28 Apr 2023 07:00
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS AMENDED BY REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.
28 April 2023
2022 Financial Statements Released
London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or the "Company") announces that, on 27 April 2023, the Board of Directors of the Company approved the Annual Report and Consolidated Financial Statements for the year ended 31 December 2022.
Highlights
· Loss for the year of $8,013,000, driven mainly by mark-to-market revaluation of the Company's investment in Minto Metals Corp ("Minto") (2021 - profit of $20,580,000, being driven by exceptional non-cash gains)
· Basic loss per share of 8.3c (2021: earnings per share 24.4c)
· Net assets at 31 December 2022 of $3,232,000 (2021: $10,894,000)
· Loan from Chairman and CEO term extended from December 2022 until December 2025
Post Year End
· Repayment of $3m convertible loan notes deferred from May 2023 until May 2025
· Ongoing negotiations on timing of payment to Capstone of remaining USD 5 million purchase price and timing of receipt from Minto of remaining surety funding provided by Pembridge and accumulated interest
· Cost saving measures introduced
· Interest due on loan to Gati Al-Jebouri added to principal
Negotiations are ongoing between Capstone Copper Corp ("Capstone"), Minto Metals Corp ("Minto") and Pembridge, involving the timing of both the $ 5 million final payment due to Capstone for the acquisition of the Minto mine and of Minto repaying the last surety funding due to Pembridge, being the remaining principal of CAD 1 million and accumulated interest including the amount that was due on 31 March 2023. Pembridge's management expect these negotiations to reach a constructive conclusion in the near term.
The Company has recently introduced cost saving measures, the main ones being that its CEO and Chairman has agreed to defer his salary effective from March until September 2023 and the company's CFO has agreed to move to a part-time basis with a corresponding cost saving effective from 1 April.
In addition, because of Pembridge's presently limited cash resources, it has agreed with Gati Al-Jebouri that the interest that became payable on its loan from him on 31 March 2023 will be added to the loan principal.
The financial statements are available in pdf form on the Company's website using the link below.
https://www.pembridgeresources.com/investors/financial-reports
The Company's Annual General Meeting will be held on 28 June 2023.
Extracts from the consolidated financial statements follow.
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of Pembridge said:
"The results of Pembridge for 2022 are affected by the challenges experienced during the year by Minto, in which Pembridge holds a 11.1% investment, which is reflected in the financial statements as the fall in the market value of that investment and deferral of the remaining surety repayments and accrued interest due to Pembridge from Minto.
In response to this, to improve the Company's solvency we have extended the repayment term of our convertible loan notes by two years and of the loan from myself by three years, and we have recently introduced measures to reduce our operating costs, all of which is intended to preserve the value of the Company for its investors.
We are negotiating with Minto and Capstone in respect of the timing of the $5m payment due to Capstone and the remaining surety funding due to Pembridge from Minto and we hope to announce a constructive outcome on these matters in the near term."
Cautionary Statement
This News Release includes certain "forward-looking statements" which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company, or management, expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management's expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes, but is not limited to, the Company's intentions regarding its objectives, goals or future plans and statements. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, the Company's ability to predict or counteract the potential impact of COVID-19 coronavirus on factors relevant to the Company's business, failure to identify additional mineral resources, failure to convert estimated mineral resources to reserves with more advanced studies, the inability to eventually complete a feasibility study which could support a production decision, the preliminary nature of metallurgical test results may not be representative of the deposit as a whole, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital, operating and reclamation costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry, and those risks set out in the Company's public documents. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.
ENDS
NOTES TO EDITORS
Pembridge is a mining company that is listed on the standard segment of the Official List of the FCA and trading on the main market for listed securities of London Stock Exchange plc. Pembridge has an investment in Minto Metals Corp, a British Columbia incorporated business listed on the TSX Venture Exchange under the symbol "MNTO" that operates the Minto mine in Yukon, Canada.
About Minto Metals Corp
Minto Metals Corp operates the underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse along the Klondike Highway. In excess of US$350 million of capital expenditure has been invested into Minto operations since site construction began in 2006. The Minto mine was in continuous production between 2007 and 2018, when the mine was placed onto temporary care and maintenance. Pembridge acquired the Minto mine from Capstone Mining Corporation in June 2019 and restarted operations in October 2019.
Enquiries:
Pembridge Resources plc: +44 (0)7905 125740
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board
David James, Chief Financial Officer
Tavira Financial Ltd: +44 (0)20 7100 5100
Jonathan Evans
Consolidated Statement of Comprehensive Income
Year ended | Year ended | ||
31 December 2022 | 31 December 2021 | ||
US$'000 | US$'000 | ||
Administrative, legal and professional expenses | (1,309) | (1,186) | |
Exceptional items | |||
- revaluation of Capstone liability | - | (1,429) | |
- payment of Capstone liability by Minto in March 2021 | - | 5,000 | |
- assumption of the Capstone liability by Minto Metals Corp | - | 15,000 | |
- mark-to-market valuation of investment in Minto Metals Corp | (6,215) | 3,800 | |
Foreign exchange gain | 448 | 40 | |
Operating (loss) / profit | (7,076) | 21,225 | |
Finance income | 200 | 274 | |
Finance cost | (1,137) | (919) | |
(Loss) / Profit before income tax | (8,013) |
| 20,580 |
Income tax | - | - | |
(Loss) / profit for the year | (8,013) | 20,580 | |
Other comprehensive income | (2) | - | |
Total comprehensive (loss) / income for the year | (8,015) |
| 20,580 |
(Loss) / profit is attributable to: | |||
Non-controlling interest | (10) | - | |
Shareholders of the Company | (8,003) | 20,580 | |
(Loss) / profit for the year | (8,013) |
| 20,580 |
Total comprehensive (loss) / income is attributable to: | |||
Non-controlling interest | (10) | - | |
Shareholders of the Company | (8,005) | 20,580 | |
Total comprehensive (loss) / income for the year | (8,015) |
| 20,580 |
Year ended | Year ended | ||
Earnings per share expressed in US cents | 31 December 2022 | 31 December 2021 | |
| |||
(Loss) / profit per share attributable to the equity holders of the Company | |||
- Basic | (8.3c) | 24.4c | |
- Diluted | (8.3c) | 19.1c |
All amounts relate to continuing activities.
Consolidated Statement of Financial Position
31 December 2022 | 31 December 2021 | ||
US$'000 | US$'000 | ||
Assets | |||
Non-current assets | |||
Investments in financial assets | 9,854 | 16,036 | |
Promissory note from Minto | - | 5,000 | |
Total non-current assets | 9,854 | 21,036 | |
Current assets |
|
|
|
Promissory note from Minto | 5,000 | - | |
Trade and other receivables | 1,894 | 4,157 | |
Cash and cash equivalents | 617 | 280 | |
Total current assets | 7,511 | 4,437 | |
Total assets | 17,365 |
| 25,473 |
Non-Current liabilities | |||
Borrowings | (5,753) | (3,000) | |
Deferred consideration due to Capstone | - | (5,000) | |
Total non-current liabilities | (5,753) | (8,000) | |
Current liabilities |
|
|
|
Trade and other payables | (380) | (434) | |
Borrowings | (3,000) | (6,145) | |
Deferred consideration due to Capstone | (5,000) | - | |
Total current liabilities | (8,380) | (6,579) | |
Total liabilities | (14,133) |
| (14,579) |
Net assets | 3,232 |
| 10,894 |
Equity | |||
Share capital | 1,276 | 1,212 | |
Share premium | 10,246 | 10,000 | |
Capital redemption reserve | 1,011 | 1,011 | |
Translation reserve | (2) | - | |
Other reserve | 325 | 293 | |
Retained deficit | (9,625) | (1,622) | |
Equity attributable to shareholders of the Company | 3,231 | 10,894 | |
Non-controlling interests | 1 | - | |
|
|
|
|
Total equity | 3,232 |
| 10,894 |
|
|
|
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
| Share capital | Share premium | Capital redemption reserve | Other reserve | Retained deficit | Total | Non-controlling interest | Total Equity |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
Balance at 1 January 2021 | 965 | 9,222 | 1,011 | 46 | (22,202) | (10,958) | - | (10,958) |
|
| |||||||
Profit for the year | - | - | - | - | 20,580 | 20,580 | - | 20,580 |
Other comprehensive income for the year | - | - | - | - | - | - | - | - |
Total comprehensive income for the year | - | - | - | - | 20,580 | 20,580 | - | 20,580 |
Proceeds from shares issued | 247 | 789 | - | - | - | 1,036 | - | 1,036 |
|
| |||||||
Direct cost of shares issued | - | (11) | - | - | - | (11) | - | (11) |
| ||||||||
Share based payments | - | - | - | 247 | - | 247 | - | 247 |
| ||||||||
Total transactions with owners recognised directly in equity | 247 | 778 | - | 247 | - | 1,272 | - | 1,272 |
Balance at 1 January 2022 | 1,212 | 10,000 | 1,011 | 293 | (1,622) | 10,894 | - | 10,894 |
|
|
|
|
|
|
|
|
|
Loss for the year | - | - | - | - | (8,003) | (8,003) | (10) | (8,013) |
Other comprehensive income for the year | - | - | - | (2) | - | (2) | - | (2) |
Total comprehensive income for the year | - | - | - | (2) | (8,003) | (8,005) | (10) | (8,015) |
Proceeds from shares issued | 64 | 246 | - | - | - | 310 | 11 | 321 |
Share based payments | - | - | - | 32 | - | 32 | - | 32 |
Total transactions with owners recognised directly in equity | 64 | 246 | - | 32 | - | 342 | 11 | 353 |
| ||||||||
Balance at 31 December 2022 | 1,276 | 10,246 | 1,011 | 323 | (9,625) | 3,231 | 1 | 3,232 |
The following describes the nature and purpose of each reserve within owners' equity:
Reserve | Description and purpose |
Share capital | Nominal value of shares issued. |
Share premium | Amount subscribed for share capital in excess of nominal value, less share issue costs. |
Capital redemption reserve | Reserve created on cancellation of deferred shares. |
Other reserve | Cumulative fair value of warrants and share options granted, together with the equity element of the convertible loan. |
Translation reserve | Cumulative translation adjustment from retranslation of group undertakings with functional currencies other than USD. |
Retained deficit | Cumulative net gains and losses recognised in the statement of comprehensive income. |
Non-controlling interest | Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the parent company and are presented separately in the Consolidated Statement of comprehensive income and within equity in the Consolidated statement of financial position, distinguished from parent company shareholders' equity. |
Consolidated Cash flow statement
Year Ended | Year Ended | ||
31 December 2022 | 31 December 2021 | ||
US$'000 | US$'000 | ||
Cash flows from operating activities | |||
(Loss) / profit for the year | (8,013) | 20,580 | |
Adjusted for: | |||
Net finance costs | 937 | 645 | |
Unrealised FX on debt included in administrative expenses | (668) | (31) | |
Share based payments | 32 | 247 | |
Revaluation of Capstone liability | - | (3,571) | |
Assumption of the Capstone liability by Minto Metals Corp | - | (15,000) | |
Mark-to-market valuation of investment in Minto Metals Corp | 6,215 | (3,800) | |
Movement in fair value of derivatives | 56 | (26) | |
(1,441) |
| (956) | |
Movements in working capital | |||
Decrease in trade and other receivables | 2,451 | - | |
Decrease in trade and other payables | (101) | (55) | |
Cash generated / (used) by operations | 909 |
| (1,011) |
Income taxes recovered / (paid) | - | - | |
Net cash generated from / (used in) operating activities | 909 |
| (1,011) |
Cash flows from investing activities | |||
Purchase of investments | (33) | (3,034) | |
Net cash used in investing activities | (33) |
| (3,034) |
Cash flows from financing activities | |||
Interest payments | (420) | - | |
Repayment of borrowings | (333) | (20) | |
Proceeds from borrowings | - | 3,304 | |
Proceeds from issuance of shares | 214 | 1,025 | |
Net cash (used in) / generated from financing activities | (539) | 4,309 | |
Net increase in cash and cash equivalents | 337 |
| 264 |
Cash and cash equivalents at beginning of year | 280 | 16 | |
Cash and cash equivalents at end of year | 617 |
| 280 |
BASIS OF PREPARATION
The Financial Statements have been prepared in accordance with UK-adopted international accounting standards.
The Financial Statements have been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on a business combination and contingent consideration measured at fair value.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.
Going concern
The Financial Statements have been prepared on a going concern basis, which assumes that the Company will continue operating in the foreseeable future and will be able to service its debt obligations, realise its assets and discharge its liabilities as they fall due.
The Company and Group have a planning, budgeting and forecasting process to determine the funds required to support their operations and expansionary plans. The budget for 2023 assumes repayments from Minto during 2023 and cost saving measures that are mentioned in the Strategic Report.
Negotiations are ongoing between Capstone Copper Corp ("Capstone"), Minto and Pembridge in respect of the timing of both the USD 5 million final payment due to Capstone and of Minto repaying the last surety funding due to Pembridge, being the remaining principal of CAD 1 million and accumulated interest including the amount that was due on 31 March 2023. The Group's ability to continue as a going concern is dependent on the outcome of these negotiations. Pembridge's management expect these negotiations to reach a constructive conclusion but, because there can be no assurance of their outcome, a material uncertainty exists which may cast doubt on the Group's ability to continue as a going concern.
In June 2021 Pembridge raised debt of USD 3 million using 14% Convertible Loan Notes, which was used exclusively for the purchase of additional newly issued shares in Minto Metals Corp. ("Minto") when it became listed on the Toronto Stock Exchange at the IPO price of CAD 2.60 per share, giving Pembridge an overall equity stake in Minto of 11.1%. The Convertible Loan Notes had a maturity date of 31 May 2023. Since 31 December 2022, Pembridge has reached agreement with the Convertible Loan Note holders to extend the repayment period to May 2025, with interest payments being made at the same 14% per annum each year on or around 31 May of each year, with Pembridge having the right to defer payment of interest until May 2025 if the cash position of Pembridge does not permit the payment of interest. In return, Pembridge has agreed that the accrued interest up to 31 January 2023 is to be settled at the time of the new terms being accepted by each Convertible Loan Note investor and for the conversion price to be reduced from £0.08 to £0.0375 per share, expressed as 4.65 USD cents at the exchange rate of GBP1:USD1.24 when the arrangement was proposed.
Pembridge does not presently plan to sell its holding in Minto, but Minto is now a publicly listed company so this can be done if necessary to raise funds. A restriction on pre-existing owners selling shares means that, as at 31 December 2022, Pembridge could sell 60% of its shares, with the restriction on the remaining 40% lifting on 25 May 2023, so that it would be possible to sell these shares if the cash proceeds were needed.
Having prepared forecasts based on current resources, assessing methods of obtaining additional finance, the Directors believe the Company and Group has sufficient resources to meet its obligations for a period of 12 months from the date of approval of these Financial Statements. Taking these matters into consideration, the Directors continue to adopt the going concern basis of accounting in preparing these Financial Statements. The Financial Statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.