Power Metal Regulatory News (POW)

3 March 2022

Power Metal Resources plc

("Power Metal" or the "Company")

Audited Financial Results for the Year Ended 30 September 2021

Power Metal Resources plc (LON:POW), the London listed exploration company seeking large-scale metal discoveries across its global project portfolio, announces its consolidated audited results for the year ended 30 September 2021, for the Company and its subsidiaries (together the "Group"). 

Highlights from the year under review:

Operational

· After an extensive preparatory period drilling commenced in October 2020 at the Molopo Farms Complex Project ("MFC Project") in Botswana, where the Company funded US$500,000 of exploration costs to earn-in to a 40% direct project interest. Results were released during the course of the year with potentially significant nickel sulphides identified from the three hole drill programme and the company completed its earn-in during April 2021, securing a direct 40% interest in the MFC Project.

· In January 2021 an option was secured over exploration interests in the Paterson Region of Western Australia and during 2021 various amendments were made to this original option culminating in the acquisition of a 5 licence exploration package covering 751km2 post-year end. Work undertaken during the year demonstrated the presence of magnetic bullseye anomalies demonstrating geological and geophysical similarities to the Havieron deposit discovered by Greatland Gold plc.

· January 2021 saw option agreements signed over exploration project interests in the Hemlo Schreiber region in Ontario Canada, with options crystallised in the year and it was then announced in September 2021 that the entire interests in the Hemlo Screiber region were sold to First Class Metals Limited ("FCM") for £1 million through the issue to wholly owned subsidiary Power Metal Canada Inc of 333,334 FCM shares at £3 per share. FCM is seeking a listing on the London capital markets.

· The Company saw its 49.9% owned joint venture in the Victoria Goldfields see its first licence applications granted and the launch of inaugural ground exploration in February 2021, with various updates released during the year confirming additional licence grants and gold exploration progress.

· In March 2021 the Company confirmed the acceleration of its earn-in to a 30% holding in the Silver Peak silver project in British Columbia, Canada, and in July 2021 diamond drilling commenced which would ultimately lead to the discovery of further bonanza grade silver, with significant copper, lead and antimony credits.

· Also in March 2021, the company announced a business update from its 50% owned joint venture with Kavango Resources plc in the Kalahari Copper Belt ("KCB"), Botswana that saw the signing of conditional acquisition agreements to acquire 8 new KCB licences and increasing the joint arrangement's KCB ground footprint to 4,255km2. The acquisitions were completed in August 2021 and saw all KCB interests transferred to a new 50% joint operating company Kanye Resources Pty Ltd.

· In May 2021 the Company secured an option agreement over two gold - nickel prospecting licences in Botswana, and after due diligence exercised the option in July 2021. Accelerated exploration led to the discovery of multiple kilometre-scale gold, nickel and arsenic anomalies announced in July, ultimately leading into a post-year end reverse circulation drill programme. Following option exercise the two licences underlying the properties (the "Tati Project") were successfully transferred post-year end into a new 100% Power Metal owned Botswana holding company, Tati Greenstone Resources Pty Ltd.

· June 2021 saw the Company sign an Assignment and Assumption Agreement to acquire a right to earn into a 100% interest in the Golconda Summit Gold Property in Nevada USA, marking the Company's first project in Nevada.

· Also in June 2021 acquisitions in Nevada continued with the acquisition of a 100% interest in the Stonewall and Garfield exploration projects from fellow AIM listed Sunrise Resources plc.

· July 2021 saw the identification of rare earth element drill targets at the Ditau Camp project in Botswana, also held in the 50% owned joint venture with Kavango Resources plc, Kanye Resources Pty Ltd.

· The Company signed an agreement in July 2021 through which it may acquire a 100% interest in the Authier North lithium exploration property in Quebec, Canada, situated adjacent to Sayona Mining's (ASX:SYA) Authier lithium project.

· In September 2021 the Company launched a uranium staking programme in the Athabasca area of Saskatchewan, Canada which ultimately saw c.412km2 of ground staked, allocated into 7 project packages.

Financial

· Loss for the year to 30 September 2021 of £622k (2020: £1.4 million); 

· Pre non-controlling interest total equity of £6.3 million at the year-end (2020: £2.7 million); and 

· Raised £3.6 million in cash during the year from the exercise of Power Metal share warrants, including by directors.

Post-year end

In November 2021, Power Metal raised over £1,050,000 gross proceeds through a placing of 60,000,000 new ordinary shares of 0.1 pence each, at an issue price of 1.75 pence per share. In conjunction with the placing, each new ordinary shareholder receives an attaching warrant, to subscribe for a further new ordinary share of 0.1 pence each, at an exercise price of 3.5 pence each, expiring after two years.

Following the end of this reporting period, to the date of signing, the Company has received funds of £593,481 in relation to warrant and option exercises, issuing a total of 74,192,876 new ordinary shares.

Drilling programme commencement at Tati project in Botswana was announced October 2021 with completion by the calendar year end and results dispatched to Intertek in Australia for assay testing.

New copper anomalies identified at the Garfield project in Nevada USA, with additional claims staked to cover the ground footprint over the identified anomalies, as announced in October 2021.

In October 2021, it was announced that the final licence application was granted at the Wallal project, leading to the Company signing a revised agreement to acquire 100% of First Development Resources Australia Pty, via its subsidiary First Development Resources Ltd. The transaction consideration was funded through the issue of 13,333,333 Power Metal new ordinary shares at an issue price of 2.75 pence each and 13,333,333 warrants over Power Metal shares at an exercise price of 4.5 pence per ordinary share. Additional consideration of 10,000,000 Power Metal shares at an issue price of 3.2 pence and 10,000,000 warrants over Power Metal shares with an exercise price of 5.0 pence per ordinary share will be settled by Power Metal for all other Australia licences with interests held by First Development Resources Pty Ltd, owned by third parties to be transferred to First Development Resources Pty Ltd.

Approval of the Environmental Management Plan was secured in October 2021 for the Kalahari Copper Belt and Ditau Camp projects licence areas held in the Kanye Resources joint venture with Kavango Resources plc clearing the last key administrative step prior to drilling key targets at the project areas.

In October 2021, Power Metal Resources Australia Pty Ltd, a subsidiary of the Company, submitted two licence applications in South Australia covering 1,994km2 targeting Olympic Dam style mineralisation.

On 29 October 2021, the Group concluded the 100% share capital purchase of First Development Resources Pty Ltd ('FDR Australia') for total consideration of £749,743, consisting of £36,200 cash (AUD$66,000), 13,333,333 new ordinary shares in the Company at a share price of 2.75 pence, 10,000,000 new ordinary shares at a share price of 3.2 pence, and warrants with a total fair value of £26,876. FDR Australia holds exploration interests in the Paterson region of Western Australia and work in 2021 identified three magnetic bullseye targets hosted within the Wallal Project. The acquisition meets the definition of a business combination and will be accounted for using the acquisition accounting method in accordance with the Group's accounting policies.

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: 

There were no associated transaction costs.

The Company announced in November 2021 the signing of a 3 month option agreement by Kavango Resources plc to acquire 51.15% of Kalahari Key Minerals Exploration Pty Ltd. The acquisition will include the 5,313 shares in Kalahari Key currently owned by Power Metal. The acquisition does not affect the 40% project interest which the Company has earnt-in to. Following the transaction, Kalahari Key is due to restructure, with the 40% project interest held by Power Metal to transfer to interest in the company.

In November 2021, the Company announced it had signed an agreement for the 100% acquisition of the Selta project, located in the Northern Territory, Australia. The acquisition will be made by the Company's wholly-owned subsidiary, First Development Resources Ltd ("FDR"). Consideration includes AUD $25,000 cash and £100,000 payable through the issue of 1,499,250 shares in First Development Resources Ltd at an issue price of 6.67 pence per share. Additional consideration in the form of FDR shares will be due as each of the three licence applications are granted. Should all FDR shares be issued Power Metals interest will dilute down to 83.33%. FDR is to seek a listing on the London capital markets.

The Company announced in November 2021 it had exercised the option to acquire a 100% interest in the Pilot Mountain Project from fellow AIM listed Thor Mining plc, via its wholly-owed subsidiary, Golden Metal Resources Ltd. Power Metal paid consideration of US$1,650,000 through the issue of 48,118,920 new ordinary shares at an issue price of 2.5 pence per share (£1,202,973), together with a US$115,000 cash payment and issue of Power Metal warrants to Thor Mining plc.

In November 2021 the Company announced drill assay results from its 30% owned Silver Peak Project in British Columbia Canada demonstrating bonanza grade silver in 10 of 19 holes drilled, and in December 2021, overlimit assays for copper, lead and antimony further increasing silver equivalent grades by an average of 18.8%.

In November 2021 a detailed exploration update covering the Nevada projects held through wholly Power Metal owned Golden Metal Resources Limited was followed by a pre-IPO financing for Golden Metal raising £750,000 for was announced in December 2021 at a pre-money valuation of £3.25million. Golden Metal is seeking a listing on the London capital markets. Following completion of the financing Power Metal's holding in Golden Metal will dilute down to 83.13%.

In November 2021 the Company received notification of the grant of one exploration licence in the Victora Goldfields of Australia.

In December 2021 the Company's 49.9% holding in the Victoria Goldfields joint venture was hived up to New Ballarat Gold Corporation PLC where Power Metal holds the same 49.9% interest. Diamond drilling commenced in the joint venture properties located in the state of Victoria in December 2021.

Sampling assay results of initial uranium exploration at 3 properties in the Athabasca basin, Saskatchewan, Canada were announced, demonstrating up to 38,600ppm (3.86%) uranium highlighting the prospectivity of the uranium properties examined.

January 2022 saw the launch of inaugural diamond drilling at the 35% Power Metal owned Haneti Project in Tanzania, with a 3 hole 1,000 drill programme, targeting nickel sulphide-copper-platinum group metal mineralisation.

Also in January 2022 a ground reconnaissance programme was commenced in the Paterson Region, Western Australia to review and access locations for a planned deep drill programme in 2022 seeking gold-copper mineralisation at magnetic bullseye targets at the Wallal Project.

Following a rotary air blast drill programme completed in 2021 an inaugural diamond drilling programme was launched in January 2022 at the Haneti Project in Tanzania, targeting nickel, copper, cobalt and platinum group elements. The programme was completed in February 2022 with core logging and sampling currently being prepared for analysis and laboratory assay testing.

January 2022 saw the successful transfer of Tati Project prospecting licences into Power Metal's wholly owned local operating company in Botswana triggering share and warrant payments to the vendors

January also saw the renewal of key prospecting licences at the Molopo Farms Complex project in Botswana.

The initial results from a uranium project data compilation at the Athabasca Basin project interests in Saskatchewan, Canada, demonstrating considerable prospectivity and to be used as the basis for planned 2022 exploration programmes.

In January 2022, Power Metal completed the acquisition of the Pilot Mountain project into a newly created Australian holding company and announced early clearance of a US$500,000 tail benefit potentially due to vendor Thor Mining plc.

Diamond drilling commenced in January 2022 at the Haneti Project in Tanzania completing in February 2022, with samples being prepared for assay testing at SGS Tanzania.

In February 2022 the Company received notification of the grant of three exploration licences at the Selta Project in the Northern Territory, Australia.

Notice of Annual General Meeting and Distribution of Accounts to Shareholders

The Company's Annual General Meeting ("AGM") will take place at 10.00am on 30 March 2022 at Suite 24, Temple Chambers, 3-7 Temple Avenue, London, EC4Y ODT. The Company's Annual Report and Accounts for the year ended 30 September 2021 will be posted to shareholders this week. Copies of the Notice of AGM and the Annual Report and Accounts will also be available on the Company's website at www.powermetalresources.com in due course.

Introduction

Power Metal Resources is an energetic hub of activity we believe to be uncommon to the junior resource space, and certainly to an extent it has not previously experienced as a public company.

The refinancing and restructuring undertaken in February 2019 kickstarted a pathway of aggressive repositioning and confident growth, which was the only way to restore the market's confidence after the Company's failings of the past.

We commenced this financial year with six African project interests, augmented by precious metal interests in North America and Australia. We ended the year with a global business with considerable portfolio interests across North America, Africa and Australia.

We have a model of proactive project search, selection and acquisition, followed by immediate exploration to increase value. Thereafter projects enter our in-house exploration portfolio or our corporate channel where we seek disposals or spin-outs to generate significant value to build our asset base and financial strength.

Our model is highly flexible, provides long-term sustainable balance sheet growth and is driven by clear objectives, notably to do all in our power to generate high returns for shareholders, working fairly with all business partners and protecting and offering opportunity to the communities in which we operate.

Operations Review

Projects

Africa

Botswana

Power Metal currently has six projects in Africa with a main focus on Botswana, recognising the extremely positive operating environment for diligent and respectful resource exploration companies in country, and the tremendous resource endowment offering junior exploration companies the opportunity for district-scale metal discoveries.

Our joint operation with Kavango Resources plc has been structured under a single vehicle, Kanye Resources Pty Ltd ("Kanye Resources"), a Botswana private company in which we hold a 50% interest and into which all prospecting licences have been transferred. The previously announced plan is for our interest to hive up into Kanye Resources PLC, a UK vehicle which would be used as the host for a listing in the London capital markets. That plan remains in place, albeit we have a high level of ground exploration underway, and our focus during the recent financial year has been on further value enhancement across the portolfio via these various ground exploration programmes. As the hive up has not yet taken place, the joint arrangement has been reclassified as a joint operation in the financial statements.

Ground exploration has delivered positive results with numerous prospective drill targets identified across the South Ghanzi project in the Kalahari Copper Belt ("KCB") targeting copper-silver and at the Ditau Camp project targeting rare-earth elements and base metal mineralisation.

We have successfully added to the South Ghanzi project in Botswana, with the addition of eight more prospecting licences in the financial year, including the South Ghanzi extension and Mamuno licences at a cost of US$430,000 split 50/50 with our partners, Kavango Resources plc.

At the year end Kanye Resources held 4,257km2 of prospective KCB ground over ten licences and 1,386km2 of ground over two licences representing the Ditau Camp Project. This is an immense land holding, with ongoing ground exploration proving up multiple drill targets and plans for extensive drilling as soon as detailed preparatory work has been completed.

The financial year also saw the acquisition of the Tati Project in Botswana, comprising two prospecting licences located near Francistown which are prospective for gold and nickel. The Company exercised its option to earn 100% over the project in July 2021 and paid a cash option fee of £50,000 which may be offset against future drilling costs incurred by the project vendors' wholly-owned drilling services company. Up to 5,833,332 shares to be issued at 3.0p comprises most of the consideration with an additional 5,833,332 warrants over new Power Metal ordinary shares (50% at 5p and 50% at 7.5p).

Thorough due diligence and post-option exercise exploration programmes led to the identification of multiple kilometre-scale gold, arsenic and nickel anomalies which were subject to follow up exploration and notably a post-year end reverse circulation drilling campaign.

Finally in Botswana, the Company made significant progress at the Molopo Farms Complex project ("MFC Project") located in Botswana, where the Company funded US$500,000 of exploration and in April 2021 completed its earn-in to acquire a 40% interest in the MFC Project. The funding covered the drilling of 3 deep diamond drillholes into 3 geophysical targets, with the second hole successfully intersecting nickel sulphides and platinum group metals as announced in April 2021.

Follow-on technical analysis continued during the year with positive findings released to the market leading to an option being signed post-year end with Kavango Resources plc, for Kavango to take an interest in the MFC Project by acquiring the majority of Kalahari Key Mineral Exploration Pty Ltd., which holds the remaining 60% MFC Project interest after the completion of Power Metal's earn-in.

The Democratic Republic of the Congo (the DRC)

The Company has a 70% interest in the Kisinka Project in the DRC where previous exploration saw the identification of a 6.8km copper-cobalt anomaly. In November 2020 assay results from a pitting and mapping exploration programme demonstrated high copper and cobalt values.

In May 2021, the Kisinka Project was awarded a 25 year production licence adding further value to the project and the next step including plans for exploration were developed. Ultimately it was determined that exploration drilling was the best follow-on step, and the company continued to work post-year end to implement this in an acceptable manner.

Regrettably operational progress has been difficult to secure in an acceptable manner in country, across a number of areas that we are seeking to resolve. The next step in our planned exploration would be drilling, a costly affair requiring us to have operational confidence through a well planned and cost effective drill programme. Also, it is important to have the bedrock of strong commercial relationships in country to underpin the project now, and particularly in the event of forward exploration success. We have not had adequate progress of late, or sufficient confidence to invest further at this stage, and given this underlying uncertainty have taken the current decision to impair our investment in full at this time (£841,000 including £156,000 investment and £685,000 intercompany loan balance). This is an accounting transaction only which has no impact on Power Metal's cash position and we will continue to work in-country to secure the progress we need to push this project forward.

It is also noted that Power Metal deploys a continuous review of project specific capital allocation, focusing its resources on those projects that offer the best potential value upside and security of tenure, whereby value generated will be protected, notably following major value events including commercial discoveries.

Tanzania

The Company holds a 35% stake in the Haneti Project in Tanzania with partner and fellow AIM listed Katoro Gold plc (LON:KAT) holding the remaining 65%.

During the year a rotary air blast drill programme was undertaken at the Haneti Project, seeking to help delineate drill targets for follow-on diamond drilling. The positive outcome of this programme was announced in April 2021, which included the confirmation of targets and the discovery of new gossanous nickel-copper veining at the Mihanza Hill target. Deep diamond drilling was confirmed as the next step and this commenced post-year end in January 2022.

Australia

First Development Resources

During the year the company increased its exposure to Australian exploration opportunities with an option secured in January 2021 to acquire a 100% interest in First Development Resources Pty Limited ("FDR Australia"), a company which held two exploration licence interests in the Paterson region of Western Australia.

Various amendments were made to the original option agreement during the course of the year and post-year end the Company acquired FDR Australia outright through its wholly owned UK company First Development Resources Limited ("FDR UK"). At the time of acquisition, FDR Australia had interests in five exploration licences located in the Paterson region and during the year and post-year end all FDR Australia licence interests achieved granted status enabling the launch of inaugural ground exploration. Furthermore, heritage agreements with the native title holders were prepared as a precusor step required in advance of a planned diamond drilling campaign targeted in 2022.

The intention is to list FDR UK on the London capital markets and during the year and post-year end work was undertaken in order to advance the company towards its planned Q2 2022 listing.

Exploration was undertaken during the year which led to the identification of three magnetic bullseye targets at the Wallal Project as announced in July and September 2021. The Company believe that the anomalies bear geophysical similarities to the Havieron deposit discovered by fellow AIM listed Greatland Gold plc (LON:GGP) and also located within the Paterson region.

New Ballarat Gold Corporation

At the start of the year Power Metal held a 49.9% interest in Red Rock Australasia Pty Ltd ("RRAL"), a joint venture vehicle with exploration licence interests in the Victoria Goldfields, Australia. The remaining 50.1% was held by fellow AIM listed Red Rock Resources plc (LON:RRR).

In September 2020 RRAL held 2,188km2 of ground across twelve licence applications where the application status meant material ground exploration could not be undertaken. During the course of the year, a number of licence applications were granted and ground exploration was launched.

By the year end, seven licence applications had been granted covering 848km2 and 1,458km2 over nine licence applications were awaiting grant.

The original plan for RRAL was to secure a listing in Canada, however in August 2021 the joint venture partners confirmed the focus for the listing was changed to the London capital markets. Reflecting this, and post-year end, the partners' interest in RRAL was hived up to a new company New Ballarat Gold Corporation PLC, with Power Metal holding a 49.9% interest as before.

Exploration work during the year and post-year end delineated multiple drill targets which led to the commencement of diamond drilling in December 2021 for Buninyong, EL007271, and Pitfield EL007301.

North America

Silver Peak

Just prior to the start of the financial year, in September 2020, Power Metal exercised an option to earn-in to a 30% interest in the Silver Peak project, in British Columbia, Canada.

To secure this option, Power Metal made a payment of £129,683 to the vendors comprising CAD$30,000 (£17,183) cash and £112,500 through the issue of 9,000,000 new Ordinary Shares (the "Option Exercise Shares") at a price of 1.25p per Option Exercise Share. In addition, the vendors were granted 9,000,000 warrants to subscribe for new Ordinary Shares in the Company at a price of 1.75p with a three-year life to expiry.

The earn-in was competed in the financial year, as announced in March 2021. In the original agreement, Power Metal was to pay CAD$250,000 against exploration expenditure at the Silver Peak Project. Previously Power Metal had paid CAD$141,048 and the remaining CAD$108,952 (£62,313) was paid to clear the outstanding balance.

In addition Power Metal made a final earn-in payment of CAD$200,000 (£114,349), satisfied by the issue of 5,139,281 new Ordinary Shares to the vendors of the Project. The number of shares to be issued was based on an agreed seven-day volume weighted average price of Power Metal shares of 2.225p.

In addition, the vendors received 2,569,641 warrants to subscribe for new Ordinary Shares exercisable at a price of 2.89p representing a 30% premium to the issue price of the final payment shares. The final payment warrants have a three year life to expiry from the date of announcement.

During the year, two drill programmes were undertaken at the Silver Peak project, the first in November 2020 which was curtailed due to poor weather conditions. Notwithstanding the challenges, the programme successfully delineated very high-grade silver including 5,270 g/t silver (169.5 troy oz/t). A further drill programme was undertaken in summer 2021 and completed in August 2021. Results from this programme and from subsequent overlimit assays were announced after the year end and demonstrated extensive bonanza grade silver.

Authier North

In July 2021 the Company announced an agreement to earn-in to the Authier North and Duval East lithium exploration properties in Quebec, Canada.

On signing of the agreement, Power Metal, on behalf of Power Metal Canada, made initial earn-in payments to the vendors including a cash payment of CAD$15,000 (c.£8,777) and a share based payment of CAD$50,000 (c.£29,257) through the issue of 1,063,891 new Ordinary Shares of 0.1p each in Power Metal at a price of 2.75p per share, ("Initial Earn-in Shares"). During the first year Power Metal must expend CAD$25,000 (c.£14,628) on exploration costs on the properties.

In year 2 Power Metal will make a cash payment of CAD$25,000 to the vendors and a further share based payment of CAD$50,000 with the number of new Ordinary Shares based on the ten consecutive trading day volume weighted average Power Metal share price prior to the delivery of written confirmation to the Vendors that Power Metal Canada wishes to proceed to year 2 of the Option. During the second year Power Metal must expend CAD$50,000 on exploration costs on the Properties.

In year 3 Power Metal will make a cash payment of CAD$25,000 to the Vendors and a further share based payment of CAD$75,000 with the number of new Ordinary Shares based on the ten consecutive trading day volume weighted average Power Metal share price prior to the delivery of written confirmation to the Vendors that Power Metal Canada wishes to proceed to year 3 payments. During the third year Power Metal must expend CAD$100,000 on exploration costs on the Properties.

Should all payments be made above, the total cost to Power Metal, on behalf of Power Metal Canada, would be £242,832 over a maximum 3 year period, and following that expenditure Power Metal Canada will hold a 100% interest in the Property. Power Metal Canada can elect to accelerate all expenditures should it wish, at any time, to allow earlier completion of the earn-in.

There is an existing 1% net smelter royalty ("NSR") over the Properties that will remain in place. In addition, on completion of the earn-in Power Metal will grant to the Vendors a further 1.25% NSR (the "Vendor NSR") and 0.5% of the Vendor NSR may be bought back by Power Metal Canada at any time for a cash payment of CAD$500,000. In total, prior to any buyback, the total NSRs amount to 2.25% over the Property.

A soil sampling and mapping exploration programme was announced in September 2021, with the results released after the year end.

Athabasca Basin

In September 2021 the Company announced the staking of four 100% owned uranium exploration properties covering a combined 10,869-hectares (109km2) giving Power Canada a strong foothold in the prolific Athabasca Basin. The properties include the Clearwater Uranium Property ("Clearwater"), Tait Hill Uranium Property ("Tait Hill"), Thibaut Lake Uranium Property ("Thibaut Lake"), and the Soaring Bay Uranium Property ("Soaring Bay").

Building on this initial acquisition, later in September 2021, the Company announced an increase of ground to 241km2 achieved through the staking of additional ground immediately surrounding the Company's Clearwater, Tait Hill, and Soaring Bay uranium properties, as well as the acquisition of three additional uranium properties including the Cook Lake, E-12, and Reitenbach properties (together the "Properties").

The cost of acquisition of the Properties was the staking cost only amounting to CAD$14,458 by the financial year end. The uranium properties are held by Power Canada through its 100% owned holding company 102134984 Saskatchewan Ltd.

Ground staking to build the footprint continued after the year end, and an initial sampling and mapping programme was undertaken at three of the properties also after the year end.

Hemlo-Schreiber / First Class Metals

In January 2021 the Company acquired the Hemlo North project, an early stage exploration opportunity prospective for both gold and base metal mineralisation, situated over an underexplored part of the very prospective Hemlo-Schreiber Greenstone Belt. Hemlo North consisted of 122 Single Cell Mining Claims ("Claims") being vended as three contiguous claim packages; Roger Lake (50 Claims); Olga Lake (42 Claims); and Dotted East (30 Claims), over a total area of 25.82km2.

The cost of acquisition of the Hemlo North project was CAD$120,000 (c.£69,130) of which CAD$60,000 (c.£34,565) was paid in cash and CAD$60,000 through the issue to the vendors of 1,152,233 new Ordinary Shares of 0.1p each in the Company at an issue price of 3.0 pence per share.

Later in January 2021 the Company signed option agreements to acquire 4 further precious and base metal exploration properties in the Hemlo-Schreiber region. The four option properties were located within 100km west or southwest of the Company's Hemlo North project and included:

- McKellar, consisting of 58 Mining Claims (12.3km2) prospective for both volcanogenic massive sulphide ("VMS") copper-lead-zinc mineralisation and orogenic gold deposits.

- Enable, consisting of 41 Single Cell Mining Claims (circa 8.7km2) and underlain by gold prospective, greenstone belt.

- Magical, consisting of 14 Single Cell Mining Claims (circa 3km2) where regional geophysics data show a possible target related to the intersection of a granitoid intrusion with a regional-scale magnetic geophysics lineation.

- Coco East, consisting of 30 Single Cell Mining Claims (circa 6.4km2) considered prospective for both mesothermal lode gold and VMS deposits.

For the acquisition of a 100% interest in the each of the option properties the following cash and equity consideration was payable:

The POW shares payable as consideration were new Ordinary Shares of 0.1p each in the Company at an issue price of 3.0 pence per share.

The Vendors will retain a 2% net smelter royalty ("NSR") in respect of each of the properties. Power Metal may purchase 1% of each NSR for each property, at any time, by making a cash payment to the Vendors of CAD$500,000 per Property.

The option over all four properties were exercised by the end of February 2021.

In September 2021, the Company announced the sale of all 5 projects to First Class Metals Limited ("First Class"). First Class is a UK private company with an existing portfolio of interests in the Schreiber-Hemlo region held through its Canadian operating subsidiary First Class Metals Inc., and is currently seeking a listing on a recognised stock exchange in London.

The total consideration was £1 million payable through the issue of 333,334 new Ordinary Shares of £1 each in First Class Metals Ltd ("First Class Shares") at a price of £3 per share.

New Opportunities

Power Metal Resources

Power Metal Resources had a pipeline of new opportunities under review during the year, some of which led to new transactions as detailed above.

The Company maintains strict criteria for project selection and only proceeds with projects that complement existing business interests and planned strategy and where transactions can be undertaken on reasonable commercial terms.

Power Capital Investments Ltd

In May 2021 the Company announced it had established a new 100% owned subsidiary 'incubator' business: Power Capital Investments Ltd ("Power Capital"). Power Capital will initially be fully funded by Power Metal.

Power Capital will actively identify small, entrepreneurial business ventures with significant growth potential in the junior resource space and provide support with regard to business management, project development and corporate development to enable them to scale rapidly and realise their potential. Power Capital may also provide financial support.

Power Capital will look to develop these high-potential early stage ventures, to the point of sale, public listing, or incorporation into the Company's portfolio, dependent on a set of key performance indicators to be established.

As a major shareholder in each selected business, Power Capital, and thereby Power Metal, has the opportunity for significant capital appreciation from each successful venture together with a self-created pipeline of new resource projects for operational development by Power Metal.

Corporate Social Responsibility ("CSR")

The Company maintains a focus on CSR through internal policies and our approach to external operational activities.

The priority given to this aspect of our work is shown in the fact that at RRAL we recruited a community relations officer as the second employee engaged, in order to start community engagement even in advance of any license grant.

The Company will continue to prudently invest in the regions in which we have business activities, in support of the communities where we operate. As an early stage Company, Power Metal Resources is keen to employ workers from the areas in which we operate, and to operate in a safe, responsible, and reasonable manner.

As certain projects mature, we would expect our community engagement to become more extensive in line with the level of operational activities.

Financial Review

The Group recorded an audited loss after tax for the year to 30 September 2021 of £622k (2020: loss of £1.4 million). The loss per share from continuing activities was 0.05p (2020: 0.25p).

The Group's exploration activities during the financial year under review were funded through the issue of shares to raise cash. In aggregate, new Ordinary Shares were issued during the financial year, raising a total of approximately £3.6 million from the exercise of warrants, including by directors.

We ended the financial year with a cash balance of £1.27 million (2020: £0.91 million), which was enhanced post-financial year end by the November 2021 placing, raising £1.05 million gross proceeds through a placing of 60,000,000 new Ordinary Shares of 0.1 pence each, at an issue price of 1.75 pence per share, and the exercise of warrants and options bringing an additional £593k into the Company post-year end.

Cash balances held at the year end are supplemented by listed company shares and warrants (cash equivalents), which represent a further pool of accessible cash available on the sale of shares in listed companies.

Targets for 2022

Our operational targets for the remainder of 2022 are:

· To advance our in-house exploration projects seeking to deploy capital primarily on exploration drill programmes, targeting large scale metal discoveries;

· To advance our spin out model, working to secure independent listings of multiple vehicles, enabling the exploration packages that are spun out to thrive with independent management, financing, strategy and operational drive whilst building Power Metal's underlying asset value;

· To secure further disposals of project portfolio interests to augment working capital, which alongside the creation of spin out value will move the Company toward financial self-sustainability;

· To invest in, and focus on, Environmental, Social and Governance policies to protect and advance the locations, people and opportunity of the jurisdictions in which we work; and

· To focus on value creation from our existing portfolio of interests first and foremost, and to seek to replenish that portfolio with new, vibrant and meaningful opportunities.

Board Changes

Andrew Bell stepped down from the Board as Executive Chairman on 30 September 2021, whilst continuing to work with the Company in an advisory capacity for at least 12 months.

Outlook

The Directors believe Power Metal is now positioned better than at any time in its history, with 14 project packages across 3 continents, within 6 countries, and targeting 10 important metals. We have within our portfolio opportunities targeting precious, base and strategic metals. The Directors believe this provides our shareholders with a dynamic and broad spectrum of exposure to upside potential, driven by wider junior resource sector sentiment, the forward supply/demand balance in the metals market and notably, from the potential success of our exploration and corporate programmes.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2021 

The financial statements of Power Metal Resources plc, company number 07800337, were approved by the board of Directors and authorised for issue on 2 March 2022.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

1. Reporting entity

Power Metal Resources plc is a public company limited by shares which is incorporated and domiciled in England and Wales. The address of the Company's registered office is 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT. The consolidated financial statements of the Company as at and for the year ended 30 September 2021 include the Company and its subsidiaries. The Group is primarily involved in the exploration and exploitation of mineral resources in Africa, Australia, Canada and the US.

2. Going concern

The financial statements are prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the current and future position of the Group, including current level of resources, additional funding raised during the year and post-year-end, and the required level of spending on exploration and drilling activities. As part of their assessment, the Directors have also taken into account the ability to raise new funding whist maintaining an acceptable level of cash flows for the Group to meet all commitments.

In the current business climate, the Directors acknowledge the COVID-19 pandemic and has implemented logistical and organisational changes to underpin the Group's resilience to COVID-19, with the key focus being minimising the impact on critical work streams, ensuring business continuity and conserving cash flows. COVID-19 may impact the Group in varying ways leading to the Group reducing all non-essential expenditure, the potential impairment of assets held, the Group's ability to finance exploration and drilling activities and meet commitments relating to its investments, including for transactions entered into after the financial reporting date. The inability to gauge the length of such disruption further adds to this uncertainty. For these reasons, the preservation of cash flows is a primary focus for the Directors.

The Directors have stress tested the Group's cash projections, which involves preserving cash flows and adopting a policy of minimal cash spending for a period of at least 12 months from the date of approval of these financial statements. The Directors believe the measures they have put in place will result in sufficient working capital and cash flows to continue in operational existence, assuming that all exploration and drilling activities are managed carefully and curtailed if necessary. For the Group to carry out the desired levels of exploration and drilling activities, the Directors believe that it needs to secure further funding either from a strategic partner or subsequent equity raisings in the next financial year, which the Group has succeeded in completing over recent years. Taking these matters in consideration, the Directors continue to adopt the going concern basis of accounting in the preparation of the 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.

3. Intangible assets - prospecting and exploration rights

Rights acquired with subsidiaries are recognised at fair value at the date of acquisition. Other rights acquired and development expenditure are recognised at cost.

Exploration and evaluation costs arising following the application for the legal right, are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. When a project is deemed not feasible, related costs are expensed as incurred. Costs incurred include any costs pertaining to technical and administrative overheads. Administration costs that are not directly attributable to a specific exploration area are expensed as incurred, and subsequently capitalised if it is reasonably certain that a resource will be defined.

Capitalised development expenditure will be measured at cost less accumulated amortisation and impairment losses.

4. Operating expenses

Auditor's remuneration in respect of the Company amounted to £26,500 (2020: £23,500).

5. Intangible assets

The opening balance of intangible assets was initially recognised on the acquisition of the Kisinka Copper-Cobalt project held by the Company's subsidiary, Power Metal Resources SA. During the year, the Directors took the decision to impair the Kisinka Project, and acquired interests in several other projects, see below:

The Directors regularly assess the carrying value of the Group's assets, including its prospecting and exploitation rights, and write off any exploration expenditure that they believe to be unrecoverable.

Kisinka Copper-Cobalt Project

Following the discovery of a 6.8km copper anomaly at the Company's 70% owned Kisinka Project near Lubumbashi in the DRC, Power Metal conducted a follow pitting, sampling, and mapping programme in early 2020. The programme was conducted successfully on the ground with in-country X-ray Fluorescence (XRF) of samples confirming the previously identified copper anomaly. Samples were prepared for assay testing in South Africa, the results from which confirmed high grade copper and cobalt.

The licence renewal at Kisinka Project was to be commenced in the year but the decision was taken instead to convert the licence to a Permis d'Exploitation (production licence) with a 25-year life. As part of the process 50% of the less prospective ground is to be surrendered, leaving the Company with 41 carrés miniers (each 84.95 ha). This licence was granted in May 2020.

Next stage exploration is drill testing of the 6.8km copper-cobalt geochemical anomaly identified previously, with preparations continuing for drilling including target refinement and sourcing of appropriate contractors.

A decision was taken to impair the value of the Kisinka Project in The Democratic Republic of the Congo in full (£155,584) to reflect uncertainty due to the lack of progress in country in 2021, and reflecting the increased importance of Power Metal investing operational resources and capital into its wider project portfolio where material progress is being made. Work will continue in-country to seek more definitive progress.

Athabasca Uranium Project

In September 2021, the Company acquired seven properties over a combined 24,097-hectares, giving the Group a strong foothold in the prolific Athabasca basin, in northern Saskatchewan, Canada, all of which are prospective for uranium mineralisation. The properties were acquired through 102134984 Saskatchewan Ltd, which is wholly owned by the Company's wholly-owned subsidiary Power Metal Resources Canada Inc.

Work is being undertaken to assemble detailed project information and to determine next steps for the newly acquired properties.

Tati Gold-Nickel Project

The Company exercised its option to acquire a 100% interest in the Tati Gold-Nickel Project in July 2021, through its wholly owned operating subsidiary Power Metal Resources Botswana Pty Ltd.

The Project recently completed its Phase I and Phase II work programmes, which included high-resolution soil sampling (1,107 samples collected), mapping and prospecting (49 rock samples collected), as well as ground-based geophysics including high-resolution magnetic and radiometric surveys.

The results have highlighted five target areas across the two licences, which are defined by kilometre-scale geochemical anomalies that are coincident with various geological structures that were highlighted by the ground geophysical surveys.

Drilling commenced early in October 2021, targeting large scale gold and nickel discoveries and which will include roughly 1000m of reverse circulation (RC) drilling across the various target areas.

Garfield/Stonewall Projects

The two exploration properties in Nevada were acquired in June 2021, through the Company's wholly owned operational subsidiary, Golden Metal Resources Ltd.

Initial exploration now launched includes the processing of various Aster and Worldview-3 hyperspectal satellite imagery datasets over the Garfield Property, which will allow for the remote mapping of various iron and hydrothermal alteration minerals. In October 2021, copper anomalies were identified at the Garfield property. Remote sensing studies including Advanced Spaceborne Thermal Emission and Reflection Radiometer and European Space Agency Sentinel-2 datasets highlighted considerable additional prospective ground (now staked).

The Company have commissioned a gold deposit geologist to undertake a comprehensive historic data analysis at the Stonewall property. Favourable structural zones for potential epithermal gold mineralisation were identified near the eastern and western end of exposed Stonewall vein, representing compelling high-priority exploration targets going forward.

Ditau Camp/South Ghanzi Projects

In September 2020, the Company acquired 50% of four prospecting licences in Botswana, from Kavango Resources Plc, with a view to creating a new joint venture based in Botswana. During the year, the licences were transferred into a new joint venture holding company, owned 50% by Kavango Resources Plc, and 50% by Power Metal. As the original contractual arrangement for joint control of the licences, rather than the holding company, remains in place, the investment has been reclassified as a joint operation during the year (£273,000 as above), and subsequently the initial investment has been removed from Investments in Joint Ventures to Intangible Assets with assets, liabilities, expenses and revenue for the period recognised on a line-by-line basis in Power Metal's financial statements.

Approval of the Environmental Management Plan was secured in October 2021 for the Kalahari Copper Belt and Ditau Camp projects licence areas held in the Kanye Resources joint venture with Kavango Resources plc clearing the last key administrative step prior to drilling key targets at the project areas.

Numerous prospective drill targets were identified across the South Ghanzi project in the Kalahari Copper Belt targeting copper-silver, and at the Ditau Camp project targeting rare-earth elements and base metal mineralisations.

Eight more prospecting licences were added to the South Ghanzi Project during the year. At the year end Kanye Resources held 4,257km2 of prospective KCB ground over ten licences and 1,386km2 of ground over two licences representing the Ditau Camp Project

6. Trade and other receivables

7. Share capital

The prior year adjustment relates to a previous misallocation between share capital and share premium, relating to a share issue in the year ended 30 September 2017. £19,011 was incorrectly allocated to share capital, this has been rectified in the year ended 30 September 2021, the amount has not been corrected in the prior year as it is deemed immaterial.

All ordinary shares rank equally with regard to the Company's residual assets.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Both classes of deferred shares (Deferred and Deferred A), do not entitle the holders thereof to receive notice of or attend and vote at any general meeting of the Company or to receive dividends or other distributions or to participate in any return on capital on a winding up unless the assets of the Company are in excess of £1,000,000,000,000. The Company retains the right to purchase the deferred shares from any shareholder for a consideration of one penny in aggregate for all that shareholder's deferred shares. As such, the deferred shares effectively have no value. Share certificates will not be issued in respect of the deferred shares.

Issue of ordinary shares

During the year, 425,140,840 shares were issued in relation to warrant exercises; 181,150,000 were exercised at 1.0 pence per share, 5,000,000 were exercised at 2.0 pence per share, 6,000,000 were exercised at 0.5 pence per share, 122,250,000 were exercised at 0.7 pence per share, and 110,740,840 were exercised at 0.75 pence per share.

In January 2021, the Company secured an exclusive 60-day option to acquire a 100% interest in First Development Resources Pty Ltd. The Company paid the vendors a total consideration of £30,000 for the option, through the issue of 1,000,000 new ordinary shares at a price of 3.0 pence per share.

In January 2021, the Company signed an agreement to acquire a 100% interest in four separate gold exploration properties located in Ontario, Canada. The Company paid the vendors a total consideration of US$60,000 for the option, through the issue of 1,152,233 new ordinary shares at a price of 3.0 pence per share.

In February 2021, the Company exercised its option to acquire a 100% interest in McKellar. The Company paid the Vendors a total consideration of US$50,000 for the Option, through the issue of 960,000 new ordinary shares at a price of 3.0 pence per share.

In February 2021, the Company exercised its option to acquire the Coco East Property. The Company paid the Vendors a total consideration of US$30,000 for the Option, through the issue of 576,000 new ordinary shares at a price of 3.0 pence per share.

In February 2021, the Company exercised its option to acquire both the Magical Property and the Enable Property. The Company paid the Vendors a total consideration of US$50,000 for the Option, through the issue of 960,000 new ordinary shares at a price of 3.0 pence per share.

In April 2021, Power Metal accelerated its earn-in to the Silver Peak project to hold 30%. The final earn-in payment of CAD$200,000 (£114,349) was made through the issue of 5,139,281 new ordinary shares at a price of 2.225 pence per share.

In June 2021, the Company signed an agreement to to acquire gold-copper projects in Nevada. The Company paid the vendors a total consideration of £61,875 for the option to be held by the Company's subsidiary, Golden Metal Resources Ltd, through the issue of 2,250,000 new ordinary shares in the Company at a price of 2.75 pence per share.

In July 2021, the Company exercised its option to acquire a 100% interest in two gold-nickel exploration licences within the Tati Greenstone Belt. The Company paid an initial consideration of £25,000 payable through the issue to the Vendors of 833,333 new ordinary shares of 3.0 pence in the Company.

In September 2021, the Company's subsidiary acquired an option to acquire 100% interest in the Pilot Mountain project. Consideration of £12,500 was paid through the issue of 500,000 new ordinary shares in the Company at an issue price of 2.5 pence per share.

8. Earnings per share

Basic and diluted loss per share

The calculation of basic and diluted loss per share is based on the loss attributable to ordinary shareholders of £591,938 (2020: £1,381,290), and a weighted average number of ordinary shares in issue of 1,079,317,932 (2020: 558,893,170).

9. Trade and other payables

Group

Company

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information please visit https://www.powermetalresources.com/ or contact:

NOTES TO EDITORS

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa and Australia.

Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint ventures until a project becomes ready for disposal through outright sale or separate listing on a recognised stock exchange thereby crystallising the value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the Company's growth or may be returned to shareholders through share buy backs, dividends or in-specie distributions of assets.

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results awaited, as outlined below:

A should Kavango exercise their option to acquire Kalahari Key, Power Metal interest would reduce to 40% of the Molopo Farms Complex project