26 Sep 2019 07:00
Erris Resources plc / EPIC: ERIS.L / Market: AIM / Sector: Mining
26 September 2018
Erris Resources plc
('Erris Resources' or the 'Company')
Interim Results
Erris Resources, the European focused mineral exploration company with a portfolio of zinc prospects in Ireland and gold projects in Sweden, is pleased to announce its interim results for the six months ended 30 June 2019.
CHAIRMAN STATEMENT
Erris has continued to be active during the first half of this financial year. As part of its alliance with Centerra Gold, new targets have been identified in both Finland and Sweden with field work continuing into the summer season. In Ireland, metallurgical testwork at our Abbeytown Project was positive for the Project and the results of the soil sampling programme we undertook have identified a number of new potential targets along strike from the old mine. Early stage work at the Company's Galway Project has highlighted a number of potential target areas which require further work.
The market for junior explorers has been challenging so far this year, resulting in the Company maintaining disciplined expenditure and preserving its cash position. With regard to the Abbeytown Project, we are actively seeking joint venture partners to advance the project. In Sweden and Finland, Erris is fortunate to have in place a valued partner in Centerra Gold, which gives us increased exposure to discovery at no cost whilst also earning a management fee and maintaining an active team and exploration portfolio. The team is also actively seeking to identify further assets, with the aim to enhance shareholder value.
The Company has identified and secured permits over a number of prospective areas in Finland and Norway. Beginning in June, the Company's geologists mobilised to the Sakiatieva and Pirunkoukka reservation permits in Finland to carry out prospecting and ground truthing of targets. The work is fully funded as part of the Company's strategic alliance with Centerra Gold. Erris aims to identify drill targets on one or more of the projects, which may lead to Centerra Gold electing a Designated Project Area for earn-in as per the agreement signed between the two parties in December 2015.
In Ireland, at our Abbeytown Project we completed a soil sampling programme which identified a number of encouraging target areas 1.2 km south of the existing mine workings and beyond the area of surface drilling. If continuity of mineralisation indicated by these soil anomalies is confirmed, then we are looking at a number of new zones of mineralisation that could potentially indicate a much larger deposit. We also conducted a preliminary metallurgical study which showed that good quality lead and zinc concentrates can be produced using a standard flotation process. Furthermore, the recoveries are excellent, the concentrate is clean with respect to penalty elements and the grindability characteristics of the mineralised sample are positive. The results further reinforce our confidence in the economic potential of the Abbeytown Project.
Erris continues to strive to create value through the process of discovering or advancing new mineral deposits. The Company continues to evaluate new prospective projects and licences in low-risk jurisdictions.
During the period, Andrew Partington stepped down from the Board and Jeremy Taylor-Firth assumed his position as Chairman of the Audit Committee. The strength and depth of experience of our Board continues to be one of our key points of differentiation to other micro-cap mining companies.
The Company continues to maintain its extremely disciplined approach to expenditure and cash management and as such is well funded into 2020 with a €1.7m cash position as at the date of this report.
Jeremy Martin
Non-Executive Chairman
STRATEGIC REPORT
Highlights
·; Commenced fieldwork in Finland as part of strategic alliance with Centerra Gold
·; Centerra Gold funded mapping and prospecting carried out on new targets in North Sweden
·; Soil sampling at Skreen in Ireland, resulting in high priority targets, confirms the importance of the Ox Mountains Fault on controlling mineralisation
·; Submitted renewal reports for the 100% owned Abbeytown Zn-Pb-Ag project
·; Data review and first pass soil sampling completed at the 100% owned Irish Galway zinc-lead-silver project
·; Maintaining tight control on expenditure with cash of approximately €1.9 million at the end of June
·; Evaluated several new project opportunities and remain focused on identifying and securing a new core asset to build shareholder value
Operational review and outlook
Centerra Alliance - Finland and Sweden
The Company's geologists mobilised to the Sakiatieva and Pirunkoukka reservation permits in Finland to carry out prospecting and ground truthing of targets during June 2019. Mapping and prospecting was also carried out on new target areas in North Sweden. The work is fully funded as part of the Company's strategic alliance with Centerra Gold. Erris aims to identify drill targets on one or more of the projects, which may lead to Centerra Gold electing a Designated Project Area for earn-in as per the agreement signed between the two parties in December 2015. At present the Sakiatieva project in North Finland ranks as the most interesting in terms of potential for significant mineralisation.
Ireland
Renewal reports and supporting documentation have been submitted to the Exploration and Mining Division in Ireland for five of the six prospecting licences ("PLs") held over the Abbeytown Project in County Sligo. Five PLs covering Abbeytown and Skreen have been renewed to August 2025 following significant expenditure over the past two years including soil sampling and drilling, both from the surface and underground. The Company has decided to surrender one PL north of Abbeytown, which covers Ballysadare Bay and part of the Strandhill peninsula, as the ground is deemed to have little potential for shallow, economic mineralisation.
Results from underground drilling were received and reported in January 2019. A number of high-grade intersections were reported including additional channel sample results. Highlights from drilling include 12.66 % Zn+Pb combined and 21.05g/t Ag over 2.0m in ABUG004 and 14.37 % Zn+Pb combined and 67.25g/t Ag over 2.0m in ABUG009. A channel sample in pillar AB-PL-10 returned 9.32 % Zn+Pb combined and 60.4g/t Ag over 4.0m. The combination of underground mapping, sampling and drilling has resulted in a much better understanding of the controls and distribution of mineralisation in the project area and has confirmed that mineralisation is continuous between the mine and the location of surface drilling south of the mine, results of which were announced on 24 October 2018.
In March 2019, the Company reported positive results from 527 closely spaced soil samples south of the Abbeytown mine with three new targets identified up to 1.25km southwest of the Abbeytown mine close to the Ox Mountains Fault. The strongest anomaly occurs over two lines spaced 100m apart and is coincident with an inferred northeast trending splay off the Ox Mountains Fault, 1.25km southwest of the Abbeytown mine. Values up to 10.65ppm Ag, 1,585ppm Pb and 2,530ppm Zn were returned in one sample, compared to a sample located 10m to the north of this which had values of 2.84ppm Ag, 631 ppm Pb and 738ppm Zn. On the adjacent line 100m to the east, a cluster of anomalous samples are centred around a sample which returned 1.63ppm Ag, 413 ppm Pb and 404 ppm Zn. The tenor, scale and structural setting of this anomaly make it a key target for follow up work.
Results from a soil sampling programme carried out on PL 757 at Skreen were reported with the mid-year operational update on 27 June. The survey was carried out to meet expenditure commitments on PL 757 while also testing structures that may have been exploited by mineralising hydrothermal fluids. A total of 470 samples including QAQC samples were taken along seven lines with a sample spacing of 10m.
Some low order anomalies were detected, and a strong Pb-Zn-Ag anomaly was also detected on the Ox Mountains Fault with a maximum of 500 ppm Pb, 1,145 ppm Zn and 0.72 g/t Ag in one sample. Adjacent samples were highly anomalous. These results confirm the importance of the Ox Mountains Fault as a first order control on mineralisation in the district, which is also evident south of Abbeytown itself. They also reinforce Erris' confidence in the potential of the Abbeytown Project and indicate that it may be beneficial to carry out further tests when possible.
The 100% owned Abbeytown Project, including the historic Abbeytown mine, is a key asset for the Company. Work to date has proven the potential for a high-grade Zn-Pb-Ag deposit and underground access allows direct access to the mineralisation with several high priority targets to test. Due to the current challenging market conditions, the Company will be looking for joint venture partners to advance this project.
On the Galway Project, a desktop review of all historic exploration in the region was carried out in order to rank targets for further exploration. This led to the identification of several historic soil anomalies from work dating back to the 1960s, '70s and '80s, some of which have never been tested by drilling. Anomalies associated with major structures inferred from the new aeromagnetic and electromagnetic data are of particular interest. Two target areas with coincident Pb-Zn-Cu soil anomalies and extensional faults adjacent to inferred basin margins near Craughwell and Athenry were selected for modern soil sample testing.
A soil sample line with a northwest-southeast orientation, 1,135m long and with sample spacing of 10m for 102 samples located 2.7km northeast of Athenry confirmed low order anomalism in base metals coincident with an inferred structural zone. Values of 35 ppm Pb and 84 ppm Zn were returned over the structure and, although these are reasonably low values, they are considerably higher than those further from the fault. The Athenry Fault is known to have been active during deposition of the limestones with significant extension inferred from previous academic work and drilling by the geological survey. The Athenry Fault is interpreted as the northwest edge of the Tynagh basin; the Tynagh deposit which lies 27 km to the southeast and is now mined out contained approximately 9.2Mt @ 5.0% Zn, 6.0% Pb, 0.5% Cu and >1 oz/ton Ag.
A sample line with a west-northwest orientation, 790m long and with sample spacing of 10m for 78 samples located 4.4km northeast of Craughwell confirmed zinc anomalism directly over the inferred structure with a high of 252 ppm Zn. The adjacent samples were elevated in lead and zinc compared to samples taken further from the structure.
A number of rock samples were collected at the site of small, historic underground workings on the coast at Oranmore in the west of the licence block. One sample from weathered massive pyrite returned 76 g/t Ag, 1.85% Pb and 3.58% Zn. The mineralisation is interpreted to be in the footwall of a large normal fault located up to 200m to the north-northeast. The presence of mineralisation here confirms that extensional faults in the region were conduits for hydrothermal fluids. The Oranmore mine site itself is not a target for economic mineralisation due to the sensitivity of the location, however, the structure extends several kilometres inland towards the Craughwell target to the east and warrants further work in that area. These results suggest that more extensive soil sampling across the prospective structures should allow the Company to identify new exploration targets. Erris will continue to advance the Galway Project with low cost work and will consider JV opportunities that may arise.
Outlook
At the end of August, the Company held approximately €1.7 million in cash and maintained a disciplined approach to expenditure on its 100% owned projects. Given the challenging state of the resources sector currently, the Company will maintain this approach whilst actively seeking partners for its zinc-lead projects in Ireland. At the same time, the Board and Management continue to review projects in low risk jurisdictions internationally that fit its investment criteria.
Financial review
Notwithstanding that the company is a UK plc, admitted to trading on AIM, the Company presents its accounts in its functional currency of Euros, since the majority of exploration expenditure is denominated in this currency.
The Group is still at an exploration stage and not yet producing minerals, which would generate commercial income. Under the terms of the Centerra JV Agreement, the company earns a 10% Management Fee on all committed expenditures, which amounted to €0.02m in the period compared with €0.07m in 2018. However, the Group is not expected to report overall profits until it disposes of or is able to profitably commercialise its exploration and development projects.
During the period, the Group made an operating loss of €0.27m compared with a loss of €0.36m for the period ended 30 June 2018. This narrowed loss is mainly due to a reduction in administrative costs to €0.24m from €0.30m in 2018, which primarily relates to the costs related to being a public listed company, including the costs of non-executive directors, brokers, nominated adviser and other advisers.
The Total Net Assets of the Group decreased to €3.76m at 30 June 2019 from €4.72m at 30 June 2018, primarily due to ongoing administrative and project related expenditure within the Group. Intangible assets increased to €1.87m from €1.52m due to ongoing exploration at the Group's Ireland and Sweden projects. Current liabilities decreased from €0.23m to €0.04m due to reduction in accounting timing differences on funds received in relation to the joint venture with Centerra Gold.
The closing cash balance for the Group at the period end was €1.9m which is lower than the €2.4m at the end of the same period in the prior year, due to ongoing operations within the Group. As at the date of this report, the Group's cash balance is €1.5m.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
| 30 June |
| 30 June |
| |||||||
| 2019 |
| 2018 |
| |||||||
| Unaudited |
| Unaudited |
| |||||||
| Notes |
| € |
| € |
| |||||
| |||||||||||
Revenue |
|
| 15,835 |
| 65,747 |
| |||||
Cost of sales |
| (45,167) |
| (50,336) | |||||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Gross (loss)/profit |
| (29,332) |
| 15,411 |
| ||||||
| |||||||||||
Administrative expenses |
| (235,971) |
| (301,078) | |||||||
Share based payments charge |
|
| - |
| (70,955) |
| |||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Operating loss | 4 |
| (265,303) |
| (356,622) |
| |||||
| |||||||||||
Finance income |
|
| - |
| 1,289 |
| |||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Loss before taxation |
| (265,303) |
| (355,333) |
| ||||||
| |||||||||||
Tax on (loss)/profit |
|
| - |
| - | ||||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Loss for the financial period |
|
| (265,303) |
| (355,333) |
| |||||
| |||||||||||
Other comprehensive income |
| - |
| - |
| ||||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Total comprehensive income for the period |
| (265,303) |
| (355,333) |
| ||||||
| |||||||||||
|
|
|
|
| |||||||
| |||||||||||
Earnings per share from continuing operations attributable to the owners of the parent company | |||||||||||
| |||||||||||
Basic and diluted (cents per share) (0.85) (1.14)
| |||||||||||
| |||||||||||
CONDENSED STATEMENT OF FINANCIAL POSITION
| 30 June 2019 Unaudited |
| 30 June 2018 Unaudited |
| 31 December 2018 |
| |||||||||
| Audited |
| |||||||||||||
| Notes |
| € |
| € |
| € |
| |||||||
|
|
|
| ||||||||||||
Non-current assets |
|
|
|
| |||||||||||
Intangible assets | 6 |
| 1,870,651 |
| 1,523,733 |
| 1,745,118 |
| |||||||
Property, plant and equipment |
|
| - |
| 31 |
| - |
| |||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
| ||||||||
|
|
|
| ||||||||||||
| 1,870,651 |
| 1,523,763 |
| 1,745,118 |
| |||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Current assets |
|
|
|
| |||||||||||
Trade and other receivables |
|
| 62,847 |
| 76,378 |
| 59,334 |
| |||||||
Cash and cash equivalents |
| 1,868,979 |
| 3,347,678 |
| 2,366,893 |
| ||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
| 1,931,826 |
| 3,424,056 |
| 2,426,227 |
| |||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Total assets |
| 3,802,477 |
| 4,947,819 |
| 4,171,345 |
| ||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Current liabilities |
|
|
|
| |||||||||||
|
|
|
| ||||||||||||
Borrowings |
|
| - |
| 1,139 |
| - |
| |||||||
Current tax liabilities |
| 30,648 |
| 30,648 |
| 30,648 |
| ||||||||
Trade and other payables |
|
| 6,029 |
| 30,277 |
| 112,873 |
| |||||||
Amounts owed to Strategic Alliance partner | 8 |
| 7,073 |
| 169,560 |
| 3,794 |
| |||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
| 43,750 |
| 231,624 |
| 147,315 |
| |||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Net current assets | 1,888,076 |
| 3,192,432 |
| 2,278,912 |
| |||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Total liabilities |
| 43,750 |
| 231,624 |
| 147,315 |
| ||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Net assets |
| 3,758,727 |
| 4,716,195 |
| 4,024,030 |
| ||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Equity |
|
|
|
| |||||||||||
Share capital |
|
| 351,133 |
| 351,133 |
| 351,133 |
| |||||||
Share premium |
|
| 4,151,045 |
| 4,151,045 |
| 4,151,045 |
| |||||||
Other reserves |
|
| 827,376 |
| 830,642 |
| 827,376 |
| |||||||
Retained earnings |
|
| (1,570,827) |
| (616,625) |
| (1,305,524) |
| |||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
Total equity |
| 3,758,727 |
| 4,716,195 |
| 4,024,030 |
| ||||||||
|
|
|
| ||||||||||||
|
|
|
|
|
|
| |||||||||
|
|
|
| ||||||||||||
|
|
|
| ||||||||||||
CONDENSED STATEMENT OF CHANGES IN EQUITY
| Share capital | Share premium | Other reserves | Retained earnings | Total |
| ||||||||||
|
| € | € | € | € | € |
| |||||||||
| ||||||||||||||||
Balance at 1 January 2019 |
| 351,133 | 4,151,045 | 827,376 |
| (1,305,524) | 4,024,030 |
| ||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Six months ended 30 June 2019: |
| |||||||||||||||
Loss and total other comprehensive income for the period |
| - | - | - | (265,303) | (265,303) |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Total comprehensive income for the period | - | - | - | (265,303) | (265,303) |
| ||||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Balance at 30 June 2019 | 351,133 | 4,151,045 | 827,376 |
| (1,570,827) | 3,758,727 |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| Share capital | Share premium | Other reserves | Retained earnings | Total |
| ||||||||||
|
| € | € | € | € | € |
| |||||||||
| ||||||||||||||||
Balance at 1 January 2018 |
| 351,133 | 4,151,045 | 759,687 |
| (261,292) | 5,000,573 |
| ||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Six months ended 30 June 2018: |
| |||||||||||||||
Loss and total other comprehensive income for the period |
| - | - | - | (355,333) | (355,333) |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Total comprehensive income for the period | - | - | - | (355,333) | (355,333) |
| ||||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||
Credit to equity for equity settled share-based payments |
| - | - | 70,955 | - | 70,955 |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Total transactions with owners recognised directly in equity |
| - | - | 70,955 | - | 70,955 |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
| ||||||||||||||||
Balance at 30 June 2018 | 351,133 | 4,151,045 | 830,642 |
| (616,625) | 4,716,195 |
| |||||||||
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
CONDENSED STATEMENT OF CASHFLOWS
| 30 June 2019 |
| 30 June 2018 |
| ||||||||||
| Unaudited |
| Unaudited |
| ||||||||||
| Notes | € | € | € | € |
| ||||||||
|
| |||||||||||||
Cash flows from operating activities |
|
| ||||||||||||
|
| |||||||||||||
Cash (used in)/generated from operations | 9 |
| (404,884) |
| (437,466) |
| ||||||||
|
| |||||||||||||
|
|
|
|
| ||||||||||
|
| |||||||||||||
Net cash (used in)/generated from operating activities |
| (404,884) |
| (437,466) |
| |||||||||
|
| |||||||||||||
Cash flows from investing activities |
|
| ||||||||||||
Exploration expenditure |
| (125,232) |
| (475,978) |
|
| ||||||||
Exploration expenditure utilising funds from Strategic Alliance Agreement |
| (159,953) |
| (678,066) |
|
| ||||||||
Interest received | - |
| 1,289 |
|
| |||||||||
|
| |||||||||||||
|
|
|
|
|
| |||||||||
|
| |||||||||||||
Net cash used in investing activities |
| (285,485) |
| (1,152,755) |
| |||||||||
|
| |||||||||||||
Cash flows from financing activities |
|
| ||||||||||||
Proceeds from issue of shares | - |
| 56,320 |
|
| |||||||||
Funds received from Strategic Alliance Agreements | 163,232 |
| 782,659 |
|
| |||||||||
|
| |||||||||||||
|
|
|
|
|
| |||||||||
|
| |||||||||||||
Net cash generated from financing activities |
| 163,232 |
| 838,979 |
| |||||||||
|
| |||||||||||||
|
|
|
|
| ||||||||||
|
| |||||||||||||
Net decrease in cash and cash equivalents |
| (527,137) |
| (751,242) |
| |||||||||
|
| |||||||||||||
Cash and cash equivalents at beginning of period |
| 2,366,893 |
| 4,090,144 |
| |||||||||
Effect of foreign exchange rates |
| 29,222 |
| 8,776 |
| |||||||||
|
| |||||||||||||
|
|
|
|
| ||||||||||
|
| |||||||||||||
Cash and cash equivalents at end of period |
| 1,868,978 |
| 3,347,678 |
| |||||||||
|
| |||||||||||||
|
|
|
|
| ||||||||||
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
1 | Accounting policies |
| |
| Company information |
| |
| Erris Resources Plc ("the Company") is a public limited company which is listed on the AIM Market of the London Stock Exchange domiciled and incorporated in England and Wales. The registered office address is 29-31 Castle Street, High Wycombe, Buckinghamshire, United Kingdom, HP13 6RU.
The group consists of Erris Resources Plc and its wholly owned subsidiaries Erris Zinc Limited in Ireland, Erris Resources (Exploration) Ltd in the UK and Sweden and Tulivori Exploration OY in Finland.
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| |
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1.1 | Basis of preparation |
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| These unaudited interim condensed financial statements have been prepared under the historical cost convention and in accordance with the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The unaudited interim condensed financial statements should be read in conjunction with the annual report and financial statements for the year ended 31 December 2018, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The unaudited interim condensed financial statements do not constitute statutory financial statements within the meaning of the Companies Act 2006. They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of IFRSs as adopted by the European Union. Statutory financial statements for the year ended 31 December 2018 were approved by the Board of Directors on 4 April 2019 and delivered to the Registrar of Companies. The report of the auditor on those financial statements was unqualified.
The same accounting policies, presentation and methods of computation are followed in these unaudited interim condensed financial statements as were applied in the preparation of the audited financial statements for the year ended 31 December 2018.
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| The financial statements are prepared in euros, which is the functional currency of the company and the group's presentation currency, since the majority of exploration expenditure is denominated in this currency. Monetary amounts in these financial statements are rounded to the nearest €.
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1.2 | Basis of consolidation |
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| The consolidated financial statements incorporate those of Erris Resources Plc and all of its subsidiaries (ie entities that the group controls 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).
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| All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date on which control ceases.
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1.3 | Going concern At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements. |
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1.4 | Revenue Revenue is recognised at the fair value of the consideration received or receivable for services provided over time in the normal course of business and is shown net of VAT and other sales related taxes.
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Recognised in revenue are charges that are invoices to the group's joint venture partner. These are based upon costs incurred together with management fees in connection with exploration programmes carried out under joint venture arrangements and in which the group acts as principal. Revenue from providing services is recognised in the accounting period in which the services are rendered. The execution of exploration programmes under joint venture funding arrangements is a key component of the strategy of the group. | ||
1.5 | Intangible fixed assets other than goodwill | |
| Capitalised Exploration and Evaluation costs
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| Capitalised Exploration and Evaluation Costs consist of direct costs and fixed salary/consultants costs, capitalised in accordance with IFRS 6 "Exploration for and Evaluation of Mineral Resources". The group recognises expenditure in 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 impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. Any impairment is recognised directly in profit or loss.
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1.6 | Impairment of non-current assets | |
| At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets not yet ready to use and not yet subject to amortisation are reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease | |
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2 | Judgements and key sources of estimation uncertainty | |
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| In the application of the accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
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Critical judgements |
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The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements. |
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Stability of Joint Venture Partners |
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The stability of the joint venture partners is periodically reviewed in determining the likelihood of future funding for related projects.
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Impairment of Capitalised Exploration Costs |
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Capitalised exploration costs had a carrying value as at 30 June 2019 of €1,870,651 (31 December 2018: €1,745,118). Management tests annually whether capitalised exploration costs have a carrying value in accordance with the accounting policy stated in note 1.5. Each exploration project is subject to an annual review either by a consultant or senior company geologist to determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting and infrastructure as well as the likelihood of on-going funding from joint venture partners. In the event that a project does not represent an economic exploration target and results indicate that there is no additional upside, or that future funding from joint venture partners is unlikely, a decision will be made to discontinue exploration. The Directors have reviewed the estimated value of each project prepared by management and do not consider any impairment necessary.
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3 | Segmental reporting |
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| The group operates principally in the UK, Ireland and Sweden, with operations managed on a project by project basis within each geographical area. Activities in the UK are mainly administrative in nature whilst the activities in Ireland & Sweden relate to exploration and evaluation work. The reports used by the Board and Management are based on these geographical segments.
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| Ireland | Sweden | Finland | UK | Total |
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| 2019 | 2019 | 2019 | 2019 | 2019 |
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| € | € | € | € | € |
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| Revenues | - | 15,835 | - | - | 15,835 |
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| Cost of sales and administrative expenses |
| (31,814) | - | - | (278,546) | (310,360) |
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| Share based payments charge | - | - | - |
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| Gain/loss on foreign exchange |
| 11,527 | 1,412 | - |
| 16,283 | 29,222 |
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| Profit/(loss) from operations per reportable segment |
| (20,287) | 17,247 |
| - | (262,263) | (265,303) |
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| Reportable segment assets | 1,830,807 | 104,569 | 8,605 | 1,858,496 | 3,802,477 |
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| Reportable segment liabilities | 27 | 19 | 7,073 | 36,631 | 43,750 |
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| Ireland | Sweden | Finland | UK | Total |
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| 2018 | 2018 | 2018 | 2018 | 2018 |
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| € | € | € | € | € |
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| Revenues | - | 65,747 | - | - | 65,747 |
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| Cost of sales and administrative expenses |
| (54,545) | - | - |
| (305,645) | (360,190) |
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| Share based payments charge | - | - | - | (70,955) | (70,955) |
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| Gain/loss on foreign exchange | (9,416) |
| (1,999) | - |
| (20,191) | 8,776 |
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| Profit/(loss) from operations per reportable segment | (63,961) | 63,748 | - |
| (356,409) | (356,622) |
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| Reportable segment assets | 1,385,446 | 402,922 | - | 3,159,452 | 4,947,819 |
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| Reportable segment liabilities | 27 | 171,620 | - | 59,977 | 231,624 |
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4 | Operating (loss)/profit |
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| 2019 | 2018 | |||||||||||
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| Operating (loss)/profit for the period is stated after charging: |
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| Exchange gains/losses | (29,222) | (8,775) | ||||||||||
| Share-based payments | - | 70,955 | ||||||||||
| Operating lease charges | 21,872 | 16,777 | ||||||||||
| Exploration costs expensed | 31,814 | 54,545 | ||||||||||
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5 | Earnings per share | 2019 | 2018 | ||||||||||
| Number | Number | |||||||||||
| Weighted average number of ordinary shares for basic earnings per share | 31,069,430 | 31,069,430 | ||||||||||
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| Effect of dilutive potential ordinary shares: |
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| - Weighted average number outstanding share options | 4,500,000 | 4,500,000 | ||||||||||
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| Weighted average number of ordinary shares for diluted earnings per share | 35,569,430 | 35,569,430 | ||||||||||
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| Earnings | € | € | ||||||||||
| Continuing operations |
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| Loss/profit for the period from continuing operations |
| (265,303) | (355,333) | |||||||||
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| Earnings for basic and diluted earnings per share attributable to equity shareholders of the company |
| (265,303) | (355,333) | |||||||||
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| Earnings per share for continuing operations |
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| Basic and diluted earnings per share |
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| Basic earnings per share |
| (0.85) | (1.14) | |||||||||
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| Diluted earnings per share |
| (0.85) | (1.14) | |||||||||
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| There is no difference between the basic and diluted earnings per share for the period ended 30 June 2019 and 2018 as the effect of the exercise of options would be to decrease the loss per share.
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6 | Intangible fixed assets |
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| Ireland Exploration and Evaluation costs | Sweden Exploration and Evaluation costs | Total |
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| € | € | € |
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| Cost |
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| At 1 January 2019 | 1,645,118 | 100,000 | 1,745,118 |
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| Additions - group funded | 138,106 | (12,573) | 125,533 |
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| At 30 June 2019 | 1,783,224 | 87,427 | 1,870,651 |
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| Amortisation and impairment |
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| At 1 January 2019 and 30 June 2019 | - | - | - |
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| Carrying amount |
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| At 30 June 2019 | 1,783,224 | 87,427 | 1,870,651 |
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| Intangible assets comprise capitalised exploration and evaluation costs (direct costs and fixed salary / consultants' costs) for the Ireland Zinc Projects and the Sweden Gold Projects (excluding the amounts recovered from Centerra Gold.) |
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7 | Subsidiaries |
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| Details of the company's subsidiaries at 30 June 2019 are as follows:
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| Name of undertaking | Registered office | Nature of business | Class of shares held | Direct | Indirect |
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| Erris Resources (Exploration) Ltd | United Kingdom | Exploration | Ordinary | 100.00 | - |
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| Erris Zinc Ltd | Ireland | Exploration | Ordinary | 100.00 | - |
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| Tulivuori Exploration OY | Finland | Exploration | Ordinary | 100.00 | - |
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| The registered office address of Erris Resources (Exploration) Ltd is 29-31 Castle Street, High Wycombe, Bucks, HP13 6RU.
On 26 February 2018, Erris Zinc Ltd was created to separate out the Group's Irish exploration assets into a separate company. All licences held in Ireland were transferred to this subsidiary on 26 June 2018. The registered office address of Erris Zinc Ltd is The Bungalow, Newport Road, Castlebar, Co Mayo, F23 YF24.
On 12 December 2018, Erris Resources (Exploration) Ltd acquired the entire issued share capital of Tulivuori Exploration OY shortly after incorporation. Tulivuori Exploration OY is a company registered in Finland and will be renamed Erris Finland. The registered office address of Tulivuori Exploration OY is c/o Bokforingsbyra Mattans AB, Storalanggatan 57 A 11, 65100 Vasa, Finland.
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8 | Amounts owed to Strategic Alliance partner |
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| 2019 | 2018 |
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| Amounts owing to Centerra Gold Inc |
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| 7,073 | 169,560 |
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| On 1 January 2016, the company entered into a strategic alliance with Centerra Gold over an Area of Interest ("AOI") in Northern Sweden within which Erris holds exploration permits over seven areas totalling 253km2. Under the terms of this agreement, Centerra have the right to make an election ("Election") in respect of any or all of the designated project areas ("DPA" or "DPAs") in the AOI and on any rights subsequently acquired by Erris during the first two years after initial grant of the permit.
During the period, Centerra has spent a total of €159,953 (2018 : €678,066), comprising reimbursed costs of €144,118 (2017 : €612,319) and paid management fees of €15,835 (2018 : €65,747). In accordance with the terms of the agreement, amounts received but not yet expensed are repayable to Centerra.
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| A summary of the funding received from and costs incurred on behalf of Centerra for the 6 months ended 30 June 2019 is analysed as follows: |
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| Funding from Centerra | Exploration expenditure | Management and consultancy fees | Net |
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| Generative Sweden |
| 42,245 | 40,966 | 2,728 | (1,449) |
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| Generative Finland |
| 120,987 | 103,152 | 13,107 |
| 4,728 |
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| €163,232 | €144,118 | €15,835 | €3,279 |
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9 | Cash (used in)/generated from group operations |
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| 2019 | 2018 |
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| € | € |
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| (Loss)/profit for the period after tax |
| (265,303) | (355,333) |
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| Adjustments for: |
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| Investment income |
| - | (1,289) | |||||||||||||||||||||||||
| Foreign exchange |
| (29,222) | (8,776) |
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| Equity settled share based payment expense | - | 70,955 |
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| Movements in working capital: |
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| (Increase)/decrease in trade and other receivables |
| (3,513) | 67,397 |
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| (Decrease)/increase in trade and other payables | (106,846) | (210,420) |
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| Cash (used in)/generated from operations |
| (404,884) | (437,466) |
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10 | Events after the reporting date |
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| There were no material subsequent events to disclose after the reporting date.
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11 | Approval of interim condensed financial statements |
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| These interim condensed financial statements were approved by the Board of Directors on 25 September 2019.
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*ENDS*
Anton du Plessis | Erris Resources plc | +44 (0) 7803 712 280 |
David Hart/Liz Kirchner | Allenby Capital (Nominated Adviser) | +44 (0) 20 3328 5656 |
Erik Woolgar | Shard Capital (Joint Broker) | +44 (0) 20 7186 9952 |
Andy Thacker | Turner Pope Investments (TPI) Ltd (Joint Broker) | +44 (0) 20 3621 4120 |
Isabel de Salis/Gaby Jenner | St Brides Partners (Financial PR) | +44 (0) 20 7236 1177 |