CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
2023
|
|
2022
|
|
|
Note
|
£
|
|
£
|
|
Cash flows from operating activities
|
|
|
|
|
|
Loss before income tax
|
|
(2,937,909)
|
|
(2,041,452)
|
|
Depreciation of property, plant and
equipment
|
4
|
43,276
|
|
45,133
|
|
Equity-settled share-based
transactions
|
|
387,668
|
|
240,537
|
|
Impairment of exploration
costs
|
4
|
350,158
|
|
36,988
|
|
Loss on disposal of property, plant
and equipment
|
9
|
643
|
|
-
|
|
Gain on disposal of right of use
assets
|
|
(58)
|
|
-
|
|
Finance income
|
3
|
(7,923)
|
|
(176)
|
|
Finance cost
|
3
|
197,724
|
|
304,806
|
|
Grant income
|
6
|
(96,750)
|
|
(84,797)
|
|
Gain on sale of
investment
|
|
-
|
|
(21,951)
|
|
Amortisation of right-of-use
assets
|
12
|
29,478
|
|
6,384
|
|
Unrealised foreign exchange
losses
|
|
86,637
|
|
55,337
|
|
Recovery of impairment on listed
investment
|
|
(6,563)
|
|
-
|
|
|
|
(1,953,619)
|
|
(1,459,191)
|
|
|
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
61,395
|
|
(36,535)
|
|
Decrease in trade and other
payables
|
|
(277,400)
|
|
(43,827)
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
(2,169,624)
|
|
(1,539,553)
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of intangible
assets
|
8
|
(2,308,473)
|
|
(1,536,674)
|
|
Purchase of property, plant and
equipment
|
9
|
(7,052)
|
|
(34,397)
|
|
Payments for improvements of right
of use assets
|
|
(33,121)
|
|
-
|
|
Disposal of investments
|
4
|
-
|
|
21,951
|
|
Grant receipt
|
6
|
96,750
|
|
84,797
|
|
Grant repaid
|
|
-
|
|
(39,849)
|
|
Interest received
|
3
|
7,923
|
|
176
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
(2,243,973)
|
|
(1,503,996)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from issue of
shares
|
|
4,373,056
|
|
-
|
|
Payment of share issue
costs
|
16
|
(704,587)
|
|
-
|
|
Lease principal
|
20
|
(21,228)
|
|
(6,347)
|
|
Lease interest paid
|
20
|
(2,420)
|
|
(264)
|
|
Proceeds from borrowings, net of
issue costs
|
21
|
-
|
|
1,554,381
|
|
Interest paid
|
|
-
|
|
(10)
|
|
|
|
|
|
|
|
Net cash from financing
activities
|
|
3,644,821
|
|
1,547,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
(768,776)
|
|
(1,495,789)
|
|
Cash and cash equivalents at
beginning of year
|
|
1,776,556
|
|
3,336,134
|
|
Effect of foreign exchange rate
changes
|
|
(102,225)
|
|
(63,789)
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
905,555
|
|
1,776,556
|
|
|
|
|
|
|
COMPANY
STATEMENT OF CASH FLOWS
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Note
|
£
|
|
£
|
|
Cash
flows from operating activities
|
|
|
|
|
|
Loss before income tax
|
|
(2,959,228)
|
|
(1,372,662)
|
|
Expected credit losses
|
11
|
1,001,537
|
|
5,336
|
|
Equity-settled share-based
transactions
|
|
321,534
|
|
173,344
|
|
Depreciation of property, plant and
equipment
|
|
233
|
|
278
|
|
Loss on disposal of property, plant
and equipment
|
|
643
|
|
-
|
|
Finance income
|
3
|
(7,655)
|
|
(170)
|
|
Finance cost
|
|
195,304
|
|
304,529
|
|
Gain on disposal of
investment
|
|
-
|
|
(21,951)
|
|
Unrealised foreign exchange
losses
|
|
86,637
|
|
55,337
|
|
Recovery of impairment on listed
investment
|
|
(6,563)
|
|
-
|
|
|
|
(1,367,558)
|
|
(855,959)
|
|
|
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
4,129
|
|
(12,099)
|
|
(Decrease)/increase in trade and
other payables
|
|
(88,052)
|
|
101,779
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
(1,451,481)
|
|
(766,279)
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
Loans to subsidiaries
|
11
|
(2,757,113)
|
|
(909,975)
|
|
Interest received
|
3
|
7,655
|
|
170
|
|
Financing of subsidiary
|
10
|
(250,000)
|
|
(1,200,000)
|
|
Grant repaid
|
20
|
-
|
|
(39,849)
|
|
Purchase of property, plant and
equipment
|
|
(1,006)
|
|
-
|
|
Disposal of investments
|
4
|
-
|
|
21,951
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
(3,000,464)
|
|
(2,127,703)
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
Proceeds from issue of
shares
|
|
4,373,056
|
|
-
|
|
Payment of share issue
costs
|
16
|
(704,587)
|
|
-
|
|
Proceeds from borrowings
|
21
|
-
|
|
1,554,381
|
|
|
|
|
|
|
|
Net cash from financing
activities
|
|
3,668,469
|
|
1,554,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
(783,476)
|
|
(1,339,601)
|
|
Cash and cash equivalents at
beginning of year
|
|
1,667,840
|
|
3,075,741
|
|
Effect of foreign exchange rate
changes
|
|
(89,455)
|
|
(68,300)
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of year
|
|
794,909
|
|
1,667,840
|
|
|
|
|
|
|
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
1. Material
accounting policy information
Nature of
operations
Beowulf Mining plc (the "Company") is domiciled
in England. The Company's registered office is 201 Temple Chambers,
3-7 Temple Avenue, London, EC4Y 0DT. These consolidated financial
statements comprise the Company and its subsidiaries (collectively
the "Group" and individually "Group companies"). The Group is
engaged in the acquisition, exploration and evaluation of natural
resources assets and has not yet generated revenues.
The principal accounting policies applied in
the preparation of these consolidated financial statements are set
out below:
Going
concern
As at 31 December 2023, the Group had a cash
balance of £0.91 million (2022: £1.78 million) and the Company had
a cash balance of £0.79 million (2022: 1.67 million).
As disclosed in Note 28, on 16 February 2024,
in conjunction with the Company's right issue, the Company entered
into a short-term bridging loan of SEK 10 million (approx. £724k)
with the underwriters of the rights issue to ensure that the
Company has sufficient financial resources to continue advancing
its projects ahead of the right issue being finalised. The bridging
loan accrues interest of 1.5% per 30-day period and is repayable on
31 May 2024. The bridging loan was repaid early in April 2024 using
part of the proceeds from the capital raise on the right issue,
noted below.
On 3 April 2024 the Company announced the
completion of the capital raise with a total of £4.3 million (SEK
56.3 million) gross raised to fund the development of the Company's
assets through their next key valuation milestones. The net funds
raised after the loan repayment and share issue transaction costs
are £3.0 million (see note 28).
Therefore, at the date of this report, based on
management prepared cashflow forecasts, the Directors are confident
that the Group and Company has raised sufficient capital to fund
the Group's key projects and investments for the period to June
2025 but note that further funds will be required within a few
months post this date to allow the Group and Company to realise its
assets and discharge its liabilities in the normal course of
business. There are currently no agreements in place and there is
no certainty that the funds will be raised within the appropriate
timeframe. These conditions indicate the existence of a material
uncertainty which may cast significant doubt over the Group's and
the Company's ability to continue as going concerns and therefore,
the Group and the Parent Company may be unable to realise their
assets and discharge their liabilities in the normal course of
business. The Directors will continue to explore funding
opportunities at both asset and corporate levels. The Directors
have a reasonable expectation that funding will be forthcoming
based on their past experience and therefore believe that the going
concern basis of preparation is deemed appropriate and as such the
financial statements have been prepared on a going concern
basis. The financial statements do not include any
adjustments that would result if the Group and the Company were
unable to continue as going concerns.
Basis of
preparation
The consolidated and individual Company
financial statements have been prepared in accordance with UK
adopted international accounting standards. The policies have been
consistently applied to both the parent Company and Group. The
financial statements are presented in GB Pounds Sterling. They are
prepared on the historical cost basis or the fair value basis where
the fair valuing of relevant assets and liabilities has been
applied.
Merger relief under s612 of the Companies Act
2006 removes the requirement to credit the share premium account
and where the conditions are met, the relief must be applied.
However, it allows the investment to be accounted for at the
nominal value of the shares issued or the fair value of the
consideration. Where the investment is to be recorded at fair
value, then the credit will be to the merger relief
reserve.
The conditions to qualify for merger relief
are:
· the consideration
for shares in another company includes issued shares;
· on completion of
the transaction, the company issuing the shares will have secured
at least a 90% equity holding in the other company.
Merger relief was required to be applied in
acquisition of Grafintec, in which the Company obtained 100% of the
share capital of Grafintec for shares issued by the Company.
Further details of this acquisition are outlined in note
10.
New standards,
amendments and interpretations
Standards and
interpretations adopted during the year
Information on new standards, amendments and
interpretations that are relevant to the Group and Company annual
report and accounts is provided below:
· IFRS 17 Insurance
Contracts
· Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
- amendments to IAS 12
· Disclosure of
Accounting Policies - amendments to IAS 1 and IFRS Practice
Statement 2
· Definition of
Accounting Estimates - amendments to IAS 8
The Group did not have to change its accounting
policies or make retrospective adjustments as a result of adopting
these new standards and amendments and they did not have a material
impact.
Standards,
amendments and interpretations that are not yet
effective
There are a number of standards, amendments to
standards, and interpretations which have been issued by the IASB
that are effective in future accounting periods that the Group has
decided not to adopt early.
The following amendments are effective for the
period beginning 1 January 2024:
· Amendments to IAS
1 Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current
· IFRS 16 Leases
(Amendment - Liability in a Sale and Leaseback)
· IAS 1
Presentation of Financial Statements (Amendment - Non-current
Liabilities with Covenants)
Significant
accounting judgements, estimates and assumptions
Beowulf Mining Plc is currently assessing the
impact of these new accounting standards and amendments.
The preparation of the financial statements
requires management to make judgements, estimates and assumptions
that affect the amounts reported for income and expenses during the
year and the amounts reported for assets and liabilities at the
balance sheet date. However, the nature of estimation means that
the actual outcomes could differ from those estimates. The
estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the
period in which the revision is made.
Control of
Vardar Group
Judgement is exercised in assessing the control
of the Vardar Group and, in respect of the Parent Company, the
recoverability of the loans made to subsidiary
undertakings.
The Company is assessed to have control by
virtue of its shareholding in Vardar Minerals Limited, which was
61.1% at 31 December 2023 (2022: 59.5%).
Exploration
costs capitalisation
The Group has to apply judgement in determining
whether exploration and evaluation expenditure should be
capitalised within intangible assets as exploration costs or
expensed. The Group has a policy of capitalising all costs which
relate directly to exploration costs (as set out above). Management
apply judgement in determining if Directors' remuneration costs are
directly attributable to a specific exploration area (project) and
should be capitalised or expensed as incurred. The total value of
exploration costs capitalised as at each of the reporting dates is
set out in Note 8.
Exploration
assets
The Pitkäjärvi licence was renewed in 2021 and
expires on 26 April 2024, a further extension was applied for on 15
March 2024 and remains subject to approval.
The licences for Mitrovica and Viti expired on
27 January 2024. New licence applications were submitted, and
confirmation of receipt was provided on 22 February 2024, which
remain subject to approval. With the licence applications formally
lodged with ICMM, no other party may apply for licences over the
same area.
Management considers that in each case licence
conditions have been met and are confident applications or renewals
will be accepted by receiving authorities.
The Board has considered the impairment
indicators as outlined in the Group's accounting policies and
having done so is of the opinion that no impairment provisions are
required for Group's main assets, Kallak, Aitolampi, Mitrovica and
Viti.
The licence for Åtvidaberg is not expected to
be renewed when it expires in 2024 and therefore has been fully
impaired in the year (see note 8).
Sources of
estimation and uncertainty
Valuation of
share-based payments
Accounting for some equity-settled share-based
payment awards required the use of valuation models to estimate the
future share price performance of the Company. These models require
the Directors to make assumptions regarding the share price
volatility, risk free rate and expected life of awards in order to
determine the fair values of the awards at grant date (see note
17).
Expected
credit losses
The Company, in applying the ECL model under
IFRS 9, must make assumptions when implementing the forward-looking
ECL model. This model is required to be used to assess the
intercompany loans receivable from subsidiaries for
impairment.
Estimations were made regarding the credit risk
of the counterparty and the underlying probability of default in
each of the credit loss scenarios. The scenarios identified by
management included Production, Divestment, Fire-sale and Failure.
These scenarios considered technical data, necessary licences to be
awarded, the Company's ability to raise finance, and ability to
sell the project. A reasonable change in the probability weightings
of both the downside scenarios of failure and fire-sale of 3% would
result in further impairment of £789,297 (2022:
£626,927).
Basis of
consolidation
(i)
Subsidiaries and acquisitions
The consolidated financial statements
incorporate the financial statements of the Company and entities
controlled by the Company (and its subsidiaries) made up to 31
December each year. Control is recognised where an investor
is exposed, or has rights, to variable returns from its investment
with the investee, and has the ability to affect these returns
through its power over the investee.
The results of subsidiaries acquired or
disposed of during the year are included in the statement of
comprehensive income from the effective date of acquisition, or up
to the effective date of disposal, as appropriate.
Non-controlling interests in subsidiaries are
presented separately from the equity attributable to equity owners
of the parent Company. When changes in ownership in a subsidiary do
not result in a loss of control, the non-controlling shareholders'
interests are initially measured at the non-controlling interests'
proportionate share of the subsidiaries net assets. Subsequent to
this, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the
non-controlling interests' share of subsequent changes in equity.
Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
(ii)
Transactions eliminated on consolidation
Intra-Group balances and any unrealised gains
and losses or income and expenses arising from intra-Group
transactions are eliminated in preparing the consolidated financial
statements.
Intangible
assets - deferred exploration costs
All costs incurred prior to the application for
the legal right to undertake exploration and evaluation activities
on a project are expensed as incurred. Each asset is evaluated
annually at 31 December, to determine whether there are any
indications that impairment exists.
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. Costs
incurred include appropriate employee costs and costs pertaining to
technical and administrative overheads.
Exploration and evaluation activities
include:
•
researching and analysing historical exploration data;
•
gathering exploration data through topographical, geochemical and
geophysical studies;
•
exploratory drilling, trenching and sampling;
•
determining and examining the volume and grade of the
resource;
•
surveying transportation and infrastructure requirements;
and
•
conducting market and finance studies.
Administration costs that are not directly
attributable to a specific exploration area are expensed as
incurred.
Exploration costs are carried at historical
cost less any impairment losses recognised. When a project is
deemed to no longer have commercially viable prospects to the
Group, exploration costs in respect of that project are deemed to
be impaired and written off to the statement of comprehensive
income. Once the decision for investment is taken, the assets will
be assessed for impairment and to the extent that these are not
impaired, will be classified as development assets. At the point
that production commences these assets will be
depreciated.
Intangible
assets - capitalised development costs
Development costs that are directly
attributable to the GAMP project are recognised as intangible
assets where the following criteria are met:
· it is technically
feasible to complete the intangible asset so that it will be
available for use;
· management
intends to complete the intangible asset and use or sell
it;
· there is an
ability to use or sell the intangible asset;
· it can be
demonstrated how the intangible asset will generate probable future
economic benefits;
· adequate
technical, financial and other resources to complete the
development and to use or sell the intangible asset are available,
and;
· the expenditure
attributable to the intangible asset during its development can be
reliably measured.
Directly attributable costs that are
capitalised as part of intangible assets include employee costs and
an appropriate portion of relevant overheads.
Capitalised development costs are recorded as
intangible assets and amortised from the point at which the asset
is ready for use.
Impairment
Whenever events or changes in circumstance
indicate that the carrying amount of an asset may not be
recoverable an asset is reviewed for impairment. An asset's
carrying value is written down to its estimated recoverable amount
(being the higher of the fair value less costs to sell and value in
use) if that is less than the asset's carrying amount.
Impairment reviews for exploration costs are
carried out on a project by project basis, with each project
representing a potential single cash generating unit. An impairment
review is undertaken when indicators of impairment arise such
as:
(i)
unexpected geological occurrences that render the resource
uneconomic;
(ii) title to
the asset is compromised;
(iii)
variations in mineral prices that render the project
uneconomic;
(iv)
substantive expenditure on further exploration and evaluation of
mineral resources is neither budgeted nor planned; and
(v)
the period for which the Group has the right to explore has expired
and is not expected to be renewed.
Property,
plant and equipment
Items of property, plant and equipment are
stated at historical cost less accumulated depreciation.
Depreciation is provided at the following
annual rates in order to write off each asset over its estimated
useful life.
|
|
Office equipment
|
-
|
25 per cent on reducing balance
|
|
|
Computer equipment
|
-
|
25 per cent on reducing balance
|
|
|
Motor vehicles
|
-
|
20 per cent on reducing balance
|
|
|
Machinery and
equipment
|
-
|
20 to 25 per cent on reducing
balance
|
The assets' residual values and useful lives
are reviewed, and adjusted if appropriate, at each balance sheet
date.
Leased
assets
When entering into a contract the Group
assesses whether or not a lease exists. A lease exists if a
contract conveys a right to control the use of an identified asset
under a period of time in exchange for consideration. Leases of low
value items and short-term leases (leases of less than 12 months at
the commencement date) are charged to the profit or loss on a
straight-line basis over the lease term in administrative
expenses.
The Group recognises right-of-use assets at
cost and lease liabilities at the lease commencement date based on
the present value of future lease payments. The right-of-use assets
are amortised on a straight-line basis over the length of the lease
term. The lease liabilities are recognised at amortised cost using
the effective interest rate method. Discount rates used reflect the
incremental borrowing rate specific to the lease.
Investments in
subsidiaries
Investments in subsidiary undertakings are
stated at cost less provision for any impairment in
value.
Cash and cash
equivalents
Cash and cash equivalents include cash in hand,
deposits held at call with banks, and other short term highly
liquid investments with original maturities of three months or
less.
Financial
assets
The Group classifies its financial assets at
amortised cost and at fair value through profit or loss.
Management determines the classification of its financial assets at
initial recognition.
Amortised
cost
The Group's financial assets held at amortised
cost comprise trade and other receivables, cash and cash
equivalents and loans and other financial assets in the
consolidated statement of financial position.
These assets are non-derivative financial
assets with fixed or determinable payments that are not quoted in
an active market. They arise principally through financial
assets where the objective is to hold their assets in order to
collect contractual cash flows and the contractual cash flows are
solely payments of the principal and interest. They are initially
recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment.
Impairment provisions for trade receivables are
recognised based on the simplified approach within IFRS 9 using the
lifetime ECLs. During this process the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime ECL for the trade receivables.
For trade receivables, which are reported net; such provisions are
recorded in a separate provision account with the loss being
recognised within administrative expenses in the consolidated
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Expected credit loss provisions for other
receivables are recognised based on a forward-looking expected
credit loss model. The methodology used to determine the amount of
the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial
asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest
income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with
the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are
recognised.
Fair value
through profit or loss
The Group's financial assets held at fair value
through profit or loss comprise equity investments held. These are
carried in the statement of financial position at fair value (refer
to fair value hierarchy below). Subsequent to initial recognition,
changes in fair value are recognised in the statement of
comprehensive income.
Financial
liabilities
The Group's financial liabilities include trade
and other payables and borrowings. All financial liabilities are
recognised initially at fair value, net of transaction costs
incurred, and are subsequently stated at amortised cost, using the
effective interest method.
Borrowings include convertible debt with
settlement terms that fail the fixed for fixed criterion and are
treated as containing an embedded derivative liability, where this
is recognised the loan value is allocated between the derivative
value and the loan residual which is carried at amortised cost.
Borrowings are derecognised when the obligation is
extinguished.
Unless otherwise indicated, the carrying values
of the Group's financial liabilities measured at amortised cost
represents a reasonable approximation of their fair
values.
Share
capital
Financial instruments issued by the Group are
classified as equity only to the extent that they do not meet the
definition of a financial liability or financial asset.
Equity instruments issued by the Company are
recorded at the proceeds received, net of direct issue costs.
Where equity instruments are issued as part of an acquisition they
are recorded at their fair value on the date of
acquisition.
The Group's ordinary shares are classified as
equity instruments.
Taxation
Current tax, including UK corporation tax and
foreign tax, is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised, using the liability
method, in respect of temporary differences between the carrying
amount of the Group's assets and liabilities and their tax
base.
Deferred tax assets and deferred tax
liabilities are offset, if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the
deferred taxes relate to the same taxable entity and the same
taxation authority. Any remaining deferred tax asset is recognised
only when, on the basis of all available evidence, it can be
regarded as probable that there will be suitable taxable profits,
within the same jurisdiction, in the foreseeable future against
which the deductible temporary difference can be
utilised.
Deferred tax is determined using tax rates that
are expected to apply in the periods in which the asset is realised
or liability settled, based on tax rates and laws that have been
enacted or substantively enacted by the balance sheet
date.
Current and deferred tax is recognised in the
profit or loss, except when the tax relates to items charged or
credited directly in equity, in which case the tax is also
recognised directly in equity.
Foreign
currencies
The individual financial statements of each
Group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
For the purpose of the consolidated financial statements, the
results and financial position of each entity are expressed in GB
Pounds Sterling which is the presentation currency for the Group
and Company financial statements. The functional currency of
the Company is the GB Pounds Sterling.
In preparing the financial statements of the
individual entities, transactions in currencies other than the
entity's functional currency (foreign currencies) are recorded at
the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date.
Exchange differences arising on the settlement
of monetary items and on the retranslation of monetary items are
included in the statement of comprehensive income for the
period.
For the purpose of presenting consolidated
financial statements, the assets and liabilities of the Group's
foreign operations are expressed in GB Pounds Sterling using
exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for the
period. Exchange differences arising, if any, are classified
as other comprehensive income and are transferred to the Group's
translation reserve.
Foreign currency movements arising from the
Group's net investment, which comprises equity and long-term debt,
in subsidiary companies whose functional currency is not the GB
Pounds Sterling are recognised in the translation reserve, included
within equity until such time as the relevant subsidiary company is
sold, whereupon the net cumulative foreign exchange difference
relating to the disposal is transferred to profit and
loss.
Share-based
payment transactions
Where equity settled share options are awarded
to employees, the fair value of the options at the date of grant is
charged to the income statement over the vesting period.
Non-market vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at each balance
sheet date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into
the fair value of all options granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether
market vesting conditions are satisfied. The cumulative expense is
not adjusted for failure to achieve a market vesting
condition.
Where terms and conditions of options are
modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is
also charged to the income statement over the remaining vesting
period.
Where equity instruments are granted to persons
other than employees, the income statement or share premium
account, if appropriate, are charged with the fair value of goods
and services received.
Government
grants
Government grants received on capital
expenditure are generally deducted in arriving at the carrying
amount of the asset purchased. Grants for revenue expenditure are
recorded gross in the Group income statement.
2. Employees
and directors
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries
|
1,156,604
|
|
794,969
|
|
637,755
|
|
308,543
|
|
Social security costs
|
182,611
|
|
138,192
|
|
56,454
|
|
45,632
|
|
Other benefits
|
20,832
|
|
10,691
|
|
15,401
|
|
6,554
|
|
|
1,360,047
|
|
943,852
|
|
709,610
|
|
360,729
|
Directors' remuneration is as
follows:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Directors' emoluments, including
salary and fees
|
443,157
|
|
315,097
|
|
Payments for loss of
office
|
210,000
|
|
-
|
|
Shared-based payments
|
321,534
|
|
173,345
|
|
|
974,691
|
|
488,442
|
Further details pertaining to Directors'
remuneration can be found in the Directors' remuneration report on
page 33.
The remuneration of the highest paid Director
who served during the year was Kurt Budge which consisted of base
salary of £210,000 (2022: £210,000).
The average monthly number of employees and
Directors during the year was as follows:
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Number
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
Directors
|
3
|
|
3
|
|
3
|
|
3
|
|
Employees
|
12
|
|
10
|
|
-
|
|
-
|
3. Finance
income and costs
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Finance income:
|
|
|
|
|
|
|
|
|
Deposit account interest
|
7,923
|
|
176
|
|
7,655
|
|
170
|
|
|
7,923
|
|
176
|
|
7,655
|
|
170
|
|
|
|
|
|
|
|
|
|
|
Finance costs:
|
|
|
|
|
|
|
|
|
Interest on lease
liabilities
|
2,420
|
|
267
|
|
-
|
|
-
|
|
Interest on loans and
borrowings
|
195,304
|
|
304,529
|
|
195,304
|
|
304,529
|
|
Other interest paid
|
-
|
|
10
|
|
-
|
|
-
|
|
|
197,724
|
|
304,806
|
|
195,304
|
|
304,529
|
4. Loss before
tax and auditor's remuneration
a. The loss before tax is stated
after charging:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Depreciation of property, plant and
equipment (note 9)
|
43,276
|
|
45,133
|
|
Amortisation of right-of-use asset
(note 12)
|
29,478
|
|
6,353
|
|
Share-based payment
expense
|
387,668
|
|
240,537
|
|
Foreign exchange
differences
|
58,035
|
|
68,302
|
|
Loss on disposal of property, plant
and equipment (note 9)
|
643
|
|
-
|
|
Gain on disposal of right of use
assets (note 12)
|
(58)
|
|
-
|
|
Gain on disposal of
investment1
|
-
|
|
21,951
|
|
Recovery of impairment on listed
investments2
|
6,653
|
|
-
|
|
Impairment of exploration costs (note
8)
|
350,158
|
|
36,988
|
1Gain on disposal of investment relates to shares held in
Sunvest Corporation Limited, which were previously impaired in
full.
2Recovery of impairment on listed investments related to shares
held in Marula Mining Plc, which were previously impaired in
full.
b. Auditor's
remuneration
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
Fees payable to the Group's auditor
for the audit of the consolidated financial statements
|
103,290
|
|
57,005
|
|
Fees payable to the Group auditor for
other services:
|
|
|
|
|
- audit of subsidiaries pursuant to
legislation
|
-
|
|
6,000
|
|
- review of quarterly financial
statements
|
3,240
|
|
3,208
|
|
- tax compliance services
|
-
|
|
11,826
|
|
|
106,530
|
|
78,039
|
5. Income
tax
Analysis of
tax expense
No liability to UK corporation tax arose on
ordinary activities for the year ended 31 December 2023
or for the year ended 31 December 2022.
Factors
affecting the tax expense
The tax assessed for the year is lower than the
standard rate of corporation tax in the UK. The difference is
explained below:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Loss on ordinary activities before
income tax
|
(2,937,909)
|
|
(2,041,452)
|
|
|
|
|
|
|
Tax thereon at a UK corporation tax
rate of 23.5% (2022: 19%)
|
(690,409)
|
|
(387,876)
|
|
Effects of:
|
|
|
|
|
Non-deductible expenditure
|
75,615
|
|
32,936
|
|
Tax losses not
recognised
|
390,715
|
|
241,390
|
|
Losses of overseas subsidiaries to be
carried forward
|
224,079
|
|
113,550
|
|
|
-
|
|
-
|
The main rate of UK corporation tax for the
year ended 31 December 2023 and up to 1 April 2023 was 19 per cent.
From 1 April 2023, the main rate of UK corporation tax increased to
25 per cent, resulting in an effective tax rate of 23.5% for the
year ended 31 December 2023. The Group has estimated UK losses of
£16,656,271 (2022: £14,993,653) and foreign losses of £5,780,656
(2022: £4,659,376) available to carry forward against future
trading profits. The value of unrecognised deferred tax assets in
respect of the UK losses amounts to £4,164,068 (2022: £3,748,413)
and foreign losses of £1,041,936 (2022: £804,730). The Directors
believe that due to the uncertainty over when the tax losses will
be utilised it is appropriate not to recognise a deferred tax asset
at this time.
6. Grant
income
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Business Finland
|
96,750
|
|
84,797
|
|
|
96,750
|
|
84,797
|
Grafintec is participating in project titled
"BATCircle - the development of a Finland-based Circular Ecosystem
of Battery Metals". BATCircle is part of the European Union
("EU") Strategic Energy Technology Programme. The project is being
administered by Business Finland and a 50 per cent contribution to
a budget of €791,000 (approximately £700,000) for Phase 2 and
€224,900 (approximately £200,000) Phase 1. The funds will be used
for graphite purification and spheroidization test work, and the
further assessment of Grafintec's graphite for battery
applications. The funding is released by the administrator as
incurred with Phase 1 running from 1 January 2019 to 31 January
2020 and Phase 2 running from 1 January 2021 to 31 December 2023.
In the year to 31 December 2023, £96,750 has been recognised as
grant income (2022: £84,797).
7. Basic and
diluted loss per share
The calculation of basic and diluted loss per
share at 31 December 2023 was based on the loss attributable to
ordinary shareholders of £2,863,959 (2022:
£1,948,459) and a weighted average number
of Ordinary Shares outstanding during the year ended 31 December
2023 of 1,084,958,359 (2022: 831,710,636)
calculated as follows:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Loss attributable to ordinary
shareholders
|
(2,863,959)
|
|
(1,948,459)
|
Weighted
average number of ordinary shares
|
|
2023
|
|
2022
|
|
|
Number
|
|
Number
|
|
|
|
|
|
|
Number of shares in issue at the
beginning of the year
|
831,710,636
|
|
831,710,636
|
|
Effect of shares issued during
year
|
253,247,723
|
|
-
|
|
Weighted average number of ordinary
shares in issue for the year
|
1,084,958,359
|
|
831,710,636
|
The diluted earnings per share is identical to
the basic loss per share as the exercise of warrants and options
would be anti-dilutive.
Following the year end, the Company issued
52,326,758 new Ordinary shares as consideration for the
consolidation of ownership of Vardar Minerals Limited. The
calculation of loss per share has not been adjusted as the issue of
shares does not affect the amount of capital used to produce profit
or loss for the year.
8. Intangible
assets - Group
|
|
Exploration costs
|
|
Other
intangible assets
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
COST
|
|
|
|
|
|
|
At
1 January 2022
|
11,235,656
|
|
-
|
|
11,235,656
|
|
Additions for the year -
cash
|
1,536,674
|
|
-
|
|
1,536,674
|
|
Additions for the year -
non-cash
|
314,272
|
|
-
|
|
314,272
|
|
Foreign exchange movements
|
(47,149)
|
|
-
|
|
(47,149)
|
|
Impairment
|
(36,988)
|
|
-
|
|
(36,988)
|
|
At
31 December 2022
|
13,002,465
|
|
-
|
|
13,002,465
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
13,002,465
|
|
-
|
|
13,002,465
|
|
Additions for the year -
cash
|
2,232,694
|
|
75,779
|
|
2,308,473
|
|
Additions for the year -
non-cash
|
98,208
|
|
-
|
|
98,208
|
|
Foreign exchange movements
|
(185,376)
|
|
(286)
|
|
(185,662)
|
|
Impairment
|
(350,158)
|
|
-
|
|
(350,158)
|
|
At
31 December 2023
|
14,797,833
|
|
75,493
|
|
14,873,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
BOOK VALUE
|
|
|
|
|
|
|
At
31 December 2023
|
14,797,833
|
|
75,493
|
|
14,873,326
|
|
At
31 December 2022
|
13,002,465
|
|
-
|
|
13,002,465
|
The net book value of exploration costs is
comprised of expenditure on the following projects:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Kallak
|
9,481,130
|
|
7,666,563
|
|
Åtvidaberg
|
-
|
|
358,694
|
|
Ågåsjiegge
|
-
|
|
7,718
|
|
Pitkäjärvi
|
1,667,854
|
|
1,641,836
|
|
Karhunmaki
|
55,935
|
|
56,089
|
|
Rääpysjärvi
|
174,060
|
|
148,430
|
|
Mitrovica
|
2,527,239
|
|
2,430,150
|
|
Viti
|
680,331
|
|
687,065
|
|
Emas
|
41,693
|
|
1,663
|
|
Luopioinen
|
4,812
|
|
4,257
|
|
Shala
|
164,779
|
|
-
|
|
|
14,797,833
|
|
13,002,465
|
Total Group exploration costs of £14,797,833
are currently carried at cost in the financial statements. The
Group will need to raise funds and/or bring in joint venture
partners to further advance exploration and development work. An
amount of £183,034 was recorded against the projects for services
provided by the Directors during the year (2022:
£262,684).
In Sweden, on 24 January 2023, the Company
announced the positive economic results of the Kallak North Scoping
Study. Management have considered that there is no current risk
associated with Kallak and thus have not impaired the
project.
In Finland, the development of downstream
capabilities is a key part of Grafintec's strategy. During the
year, the Company announced the results of a PFS, envisaging
importing Spherical Purified Graphite ("SPG") and producing an
initial 20,000 tonne per annum of Coated Spherical Graphite
("CSPG"), for sale to anode manufacturers. The economics of the
study were extremely positive with an after-tax NPV8 of US$242
million, an Internal Rate of Return of 39 per cent, and a Payback
Period of 2.4 years.
To support a sustainable graphite anode value
chain in Finland, Grafintec is focused on expanding its resource
footprint and increasing its raw materials' inventory, primary and
recycled, feeding downstream processing, leveraging renewable
power, targeting net zero CO2 emissions across the supply
chain.
The Company's most advanced natural flake
graphite project, Aitolampi, has an Indicated and Inferred Mineral
Resource of 26.7 Mt at 4.8 per cent TGC for 1,275,000 tonnes of
contained graphite. In addition to Aitolampi, the Company has other
graphite exploration prospects, including Rääpysjärvi for which
positive exploration results were announced during the prior
year.
In Kosovo, Vardar has three exploration licence
areas, Mitrovica, Viti and Shala. Significant progress
continues to be made in Kosovo. The Company has also made further
investments to fund drilling and taking the Company's ownership of
Vardar to approximately 61.1 per cent.
The focus of activity in 2023 was on low-cost
exploration including mapping, sampling and drone magnetic surveys
to identify and refine exploration targets.
In the year, an impairment provision of
£350,158 was recognised for project costs capitalised for projects
at Ågåsjiegge and Åtvidaberg (2022: £36,988 in project Merivaara)
on the basis that licence at Ågåsjiegge was relinquished early and
the licence at Åtvidaberg will not be renewed. In respect of the
other licence areas, no impairment indicators have been identified.
The impairment is charged as an expense and included within the
consolidated income statement.
Other intangible assets capitalised are
development costs incurred following the feasibility of GAMP
project. This development has attained a stage that it satisfies
the requirements of IAS 38 to be recognised as intangible asset in
that it has the potential to completed and used, provide future
economic benefits, its costs can be measured reliably and there is
the intention and ability to complete. The development costs will
be held at cost less impairment until the completion of the GAMP
project at which stage they will be transferred to the value of the
Plant.
9. Property,
plant and equipment
Group
|
|
Office
equipment
|
|
Motor
vehicles
|
|
Machinery
& equipment
|
|
Computer
equipment
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
At
1 January 2022
|
2,975
|
|
146,545
|
|
98,830
|
|
1,499
|
|
249,849
|
|
Additions
|
-
|
|
2,730
|
|
31,667
|
|
-
|
|
34,397
|
|
Foreign exchange movements
|
(21)
|
|
(579)
|
|
3,349
|
|
-
|
|
2,749
|
|
At
31 December 2022
|
2,954
|
|
148,696
|
|
133,846
|
|
1,499
|
|
286,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
1,787
|
|
65,811
|
|
48,436
|
|
387
|
|
116,421
|
|
Charge for year
|
1,006
|
|
19,796
|
|
24,053
|
|
278
|
|
45,133
|
|
Foreign exchange movements
|
36
|
|
(6,018)
|
|
1,708
|
|
-
|
|
(4,274)
|
|
At 31 December 2022
|
2,829
|
|
79,589
|
|
74,197
|
|
665
|
|
157,280
|
Group
|
|
Office
equipment
|
|
Motor
vehicles
|
|
Machinery
& equipment
|
|
Computer
equipment
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
2,953
|
|
148,696
|
|
133,846
|
|
1,499
|
|
286,994
|
|
Additions
|
-
|
|
-
|
|
6,046
|
|
1,006
|
|
7,052
|
|
Disposals
|
-
|
|
-
|
|
-
|
|
(1,499)
|
|
(1,499)
|
|
Reclassification
|
1,806
|
|
(7,330)
|
|
5,524
|
|
-
|
|
-
|
|
Foreign exchange movements
|
(126)
|
|
(6,151)
|
|
(5,255)
|
|
-
|
|
(11,532)
|
|
At
31 December 2023
|
4,633
|
|
135,215
|
|
140,161
|
|
1,006
|
|
281,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
2,829
|
|
79,589
|
|
74,197
|
|
665
|
|
157,280
|
|
Charge for year
|
741
|
|
19,416
|
|
22,886
|
|
233
|
|
43,276
|
|
Disposals
|
-
|
|
-
|
|
-
|
|
(856)
|
|
(856)
|
|
Foreign exchange movements
|
(102)
|
|
(3,586)
|
|
(2,752)
|
|
-
|
|
(6,440)
|
|
At 31 December 2023
|
3,468
|
|
95,419
|
|
94,331
|
|
42
|
|
193,260
|
|
Net
book value
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
1,165
|
|
39,796
|
|
45,830
|
|
964
|
|
87,755
|
|
At 31 December 2022
|
125
|
|
69,107
|
|
59,649
|
|
834
|
|
129,715
|
9.
Property, plant and equipment (continued)
Company
|
|
|
Computer
equipment
|
|
Total
|
|
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
At
1 January 2022
|
|
1,499
|
|
1,499
|
|
At
31 December 2022
|
|
1,499
|
|
1,499
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
At 1 January 2022
|
|
387
|
|
387
|
|
Charge for year
|
|
278
|
|
278
|
|
At 31 December 2022
|
|
665
|
|
665
|
Company
|
|
|
Computer
equipment
|
|
Total
|
|
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
|
At
1 January 2023
|
|
1,499
|
|
1,499
|
|
Additions
|
|
1,006
|
|
1,006
|
|
Disposals
|
|
(1,499)
|
|
(1,499)
|
|
At
31 December 2023
|
|
1,006
|
|
1,006
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
At 1 January 2023
|
|
665
|
|
665
|
|
Charge for year
|
|
233
|
|
233
|
|
Disposals
|
|
(856)
|
|
(856)
|
|
At 31 December 2023
|
|
42
|
|
42
|
|
Net
book value
|
|
|
|
|
|
At 31 December 2023
|
|
964
|
|
964
|
|
At 31 December 2022
|
|
834
|
|
834
|
10.
Investments
|
|
Group and
Company
|
|
Company
|
|
|
listed
|
|
Shares
in
|
|
|
investments
|
|
subsidiaries
|
|
|
£
|
|
£
|
|
Cost
|
|
|
|
|
At 1 January 2022
|
-
|
|
2,377,988
|
|
Acquisitions
|
-
|
|
1,267,193
|
|
At 31 December 2022
|
-
|
|
3,645,181
|
|
|
|
|
|
|
At 1 January 2023
|
-
|
|
3,645,181
|
|
Acquisitions
|
-
|
|
322,697
|
|
Recovery of impairment
|
6,563
|
|
-
|
|
At 31 December 2023
|
6,563
|
|
3,967,878
|
Listed
investments
The listed investment includes equity
investment in Marula Mining Plc which is recognised at fair
value.
Shares in
subsidiaries
Further investments in the share capital of
subsidiaries of Vardar constitute additions during the year of
£250,000 (2022: £1,200,000) to increase the Company's shareholding
in Vardar from 59.5% to 61.1%. The share capital of Vardar was
reclassified to share capital of subsidiaries following control
being obtained on 1 April 2019. The basis for control was assessed
on the on the Group's ability to exercise power over Vardar through
combination of the increased investment in Vardar and the
appointment of the CEO as Investor Director, which conveyed
substantive rights to direct the actions of Vardar that would
ultimately affect the returns of the investee.
The additional investment during the year
includes a share-based payment expense of £66,134 in relation to
share options granted to employees of the Company's subsidiaries
Grafintec and JIMAB.
Included within the brought forward investment
is 100 per cent of the share capital of Grafintec, that was
acquired during the year ended 31 December 2016 and holds a
portfolio of four early-stage graphite exploration projects. At the
time of acquisition, Beowulf paid for 100 per cent of the share
capital of Grafintec by issuing 2.55 million ordinary shares in the
Company, with two further tranches of 2.1 million ordinary shares
to be issued on achievement of certain performance
milestones.
The first tranche of 2.1 million ordinary
shares was issued on the anniversary of 24 months from the date of
the acquisition, in accordance and Mr Blomqvist having worked for
the Company as a full-time employee during that period. The second
tranche of shares will be issued on completion of a bankable
feasibility study on one of the graphite projects in the
portfolio.
The total number of ordinary shares that may be
issued, if all performance milestones are achieved, is 6.75 million
ordinary shares. Beowulf will issue up to a further 2.1 million
additional consideration shares in the form of a share-based
payment transaction to the former owner, Rasmus Blomqvist. The
share-based payments fall within the scope of IFRS 2 and are fair
valued at the grant date based on the estimated number of shares
that will vest. The fair value has been prepared using a
Black-Scholes pricing model including a share price of 6.4 pence,
option life of two years, volatility of 49.79 per cent and a
risk-free rate of 0.698 per cent.
There was nil consideration recognised in the
financial statements for the year ended 31 December 2023, (2022:
£Nil). No further share-based payment expense for the consideration
shares was capitalised to intangibles in the year ended 31 December
2023 (2022: £Nil).
The remaining investment in subsidiaries
includes the share capital of the Company's directly owned
subsidiaries, listed below.
Step up
interest in Vardar Minerals
The investment in Vardar gives the Company
exposure to a portfolio of exploration licences situated in the
European Tertiary calc-alkaline Tethys Arc most notable for its
lead-zinc-silver mining districts, as well as recent porphyry
related copper and gold discoveries. On 12 March 2023, a further
investment of £250,000 was made to increase the Company's
shareholding in Vardar from 59.5% to 61.1%.
Further investment in Vardar was recognised as
an increase to accumulated losses of £48,141 (2022:
£297,201).
The Group consists of the following subsidiary
undertakings:
|
|
|
|
2023
|
2022
|
|
Name
|
Incorporated
|
Activity
|
%
holding
|
%
holding
|
|
Grafintec Oy
|
Finland
|
Mineral exploration
|
100%
|
100%
|
|
Jokkmokk Iron Mines AB
|
Sweden
|
Mineral exploration
|
100%
|
100%
|
|
Beowulf Mining Sweden AB
|
Sweden
|
Mineral exploration
|
100%
|
100%
|
|
Wayland Copper Limited
|
UK
|
Holding company
|
65.25%
|
65.25%
|
|
Wayland Sweden AB
|
Sweden
|
Mineral exploration
|
(1)(2)65.25%
|
(1)(2)65.25%
|
|
Vardar Minerals Ltd
|
UK
|
Mineral exploration
|
61.1%
|
59.5%
|
|
UAV Geophysics (UK) Ltd
|
UK
|
Dormant
|
(1)(2) 61.1%
|
(1)(2)59.5%
|
|
Vardar Geoscience BVI Ltd
|
British Virgin Islands
|
Holding company
|
(1)(2) 61.1%
|
(1)(2)59.5%
|
|
Vardar Geoscience Kosovo
L.L.C
|
Kosovo
|
Mineral exploration
|
(1)(2) 61.1%
|
(1)(2)59.5%
|
|
Vardar Exploration Kosovo
L.L.C
|
Kosovo
|
Mineral exploration
|
(1)(2) 61.1%
|
(1)(2)59.5%
|
(1) Indirectly held
(2) Effective interest
The registered offices of the subsidiary
undertakings as are follows:
|
Name
|
Registered office
|
|
Grafintec Oy
|
Plåtslagarevägen 35 A 1, 20320
Turku, Finland
|
|
Jokkmokk Iron Mines AB
|
Storgatan 36, 921 31, Lycksele, Sweden
|
|
Beowulf Mining Sweden AB
|
Storgatan 36, 921 31, Lycksele, Sweden
|
|
Wayland Copper Limited
|
201 Temple Chambers, 3-7 Temple
Avenue, London
|
|
Wayland Sweden AB
|
Storgatan 36, 921 31, Lycksele,
Sweden
|
|
Vardar Minerals Limited
|
35-39 Maddox Street, London,
England
|
|
UAV Geophysics (UK) Ltd
|
Stapeley House, London Road,
Nantwich, United Kingdom
|
|
Vardar Geoscience BVI Ltd
|
Trident Chambers, P.O. Box 146,
Wickhams Cay 1 Road Town, British Virgin Islands
|
|
Vardar Geoscience Kosovo
L.L.C
|
Rifat Berisha 23/10, Pristina,
Republic of Kosovo
|
|
Vardar Exploration Kosovo
L.L.C
|
Rifat Berisha 23/10, Pristina,
Republic of Kosovo
|
Details on the non-controlling interest in
subsidiaries is given in note 15.
11. Loans and
other financial assets
Group
|
|
Financial
fixed
assets
|
|
|
£
|
|
|
|
|
At
1 January 2022
|
5,247
|
|
Foreign exchange movements
|
(66)
|
|
At
31 December 2022
|
5,181
|
|
|
|
|
At
1 January 2023
|
5,181
|
|
Foreign exchange movements
|
28
|
|
At
31 December 2023
|
5,209
|
Company
|
|
Loans to
group undertakings
|
|
Financial
assets
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
At
1 January 2022
|
10,176,866
|
|
2,784
|
|
10,179,650
|
|
Advances made in the year
|
909,975
|
|
-
|
|
909,975
|
|
ECLs in year
|
(5,336)
|
|
-
|
|
(5,336)
|
|
At
31 December 2022
|
11,081,505
|
|
2,784
|
|
11,084,289
|
|
|
|
|
|
|
|
|
At
1 January 2023
|
11,081,505
|
|
2,784
|
|
11,084,289
|
|
Advances made in the year
|
2,757,113
|
|
-
|
|
2,757,113
|
|
ECLs in year
|
(1,001,537)
|
|
-
|
|
(1,001,537)
|
|
At
31 December 2023
|
12,837,081
|
|
2,784
|
|
12,839,865
|
Reconciliation of provisions against
receivables arising from lifetime ECLs
|
|
31
December
2022
|
|
Current
year movement
|
|
31
December 2023
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
ECLs
|
2,106,249
|
|
1,001,537
|
|
3,107,786
|
|
Total provision arising from
ECLs
|
2,106,249
|
|
1,001,537
|
|
3,107,786
|
The Directors have also assessed the cash flow
scenarios of the above considerations. Estimations were made
regarding the credit risk of the counterparty and the underlying
probability of default in each of the credit loss scenarios. The
scenarios identified by management included Production, Divestment,
Fire-sale and Failure. These scenarios considered technical data,
necessary licences to be awarded, the Company's ability to raise
finance, and ability to sell the project. The expected credit loss
is calculated based on the Fire-Sale and Failure outcomes, being
the outcomes with an expected value of less than the carrying value
of loans. The expected credit loss increased due to the impairment
of Ågåsjiegge and Åtvidaberg in the year and a reassessment of
expected recoverability of the loans to the subsidiaries. A
reasonable change in the probability weightings of 3% to failure
and fire-sale would result in further impairment of £789,297 (2022:
£626,927)
Further details of the transactions in the year
are shown within related parties disclosure note 25.
12. Right of
use assets
|
Group
|
Buildings
|
|
Buildings
|
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Cost
|
|
|
|
|
At 1 January
|
29,774
|
|
11,100
|
|
Additions
|
77,924
|
|
17,506
|
|
Disposals
|
(11,493)
|
|
-
|
|
Foreign exchange movements
|
(2,305)
|
|
1,169
|
|
At 31 December
|
93,900
|
|
29,775
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
At 1 January
|
10,496
|
|
3,701
|
|
Charge
|
29,478
|
|
6,353
|
|
Disposals
|
(9,577)
|
|
-
|
|
Foreign exchange movements
|
345
|
|
442
|
|
At 31 December
|
30,742
|
|
10,496
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
At
31 December
|
63,158
|
|
19,279
|
|
|
|
|
|
13. Trade and
other receivables
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
88,180
|
|
78,148
|
|
-
|
|
-
|
|
VAT
|
51,315
|
|
121,284
|
|
37,515
|
|
32,289
|
|
Prepayments and accrued
income
|
12,509
|
|
20,995
|
|
11,640
|
|
20,995
|
|
|
152,004
|
|
220,427
|
|
49,155
|
|
53,284
|
Included in other receivables is a deposit of
£17,724 held by Finnish regulatory authorities (2022:
£17,724).
14. Cash and
cash equivalents
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Bank accounts
|
905,555
|
|
1,776,556
|
|
794,909
|
|
1,667,840
|
|
|
905,555
|
|
1,776,556
|
|
794,909
|
|
1,667,840
|
15.
Non-controlling interests
The Group has material non-controlling
interests arising from its subsidiaries Wayland Copper Limited and
Vardar Minerals Limited. These non-controlling interests can be
summarised as follows;
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Balance at 1 January
|
568,732
|
|
325,039
|
|
Total comprehensive loss allocated to
NCI
|
(102,443)
|
|
(53,508)
|
|
Effect of step
acquisitions
|
48,141
|
|
297,201
|
|
Total
|
514,430
|
|
568,732
|
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Wayland Copper Limited
|
(164,573)
|
|
(163,666)
|
|
Vardar Minerals Limited
|
679,003
|
|
732,398
|
|
Total
|
514,430
|
|
568,732
|
Wayland Copper Limited is a 65.25% per cent
owned subsidiary of the Company that has material non-controlling
interests ("NCI").
Summarised financial information reflecting 100
per cent of the Wayland's relevant figures is set out
below:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Administrative expenses
|
(2,315)
|
|
(2,931)
|
|
Loss after tax
|
(2,315)
|
|
(2,931)
|
|
|
|
|
|
|
Loss allocated to NCI
|
(805)
|
|
(1,019)
|
|
Other comprehensive loss allocated to
NCI
|
(102)
|
|
(155)
|
|
Total comprehensive loss allocated to
NCI
|
(907)
|
|
(1,174)
|
|
|
|
|
|
|
Current assets
|
12,973
|
|
15,298
|
|
Current liabilities
|
(486,563)
|
|
(486,280)
|
|
Net liabilities
|
(473,590)
|
|
(470,982)
|
|
|
|
|
|
|
Net cash outflow
|
-
|
|
(725)
|
|
|
|
|
|
|
Non-controlling interest
|
(164,573)
|
|
(163,666)
|
Vardar Minerals Limited, a 61.1% per cent owned
subsidiary of the Company that has material non-controlling
interests ("NCI").
Summarised financial information reflecting 100
per cent of the Vardar Minerals relevant figures is set out
below:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Administrative expenses
|
(112,400)
|
|
(199,197)
|
|
Loss after tax
|
(112,400)
|
|
(199,197)
|
|
|
|
|
|
|
Loss allocated to NCI
|
(73,145)
|
|
(91,974)
|
|
Other comprehensive income allocated
to NCI
|
(28,391)
|
|
39,640
|
|
Total comprehensive loss allocated to
NCI
|
(101,536)
|
|
(52,334)
|
|
|
|
|
|
|
Current assets
|
20,195
|
|
109,099
|
|
Non-current assets
|
2,388,133
|
|
2,186,253
|
|
Current liabilities
|
(142,686)
|
|
(214,294)
|
|
Net assets
|
2,265,642
|
|
2,081,058
|
|
|
|
|
|
|
Net cash (outflow)/inflow
|
(51,783)
|
|
34,043
|
|
|
|
|
|
|
Non-controlling interest
|
679,003
|
|
732,398
|
16. Share
capital
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Share
premium
|
|
Total
|
|
|
Number
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
831,710,636
|
|
8,317,106
|
|
24,689,311
|
|
33,006,417
|
|
Issue of new shares
|
325,476,827
|
|
3,254,769
|
|
2,452,1331
|
|
5,706,902
|
|
At 31 December 2023
|
1,157,187,463
|
|
11,571,875
|
|
27,141,444
|
|
38,713,319
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Share
premium
|
|
Total
|
|
|
Number
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
831,710,636
|
|
8,317,
106
|
|
24,689,311
|
|
33,006,417
|
|
At 31 December 2022
|
831,710,636
|
|
8,317,
106
|
|
24,689,311
|
|
33,006,417
|
All issues are for cash unless otherwise
stated.
1Includes issue costs
of £1,202,696 of which £704,587 was paid in cash and £498,109 in
ordinary shares of the company.
The par value of all Ordinary Shares in issue
is £0.01.
The Company has removed the limit on the number
of shares that it is authorised to issue in accordance with the
Companies Act 2006.
There were 325,476,827 shares issued in 2023.
There were no shares issued in 2022.
17.
Share-based payments
During the year ended 31 December 2023,
12,250,000 options were granted (2022: 23,250,000). The options
outstanding as at 31 December 2023 have an exercise price in the
range of 1.00 pence to 7.35 pence (2022: 1.00 pence to 7.35 pence)
and a weighted average remaining contractual life of 5 years, 294
days (2022: 7 years, 98 days).
The share-based payments expense for the
options for the year ended 31 December 2023 was £387,668 (2022:
£240,537).
The fair value of share options granted and
outstanding were measured using the Black-Scholes model, with the
following inputs:
|
|
2023
|
2022
|
2022
|
2019
|
|
Fair value at grant date
|
0.52p
|
3.59p
|
3.59p
|
1.15p
|
|
Share price
|
1.68p
|
4.00p
|
4.00p
|
5.65p
|
|
Exercise price
|
2.06p
|
1.00p
|
1.00p
|
7.35p
|
|
Expected volatility
|
55.2%
|
100.0%
|
100.0%
|
51.89%
|
|
Expected option life
|
2.5
years
|
6
years
|
6
years
|
2
years
|
|
Contractual option life
|
5
years
|
10
years
|
10
years
|
10
years
|
|
Risk free interest rate
|
4.800%
|
4.520%
|
4.520%
|
0.718%
|
The options issued will be settled in the
equity of the Company when exercised and have a vesting period of
one year from date of grant.
|
Reconciliation of options in issue
|
Number
|
|
Weighted
average exercise price(£'s)
|
|
Number
|
|
Weighted
average exercise price(£'s)
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Outstanding at 1 January
|
32,500,000
|
|
0.055
|
|
13,750,000
|
|
0.089
|
|
Granted during the year
|
12,250,000
|
|
0.021
|
|
23,250,000
|
|
0.048
|
|
Lapsed during the year
|
-
|
|
-
|
|
(4,500,000)
|
|
0.120
|
|
Outstanding at 31 December
|
44,750,000
|
|
0.046
|
|
32,500,000
|
|
0.055
|
|
Exercisable at 31 December
|
37,250,000
|
|
0.042
|
|
11,750,000
|
|
0.060
|
|
|
|
|
|
|
|
|
|
No warrants were granted during the year (2022:
Nil).
18.
Reserves
The following is a description of each of the
reserve accounts that comprise equity shareholders'
funds:
|
Share capital
|
The share capital comprises the
issued ordinary shares of the Company at par.
|
|
|
|
|
Share premium
|
The share premium comprises the
excess value recognised from the issue of ordinary shares above par
value.
|
|
|
|
|
Capital contribution
reserve
|
The capital contribution reserve
represents historic non-cash contributions to the Company from
equity holders.
|
|
|
|
|
Share-based payment
reserve
|
Cumulative fair value of options
charged to the consolidated income statement net of transfers to
the profit or loss reserve on exercised and cancelled/lapsed
options.
|
|
|
|
|
Translation reserve
|
Cumulative gains and losses on
translating the net assets of overseas operations to the
presentation currency.
|
|
|
|
|
Merger reserve
|
The balance on the merger reserve
represents the fair value of the consideration given in excess of
the nominal value of the ordinary shares issued in an acquisition
made by the issue of shares where the transaction qualifies for
merger relief under the Companies Act 2006.
|
|
|
|
|
Accumulated losses
|
Accumulated losses comprise the
Group's cumulative accounting profits and losses since
inception.
|
19. Trade and
other payables
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Current:
|
|
|
|
|
|
|
|
|
Trade payables
|
307,909
|
|
448,045
|
|
43,511
|
|
148,567
|
|
Social security and other
taxes
|
14,631
|
|
34,493
|
|
13,224
|
|
22,771
|
|
Other payables
|
29,900
|
|
24,834
|
|
851
|
|
2,142
|
|
Accruals
|
81,222
|
|
118,358
|
|
70,632
|
|
42,790
|
|
|
433,662
|
|
625,730
|
|
128,218
|
|
216,270
|
20. Lease
liability
Nature of
leasing activities
Vardar Geoscience leases buildings located in
Str. Highway Prishtina Mitrovice Village Shupkove No.2,
Kosovo.
Jokkmokk Mining leases office premises located
in 962 31 Jokkmokk, Sweden.
|
|
2023
|
|
2022
|
|
|
No.
|
|
No.
|
|
Number of active leases
|
2
|
|
1
|
Lease
liability at year end
|
Group
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
Current
|
|
|
|
|
Lease liability
|
22,575
|
|
10,840
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
Lease liability
|
15,053
|
|
8,537
|
|
|
|
|
|
|
Total lease liability
|
37,628
|
|
19,377
|
Analysis of
lease liability
|
Group
|
Buildings
|
|
|
£
|
|
|
|
|
At 1 January 2022
|
7,491
|
|
Additions
|
17,506
|
|
Interest expense
|
264
|
|
Lease payments
|
(6,611)
|
|
Foreign exchange movements
|
727
|
|
At 31 December 2022
|
19,377
|
|
|
|
|
Additions
|
43,126
|
|
Interest expense
|
2,420
|
|
Lease payments
|
(23,648)
|
|
Lease disposals
|
(1,974)
|
|
Foreign exchange movements
|
(1,673)
|
|
At 31 December 2023
|
37,628
|
Analysis of
gross value of lease liabilities
Maturity of the lease liabilities is analysed
as follows:
|
|
2023
|
|
|
£
|
|
|
|
|
Within 1 year
|
22,575
|
|
Later than 1 year and less than 5
years
|
15,053
|
|
After 5 years
|
-
|
|
At 31 December 2023
|
37,628
|
The total cash outflow for leases in 2023 was
£25,637 (2022: £6,611).
21.
Borrowings
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
1,845,947
|
|
-
|
|
1,845,947
|
|
-
|
|
Funds advanced, net of commission and
transaction costs
|
-
|
|
1,554,381
|
|
-
|
|
1,554,381
|
|
Finance costs
|
195,304
|
|
304,529
|
|
195,304
|
|
304,529
|
|
Effect of FX
|
(2,818)
|
|
(12,963)
|
|
(2,818)
|
|
(12,963)
|
|
Funds repaid
|
(2,038,433)
|
|
-
|
|
(2,038,433)
|
|
-
|
|
|
-
|
|
1,845,947
|
|
-
|
|
1,845,947
|
On 3 July 2022, the Company secured a bridging
loan from Nordic investors of SEK 22 million, gross of commission
and transaction costs (approximately: £1.76 million). The loan had
a fixed interest rate of 1.5 percent per stated 30-day period
during the duration. Accrued interest was compounding. The
loan had a commitment fee of 5 per cent and a maturity date of 28
February 2023.
The loan and accrued interest were repayable at
any time prior to the maturity date. If the loan and accrued
interest was not repaid by maturity date, at the latest, the
creditors had the right to offset a minimum of SEK 1 million at a
time of the loan and accrued interest into SDRs at a price per SDR
calculated with a 15 per cent discount on the volume weighted
average price of the SDR during the preceding 5 trading days to the
conversion decision.
The loan was accounted for using an amortised
cost using an effective rate of interest. The conversion feature
contained within the loan is considered an embedded derivative and
was not assessed to be significant given the available
inputs.
During the year, it became
apparent that due to the timing of the receipt of the funds from
the rights issue the Company would not be in a position to pay back
the bridging loan facility at its maturity. The outcome of this is
that the holder of the loan enforced the penalty interest for
entering another 30-day period, which was circa 1 million SEK. The
loan principal and interest totalling £2.04m was repaid via a
deduction to the gross proceeds from the Rights Issue.
22. Changes in
liabilities from financing activities
|
Group
|
Leases
|
|
Borrowings
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Opening balance 1 January
2023
|
19,377
|
|
1,845,947
|
|
1,865,324
|
|
|
|
|
|
|
|
|
Cash
movements
|
|
|
|
|
|
|
Lease payments
|
(23,648)
|
|
-
|
|
(23,648)
|
|
Total
|
(4,271)
|
|
1,845,947
|
|
1,841,676
|
|
|
|
|
|
|
|
|
Non-cash movements
|
|
|
|
|
|
|
Lease additions
|
43,126
|
|
-
|
|
43,126
|
|
Lease disposals
|
(1,974)
|
|
-
|
|
(1,974)
|
|
Finance cost
|
2,420
|
|
195,304
|
|
197,724
|
|
Funds repaid
|
-
|
|
(2,038,433)
|
|
(2,038,433)
|
|
Effect of FX
|
(1,673)
|
|
(2,818)
|
|
(4,491)
|
|
Closing balance 31 December
2023
|
37,628
|
|
-
|
|
37,628
|
|
Group
|
Leases
|
|
Borrowings
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Opening balance 1 January
2022
|
7,491
|
|
-
|
|
7,491
|
|
|
|
|
|
|
|
|
Cash
movements
|
|
|
|
|
|
|
Borrowings advances
|
-
|
|
1,554,381
|
|
1,554,381
|
|
Lease payments
|
(6,611)
|
|
-
|
|
(6,611)
|
|
Total
|
880
|
|
1,554,381
|
|
1,555,261
|
|
|
|
|
|
|
|
|
Non-cash movements
|
|
|
|
|
|
|
Lease additions
|
17,506
|
|
-
|
|
17,506
|
|
Finance cost
|
264
|
|
304,529
|
|
304,793
|
|
Effect of FX
|
727
|
|
(12,963)
|
|
(12,236)
|
|
Closing balance 31 December
2022
|
19,377
|
|
1,845,947
|
|
1,865,324
|
|
Company
|
Borrowings
|
|
Total
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Opening balance 1 January
2023
|
1,845,947
|
|
1,845,947
|
|
|
|
|
|
|
Non-cash movements
|
|
|
|
|
Funds repaid
|
(2,038,433)
|
|
(2,038,433)
|
|
Finance cost
|
195,304
|
|
195,304
|
|
Effect of FX
|
(2,818)
|
|
(2,818)
|
|
Closing balance 31 December
2023
|
-
|
|
-
|
|
Company
|
Borrowings
|
|
Total
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Opening balance 1 January
2022
|
-
|
|
-
|
|
|
|
|
|
|
Cash
movements
|
|
|
|
|
Borrowings advances
|
1,554,381
|
|
1,554,381
|
|
Total
|
1,554,381
|
|
1,554,381
|
|
|
|
|
|
|
Non-cash movements
|
|
|
|
|
Finance cost
|
304,529
|
|
304,529
|
|
Effect of FX
|
(12,963)
|
|
(12,963)
|
|
Closing balance 31 December
2022
|
1,845,947
|
|
1,845,947
|
23. Financial
instruments
The Group and Company's financial instruments
comprise cash and cash equivalents, loans and other financial
assets, trade and other receivables, trade and other payables,
borrowings and lease liabilities that arise directly from its
operations.
The Group and Company hold the following
financial instruments:
|
|
Group
|
|
At
31 December 2023
|
Held at
amortised cost
|
|
Fair value
through profit and loss
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
Financial assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
905,555
|
|
-
|
|
905,555
|
|
Trade and other
receivables
|
90,965
|
|
-
|
|
90,965
|
|
Other financial assets
|
5,209
|
|
6,563
|
|
11,772
|
|
|
1,001,729
|
|
6,563
|
|
1,008,292
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Trade and other payables
|
420,808
|
|
-
|
|
420,808
|
|
Lease liability
|
37,628
|
|
-
|
|
37,628
|
|
|
458,436
|
|
-
|
|
458,436
|
|
|
Company
|
|
At
31 December 2023
|
Held at
amortised cost
|
|
Fair value
through profit and loss
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
Financial assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
794,909
|
|
-
|
|
794,909
|
|
Loans to group
undertakings
|
12,837,080
|
|
-
|
|
12,837,080
|
|
Other financial assets
|
2,784
|
|
6,563
|
|
9,347
|
|
|
13,634,773
|
|
6,563
|
|
13,641,336
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Trade and other payables
|
116,743
|
|
-
|
|
116,743
|
|
At
31 December 2023
|
116,743
|
|
-
|
|
116,743
|
|
|
Group
|
|
Company
|
|
At
31 December 2022
|
Held at
amortised cost
|
|
Total
|
|
Held at
amortised cost
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Financial assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1,776,556
|
|
1,776,556
|
|
1,667,840
|
|
1,667,840
|
|
Trade and other
receivables
|
78,148
|
|
78,148
|
|
-
|
|
-
|
|
Loans to group
undertakings
|
-
|
|
-
|
|
11,081,505
|
|
11,081,505
|
|
Other financial assets
|
5,181
|
|
5,181
|
|
2,784
|
|
2,784
|
|
|
1,859,885
|
|
1,859,885
|
|
12,752,129
|
|
12,752,129
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables
|
591,237
|
|
591,237
|
|
195,328
|
|
195,328
|
|
Borrowings
|
1,845,947
|
|
1,845,947
|
|
1,845,947
|
|
1,845,947
|
|
Lease liability
|
19,377
|
|
19,377
|
|
-
|
|
-
|
|
|
2,456,561
|
|
2,456,561
|
|
2,041,275
|
|
2,041,275
|
The carrying values of the Group's financial
liabilities measured at amortised cost represents a reasonable
approximation of their fair values.
The main purpose of these financial instruments
is to finance the Group's and Company's operations. The Board
regularly reviews and agrees policies for managing the level of
risk arising from the Group's financial instruments as summarised
below.
a)
Market
risk
Market risk is the risk that changes in market
prices, such as commodity prices, foreign exchange rates, interest
rates and equity prices will affect the Group's and Company's
income or the value of its holdings in financial
instruments.
i) Foreign exchange
risk
The Group operates internationally and is
exposed to currency risk arising on cash and cash equivalents,
receivables and payables denominated in a currency other than the
respective functional currencies of the Group entities, which are
primarily Swedish Krona, Euro and Sterling. The Group manages
foreign currency risk by paying for foreign denominated invoices in
the currency in which they are denominated. The Group's and
Company's net exposure to foreign currency risk at the reporting
date is as follows:
|
|
Group
|
|
Company
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Net foreign currency
financial
|
|
|
|
|
|
|
|
|
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swedish Krona
|
427,207
|
|
1,560,383
|
|
484,839
|
|
1,655,334
|
|
Euro
|
(25,804)
|
|
(32,396)
|
|
(2,960)
|
|
(2,906)
|
|
Total net exposure
|
401,403
|
|
1,527,987
|
|
481,879
|
|
1,652,428
|
Sensitivity
analysis
A 10 per cent strengthening of sterling against
the Group's primary currencies at 31 December 2023 would
have decreased equity and profit or loss by the amounts shown
below:
Group
|
|
Profit or
loss
|
|
Equity
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Swedish Krona
|
(42,721)
|
|
(156,038)
|
|
(42,721)
|
|
(156,038)
|
|
Euro
|
2,580
|
|
3,240
|
|
2,580
|
|
3,240
|
|
Total
|
(40,141)
|
|
(152,798)
|
|
(40,141)
|
|
(152,798)
|
Company
|
|
Profit or
loss
|
|
Equity
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
Swedish Krona
|
(48,484)
|
|
(165,533)
|
|
(48,484)
|
|
(165,533)
|
|
Euro
|
296
|
|
291
|
|
296
|
|
291
|
|
Total
|
(48,188)
|
|
(165,242)
|
|
(48,188)
|
|
(165,242)
|
A 10 per cent weakening of sterling against the
Group's primary currencies at 31 December 2023 would have
an equal but opposite effect on the amounts shown above.
ii) Interest rate
risk
The Group's and Company's policy is to retain
its surplus funds on the most advantageous term of deposit
available up to a 12-month maximum duration. Given that the
Directors do not consider that interest income is significant in
respect of the Group's and Company's operations no sensitivity
analysis has been provided in respect of any potential fluctuations
in interest rates.
Interest rate risk is the risk that the value
of a financial instrument or cash flows associated with the
instrument will fluctuate due to changes in market interest rates.
Interest rate risk arises from interest bearing financial assets
and liabilities that the Group uses. The Group's interest-bearing
financial liability in the year is the bridging loan finance
entered into in the prior year and repaid in the current year; this
was at a fixed rate of interest. The interest-bearing financial
liability in the prior year was the bridging loan finance, which
was at a fixed rate of interest.
b)
Credit risk
The Group's principal financial assets are the
cash and cash equivalents and loans and receivables, as recognised
in the statement of financial position, and which represent the
Group's maximum exposure to credit risk in relation to financial
assets. The Group and Company policy for managing its exposure to
credit risk with cash and cash equivalents is to only deposit
surplus cash with financial institutions that hold a Standard &
Poor's, BBB- rating as a minimum.
The Company has made unsecured interest-free
loans to its subsidiaries. Although they are repayable on demand,
they are unlikely to be repaid until the projects are successful
and the subsidiaries start to generate revenues. An assessment of
the expected credit loss arising on intercompany loans is detailed
in note 11.
The amounts used by the subsidiaries are as
follows:
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Jokkmokk Iron Mines AB
|
10,105,806
|
|
8,407,039
|
|
Beowulf Mining Sweden AB
|
-
|
|
368,306
|
|
Grafintec Oy
|
2,656,618
|
|
2,304,786
|
|
Total
|
12,762,424
|
|
11,080,131
|
Reconciliation of provisions against
receivables arising from lifetime ECLs
|
|
1 January
2023
|
|
Movement
in the year
|
|
31
December 2023
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
ECLs
|
2,106,249
|
|
1,001,537
|
|
3,107,786
|
|
Total provision arising from
ECLs
|
2,106,249
|
|
1,001,537
|
|
3,107,786
|
|
|
1 January
2022
|
|
Movement
in the year
|
|
31
December 2022
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
ECLs
|
2,100,913
|
|
5,336
|
|
2,106,249
|
|
Total provision arising from
ECLs
|
2,100,913
|
|
5,336
|
|
2,106,249
|
The Directors have also assessed the cash flow
scenarios of the above considerations. Estimations were made
regarding the credit risk of the counterparty and the underlying
probability of default in each of the credit loss scenarios. The
scenarios identified by management included Fire-sale and Failure.
These scenarios considered technical data, necessary licences to be
awarded, the Company's ability to raise finance, and ability to
sell the project. A reasonable change in the probability weightings
of 3% would result in further impairment of £789,297 (2022:
£626,927).
i) Commodity price
risk
The principal activity of the Group is the
exploration for iron ore in Sweden, graphite in Finland and other
prospective minerals in Kosovo, and the principal market risk
facing the Group is an adverse movement in the price of such
commodities/industrial minerals. Any long-term adverse movement in
market prices would affect the commercial viability of the Group's
various projects. The Board looks to mitigate this risk through the
diversification of different prospective minerals.
c)
Liquidity risk
To date the Group and Company have relied on
shareholder funding and loan funding to finance operations.
As the Group and Company have finite cash resources and no material
income, the liquidity risk is significant and is managed by
controls over expenditure and cash resources. The Group and Company
have minimal exposure to liquidity risk as trade and other payables
all have a maturity of less than one year, the only exception being
the lease liability per note 21. The rationale for the preparation
of the accounts on a going concern basis is detailed in the Report
of the Directors.
The undiscounted contractual maturities of the
Group's financial liabilities are set out below:
|
31
December 2023
|
Less than
3 months
|
|
Between 3
and 12 months
|
|
Between 1
and 2 years
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Trade and other payables
|
433,662
|
|
-
|
|
-
|
|
Borrowings
|
-
|
|
-
|
|
-
|
|
Lease liabilities
|
6,282
|
|
17,940
|
|
15,597
|
|
|
439,944
|
|
17,940
|
|
15,597
|
|
31
December 2022
|
Less than
3 months
|
|
Between 3
and 12 months
|
|
Between 1
and 2 years
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Trade and other payables
|
625,730
|
|
-
|
|
-
|
|
Borrowings
|
1,845,947
|
|
-
|
|
-
|
|
Lease liabilities
|
3,912
|
|
7,685
|
|
8,773
|
|
|
2,475,589
|
|
7,685
|
|
8,773
|
d)
Capital management
The Groups capital structure consists of issued
capital and reserves, accumulated losses and non-controlling
interest.
The Board's policy is to preserve a strong
capital base in order to maintain investor, creditor and market
confidence and to safeguard the future development of the business,
whilst balancing these objectives with the efficient use of
capital. The Group and Company's net debt ratio for the year ended
31 December 2023 was below what the Board would consider to be
sustainable, furthermore, this ratio should be considered an
outlier as it arose due to the timing of the fundraising completed.
This is further discussed in Note 21.
The Group does not have any externally imposed
capital requirements.
Group
|
Net
working capital
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Cash and cash equivalents
|
905,555
|
|
1,776,556
|
|
Trade and other payables
|
(433,662)
|
|
(625,730)
|
|
Lease liabilities
|
(37,628)
|
|
-
|
|
Borrowings
|
-
|
|
(1,845,947)
|
|
Net cash/(debt)
|
434,265
|
|
(695,121)
|
|
|
|
|
|
|
Total equity
|
15,622,280
|
|
12,662,569
|
|
|
|
|
|
|
Net cash/(debt) to equity
ratio
|
2.78%
|
|
(5.49%)
|
Company
|
Net
working capital
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Cash and cash equivalents
|
794,909
|
|
1,667,840
|
|
Trade and other payables
|
(128,218)
|
|
(216,270)
|
|
Borrowings
|
-
|
|
(1,845,947)
|
|
Net cash/(debt)
|
666,691
|
|
(394,377)
|
|
|
|
|
|
|
Total equity
|
17,524,553
|
|
14,389,211
|
|
|
|
|
|
|
Net cash/(debt) to equity
ratio
|
3.80%
|
|
(2.74%)
|
24. Segment
reporting
The Group has only one primary business
activity being the exploration for, and the development of iron
ore, graphite and other mineral deposits. The Group also reports by
geographical reportable segment in the countries in which it
operates. The Group's exploration and development
activities are focused on three countries, Sweden, Finland and
Kosovo, with support provided from the UK headquarters. In
presenting information on the basis of geographical reportable
segments, the loss for the year, key statement of financial
position data, property, plant and equipment additions and deferred
exploration additions is based on the geographical location of the
assets. The Group has adopted IFRS 8 'Operating
Segments'. IFRS 8 requires operating segments to be identified
on the basis of internal reports that are regularly reviewed by the
chief operating decision maker to allocate resources and
assets.
|
2023
|
Sweden
|
|
Finland
|
|
Kosovo
|
|
UK
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
9,481,130
|
|
1,944,354
|
|
3,372,349
|
|
-
|
|
14,797,833
|
|
Other non-current assets
|
57,747
|
|
-
|
|
93,721
|
|
11,217
|
|
162,685
|
|
Current assets
|
72,699
|
|
132,412
|
|
6,218
|
|
846,230
|
|
1,057,559
|
|
Liabilities
|
(159,504)
|
|
(39,950)
|
|
(114,247)
|
|
(157,589)
|
|
(471,290)
|
|
Finance income
|
(268)
|
|
-
|
|
-
|
|
(7,655)
|
|
(7,923)
|
|
Finance costs
|
1,686
|
|
-
|
|
734
|
|
195,304
|
|
197,724
|
|
Grant income
|
-
|
|
(96,750)
|
|
-
|
|
-
|
|
(96,750)
|
|
Gain on disposal of
investment
|
-
|
|
-
|
|
-
|
|
(6,563)
|
|
(6,563)
|
|
Intangible asset additions
|
1,898,312
|
|
208,876
|
|
299,493
|
|
-
|
|
2,406,681
|
|
Impairment
|
350,158
|
|
-
|
|
-
|
|
-
|
|
350,158
|
|
Expenses1
|
549,084
|
|
404,362
|
|
85,707
|
|
2,009,992
|
|
3,049,145
|
|
Loss for the year
|
548,816
|
|
307,612
|
|
85,707
|
|
1,995,774
|
|
2,937,909
|
|
Total comprehensive loss
|
660,187
|
|
345,386
|
|
133,511
|
|
1,995,775
|
|
3,134,859
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
Sweden
|
|
Finland
|
|
Kosovo
|
|
UK
|
|
Total
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
8,032,977
|
|
1,852,274
|
|
3,117,214
|
|
-
|
|
13,002,465
|
|
Other non-current assets
|
2,674
|
|
-
|
|
146,752
|
|
4,749
|
|
154,175
|
|
Current assets
|
83,341
|
|
88,542
|
|
72,381
|
|
1,752,719
|
|
1,996,983
|
|
Liabilities
|
(178,095)
|
|
(29,339)
|
|
(166,475)
|
|
(2,117,145)
|
|
(2,491,054)
|
|
Finance income
|
(6)
|
|
-
|
|
-
|
|
(170)
|
|
(176)
|
|
Finance costs
|
10
|
|
-
|
|
267
|
|
304,529
|
|
304,806
|
|
Grant income
|
-
|
|
(84,797)
|
|
-
|
|
-
|
|
(84,797)
|
|
Gain on disposal of
investment
|
-
|
|
-
|
|
-
|
|
(21,951)
|
|
(21,951)
|
|
Intangible asset additions
|
684,396
|
|
175,269
|
|
991,281
|
|
-
|
|
1,850,946
|
|
Impairment
|
-
|
|
36,988
|
|
-
|
|
-
|
|
36,988
|
|
|
160,268
|
|
379,748
|
|
157,829
|
|
1,450,531
|
|
2,148,376
|
|
Loss for the year
|
160,262
|
|
294,951
|
|
157,829
|
|
1,428,410
|
|
2,041,452
|
|
Total comprehensive loss
|
386,566
|
|
196,831
|
|
62,591
|
|
1,428,409
|
|
2,074,397
|
1Expenses include
administrative expenses, impairment and finance costs.
25. Related
party disclosures
Transactions
with subsidiaries
During the year, cash advances of £2,153,998
(2022: £524,614) were made to Jokkmokk Iron Mines AB and net
settled costs of £33,643 with the Company (2022: net settled costs
£194,754). The advances are held on an interest free inter-group
loan which has no terms for repayment. At the year end the
inter-Group loan amounted to £12,179,315 (2022:
£9,991,673).
Beowulf Mining Sweden AB received cash advances
of £31,879 (2022: £7,320) and expenses paid on behalf of £22,318
(2022: net settled costs of £118). The advances are held on an
interest free inter-Group loan which has no terms for repayment. At
the year end the inter-Group loan amounted to £790,632 (2022:
£781,071).
Grafintec Oy received cash advances of £430,213
(2022: £180,287) and net settled costs of £30,918 (2022: net
settled costs of £1,507) with the Company. The advances are held on
an interest free inter-Group loan which has no terms for repayment.
At the year end the inter-Group loan amounted to £3,202,436 (2022:
£2,741,305).
Vardar received cash advances of £68,572 (2022:
£nil) and net settled costs of £1,374 (2022: net settled costs of
£nil) with the Company. The advances are held on an interest free
inter-Group loan which has no terms for repayment. At the year end
the inter-Group loan amounted to £100,155 (2022: £nil).
In accordance with its service agreement,
Grafintec charges Beowulf Mining plc for time incurred by its staff
on exploration projects held by other entities in the Group. In
turn Beowulf Mining plc recharges the other entities
involved.
In addition, Beowulf Mining plc charges
entities in the Group for time and expenses spent by Directors on
providing services. An arm's length margin has been included at
entity level, but this is subsequently eliminated on
consolidation.
The Company has made unsecured interest-free
loans to its subsidiaries. Although they are repayable on demand,
they are unlikely to be repaid until the projects becomes
successful and the subsidiaries start to generate revenues. An
assessment of the expected credit loss arising on intercompany
loans is detailed in note 11.
Transactions
with other related parties
Key management personnel include all Directors
and those who have authority and responsibility for planning,
directing and controlling the activities of the entity, the
aggregate compensation paid to key management personnel of the
Company is set below.
|
|
2023
|
|
2022
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Short-term employee benefits
(including employers' national insurance contributions)
|
847,791
|
|
711,962
|
|
Loss of office
|
210,000
|
|
-
|
|
Post-retirement benefits
|
67,288
|
|
44,764
|
|
Share-based payments
|
321,534
|
|
173,345
|
|
Insurance
|
526
|
|
887
|
|
|
1,447,139
|
|
930,958
|
Loss of office comprises a settlement amount in
relation to Kurt Budge's resignation, which was agreed on 21 July
2023. It represents the remainder of the notice period due to Mr
Budge as he was continued to be paid until the date the agreement
was reached.
26. Capital
commitments
As an exploration and development company, the
Company has a portfolio of exploration projects held through
subsidiary companies relevant to the local operations of the
business. All of the Company's business interests carry financial
commitments to remain in good standing which are funded directly by
the Company.
All the subsidiary companies require timely
submission of regulatory filings, financial accounts and tax
submissions. All exploration projects are held under
exploration licences and permits, against which during the year
renewals are expected to be processed with associated renewal fees
attaching.
27.
Contingent liabilities
At 31 December 2023, the Company has a possible
obligation to pay up to two years annual salary (£420,000) to Ed
Bowie in the event of a change in control.
28. Events
after the reporting date
On 16 February 2024, the Company announced its
intention to conduct a preferential rights issue of SDRs in Sweden
and a UK retail offer of ordinary shares and partially secured
capital raise up to approximately SEK 100 million (approximately
£7.5million). The rights issue is underwritten to maximum
value of SEK 50 million, subject to customary
adjustments.
On 16 February 2024, in conjunction with the
rights issue, the Company has entered into a short-term loan
agreement with the Underwriters to provide SEK 10 million to ensure
the Company has sufficient financial resources to continue
advancing its projects over the coming weeks. The loan carries an
interest charge of 1.5 per cent per month and has a commitment fee
of 5 per cent. If the loan and accrued interest is not repaid by
maturity date, at the latest, the creditors have the right to
offset a minimum of SEK 1 million at a time of the loan and accrued
interest into SDRs at a price per SDR calculated with a 15 per cent
discount on the volume weighted average price of the SDR during the
preceding 5 trading days to the conversion decision. In case of
default, the loan will accrue additional default interest of 2.5
per cent per month.
On 3 April 2024 the Company announced the
completion of the capital raise with a total of £4.3 million (SEK
56.3 million) gross raised to fund the development of the Company's
assets through their next key valuation milestones. The net funds
raised after the loan repayment and share issue transaction costs
are £3.0 million.
On 9 April 2024, the Company announced the
completion of consolidation of 100 per cent ownership of Vardar
Minerals Ltd from the currently held 61.1 per cent interest through
the issue of 52,326,761 Ordinary share in the Company. The new
shares are subject to a 12-month lock-in agreement from the 8 April
2024 and will be issued at the same time as shares issued in
connection with the proposed capital raise.
On 14 May 2024 there were 1,574,658,777 Swedish
Depository Receipts representing 81.07% per cent of the issued
share capital of the Company. The remaining issued share capital of
the Company is held in the UK.