenses |
| (1,214,398) | (1,142,338) | |||
Impairment of available for sale assets |
| 12,887 | - | |||
Impairment of intangible assets | 10 | (1,576,822) |
| |||
(Gain) or loss on other current assets |
| (18,991) | - | |||
Currency exchange differences |
| 27,174 | (347,315) | |||
Total administrative expenses |
| (2,770,151) | (1,489,653) | |||
Operating loss | 3 | (2,770,151) | (1,489,653) | |||
|
|
|
| |||
Other financial assets – fair value movement | 9 | 3,623 | 4,593 | |||
|
| (2,766,528) | (1,485,060) | |||
Financial income | 7 | 651 | 288 | |||
Other income |
| 151,004 | 19,021 | |||
Finance income and costs |
| 151,655 | 19,309 | |||
Loss for the year before taxation |
|
(2,614,873) |
(1,465,751) | |||
Income tax | 5 | - | - | |||
Loss for the year from continuing operations |
| (2,614,873) | (1,465,751) | |||
Loss on disposal of subsidiary |
| - | - | |||
Loss for the year from discontinued operations |
| - | - | |||
Loss for the year - all attributable to owners of the parent |
| (2,614,873) | (1,465,751) | |||
|
|
|
| |||
Earnings per share - basic and diluted |
|
|
| |||
On continuing operations | 4 | (0.25)p | (0.16)p | |||
The notes set out below are an integral part of these financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2022
| Year ended | Year ended | ||
30 September 2022 | 30 September 2021 | |||
£ | £ | |||
Loss for the year | (2,614,873) | (1,465,751) | ||
Items that may be reclassified subsequently to profit or loss |
|
| ||
Gain on exchange translation | 342,215 | 52,545 | ||
Other comprehensive gain for the year | 342,215 | 52,545 | ||
Total comprehensive loss for the year | (2,272,658) | (1,413,206) | ||
Attributable to: - |
|
| ||
Loss on continuing operations | (2,272,658) | (1,413,206) |
The notes set out below are an integral part of these financial statements.
Consolidated & Company Statement of Financial Position
At 30 September 2022
|
| Group | Company | |||||||
| 30 September | 30 September | 30 September | 30 September | ||||||
Note | 2022 £ | 2021 £ | 2022 £ | 2021 £ | ||||||
Assets |
|
|
|
|
| |||||
Non-current assets |
|
|
|
|
| |||||
Property, plant and equipment | 8 | 1,188,192 | 1,303,557 | 7,849 | 58,333 | |||||
Investments in subsidiaries | 9 | - | - | 22,543 | - | |||||
Intangible assets | 10 | 3,760,919 | 3,321,481 | 147,985 | 1,410,144 | |||||
Other receivables | 11 | - | - | 5,792,859 | 5,133,826 | |||||
|
| 4,949,111 | 4,625,038 | 5,971,236 | 6,602,303 | |||||
Current assets |
|
|
|
|
| |||||
Trade and other receivables | 11 | 148,043 | 146,147 | 1,037,568 | 878,097 | |||||
Inventory |
| 70,641 | 75,722 | - | - | |||||
Financial assets at fair value through profit or loss | 9 | 45,084 | 31,461 | 45,084 | 31,461 | |||||
Cash and cash equivalents | 12 | 842,889 | 2,982,046 | 233,106 | 1,467,835 | |||||
|
| 1,106,657 | 3,235,376 | 1,315,758 | 2,377,393 | |||||
Total assets |
| 6,055,768 | 7,860,414 | 7,286,944 | 8,979,696 | |||||
Current liabilities |
|
|
|
|
| |||||
Trade and other payables | 14 | 206,684 | 202,731 | 135,925 | 41,198 | |||||
|
| 206,684 | 202,731 | 135,925 | 41,198 | |||||
Total liabilities |
| 206,684 | 202,731 | 135,954 | 41,198 | |||||
Net assets |
| 5,849,084 | 7,657,683 | 7,151,069 | 8,938,498 | |||||
Equity attributable to owners of the parent |
|
|
|
|
| |||||
Share capital | 13 | 11,290,980 | 11,290,483 | 11,290,980 | 11,290,483 | |||||
Share premium | 13 | 53,057,125 | 52,593,562 | 53,057,125 | 52,593,562 | |||||
Exchange reserve |
| 926,213 | 583,998 | - | - | |||||
Other reserves |
| 440,706 | 440,706 | 440,706 | 440,706 | |||||
Retained losses |
| (59,865,940) | (57,251,067) | (57,637,742) | (55,386,525) | |||||
Total equity |
| 5,849,084 | 7,657,683 | 7,151,069 | 8,938,498 | |||||
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company profit and loss account. The loss for the parent company for the year was £2,263,395 (2021: £800,558 loss).
The notes on pages 27 to 44 are an integral part of these financial statements. The financial statements were approved and authorised for issue by the Directors on 31 March 2023 and were signed on its behalf by:
Weili (David) Tang
Non–Executive Chairman
Trevor Davenport
Independent Non-Executive Director
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
| Sharecapital | Sharepremium | Exchangereserve | Otherreserves | Retained reserves |
| ||||||
(Note 13) | (Note 13) |
|
|
| Total | |||||||
£ | £ | £ | £ | £ | £ | |||||||
Balance at 30 September 2020 | 11,286,928 | 47,090,048 | 531,453 | 440,706 | (55,785,316) | 3,563,819 | ||||||
Loss for the year | – | – | – | – | (1,465,751) | (1,465,751) | ||||||
Gain on exchange translation | – | – | 52,545 | – | – | 52,545 | ||||||
Total comprehensive loss | – | – | 52,545 | – | (1,465,751) | (1,413,206) | ||||||
Shares issued | 3,556 | 5,631,514 | – | – | – | 5,635,070 | ||||||
Share issue costs | – | (128,000) | – | – | – | (128,000) | ||||||
Share based payments | – | – | – | – | – | – | ||||||
Total transactions with owners, recognised directly in equity | 3,556 | 5,503,514 | – | – | – | 5,507,070 | ||||||
Balance at 30 September 2021 | 11,290,483 | 52,593,562 | 583,998 | 440,706 | (57,251,067) | 7,657,683 | ||||||
Loss for the year | – | – | – | – | (2,614,873) | (2,614,873) | ||||||
Gain on exchange translation | – | – | 342,215 | – | – | 342,215 | ||||||
Total comprehensive loss | – | – | 342,215 | – | (2,614,873) | (2,272,658) | ||||||
Shares issued | 497 | 463,563 | – | – | – | 464,060 | ||||||
Share issue costs | – | – | – | – | – | – | ||||||
Total transactions with owners, recognised directly in equity | 497 | 463,563 | – | – | – | 464,060 | ||||||
Balance at 30 September 2022 | 11,290,980 | 53,057,125 | 926,213 | 440,706 | (59,866,940) | 5,848,084 |
The notes set out below are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 30 September 2022
| Sharecapital | Sharepremium | Otherreserves | Retainedreserves |
| |||||
(Note 13) | (Note 13) |
|
| Total | ||||||
£ | £ | £ | £ | £ | ||||||
Balance at 30 September 2020 | 11,286,928 | 47,090,048 | 440,706 | (54,585,695) | 4,231,987 | |||||
Loss for the year | – | – | – | (800,558) | (800,558) | |||||
Total comprehensive expense | – | – | – | (800,558) | (800,558) | |||||
Shares issued | 3,556 | 5,631,514 | – | – | 5,635,070 | |||||
Share issue costs | – | (128,000) | – | – | (128,000) | |||||
Total transactions with owners, recognised directly in equity | 3,556 | 5,503,514 | – | - | 5,507,070 | |||||
Balance at 30 September 2021 | 11,290,483 | 52,593,562 | 440,706 | (55,386,253) | 8,938,498 | |||||
Loss for the year | – | – | – | (2,251,490) | (2,251,490) | |||||
Total comprehensive expense | – | – | – | (2,251,490) | (2,251,490) | |||||
Shares issued | 497 | 463,563 | – | – | 464,060 | |||||
Share issue costs | – | – | – | – | – | |||||
Total transactions with owners, recognised directly in equity | 497 | 463,563 | – | – | 464,060 | |||||
Balance at 30 September 2022 | 11,290,980 | 53,057,125 | 440,706 | (57,637,742) | 7,151,069 |
The notes set out below are an integral part of these financial statements.
Consolidated & Company Cash Flow Statement
For the year ended 30 September 2022
|
| Group | Company | |||||||
Year ended30 September | Year ended30 September | Year ended30 September | Year ended30 September | |||||||
Note | 2022 £ | 2021 £ | 2022 £ | 2021 £ | ||||||
Net cash used in operations | 20 | (918,135) | (1,398,242) | (733,226) | (1,006,026) | |||||
Investing activities |
|
|
|
|
| |||||
Purchase of property, plant & equipment | 8 | (90,321) | (1,171,840) | (2,541) | (59,038) | |||||
Increase in exploration assets | 10 | (1,674,046) | (1,452,297) | (314,663) | (76,862) | |||||
Investment in subsidiary |
| - | – | (22,543) | – | |||||
Investment in available for sale assets |
| (10,000) | – | (10,000) | – | |||||
Proceeds from sale of property, plant and equipment |
| 88,634 | – | 42,952 | – | |||||
Loan to subsidiary |
| – | – | (659,033) | (4,104,759) | |||||
Interest income | 7 | 651 | 288 | 265 | 260 | |||||
Net cash generated from / (used in) investing activities |
| (1,685,082) | (2,623,849) | (965,563) | (4,240,398) | |||||
Financing activities |
|
|
|
|
| |||||
Proceeds from issue of share capital (net of issue costs) |
| 464,060 | 5,507,088 | 464,060 | 5,507,069 | |||||
Net cash from financing activities |
| 464,060 | 5,507,088 | 464,060 | 5,507,069 | |||||
Net change in cash and cash equivalents |
| (2,139,157) | 1,484,815 | (1,234,729) | 260,645 | |||||
Cash and cash equivalents at beginning of the year |
| 2,982,046 | 1,497,231 | 1,467,835 | 1,207,190 | |||||
Effect of change in foreign exchange rates |
| - | - | - | - | |||||
Cash and cash equivalents at end of the year | 12 | 842,889 | 2,982,046 | 233,106 | 1,497,835 | |||||
Non-cash transactions: |
|
|
|
|
| |||||
The notes set out below are an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 30 September 2022
1 General information
The Company and the Group operated mineral exploration and development projects. The Group’s principal interests are in Australia and the Philippines.
The Company is a public limited company incorporated and domiciled in England. The registered office of the Company and its principal place of business is Office T3, Hurlingham Studios, Ranelagh Gardens, London SW6 3PA. The Company is quoted on the Alternative Investment Market (AIM) of the London Stock Exchange.
2 Accounting policies
Overall considerations
The principal accounting policies that have been used in the preparation of these consolidated financial statements are set out below. The policies have been consistently applied unless otherwise stated.
Basis of preparation
a) Statement of compliance
The consolidated financial statements of the Group for the 12 months ended 30 September 2022 have been prepared in accordance with UK adopted international accounting standards in conformity with the Companies Act 2006. The financial statements are prepared on the historical cost basis or the fair value basis where the fair valuing of relevant assets or liabilities has been applied.
b) (i) New and amended standards, and interpretations issued and effective for the financial year beginning 1 October 2021
There were no new standards, amendments or interpretations effective for the first time for periods beginning on or after 1 October 2021 that had a material effect on the Group or Company financial statements.
(ii) New standards, amendments and interpretations in issue but not yet effective
At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not been adopted by the EU):
Amendments to IAS 1: Classifications of liabilities and Disclosure of Accounting Policies (effective 1 January 2023);Amendments to IAS 8: Accounting Policies, Changes to Accounting Estimates and Errors (effective 1 January 2023);Amendments to IAS 12: Income Taxes – Deferred Tax arising from a Single Transaction (effective 1 January 2023);*subject to EU endorsement
The Group and Company intend to adopt these standards when they become effective. The introduction of these new standards and amendments is not expected to have a material impact on the Group or Company.
Basis of consolidation
Where the Group has control over an investee, it is classified as a subsidiary. The Group controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the Group has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The consolidated financial statements present the results of the Group as if they formed a single entity. Intercompany transactions and balances between group companies are eliminated in full.
The consolidated financial statements incorporate the financial statements of the Company and one of its subsidiaries made up to 30 September 2022. Subsidiary undertakings acquired during the period are recorded under the acquisition method of accounting and their results consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date such control ceases.
Going concern
It is the prime responsibility of the Board to ensure the Group and Company remains a going concern. At 17 February 2023, the Group has cash and cash equivalents of £612,582 and no borrowings.
The Group’s financial projections and cash flow forecasts covering a period of at least twelve months from the date of approval of these financial statements show that the Group anticipate having to raise additional funding over the course of the financial year to ensure sufficient available funds in order to meet its contracted and committed expenditure. Further details are included in Note 21 to the financial statements.
Having considered the prepared cashflow forecasts and the Group budgets, which includes the possibility of Directors cutting expenses in certain area of operations if required, the progress in activities post year-end, including the anticipated sale of properties held in Australia and sale of the Philippines, the Directors consider that they will have access to adequate resources in the 12 months from the date of the signing of these Financial Statements. As a result, they consider it appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements.
Should the Group be unable raise additional funding in the timescales necessary to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities, which might arise, and to classify non-current assets as current.
The Financial Statements have been prepared on the going concern basis and do not include the adjustments that would result if the Group was unable to continue as a going concern.
Cash and cash equivalents
Cash includes petty cash and cash held in current bank accounts. Cash equivalents include short–term investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and any provision for impairment losses.
Depreciation is charged on each part of an item of property, plant and equipment so as to write off the cost of assets less the residual value over their estimated useful lives, using the straight–line method. Depreciation is charged to the income statement. The estimated useful lives are as follows:
Office equipment | 3 years | |
Furniture and fittings | 5 years | |
Machinery and equipment | 5 years | |
Motor vehicles | 5 years | |
Land | Not depreciated |
Expenses incurred in respect of the maintenance and repair of property, plant and equipment are charged against income when incurred. Refurbishments and improvements expenditure, where the benefit is expected to be long lasting, is capitalised as part of the appropriate asset.
An item of property, plant and equipment ceases to be recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on cessation of recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset ceases to be recognised.
Exploration and development costs
All costs associated with mineral exploration and investments are capitalised on a project–by–project basis, pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished or a project abandoned, the related costs are written off in the period in which the event occurs. Where the Group maintains an interest in a project, but the value of the project is considered to be impaired, a provision against the relevant capitalised costs will be raised.
The recoverability of all exploration and development costs is dependent upon continued good title to relevant assets being held, the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition thereof.
Impairment testing
Individual assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may exceed its recoverable amount, being the higher of net realisable value and value in use. Any such excess of carrying value over recoverable amount or value in use is taken as a debit to the income statement.
Intangible exploration assets are not subject to amortisation and are tested annually for impairment.
Provisions
A provision is recognised in the Statement of Financial Position when the Group or Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre–tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Leased assets
Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset. Lease payments are allocated between principal and finance cost. All other short term leases are regarded as operating leases and the payments made under them are charged to the income statement on a straight-line basis over the lease term.
Taxation
There is no current tax payable in view of e losses to date.
Deferred income taxes are calculated using the Statement of Financial Position liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Company and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the Statement of Financial Position date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity, in which case the related current or deferred tax is also charged or credited directly to equity.
Investments in subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The investments in subsidiaries held by the Company are valued at cost less any provision for impairment that is considered to have occurred, the resultant loss being recognised in the income statement.
Equity
Equity comprises the following:
“Share capital” represents the nominal value of equity shares, both ordinary and deferred.“Share premium” represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issues.“Other reserves” represent the fair values of share options and warrants issued.“Retained reserves” include all current and prior year results, including fair value adjustments on financial assets, as disclosed in the consolidated statement of comprehensive income.“Exchange reserve” includes the amounts described in more detail in the following note on foreign currency below.Foreign currency translation
The consolidated financial statements are presented in pounds sterling which is the functional and presentational currency representing the primary economic environment of the Group.
Foreign currency transactions are translated into the respective functional currencies of the Company and its subsidiaries using the exchange rates prevailing at the date of the transaction or at an average rate where it is not practicable to translate individual transactions. Foreign exchange gains and losses are recognised in the income statement.
Monetary assets and liabilities denominated in a foreign currency are translated at the rates ruling at the Statement of Financial Position date.
The assets and liabilities of the Group’s foreign operations are translated at exchange rates ruling at the Statement of Financial Position date. Income and expense items are translated at the average rates for the period. Exchange differences are classified as equity and transferred to the Group’s exchange reserve. Such differences are recognised in the income statement in the periods in which the operation is disposed of.
Share–based payments
The Company awards share options to certain Company Directors and employees to acquire shares of the Company. Additionally, the Company has in previous years issued warrants to providers of equity finance.
All goods and services received in exchange for the grant of any share–based payment are measured at their fair values. Where employees are rewarded using share–based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to the employee.
The fair value is appraised at the grant date and excludes the impact of non–market vesting conditions. Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non–transferability, exercise restrictions, and behavioural considerations.
All equity–settled share–based payments are ultimately recognised as an expense in the income statement with a corresponding credit to “other reserves”.
If vesting periods or other non–market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior years if share options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital and, where appropriate, share premium.
A gain or loss is recognised in profit or loss when a financial liability is settled through the issuance of the Company’s own equity instruments. The amount of the gain or loss is calculated as the difference between the carrying value of the financial liability extinguished and the fair value of the equity instrument issued.
Financial instruments
Financial assets
The Group’s financial assets comprise equity investments held as financial assets at fair value through profit or loss as required by IFRS 9, and financial assets at amortised cost, being cash and cash equivalents and receivables balances. Financial assets are assigned to the respective categories on initial recognition, based on the Group’s business model for managing financial assets, which determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets at amortised cost are non–derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are initially measured at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment under the expected credit loss model.
The Group’s receivables fall into this category of financial instruments. Discounting is omitted where the effect of discounting is immaterial.
Equity investments are held as financial assets at fair value through profit or loss. These assets are initially recognised at fair value and subsequently carried in the financial statements at fair value, with net changes recognised in profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:
The rights to receive cash flows from the asset have expiredOrThe Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.Impairment of financial assets
The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss.
The amount of the expected credit loss is measured as the difference between all contractual cash flows that are due in accordance with the contract and all the cash flows that are expected to be received (i.e. all cash shortfalls), discounted at the original effective interest rate (EIR).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date.
Financial liabilities
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables and are held at amortised cost. After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with UK adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on–going basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.
The most critical accounting policies and estimates in determining the financial condition and results of the Group and Company are those requiring the greater degree of subjective or complete judgement. These relate to:
Capitalisation and recoverability of exploration costs (Note 10):
Capitalised exploration and evaluation costs consist of direct costs, licence payments and fixed salary/consultant costs, capitalised in accordance with IFRS 6 "Exploration for and Evaluation of Mineral Resources". The group and company recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral assets. Exploration and evaluation assets are initially measured at cost. Exploration and evaluation costs are assessed for indications of impairment annually. Where the carrying amount of an asset exceeds its recoverable amount an impairment is recognised. Any impairment is recognised directly in profit or loss.
Recoverability of investment in subsidiaries including intra group receivables (Note 9 and 11)
The recoverability of investments in subsidiaries, including intra group receivables, is directly linked to the recoverability of the exploration assets in those entities, which is subject to the same estimates and judgements as explained above.
3 | Operating loss | |||||
| Year ended30 September 2022 | Year ended30 September 2021 | ||||
| The operating loss is stated after charging: | £ | £ | |||
Depreciation of property, plant and equipment | 104,165 | 51,822 | ||||
Operating lease expenses | 44,843 | 31,337 | ||||
Auditors’ remuneration – fees payable to the Company’s auditor for the audit of |
|
| ||||
the parent company and consolidated financial statements | 32,000 | 26,000 | ||||
4 | Earnings per share | |||||
| Basic and Diluted | Year ended30 September 2022 | Year ended30 September 2021 | |||
| Weighted number of shares in issue during the year | 1,039,370,796 | 892,410,767 | |||
|
| £ | £ | |||
| Loss from continuing operations attributable to owners of the parent | (2,614,873) | (1,413,206) |
Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted earnings per share as the effect on the exercise of options and warrants would be to decrease the earnings per share.
Details of share options and warrants that could potentially dilute earnings per share in future periods is set out in Note 13.
5 Income tax
The relationship between the expected tax expense based on the corporation tax rate of 19% for the year ended 30 September 2022 (2021: 19%) and the tax expense actually recognised in the income statement can be reconciled as follows:
| Year ended30 September | Year ended30 September | ||
2022 | 2021 | |||
£ | £ | |||
Group loss for the year | (2,614,873) | (1,413,206) | ||
Loss on activities at effective rate of corporation tax of 19% (2021: 19%) | (496,826) | (268,509) | ||
Expenses not deductible for tax purposes | 11,540 | 63,927 | ||
Loss on disposal of subsidiary not deductible for tax purposes | - | - | ||
Income not taxable | 4,363 | 19,309 | ||
Depreciation in excess of capital allowances | 104,165 | 51,822 | ||
Loss carried forward on which no deferred tax asset is recognised | 376,758 | 133,451 | ||
Current tax expense | – | – | ||
Deferred tax (see below) | – | – | ||
Total income tax expense | – | – |
The Company has unused tax losses of approximately £8,100,000 (2020 £6,950,000) to carry forward and set against future profits; and the Company has capital losses of £197,000 to carry forward and set against future capital gains of the Company. The related deferred tax asset has not been recognised in respect of these losses as there is no certainty in regard to the level and timing of future profits.
6 Staff numbers and costs
Group and Company | Year ended | Year ended | ||
| 30 September 2022 Number | 30 September 2021 Number | ||
Directors | 4 | 3 | ||
Administration | 3 | 3 | ||
Total | 7 | 6 | ||
The aggregate payroll costs of these persons were as follows: |
|
| ||
| £ | £ | ||
Staff wages and salaries | 140,167 | 61,604 | ||
Directors’ cash based emoluments | 198,739 | 277,353 | ||
Social security costs | 24,544 | 22,817 | ||
Pension contributions | 1,456 | 1,400 | ||
| 364,906 | 363,174 |
The remuneration of the directors, who are the key management personnel of the Group, in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures’ was as follows:
| £ | £ | ||
Directors’ cash based emoluments | 198,739 | 267,353 | ||
Employer’s national insurance contributions | - | 22,817 | ||
Pension contributions | 1,456 | 1,316 | ||
| 200,195 | 291,486 |
Directors’ remuneration
As required by AIM Rule 19, details of remuneration earned in respect of the financial year ended 30 September 2022 by each Director are set out below:
| Salary | Consulting fees | Total | |||||||
|
|
|
| |||||||
| Paid | Accrued | Paid | Accrued |
| |||||
Director | £ | £ | £ | £ | £ | |||||
C Brown | 17,727 | - | - | - | 17,727 | |||||
W Tang | 48,000 | - | 28,300 | 400 | 76,700 | |||||
A Jones | 30,000 | - | 80,808 | - | 110,808 | |||||
T Davenport | 36,000 | - | 6,400 | - | 42,400 | |||||
A Scott | 27,000 | - | 7,000 | - | 34,000 | |||||
| 158,727 | - | 122,508 | 400 | 281,635 | |||||
6 Staff numbers and costs continued
Year ended 30 September 2021 | Paid | SalaryAccrued | Consultingfees | Pension | Total | |||||
Director | £ | £ | £ | £ | £ | |||||
C Brown | 165,000 | – | – | 1,316 | 166,316 | |||||
W Tang | 54,000 | 4,000 | 26,584 | – | 84,584 | |||||
A Jones | 22,500 | 2,500 | – | – | 25,000 | |||||
| 241,500 | 6,500 | 26,584 | 1,316 | 275,900 |
The highest paid Director received remuneration of £110,808 (2021: £165,000), excluding share–based payments.
7 Finance income
Year ended | Year ended | |||
30 September | 30 September | |||
2022 | 2021 | |||
Finance income | £ | £ | ||
Interest on cash and cash equivalents | 651 | 288 | ||
651 | 288 |
8 Property, plant and equipment
Group | Furniture &fittings | OfficeEquipment | Machinery &equipment | Land andBuilding | Total | |||||
Cost | £ | £ | £ | £ | £ | |||||
At 1 October 2021 | 2,982 | 37,240 | 513,136 | 822,705 | 1,376,063 | |||||
Additions | 699 | 3,999 | 85,623 |
| 90,321 | |||||
Disposal | - | - | (37,427) | (56,485) | (93,912) | |||||
At 30 September 2022 | 3,681 | 41,239 | 561,332 | 766,220 | 1,372,472 | |||||
Depreciation |
|
|
| - |
| |||||
At 1 October 2021 | 2,982 | 17,415 | 52,110 |
| 72,507 | |||||
Depreciation for the year | 176 | 7,656 | 103,941 | - | 111,773 | |||||
At 30 September 2022 | 3,158 | 25,071 | 156,051 | - | 184,280 | |||||
| Net book value |
|
|
|
|
| |||||
| At 1 October 2021 | - | 19,825 | 461,027 | 822,705 | 1,303,557 | |||||
At 30 September 2022 | 523 | 16,168 | 405,281 | 766,220 | 1,188,192 |
Company
| Furniture &fittings | OfficeEquipment | Machinery & equipment | Land andBuilding | Total | |||||
Cost | £ | £ | £ | £ | £ | |||||
At 1 October 2021 | 890 | 27,936 | 51,860 | - | 80,686 | |||||
Additions | 699 | 1,842 | - | - | 2,541 | |||||
Disposal | - | - | (45,036) | - | (45,036) | |||||
At 30 September 2022 | 1,589 | 29,778 | 6,824 | - | 38,191 | |||||
Depreciation |
|
|
|
|
| |||||
At 1 October 2021 | 890 | 17,040 | 4,424 | - | 22,354 | |||||
Depreciation for the year | 176 | 5,413 | 2,400 | - | 7,989 | |||||
At 30 September 2022 | 1,066 | 22,453 | 6,824 | - | 7,848 | |||||
Net book value |
|
|
|
|
| |||||
At 1 October 2021 | - | 20,200 | 47,436 | - | 67,636 | |||||
At 30 September 2022 | 523 | 7,325 | - | - | 17,512 |
The Group and the Company’s property, plant and equipment are free from any mortgage or charge. The comparable table for 2021 is detailed below.
Group | Furniture &fittings | OfficeEquipment | Machinery &equipment | Land andBuilding | Total | |||||
Cost | £ | £ | £ | £ | £ | |||||
At 1 October 2020 | 2,982 | 18,880 | 184,209 | - | 206,071 | |||||
Additions | - | 18,360 | 328,927 | 822,705 | 1,169,992 | |||||
At 30 September 2021 | 2,982 | 37,240 | 513,136 | 822,705 | 1,376,063 | |||||
Depreciation |
|
|
| - |
| |||||
At 1 October 2020 | 2,880 | 14,157 | 5,495 |
| 22,532 | |||||
Depreciation for the year | 102 | 3,258 | 46,615 | - | 51,822 | |||||
At 30 September 2021 | 2,982 | 17,415 | 52,110 | - | 74,354 | |||||
Net book value |
|
|
|
|
| |||||
At 1 October 2020 | 102 | 4,723 | 180,517 | - | 185,341 | |||||
At 30 September 2021 | - | 19,825 | 461,027 | 822,705 | 1,303,557 |
Company
| Furniture &fittings | OfficeEquipment | Machinery & equipment | Land andBuilding | Total | |||||
Cost | £ | £ | £ | £ | £ | |||||
At 1 October 2020 | 890 | 18,880 | 3,865 | - | 23,635 | |||||
Additions | - | 18,360 | 47,995 | - | 66,355 | |||||
At 30 September 2021 | 890 | 37,240 | 51,860 | - | 89,990 | |||||
Depreciation |
|
|
|
|
| |||||
At 1 October 2020 | 890 | 14,157 | 3,865 | - | 18,912 | |||||
Depreciation for the year | - | 2,883 | 559 | - | 3,442 | |||||
At 30 September 2021 | 890 | 17,040 | 4,424 | - | 22,354 | |||||
Net book value |
|
|
|
|
| |||||
At 1 October 2020 | 161 | - | 387 | - | 548 | |||||
At 30 September 2021 | - | 20,200 | 47,436 | - | 67,636 |
8 Investments
| Investment in subsidiaries | |
| £ | |
Cost as at 1 October 2021 | 272 | |
Disposal | (272) | |
Balance at 30 September 2022 | - |
The comparable table for 2021 is detailed below:
| Investment in subsidiaries | |
| £ | |
Cost as at 1 October 2020 | - | |
Addition | 272 | |
Balance at 30 September 2021 | 272 |
Investment in subsidiaries
At 30 September 2022, the Company had interests in the following subsidiary undertakings:
Subsidiaries: | Principalcountry ofincorporation | Principalactivity | Descriptionand effectivecountry ofoperation | Proportion ofshares held | ||||
Mercator Gold Australia Pty Ltd | Australia | Mineral Exploration | Australia | 100% | ||||
Warm Springs Renewable Energy Corporation | USA | Dormant | USA | 90% | ||||
Copper Flat Corporation | USA | Dormant | USA | 100% | ||||
Lux Exploration Pty Ltd | Australia | Mineral Exploration | Australia | 100% | ||||
Corderilla Tiger International Resources Inc. | Philippines | Mineral Exploration | Philippines | 70% | ||||
Registered office address of the subsidiaries: |
|
|
|
| ||||
Mercator Gold Australia Pty Ltd | 58 Gipps Street, Collingwood Victoria, 3066, Australia | |||||||
Warm Springs Renewable Energy Corporation | 315 Paseo de Peralta, Santa Fe, NM 87501, USA | |||||||
Copper Flat Corporation (formerly New Mexico Copper Corporation) | 315 Paseo de Peralta, Santa Fe, NM 87501, USA | |||||||
Lux Exploration Pty Ltd | 58 Gipps Street, Collingwood Victoria, 3066, Australia | |||||||
Cordillera Tiger International Resources Inc. | RM 2 4/F D Restaurant Bldg. Dangwa Terminal Baguio | |||||||
Financial assets at fair value through profit or loss | ||||
| 2022 £ | 2021 £ | ||
Quoted investments |
|
| ||
At 1 October | 31,461 | 26,870 | ||
Additions | 10,000 | - | ||
Fair value movements | 3,623 | 4,591 | ||
At 30 September | 45,084 | 31,461 | ||
10 Intangible assets – exploration and development costs | Group | Company | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| £ | £ | £ | £ | ||||
At 1 October | 3,321,481 | 1,869,184 | 1,410,144 | 1,333,282 | ||||
Additions | 1,993,719 | 1,452,297 | 292,123 | 76,862 | ||||
Impairment | (1,554,281) | - | (1,554,281) | - | ||||
At 30 September | 3,760,919 | 3,321,481 | 147,985 | 1,410,144 | ||||
The financial asset at 30 September 2022 and 2021 comprises shares in Tiger International Resources, Inc., and is held at fair value through profit or loss in accordance with IFRS 9 Financial Instruments
An operating segment level summary of exploration and development costs of the Group is presented below:
| 2022 £ | 2021 £ | ||
Danglay Gold Project, Philippines | - | 1,261,158 | ||
Central Victorian Gold Projects, Australia | 3,760,919 | 2,060,323 | ||
At 30 September | 3,760,919 | 3,321,481 |
Danglay Gold Project, Philippines
In April 2013 ECR entered into an earn-in and joint venture agreement (the “Agreement”) in relation to the Danglay gold project in the Philippines. Cordillera Tiger Gold Resources, Inc. (“Cordillera Tiger”) is a Philippine corporation and the holder of the exploration permit (the “EP”) which represents the Danglay project.
Activities under the Agreement commenced in December 2013 and ceased when the Earn-In Option (as that term is defined in the Agreement) was terminated in August 2016. The Philippine mining industry is enduring a period of significant political and regulatory upheaval, which has been particularly intense and unpredictable since June 2016. In light of this, termination of the Earn-In Option was considered a prudent step for the Company to take.
The Agreement gave ECR the exclusive right and option to earn a 25% or 50% interest in Cordillera Tiger and thereby in the Danglay project. Under the terms of the Agreement, ECR was the operator of the Danglay project, through Cordillera Tiger. The completion of various exploration programmes generated valuable data which is relevant to the assessment of the project’s economic potential.
In December 2015, the Company published an NI43-101 technical report (the “Report”) in relation to the Danglay project. The Report also disclosed a target for further exploration, as permitted by NI43-101. The Report supports the disclosure on 5 November 2015 of an inferred mineral resource estimate for oxide gold mineralisation at Danglay.
Under the Agreement, the estimation of this mineral resource and the making of expenditures exceeding US$500,000 in connection with the Danglay project, entitled ECR to a 25% interest in Cordillera Tiger.
In July 2021, Cordillera Tiger successfully renewed Exploration License EP-006 at the Danglay gold project, which is located in a prolific gold and copper mining district in the north of the Philippines for a further two years. In October 2021, ECR Minerals received formal recognition for its 25% shareholding in Philippines based company Cordillera Tiger Gold Resources, Inc. (“Cordillera Tiger”), having invested some £1.2 million in the Danglay gold.
In April 2022, the Cordillera Chairman and Vice President agreed to sell to ECR Minerals his shareholding of 1,499,996. The consideration for the additional 1,499,996 shares in Cordillera was 1,499,996 Philippine pesos (approx. £22,000), which has been paid for in cash. Following this acquisition, ECR holds 2,333,329 Ordinary Shares in Cordillera representing 70% of its issued share capital. At that stage the current management of Cordillera was kept in place.
The carrying value of Danglay as at 30 September 2022 was £1,554,281 which is based on historical spend by ECR Minerals plc. As the Group’s focus is on gold and battery metals exploration in Australia and as such, upon the conclusion of a review of operations post period, the Board decided to explore several options in relation to the Danglay project, including potential sale of the asset. Despite numerous interests, ECR is yet to receive a material offer that would bring value to shareholders. Post period, the Group has significantly reduced spending on the asset and subsequently produced a sales presentation to distribute to potential buyers. The Board acknowledge the several challenges in valuing the potential of the Danglay asset such as quantifying the value of Exploration License EP-006, Cordillera holds no value and the net assets are nil, and Cordillera Tiger Gold Resources Inc recorded no revenues or profits. Under advisement and discussions, the Board believes it would not be prudent to carry the book value of the asset forward based on the expenditure to date and current market conditions and has therefore impaired the project in full. Nevertheless, ECR continues to explore other potential sales opportunities for the Danglay Gold project.
11 Trade and other receivables | Group | Company | ||||||
| 2022£ | 2021£ | 2022£ | 2021£ | ||||
Non-current assets |
|
|
|
| ||||
Amount owed by a subsidiary | - | - | 5,792,859 | 5,133,826 | ||||
Current assets |
|
|
|
| ||||
Amount owed by a subsidiary | - | - | 938,073 | 818,566 | ||||
Other receivables | 99,365 | 100,406 | 50,933 | 33,919 | ||||
Prepayments and accrued income | 48,678 | 45,741 | 48,563 | 25,612 | ||||
| 148,043 | 146,147 | 1,037,568 | 878,097 | ||||
The short–term carrying values are considered to be a reasonable approximation of the fair value.
12 Cash and cash equivalents | Group | Company | ||||||
| 2022£ | 2021 £ | 2022£ | 2021 £ | ||||
Cash and cash equivalents consisted of the following: |
|
|
|
| ||||
Deposits at banks | 842,889 | 2,982,046 | 233,106 | 1,467,835 | ||||
Cash on hand |
|
|
|
| ||||
| 842,889 | 2,982,046 | 233,106 | 1,467,835 | ||||
13 Share capital and share premium accounts
The share capital of the Company consists of three classes of shares: ordinary shares of 0.001p each which have equal rights to receive dividends or capital repayments and each of which represents one vote at shareholder meetings; and two classes of deferred shares, one of 9.9p each and the other of 0.099p each, which have limited rights as laid out in the Company’s articles.
In particular deferred shares carry no right to dividends or to attend or vote at shareholder meetings and deferred share capital is only repayable after the nominal value of the ordinary share capital has been repaid.
a) Changes in issued share capital and share premium
|
|
| Deferred | Deferred ‘B’ | Deferred |
|
|
| ||||||||
| Number ofshares | Ordinaryshares | 9.9pshares | 0.099p shares | 0.199pshares | Total shares | Sharepremium |
Total | ||||||||
|
| £ | £ | £ | £ | £ | £ | £ | ||||||||
At 1 October 2021 | 1,016,558,551 | 10,165 | 7,194,816 | 3,828,359 | 257,161 | 11,290,453 | 52,593,562 | 58,376,975 | ||||||||
Issue of shares |
|
|
|
|
|
|
|
| ||||||||
less costs | 47,906,000 | 497 | - | - | - | 497 | 463,563 | 464,042 | ||||||||
Balance at 30 September 2022 | 1,064,464,551 | 10,644 | 7,194,816 | 3,828,359 | 257,161 | 11,290,980 | 53,057,125 | 63,884,063 |
All the shares issued are fully paid up and none of the Company’s shares are held by any of its subsidiaries.
b) Potential issue of ordinary shares
Share options
The number and weighted average exercise prices of share options valid at the year–end are as follows:
| Weightedaverageexercise price | Number of options | Weightedaverageexercise price | Number of options | ||||
2022 | 2022 | 2021 | 2021 | |||||
£ |
| £ |
| |||||
Exercisable at the beginning of the year | 0.0113 | 17,035,127 | 0.051 | 8,209,968 | ||||
Granted during the year | 0.027 | 45,000,000 | 0.0113 | 25,000,000 | ||||
Exercised during the year | - | - | 0.0117 | (16,118,841) | ||||
Expired during the year | 0.0175 | (1,758,143) | 5 | (56,000) | ||||
Exercisable at the end of the year | 0.023 | 60,276,984 | 0.0113 | 17,035,127 |
The options outstanding at 30 September 2022 have a weighted average remaining contractual life of four year and three months (2021: two year and seven months).
The options outstanding at the end of the year have the following expiry date and exercise prices:
Date granted | Expiry Date |
| Exercise Price in | No. of Options | ||||
27 February 2017 | 28 October 2024 |
| £0.01725 | 4,076,984 | ||||
30 July 2018 | 29 July 2023 |
| £0.01125 | 1,200,000 | ||||
30 July 2018 | 28 October 2024 |
| £0.01125 | 10,000,000 | ||||
23 January 2022 | 22 January 2027 |
| £0.022 | 35,000.000 | ||||
23 January 2022 | 22 January 2027 |
| £0.044 | 10,000,000 | ||||
Share-based payments |
|
|
| |||||
There were no options issued during the year. |
|
|
| |||||
|
|
| ||||||
Share warrants | Weightedaverage2022 | Number ofwarrantsexercise price2022 | Weightedaverageexercise price2021 | Number ofwarrants2021 | ||||
|
| £ | £ |
| ||||
Exercisable at the beginning of the year | 0.02878 | 159,940,371 | 0.01625 | 425,384,824 | ||||
Exercised during the year | 0.01 | (47,906,000) | 0.0138 | (310,603,127) | ||||
Expired during the year | 0.0205 | (62,034,372) | 0.0125 | (4,841,325) | ||||
Granted during the year | - | - | 0.0375 | 49,999,999 | ||||
Exercisable at the end of the year | 0.0375 | 49,999,999 | 0.02878 | 159,940,371 |
The warrants outstanding at the end of the year have the following expiry date and exercise prices:
Date granted | Expiry Date | Exercise Price £ | No. of Warrants | |||
30 April 2021 | 29 April 2023 | 0.0375 | 49,999,999 |
14 Trade and other payables | Group | Company | ||||||
| 2022 £ | 2021 £ | 2022 £ | 2021 £ | ||||
Trade payables | 149,938 | 156,301 | 109,098 | 9,605 | ||||
Social security and employee taxes | 16,489 | 34,034 | 2,226 | 19,197 | ||||
Other creditors and accruals | 40,257 | 12,397 | 24,601 | 12,397 | ||||
| 206,684 | 202,731 | 135,924 | 41,198 | ||||
15 Capital management
The Group’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern and develop its mineral exploration and development and other activities to provide returns for shareholders and benefits for other stakeholders.
The Group’s capital structure comprises all the components of equity (all share capital, share premium, retained earnings when earned and other reserves). When considering the future capital requirements of the Group and the potential to fund specific project development via debt, the Directors consider the risk characteristics of the underlying assets in assessing the optimal capital structure.
16 Related party transactions
| Group | Company | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| £ | £ | £ | £ | ||||
Amounts owed to Directors | 400 | 10,606 | 479 | 10,606 | ||||
Details of Directors’ emoluments are disclosed in Note 6. The amounts owed to Directors relate to accrued emoluments, consulting fees and expenses due.
During the year the Company provided additional advances of £659,033 under a loan to Mercator Gold Australia Pty Ltd and charged expenses and management fees of £139,507. The balance owed to the Company is shown in Note 11.
During the year the Company provided additional advance of £314,664 through project cost to Cordillera Tiger International Resources Inc. The balance owed to the Company is shown in Note 10.
The Company and the Group have no ultimate controlling party.
17 Commitments and contingencies
Capital expenditure commitment
As at 30 September 2022, the Group has a commitment expenditure of AUD$650,000 for the first three years across the three licence areas in Lolworth Range.
The Group is committed to issuing a further AUD 150,000 worth of Ordinary Shares in ECR contingent on commercial production being established from the Bailieston projects.
Contingencies
The Group entered into no agreements during the year ended 30 September 2022 which would result in disclosure of contingent assets or liabilities.
18 Financial instruments
Categories of financial instrument
Group | 2022 £ | 2021 £ | ||
Financial assets (amortised cost) |
|
| ||
Trade and other receivables (excluding prepayments) | 99,072 | 100,406 | ||
Cash and cash equivalents | 842,889 | 2,982,046 | ||
| 941,961 | 3,082,452 | ||
Financial assets (fair value through profit or loss) |
|
| ||
Equity investments | 45,084 | 31,463 | ||
| 45,084 | 31,463 | ||
Financial liabilities (amortised cost) |
|
| ||
Trade and other payables | 206,684 | 232,185 | ||
| 206,684 | 232,185 | ||
| 2022 | 2021 | ||
Company | £ | £ | ||
Financial assets (amortised cost) |
|
| ||
Trade and other receivables (excluding prepayments) | 989,006 | 852,485 | ||
Cash and cash equivalents | 233,106 | 1,467,835 | ||
Long-term borrowings, intra-group | 5,792,859 | 5,133,826 | ||
| 7,014,971 | 7,454,146 | ||
Financial assets (fair value through profit or loss) |
|
| ||
Equity investments | 45,084 | 31,463 | ||
| 45,084 | 31,463 | ||
Financial liabilities (amortised cost) |
|
| ||
Trade and other payables | 135,925 | 41,198 | ||
| 135,925 | 41,198 |
Risk management objectives and policies
The Group’s principal financial assets comprise cash and cash equivalents, trade and other receivables, investments and prepayments. The Group’s liabilities comprise trade payables, other payables including taxes and social security, and accrued expenses.
The Board determines as required the degree to which it is appropriate to use financial instruments, commodity contracts or other hedging contracts to mitigate financial risks.
Credit risk
The Group’s cash and cash equivalents are held with major financial institutions. The Group monitors credit risk by reviewing the credit quality of the financial institutions that hold the cash and cash equivalents and restricted cash. The fair value of cash and cash equivalents at 30 September 2022 and 30 September 2021 did not differ materially from their carrying value.
Management believes that the Group’s exposure to credit risk is manageable.
The Company manages its current VAT receivables by submitting VAT returns on a quarterly basis. This allows the Company to receive the VAT in a timely matter while any amounts that may come under scrutiny. Management has no formal credit policy in place for customers and the exposure to credit risk is approved and monitored on an ongoing basis individually for all significant customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Group does not require collateral in respect of financial assets.
Market risk
The Group’s financial instruments potentially affected by market risk include bank deposits, and trade payables. An analysis is required by IFRS 7, intended to illustrate the sensitivity of the Group’s financial instruments (as at period end) to changes in market variables, being exchange rates and interest rates. The Group’s exposure to market risk is not considered to be material.
Interest rate risk
The Group has no material exposure to interest rate risk. Since the interest accruing on bank deposits was relatively immaterial there is no material sensitivity to changes in interest rates.
Foreign currency risk
The Group is exposed to foreign currency risk in so far as some dealings with overseas subsidiary undertakings are in foreign currencies. Bank accounts are held in Great British Pounds (“GBP), Australian Dollars (“AUD”) and United States of American Dollars (“USD”). The Company has payables that originate in GBP, AUD, USD and Philippines Peso (“PHP”). As such the Company is affected by changes in the GBP exchange rate compared to the following currencies; AUD, USD, and PHP.
As at 30 September 2022 | GBP | AUD | PHP | |||
Cash and cash equivalents | 233,106 | 1,033,117 | 44,789 | |||
Accounts receivable | 1,037,568 | 77,251 | - | |||
Accounts payable | (135,923) | (114,461) | (220,200) | |||
Net foreign exchange exposure | 1,134,751 | 995,907 | 175,411 | |||
Translation to GBP | - | 0.5783 | 0.0153 | |||
GBP equivalent | 1,134,751 | 1,722,150 | 2,684 | |||
As at 31 December 2021 | GBP | AUD | PHP | |||
Cash and cash equivalents | 1,467,835 | 2,126,534 | - | |||
Accounts receivable | 878,097 | 102,765 | - | |||
Accounts payable | (41,198) | (161,533) | - | |||
Net foreign exchange exposure | 2,304,734 | 2,067,767 | - | |||
Translation to GBP | - | 0.5367 | - | |||
GBP equivalent | 2,304,734 | 1,109,818 | - |
Fair value of financial instruments
The fair values of the Company’s financial instruments at 30 September 2022 and 30 September 2021 did not differ materially from their carrying values.
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2: valuation techniques based on observable inputs either directly (i.e. as prices) or indirectly (i.e. derived from prices);Level 3: valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, by the level in the fair value hierarchy into which the measurement is categorised.
Group and Company
30 September 2022 | Level 1 £ | Level 2 £ | Level 3 £ | Total £ | ||||
Financial assets at fair value through profit or loss | 45,084 | – | – | 45,084 | ||||
| 45,084 | – | – | 45,084 | ||||
Group and Company |
|
|
|
| ||||
30 September 2021 | Level 1 £ | Level 2 £ | Level 3 £ | Total £ | ||||
Financial assets at fair value through profit or loss | 31,463 | – | – | 31,463 | ||||
| 31,463 | – | – | 31,463 |
Liquidity risk
The Group finances its operations primarily through the issue of equity share capital and debt in order to ensure sufficient cash resources are maintained to meet short–term liabilities and future project development requirements. Management monitors availability of funds in relation to forecast expenditures in order to ensure timely fundraising. Funds are raised in discrete tranches to finance activities for limited periods.
Funds surplus to immediate requirements may be placed in liquid, low risk investments.
The Group’s ability to raise finance is subject to market perceptions of the success of its projects undertaken during the year and subsequently. Due to the uncertain state of financial markets there can be no certainty that future funding will continue to be available.
The table below sets out the maturity profile of financial liabilities as at 30 September 2022.
| 2022£ | 2021£ | ||
Due in less than 1 month | 206,684 | 232,185 | ||
Due between 1 and 3 months | – | – | ||
Due between 3 months and 1 year | – | – | ||
Due after 1 year | – | – | ||
| 206,684 | 232,185 |
19 Segmental report
The Group is engaged in mineral exploration and development and is considered to have one business segment. The Chief Operating Decision Maker is considered to be the Board of Directors, who segment exploration activities by geographical region in order to evaluate performance individually. The segmental breakdown of exploration assets is shown in Note 10. As disclosed in the Note 10, the exploration activities in the Philippines have been impaired in full and all remaining mineral exploration assets are in Australia.
Management information in respect of profit or loss expenditures is not segmented but is considered at Group level.
20 Cash used in operations
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| Group | Company | ||||||
| Year ended30 September | Year ended 30 September | Year ended 30 September | Year ended30 September | ||||
Note | 2022 £ | 2021 £ | 2022 £ | 2021 £ | ||||
Operating activities |
|
|
|
| ||||
Loss for the year before tax | (2,614,873) | (1,413,206) | (2,251,490) | (800,558) | ||||
Adjustments: |
|
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Loss on disposal of subsidiary |
| - |
| - | ||||
Depreciation expense property, plant and equipment 8 | 104,165 | 51,822 | 7,989 | 3,442 | ||||
(Gain)/Loss on financial assets at fair value | (3,623) | (4,593) | (3,623) | (4,593) | ||||
Impairment of intangible assets | 1,576,822 | - | 1,576,822 | - | ||||
Interest income | (651) | (288) | (265) | (260) | ||||
Profit and loss on disposal | 12,887 |
| 2,086 |
| ||||
Decrease/(Increase) in accounts receivable | (1,896) | (37,531) | (159,471) | (151,408) | ||||
Decrease/(Increase) in inventory | 5,081 | (75,722) |
|
| ||||
Foreign exchange on operating activities | - | (15) | - | - | ||||
Increase/(Decrease) in accounts payable | 3,954 | 81,109 | 94,726 | (52,650) | ||||
Net cash used in operations | (918,135) | (1,398,424) | (733,226) | (1,006,026) | ||||
21 Events after the reporting date
On 4 October 2022, the Company announced an update on the stream sediment sampling campaign currently in progress on its tenements at Lolworth Range, North Queensland, Australia. ECR Minerals announced that the project is close to 75% complete, that more than 91 samples have been despatched and awaiting results from the laboratory whilst follow-up sampling work will continue.On 11 October 2022 the Company provided an update on the second drilling rig stating the rig purchase has now been completed, following the agreement of a meaningful discount, on what the board consider to be competitive and attractive terms. Arrangements are currently being made for the rig to be loaded onto a ship for delivery to Melbourne Port.On 14 October 2022 the Company announced the final gold results from the 2022 drill program at the HR3 prospect at Bailieston. ECR Minerals plc has 100% ownership of the Bailieston Project (EL5433), which contains the gold prospects known as HR3, Cherry Tree, Blue Moon and Black Cat. The projects are operated by ECR’s Australian wholly owned subsidiary Mercator Gold Australia Pty Ltd (“MGA”). The Company announced the best results in BH3DD043 with a composited grade of 9.01 g/t Au over a drilled width of 4 metres. Along with further results from the Maori Anticline include 1m @ 4.96 g/t Au (BH3DD042) at a depth of 273m. With multiple intersections along strike of the Scoulers Reef including 0.2m @ 9.22 g/t Au (BH3DD042), 0.5m @ 4.55 g/t Au (BH3DD037) and 1m @ 3.34 g/t Au (BH3DD038).On 19 October 2022 the Company announced results from a re-assay of selected diamond drill core from the Creswick diamond drilling program completed in 2021. The Company stated that Duplicate sampling of selected quartz-mineralised intercepts from the diamond drilling campaign of 2021 shows significant increase in reportable gold grades including of 0.7m @ 47.75 g/t Au from 147m in hole CSD001, 1.1m @ 6.13 g/t Au from 98m in hole CJD002 and 1m @ 3.9 g/t Au from 86.5m, also in hole CJD002. Ongoing surface exploration in the immediate area is testing for follow-up drill targets.On 27 October 2022 the Company was pleased to announce entering into a Binding Term Sheet pursuant to which it has been granted a conditional option to acquire the entire issued share capital of Placer Gold Pty Limited (“Placer Gold”) (the “Option”). To secure the option ECR has to pay a A$200,000 (approximately £144k) option fee (“Option Fee”), which is to be satisfied by a contribution to costs, the implementation of a work programme over the assets (details below) and a balancing cash payment to the shareholders of Placer Gold ("Vendors”). Once the Option Fee has been fully satisfied ECR can then exercise the Option at any time prior to 30 September 2023, at its absolute discretion. If the Option Fee is fully satisfied and the Option is exercised, the total consideration for the acquisition of Placer Gold is A$6.9m (approximately £3.8m, including the Option Fee, a further cash payment of A$200,000 payable in the event of certain milestones being reached, and a 2% net smelter royalty payable in the event the Hurricane Project is taken into production in the future, capped at £3m).On 17 November 2022 the Company pleased announce gold results from the first drillhole for 2022 (BBMDD004) completed at Blue Moon with results from the first diamond drillhole for 2022 are encouraging with 0.5m @ 7.29 g/t Au from 96.9m. Drilling continues with three out of a planned four-hole program completed to date with samples awaiting results pending.On 23 November 2022 the Company announced it will issue A$120,000 to GoldOz PL in satisfaction of all fees owing to them as adviser in connection with the recent option agreement and potential acquisition of Placer Gold Pty Limited as announced on 27 October 2022. This fee is to be satisfied by a payment of A$60,000 in cash and A$60,000 in shares through the issue of 3,272,608 shares at a price of 1.03p calculated by reference to the 30 day VWAP.On 12 December 2022 the Company announced a raise of £900,000 by way of a placing and direct subscription at a price of 0.9p per share. Both the Placing Shares and the Subscription Shares were also accompanied by the issue of one warrant to subscribe for one ordinary share in the Company for each new share issued (the “New Warrants”). When issued, the New Warrants will be exercisable at any time, for a period of 2 years from the date of admission of the Placing Shares and the Subscription Shares (as applicable) at an exercise price of 1.5p each.On 12 December 2022 the Company announced the first round of results from the recent stream sediment sampling campaign undertaken at the Lolworth Range project, North Queensland, Australia. The results are as followed 21 out of 125 stream sediment samples to date are anomalous with gold, with results up to 152.5 ppm Au. 18 of the 125 samples show visible gold and further samples are awaiting results including 212 stream sediment samples and 33 rock chips and Multiple pegmatites observed throughout the tenements.On 13 December 2022 the Company are pleased to announce two new exploration tenements have been granted to ECR’s wholly owned subsidiary Mercator Gold Australia Pty Ltd (“MGA”) at Bailieston, Victoria, Australia. The two new exploration tenements (EK006911 and EL 006912) adjacent to EL5433 have been formally granted to ECR’s wholly owned subsidiary MGA. Total exploration land package at Bailieston (EL5433, EL006911, EL006912) now totals 179 square kilometres.On 22 December 2022 the Company plc announced updated soil sampling results from the on-going geochemistry exploration on EL006184 at Creswick, Victoria, Australia. These results highlight a potential new parallel gold system within the Dimocks Main Shale (DMS).On 23 December 2022 the Company announced encouraging Lithium, Tantalum and Niobium anomalies identified within the first round of results from the recent stream sediment sampling campaign undertaken at the Lolworth Range project, North Queensland, Australia.On 3 January 2023 the Company announce it has received approval for two new exploration tenements in Victoria, Australia. The New tenement EL007296 now completes the total exploration package at Bailieston, Victoria. New Creswick tenement EL006713 effectively connects EL006184 and EL006907, creating a continuous land package from ECR’s Springmount property south through to the outskirts of Ballarat.On 23 January 2023 the Company announce updated results from soil sampling and other on-going exploration activities within licence EL006184 at Creswick, Victoria, Australia.On 1 February 2023 the Company announced high gold grades from recent in-situ rock chips sited within license EL006184 and newly acquired license EL006713 at the Creswick Project, Victoria, Australia. With results of 0.7m @ 189.42 g/t Au and 0.4m @ 86.51 g/t Au from (EL006184); 0.25m @ 441.23 g/t Au, 0.15m @ 140.83 g/t Au and 0.25m @ 24.92 g/t Au from (EL006713).On 15 February 2023 the Company is pleased to announce that it has executed a sale and purchase agreement for the sale of the Company’s ‘Bailieston’ property located at 127 Nagambie-Rushworth Road within the Company’s 100% owned Bailieston license area. For a cash sale price of A$670,000 has been agreed for the Nagambie-Rushworth Road property, with a deposit of A$67,000 already received.On 22 February the Company announced that it has executed a sale and purchase agreement for the sale of the Company’s ‘Bailieston’ property located at 127 Nagambie-Rushworth Road within the Company’s 100% owned Bailieston license area for a cash sale price of A$670,000 has been agreed for the Nagambie-Rushworth Road property, with a 10% deposit already received.On 24 February the Company was pleased to announce an increase from 70% to 90% with its ownership stake Cordillera Tiger Gold Resources, Inc (“Cordillera”), owner of Exploration License EP-006 at the Danglay gold project in the north of the Philippines.On 1 March the Company provided an update on results from three more drill holes from the Blue Moon Prospect, Bailieston, Victoria, including our best gold intercept for this 2022 drilling campaign in hole BBMDD010. With an impressive composite grade of 6.35m @4.56 g/t from 84.9m down.On 3 March the Company is pleased to provide an update on the second drilling rig. the rig has arrived 1 March 2023 at Melbourne Port and the team immediately collected and fitted out the rig with support equipment for deployment.View source version on businesswire.com: https://www.businesswire.com/news/home/20230402005022/en/
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