TIDMPOW
RNS Number : 0699Q
Power Metal Resources PLC
23 February 2021
23 February 2021
Power Metal Resources plc ("POW" or "the Company")
Audited Results for the Year Ended 30 September 2020
Power Metal Resources plc (LON:POW), the AIM listed mineral
resources exploration and development company, is pleased to
announce its consolidated audited results for the year ended 30
September 2020 for the Company and its subsidiaries, Cobalt Blue
Holdings ("CBH"), Regent Resources Interests Corp. ("RRIC"), and
Power Metal Resources SA, ("PMR"), (together the "Group").
Highlights from the year under review:
Operational
-- A strategic Australian gold joint venture was formed with Red
Rock Resources plc (LON:RRR), with Power Metal Resources holding
49.9%. By year end the joint venture holding company, Red Rock
Resources Australasia (Pty) Limited ("RRAL") had lodged 12 licence
applications covering some 2,188 km(2) in the Victoria goldfields
region. Various technical work was completed in the year including
project reports for 11 of the licence applications and a National
Instrument 43-101 report for 8 of the licence applications as a
group. A new office was secured in Ballarat town and an exploration
manager appointed to the joint venture company;
-- Following completion of ground geophysics in 2019 and the
delineation of key drill targets, Power Metal Resources elected on
31 December 2019 to earn in to a 40% project holding at the Molopo
Farms Complex Project, Botswana by expending US$500,000 on
exploration, notably key target drilling in 2020. A maiden drill
programme commenced in October 2020;
-- A new strategic joint venture was formed between Power Metal
Resources and Kavango Resources Plc (LON:KAV) in respect of the
Kalahari Copper Belt and Ditau Camp Projects in Botswana, with each
party having a 50% interest;
-- Review work was undertaken in respect of the exploration and
commercialisation options in respect of the Cobalt Blue
nickel/cobalt project in Cameroon. No formal conclusions as to the
way forward were reached in the financial year, with deliberations
continuing post year end and leading to a decision to impair the
value of the of the Cameroon project in full (GBP970,000);
-- A new earn in agreement was formed over the Silver Peak
Project, including a former working silver mine, in British
Columbia, Canada. Due diligence programme sampling demonstrated
bonanza grade silver from channel sampling;
-- A pitting, sampling and mapping work programme was undertaken
successfully at the Kisinka Project in The Democratic Republic of
the Congo. X-ray fluorescence testing of the samples confirmed the
presence of copper, with samples dispatched to South Africa for
analysis and results received post year end. The results announced
in November 2020 demonstrated high grade copper and cobalt
values;
-- Power Metal Resources increased its interest in the Haneti
Nickel Project by 10% to 35% in the financial year and worked with
joint venture partner AIM Listed Katoro Gold plc (LON:KAT) to plan
for commencement of maiden drilling for nickel sulphide and
Platinum Group Metals ("PGMs") at the Project;
-- An agreement was signed in respect of the Alamo Gold Project
in Arizona USA which saw Power Metal Resources acquire an option to
earn in to a maximum 75% interest in the project. An initial
reconnaissance survey conducted following the acquisition
identified additional prospective areas which were pegged and added
to existing claims, increasing the project footprint;
-- A further strengthening of the Board saw Edmund Shaw, an
experienced City finance professional, join the Board as
Non-executive Director in February 2020;
-- At the year-end 30 September 2020 the Company held a private
and listed shares/warrants portfolio worth circa GBP1,481,000,
including a GBP415,000 fair value uplift in the valuation of the
portfolio of listed investments in other junior natural resource
companies held by the Company over the course of the year;
-- At the year end the Company held cash in GBP, USD, AUD and
CAD of GBP913,000 in GBP equivalent.
Financial
-- Loss for the year to 30 September 2020 of GBP1.4 million (2019: GBP1.6 million);
-- Pre non-controlling interest total equity of GBP3.6 million
at the year-end (2019: GBP1.8 million); and
-- Raised GBP1.7 million (before issue costs) in new equity
financing during the financial year, from a combination of new and
existing shareholders, including the Directors, and an additional
GBP266,000 of cash received by the Company during the year from
exercises of Power Metal share warrants.
Post-year end
Expansion of exploration and activity across the Company's
project portfolio including:
-- Drilling programme commencement at the Molopo Farms Complex
Project in Botswana (announced 15 October 2020), the Silver Peak
Project in Canada (announced 10 November 2020) and the Haneti
Nickel Project in Tanzania (announced 30 December 2020);
-- Next stage exploration programmes commenced at the Kalahari
Copper Belt and Ditau Projects in Botswana, the Alamo Gold Project
in Arizona, USA and the Kisinka Project in The Democratic Republic
of the Congo ("DRC");
-- Continuation of corporate activities since the year end with
participation in a rights issue for Kalahari Key Mineral
Exploration (Pty) Limited and expansion of the Australian Gold
Joint Venture with an application to increase the JV footprint by a
further 148 km(2) surrounding the Ballarat mine area; and
-- Option agreement signed in January 2021 providing 60
business-days for due diligence which if successful would lead to
the acquisition of First Development Resources Pty Limited, a
private Australian company with copper-gold exploration interests
in Paterson Province, Australia.
-- Agreement signed by Power Metal Resources in January 2021 to
acquire a package of gold exploration properties in Ontario Canada,
followed by an option agreement providing 30 days for due diligence
which if successful would lead to the acquisition of four
additional exploration projects also in Ontario, Canada. In
February 2021, the Company announced it had exercised the Option to
acquire the McKellar Property by transferring total consideration
of CAD$100,000 in cash and shares;
-- In February 2021 RRAL received confirmation that three
licence applications had been granted enabling the commencement of
ground exploration in the Victoria Goldfields, Australia;
-- In February 2021, the Company announced, subject to
shareholder approval, a capital reduction to take place in order
for distributions to be made to shareholders; and
-- Warrant exercises since the year end have raised a further GBP2,638,470 for the Company.
Paul Johnson, Chief Executive Officer of Power Metal Resources
commented:
"The audited results for the year ended 30 September 2020
demonstrate the pace of business development at Power Metal.
In the previous financial year the Company emerged from the
refinancing in February 2019 with a new sense of energy and a
promise to deliver an exciting investment proposition in resource
exploration and development. As at today's date Power Metal is a
global exploration company with precious and base metal projects
across three continents.
Much of the development achieved in the Company was undertaken
in the year ended 30 September 2020 and since then we have seen the
launch of proactive exploration and corporate activities across
multiple projects including district scale opportunities.
Power Metal is well funded with a strong working capital
position and an objective to continue to build our "balance sheet"
working capital to move the Company toward financial self
sustainability.
We believe that 2021 and the coming years presents a great
opportunity for junior resource opportunities and where possible we
intend to take full advantage."
Notice of Annual General Meeting and Distribution of Accounts to
Shareholders
The Company's Annual General Meeting will take place at 11.00 am
on 30 March 2021 at Abbey House, 282 Farnborough Road, Farnborough,
Hampshire, GU14 7NA. The Company's Annual Report and Accounts for
the year ended 30 September 2020 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.
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.
Power Metal Resources plc
Paul Johnson (Chief Executive Officer) +44 (0) 20 7583 8304
SP Angel Corporate (Nominated Adviser and Broker)
Ewan Leggat +44 (0) 20 3470 0470
SI Capital Ltd (Broker)
Nick Emerson +44 (0) 1483 413 500
First Equity (Joint Broker)
David Cockbill/Jason Robertson +44 (0) 20 7330 1883
Chairman's Statement
As at 30 September 2020 and the date of this results statement,
Power Metal Resources plc ("POW", the "Company" or the "Group") had
two wholly owned subsidiaries, Cobalt Blue Holdings ("CBH") and
Regent Resources Interests Corp. ("RRIC"), as well as a 70%
shareholding in Power Metal Resources SA, which holds the interest
in the Kisinka licence ("PMR").
Introduction
Power Metal Resources advanced considerably during the year with
an expansion in its project portfolio across commodities,
jurisdictions, and geological environments. The Company commenced
the financial year with four largely base metal interests in Africa
and ended the year with six African projects of substance,
augmented by precious metal interests in North America and
Australia. The Company is now, in effect, a global operating
company.
The board believe that each of the Company's operational
projects is capable of delivering a large scale metal discovery, in
line with the Company's primary strategic objective. In the pursuit
of this and with our project partners in-country we have designed
and where possible implemented a structured exploration programme
for each project.
COVID-19 restrictions around the world did impact the Company's
operational activities in the year, mainly in respect of any
localised restrictions impacting field operations. The Company's
structured approach of working with local operating and management
teams meant that aside from local restrictions, we have been able
to operate effectively managing our global activities from our
London headquarters.
During the year we raised GBP1.7million in equity financings to
support our operational activities and providing sufficient working
capital for the smooth running of the business overall. The
financings were undertaken at the then market price to ensure we
protected existing shareholders from heavily discounted financings
as is our policy.
Power Metal Resources has continued to build its investment
portfolio of listed and private interests and striving towards our
objective of financial self-sustainability. At the year end the
portfolio was already demonstrating material capital gains,
something we trust we can continue to build upon in the 2021
financial year. Our growth in this area will be further emboldened
with the corporate activity to spin-out certain interests into
their own dedicated listed vehicles.
Operations Review
Projects
Australia
Following a period of planning and preparation in April 2020
Power Metal Resources announced a new joint venture acquiring a
49.9% interest in Red Rock Australasia (Pty) Limited ("RRAL") a
private Australian company, with the remaining 50.1% held by Red
Rock Resources plc (LON:RRR).
During the financial year RRAL submitted 12 separate gold
exploration licence applications in the Victoria Goldfields in the
State of Victoria, Australia and covering a total of 2,188km(2) .
Also, during the year RRAL consultants were engaged to prepare
detailed project specific reports for each licence application and
a National Instrument 43-101 Technical Report for 8 licence
applications, which together formed the BMV Gold Project.
RRAL also established an enhanced operational office in Ballarat
and employed an Exploration Manager and a community relations
officer to coordinate and drive exploration programmes.
During the year work was also undertaken with RRAL's tenement
management company and Victoria State Mines Department to advance
licence applications to granted status. From the 12 licence
applications portfolio, 3 priority licence applications were
awarded highest ranking status during summer 2020 and advertised
locally and regionally in accordance with application requirements
(with 7 further licence applications granted highest ranking status
to date post year-end). Licenses have been granted post the year
end in respect of the 3 priority licence applications.
During the year RRAL noted the potential to list some or all of
its interests on a North American Stock Exchange and received
multiple approaches from third parties expressing an interest in
its business, from the perspective of the potential listing and for
separate potential joint ventures with RRAL on some or all of its
interests.
Botswana - Molopo Farms Complex Project
Power Metal entered the financial year with an 18.26% stake in
Kalahari Key Mineral Exploration (Pty) Limited ("KKME"), the 100%
owner of the Molopo Farms Complex Project ("MFC Project"), its only
project interest. The Company also held a right to elect to earn-in
to a direct 40% interest in the MFC Project, expiring on 31
December 2019, by expending US$500,000 on exploration costs,
notably project drilling, by 31 December 2020 (since extended to 30
April 2021).
In December 2019 and given the positive outcome from ground
geophysics which identified multiple high impact nickel
sulphide/Platinum Group Metal ("PGM") drill targets, the Company
exercised its right to earn in to the MFC Project.
The earn in formally commenced in October 2020 with the
commencement of drilling at the MFC Project.
Botswana - Ditau Camp Project and Kalahari Copper Belt
In April 2020 Power Metal Resources announced an option to
acquire a 51% interest in the Ditau Camp Project (rare earths
exploration in Botswana), which was at the time 100% held by
Kavango Resources plc (LON:KAV). In parallel Power Metal Resources
invested GBP38,000 into a zero coupon Convertible Loan Note,
convertible into 4,750,000 shares in Kavango at 0.80p per share
(conversion actioned in July 2020).
As part of this financing, Power Metal Resources on conversion
in July 2020 also received 4,750,000 warrants to subscribe for a
further 4,750,000 Kavango Resources shares at a fixed price of
1.0p, and with a life to expiry of 2 years. Should Power Metal
Resources exercise the 1.0p warrants in full and within one year of
their grant, it will receive a further 4,750,000 warrants to
subscribe for Kavango Resources shares at a fixed price of 2.5p
with the same expiry date as the 1.0p warrants noted above.
After a period of due diligence, project review and discussions
with Kavango Resources plc, in September 2020 a new strategic joint
venture was announced whereby Power Metal Resources acquired a 50%
interest in the Ditau Camp Project and also two licences in the
Kalahari Copper Belt (copper/silver exploration in Botswana), also
previously owned outright by Kavango.
Consideration for the transaction was the payment of GBP75,000
cash and the issue of GBP75,000 of Power Metal Resources shares to
Kavango ( 6 million new ordinary shares of 0.1 pence each in the
Company at a price of 1.25p each and 5 million Power Metal
Resources warrants at 2.0p with a two year life to expiry and in
the event of early exercise of 2.0p warrants (within 12 months of
issue), replacement warrants at 5.0p with the same life to expiry
as the 2.0p warrants). In addition, Power Metal Resources agreed to
sole fund the first US$150,000 (in total) of exploration costs at
the strategic joint venture projects in the first two years.
The transaction between Kavango Resources plc and Power Metal
Resources envisaged the listing of the joint venture interests on a
Canadian or UK stock exchange in 2021, and the first GBP10,000 of
corporate restructuring costs in respect of this were also to be
paid by Power Metal Resources.
Initial exploration planning work on both joint venture
properties was commenced during the financial year with ground
operations commenced prior to the year end. Work in respect of the
listing of the joint venture interests has been ongoing since the
transaction was announced.
Cameroon
During the course of the financial year a project review was
undertaken with Power Metal Resource's consultants to assess the
exploration and commercialisation options in respect of 100% owned
Cameroon project, held through Cobalt Blue Holdings Inc.
("CBH").
The pace of the review work was impacted by the additional
pressures placed on the Company's managerial and technical team
managing potential disruptions due to the COVID-19 pandemic and
also given the large amount of corporate work underway to assess,
negotiate and conclude new commercial acquisitions.
The Cameroon review continued post year and included an
assessment of new additional exploration data in respect of the
project.
Given the proximity of the Cameroon project to the Nkamouna/Nada
cobalt, nickel and manganese deposit, the Company considered that
the Cameroon project may hold value and may justify additional
exploration work. Notwithstanding this the directors reviewed the
likely cost to renew exploration licences and thereafter to
undertake sufficient exploration work. The likely cost for renewal
and further exploration represented a material proportion of
existing Company resources. When comparing this with the other
project opportunities now in the Company's expanded portfolio the
directors determined a material commitment of financial and
managerial resources to the Cameroon project was not in the best
interests of the Company.
As a result of the above the directors assessed the carrying
value of CBH at the year end and took the decision to impair the
asset in its entirety. This impairment was due to the partly
disappointing results of the exploration previously conducted, with
no definitive additional information received from our review
highlighting a clear and cost-effective pathway for further project
development.
Furthermore, the effect of COVID-19 inhibited exploration during
the year. The project licences were due for renewal in the first
quarter of 2021, and the renewal costs were considered likely to be
expensive and, given the lack of work recently there was a material
risk that the renewals may not be granted.
It was therefore decided, reluctantly, to not undertake further
material operations in Cameroon and the asset was written down.
Note : With respect to Nkamouna, Geovic published an NI 43-101
compliant Mineral Resource (1) on the Nkamouna deposit with a total
Measured, Indicated and Inferred Mineral Resource of 323mt of 0.21%
cobalt, 0.61% nickel and 1.26% manganese .
(1) Source: NI 43-101 Technical Report, Geovic Mining Corp by
SRK Consulting, 02 June 2011 (viewable at Edgar Online)
Canada
In August 2020, a 30-day option agreement was signed in relation
to the Silver Peak silver project in British Columbia, Canada. The
Silver Peak Project consists of a portfolio of mineral claims (the
"claims") over a system of high grade, intrusion related,
polymetallic Ag-Pb-Zn-Cu veins, part of the historical
Eureka-Victoria Silver Mine, at Silver Peak in southern British
Columbia, Canada.
The option fee paid was GBP26,819 with GBP12,500 payable through
the issue of 1,000,000 Power Metal shares at a price of 1.25p and
GBP14,319 payable in cash.
Due diligence was undertaken, and the option exercised in
September 2020 enabling Power Metal Resources to earn in to a 30%
interest.
On option exercise Power Metal Resources paid GBP129,683 to the
Vendors comprising CAD$30,000 (GBP17,183) cash and GBP112,500
through the issue of 9,000,000 new Ordinary 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.
Power Metal Resources must then spend CAD$250,000 (GBP143,193)
on Project exploration, within 12 months (the "Exploration Spend")
and of this amount CAD$25,000 was expended on the due diligence
exploration programme, leaving CAD$225,000 (GBP128,874) outstanding
at the year end.
Subject to meeting the Exploration Spend and the receipt of
satisfactory findings from exploration work, and by 31 August 2021,
Power Metal Resources may elect to acquire a 30% interest in the
Project by making a final payment of CAD$200,000 (GBP114,554 and
the "Final Payment") with Power Metal Resources having a choice to
pay this in cash, or in Company shares, as follows.
Final Payment payable in cash:
- Power Metal Resources can make a final cash payment of CAD$200,000.
- Should Power Metal Resources make the Final Payment as cash,
warrants will also be issued to the Vendors in such volume as
equates to CAD$100,000 divided by the 7-trading day volume weighted
average price of ("VWAP") of Power Metal Resources shares
immediately preceding the day of announcing the acquisition of the
Project interest and at a price that equates to a 30% premium to
the 7-day VWAP and with a three year life to expiry.
Final Payment payable in shares:
- By payment of CAD$200,000 (GBP114,554) through the issue of
Power Metal Resources shares at a price based on the 7-trading day
VWAP preceding the date of announcing the acquisition of the
Project interest ("Final Payment Shares");
- Should Power Metal Resources elect to make the Final Payment
in Power Metal Resources shares then the Vendors will be granted
warrants to subscribe for new Ordinary Shares in such volume as
equates to 50% of the Final Payment Shares and at an exercise price
equating to a 30% premium of the issue price of the Final Payment
Shares and with a three-year life to expiry.
During the course of due diligence conducted in August and
September channel sampling was undertaken at the property and assay
results included Bonanza silver (Ag) and significant copper (Cu)
and lead (Pb) grades returned from two 0.5m long channel samples
taken across the Victoria Vein.
A further next stage exploration programme was planned and
attempted post year end, including exploration drilling, however
this was only partially completed due to weather conditions in the
area.
T he Democratic Republic of the Congo (DRC)
Following the discovery of a 6.8km copper anomaly at the
Company's 70% owned Kisinka Project near Lubumbashi in the DRC,
Power Metal Resources conducted a follow-up 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 were received
post year-end and which confirmed high grade copper and cobalt.
The licence renewal at Kisinka Project was to be applied for 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).
Tanzania
Power Metal Resources entered the financial year with a 25%
interest in the Haneti Project, a polymetallic exploration project
covering circa 5,000 km(2) acquired in May 2019 and with the
balancing 75% held by London listed Katoro Gold plc (LON:KAT)
('Katoro Gold'). The original agreement in May 2019 allowed Power
Metal Resources to increase its holding in the Haneti Project by a
further 10%, provided payment of GBP25,000 was made to Katoro Gold
by 18 May 2020.
This agreement was varied in the financial year and the deadline
extended until 31 August 2020 and on 20 August 2020 Power Metal
Resources elected to increase its holding in the Haneti Project to
35% and made the payment of GBP25,000 to Katoro Gold.
During the year Katoro Gold received approaches from external
third parties with a view to earn-in, joint venture or similar, in
respect of the Haneti Project, with a primary focus on the nickel
sulphide exploration potential.
In addition, planning and preparations were made for the launch
of a maiden drill programme at Haneti Project targeting nickel
sulphide and PGM targets with rotary air blast, then diamond
drilling. This programme was commenced post year end.
USA
In December 2019 Power Metal Resources signed an agreement with
the holders of an option to earn in to a 60% interest in the Alamo
Gold Project in Arizona USA (the "Option"). This agreement enabled
Power Metal Resources to acquire the Alamo Gold Option, in exchange
for certain cash and equity-based payments to the Optionees and
subject to Power Metal Resources exercising the Option and assuming
the financial commitments under the earn in arrangement specified
in the Option.
The Alamo Gold Project (the "Project") is a package of mining
claims initially covering an area of approximately 766 acres and is
situated in west-central Arizona, USA. The Project was originally
identified as prospective for gold following the discovery of
native gold nuggets (the "Nuggets") near surface in numerous
locations within the Project boundaries.
The geological environment supports further exploration to
investigate the source of the nugget gold and the potential for a
large, mineralised gold system. In addition, the region in which
the Project is situated is prospective for precious and base
metals, with regional mines that have produced silver, lead, gold,
zinc and copper.
A due diligence site visit was undertaken in January 2020 and
after a period of option acquisition and earn in agreement
renegotiation, Power Metal Resources elected to acquire and
exercise the Option in July 2020, with amended terms including the
right for Power Metal Resources to earn-in up to a 75% interest in
the Project.
The Project is currently 100% owned by Frisco Gold Corporation,
Bullhead City, Arizona, USA ("Frisco").
Frisco as property owners had agreed an Option over the Project
where, in exchange for the coverage of certain annual property
payments and costs expended on exploration, the Option holders
could earn into a project ownership stake. This was called a Right
to Earn-in ("RTEI").
The Option holders in this case were Joe Carrabba, a former
board director of Newmont Goldcorp and Murray Nye, the CEO of
Winston Gold Corp, (together the "Vendors").
Power Metal Resources acquired the Option from the Vendors. The
Option provides a right to earn-in to up to a 75% interest in the
Project by covering property payments over a four-year period and
exploration expenditure over a three year period as outlined
below.
The property payments and exploration spend is detailed
below:
Cost Analysis Property Exploration Final 75% Annual
Payments Spend Payment Total
US$ US$ US$ US$
Year 1 50,000 100,000 - 150,000
Year 2 50,000 250,000 - 300,000
Year 3 50,000 500,000 - 550,000
Year 4 50,000 - 50,000 100,000
Overall Total 200,000 850,000 50,000 1,100,000
========= ============ ========== ==========
Power Metal Resources has agreed to guarantee to pay the Year 1
property payments of U$50,000 and first year exploration spend of
US$100,000, in total US$150,000 (circa GBP119,530). After this
commitment, Power Metal Resources is not locked-in to any further
payments on the Project.
To acquire the Option, Power Metal Resources paid the Vendors
consideration of GBP48,000 (circa US$60,132) ("Initial
Consideration") payable through the issue of 8,000,000 new shares
("Consideration Shares") at a price of 0.6p per share and to grant
a warrant over 8,000,000 new shares at an exercise price of 1.0p
per share with a three year life to expiry.
The Consideration Shares were subject to a period of four months
and one day where they could not be sold or transferred without the
express written approval of the Company. Were Power Metal Resources
shares trading at a VWAP of 1.5p or more for seven consecutive
trading days, the Consideration Shares were to become freely
tradable.
In addition, upon earning into a 75% ownership (as outlined
below) Power Metal Resources would pay the Vendors a further
US$200,000 (circa GBP143,000) in cash or, at the Company's sole
volition, shares at a volume weighted average price ("VWAP") based
on the seven trading days prior to the announcement of a 75%
ownership interest ("Final Consideration").
If Power Metal Resources earn-in to a 75% interest in the
Project the total effective cost of the Option acquisition from the
Vendors will be the Initial Consideration of GBP48,000 together
with the Final Consideration of GBP160,000, for a total of
GBP208,000.
Upon acquisition of the Option, Power Metal Resources became the
operator of the Project, working in conjunction with a newly
appointed North American gold advisory committee and forming an
operating committee with the current Project owners, Frisco.
Project Pipeline
Power Metal Resources management have an extensive network of
contacts in the exploration business and through this network have
access to a pipeline of potential new project interests. All
material opportunities are reviewed from a technical and commercial
perspective and the Company remains open to the acquisition of
further new projects if of sufficient merit when set against the
Company's existing portfolio of interests.
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 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 projects, 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 2020 of GBP 1.4 million (2019: GBP1.6 million). The loss
per share from continuing activities was 0.025p (2019: 0.55p).
The Group's exploration activities during the financial year
under review were funded through the issue of shares to either
raise cash or in lieu of fees. In aggregate, new ordinary shares
were issued during the financial year, raising a total of
approximately GBP 1.7 million before placement costs (2019: GBP1
million). In addition, during the financial year the exercise of
warrants brought an additional GBP0.266m cash into the Company.
We ended the financial year with a cash balance of GBP 0.91
million (2019: GBP0.17 million), which was enhanced post financial
year end by the exercise of warrants bringing an additional GBP 2.6
million into the Company post year end.
Targets for 2021
Our operational targets for the remainder of 2021 are:
-- To focus on applying financial resources diligently, with
controlled corporate costs and focused investment in exploration of
our project portfolio;
-- To continue to build working capital, preferably through
organic means, and move towards financial self-sufficiently being
defined as an ability to fund the Company's operations without
absolute reliance on equity financings;
-- To continue to build our internal resources and external
network and to develop our managerial and operational teams to
provide confidence in the market of our abilities to achieve our
strategic business objective of large scale metal discoveries;
-- To proactively continue corporate work to achieve
crystallisation of value from spin-outs of certain project
interests into their own listed entities; and
-- To continue to review new opportunities and where financially
and operationally practical to acquire additional interests.
Board Changes
In February 2020 Edmund Shaw was appointed to the Board as
Non-executive Director and in September 2020 Iain Macpherson
stepped down from the Board as Non-executive Director.
Outlook
After the restructuring and refinancing of financial year 2019,
and the corporate growth of 2020, we now look to 2021 as the year
of expansive exploration across the Company's project interests
combined with corporate activity related to potential spin-outs and
new joint venture partnerships. Our aims are simple, to secure a
large scale metal discovery and to build our working capital
rapidly and organically, while maintaining the strength of our
'balance sheet'.
Andrew Bell
Executive Chairman
22 February 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2020
Note 2020 2019
GBP'000 GBP'000
Revenue 9 -
Gross profit 9 -
--------- ---------
Operating expenses 4 (835) (668)
Impairment 5 (970) (954)
Fair value gains through profit or loss 415 36
Loss from operating activities (1,390) (1,586)
--------- ---------
Share of post-tax losses of equity accounted joint ventures (33) -
Loss before tax (1,414) (1,586)
Taxation - -
--------- ---------
Loss for the year from continuing operations (1,414) (1,586)
Other comprehensive income
Items that will or may be reclassified to profit or loss;
Exchange translation (2) 63
Total other comprehensive (expense)/income (2) 63
--------- ---------
Total comprehensive expense for the year (1,416) (1,523)
========= =========
Loss for the period attributable to:
Owners of the parent (1,381) (1,539)
Non-controlling interests (33) (47)
--------- ---------
(1,414) (1,586)
========= =========
Total comprehensive loss attributable to:
Owners of the parent (1,349) (1,466)
Non-controlling interests (67) (57)
--------- ---------
(1,416) (1,523)
========= =========
Earnings per share from continuing operations attributable to the ordinary equity
holder of
the parent:
--------- ---------
Basic and diluted loss per share (pence) 8 (0.25) (0.55)
--------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
30 September 2020 30 September 2019
Note GBP'000 GBP'000
Assets
Intangible assets 5 156 1,126
Investments in associates and joint ventures 284 -
Financial assets at fair value through profit or loss 1,208 309
--------------------------
Non-current assets 1,648 1,435
-------------------------- ------------------
Trade and other receivables 6 110 32
Cash and cash equivalents 913 171
Current assets 1,023 203
-------------------------- ------------------
Total assets 2,671 1,638
========================== ==================
Equity
Share capital 7 7,286 6,843
Share premium 14,910 13,228
Shares to be issued 22 -
Capital redemption reserve 5 5
Share based payment reserve 1,286 1,195
Exchange reserve 71 39
Accumulated losses (20,911) (19,530)
-------------------------- ------------------
Total 2,669 1,780
--------------------------
Non-controlling interests (275) (208)
-------------------------- ------------------
Total equity 2,394 1,572
-------------------------- ------------------
Liabilities
Trade and other payables 9 161 66
Deferred consideration 116 -
-------------------------- ------------------
Current liabilities 277 66
-------------------------- ------------------
Total liabilities 277 66
-------------------------- ------------------
Total equity and liabilities 2,671 1, 638
========================== ==================
The financial statements of Power Metal Resources plc, company
number 07800337, were approved by the board of Directors and
authorised for issue on 22 February 2021.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2019
Share
Capital based
Share Share redemption payment Exchange Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Total interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2018 6,606 12,453 5 1,086 (34) (17,991) 2,125 (151) 1,974
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Loss for the year - - - - - (1,539) (1, 539) (47) (1,586)
Total other
comprehensive
income/(expense) - - - - 73 - 73 (10) 63
----------- -------- --------- --------- ----------------
Total
comprehensive
expense for the
year - - - - 73 (1,539) (1,466) (57) (1,523)
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Issue of ordinary
shares 237 950 - - - - 1,187 - 1,187
Costs of share
issues - (93) - - - - (93) - (93)
Share-based
payments - (82) - 109 - - 27 - 27
----------- -------- ---------
Total
transactions
with owners 237 775 - 109 - - 1,121 - 1,121
-------- -------- ----------- -------- --------- ------------ --------- ---------------- --------
Balance at 30
September 2019 6,843 13,228 5 1,195 39 (19,530) 1,780 (208) 1,572
======== ======== =========== ======== ========= ============ ========= ================ ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2020
Share
Shares Capital based
Share Share to be Redemption payment Exchange Retained Non-Controlling Total
capital premium issued Reserve Reserve reserve deficit Total Interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2019 6,843 13,228 - 5 1,195 39 (19,530) 1,780 (208) 1,572
-------- -------- -------- ----------- -------- --------- --------- -------- ---------------- --------
Loss for the
period - - - - - - (1,381) (1,381) (33) (1,414)
Total other
comprehensive
income/(expense) - - - - - 32 - 32 (34) (2)
-------- -------- ----------- -------- --------- -------- ----------------
Total
comprehensive
income /
(expense) for
the period - - - - - 32 (1,381) (1,349) (67) (1,416)
-------- -------- -------- ----------- -------- --------- --------- -------- ---------------- --------
Issue of ordinary
shares 443 1,768 22 - - - - 2,233 - 2,233
Costs of share
issues - (86) - - - - - (86) - (86)
Share-based
payments - - - - 91 - - 91 - 91
-------- ----------- -------- ---------
Total
transactions
with owners 443 1,682 22 - 91 - - 2,238 - 2,238
Balance at 30
September 2020 7,286 14,910 22 5 1,286 71 (20,911) 2,669 (275) 2,394
======== ======== ======== =========== ======== ========= ========= ======== ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 SEPTEMBER 2020
2020 2019
GBP'000 GBP'000
Cash flows used in operating activities
Loss for the year (1,414) (1,586)
Adjustments for:
Fair value adjustments (415) (36)
Share of post-tax losses of equity accounted joint ventures 33 -
Impairment 970 954
Expenses settled in shares 267 186
Share-based payment expense 91 27
Foreign exchange differences (2) 65
(470) (390)
Changes in working capital:
(Increase)/Decrease in trade and other receivables (78) 8
Increase/(Decrease) in trade and other payables 95 (209)
--------- ---------
Net cash used in operating activities (453) (591)
--------- ---------
Cash flows from investing activities
Purchase of intangibles - (15)
Purchase of financial assets at fair value through profit or loss (504) (273)
Investment in joint ventures (201) -
Proceeds from investment disposals 20 -
--------- ---------
Net cash outflows from investing activities (685) (288)
--------- ---------
Cash flows from financing activities
Proceeds from issue of share capital 1,965 1,000
Issue costs (85) (93)
Net cash inflows from financing activities 1,880 907
--------- ---------
Increase in cash and cash equivalents 742 28
Cash and cash equivalents at beginning of year 171 147
Exchange (loss) on cash and cash equivalents - (4)
Cash and cash equivalents at 30 September 913 171
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 30 SEPTEMBER 2020
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
2020 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 (note 10) 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 and 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
Operating expenses include: 2020 2019
GBP'000 GBP'000
Staff costs 296 184
Foreign exchange loss/(gain) 1 (4)
Share based payment expense 46 28
Auditor's remuneration - audit services 24 27
========= =========
Auditor's remuneration in respect of the Company amounted to
GBP23,500 (2018: GBP27,000).
5. Intangible assets
Prospecting and exploration rights
GBP'000
Cost
As at 1 October 2018 7,795
Effect of movements in exchange rate (2)
Balance at 30 September 2019 7,793
-----------------------------------
As at 1 October 2019 7,793
Disposals (6,667)
Balance at 30 September 2020 1,126
-----------------------------------
Impairment
As at 1 October 2018 5,713
Charge 954
Balance at 30 September 2019 6,667
-----------------------------------
As at 1 October 2019 6,667
Impairment 970
Disposals (6,667)
Balance at 30 September 2020 970
-----------------------------------
Net book value
At 30 September 2019 1,126
===================================
At 30 September 2020 156
===================================
The opening balance of intangible assets was initially
recognised on the acquisition of the three subsidiaries, Power
Metal Resources SA (formerly ABM Kobald SAS), (PMR), Cobalt Blue
Holdings (CBH) and Regent Resources Interests Corporation (RRIC),
which was impaired in full at 30 September 2019, and subsequently
written off.
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.
PMR
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
were received post year-end, but 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).
As a licence in a prospective area and close to existing
discoveries, with a significant apparent discovery awaiting
confirmation, this license in the Board's view is likely to have a
value greatly in excess of sums expended, and the carrying value is
not subject to any impairment.
CBH
At the reporting date, the Group held four Cameroon-based
nickel-cobalt exploration licences through two 100% owned
subsidiaries of CBH. These licences expire in the first quarter of
2021, unless renewed.
The locations of the four licences held and the Ntam Est licence
applied for are either adjacent to, or within 50km of the
Nkamouna/Mada Cobalt Project ("Nkamouna/Mada") in Cameroon,
formerly owned by ex-TSX-listed Geovic Mining Corp ("Geovic"),
where in 2011 SRK Consulting (US) Inc. reported a giant NI 43-101
compliant cobalt/nickel resource.
The directors assessed the carrying value of CBH at the year end
and took the decision to impair the asset in its entirety. This was
due to the disappointing results of the exploration during the
year, combined with the effect of COVID-19 inhibiting exploration
and lacklustre cobalt prices at a time when other prices were
performing strongly. Additionally, the licences are due for renewal
in the first quarter of 2021 which would be expensive and, given
the lack of work may not be granted, therefore it was decided not
to conduct further operations in Cameroon and the asset was written
down.
Intangible assets are not pledged as security or held under any
restriction of title.
6. Trade and other receivables
2020 2019
GBP'000 GBP'000
Accounts receivable 10 -
Other receivables 65 11
Prepayments 35 21
---------
110 32
========= =========
7. Share capital
Number of ordinary shares
2020 2019
Ordinary shares in issue at 1 October 372,838,101 136,579,143
Issued for cash 416,626,316 200,000,000
Issued in settlement for expenses 28,852,125 36,258,958
In issue at 30 September - fully paid (par value 0.1p) 818,316,542 372,838,101
============= =============
Ordinary share capital
2020 2019
GBP'000 GBP'000
Balance at beginning of year 6,843 6,606
Share issues 443 237
Balance at 30 September 7,286 6,843
============ ===========
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
GBP1,000,000,000,000. 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
In October 2019, the Company issued 4,852,125 new ordinary
shares to enter into a due diligence period to enable inspection,
verification and sampling in respect of the Alamo project.
In December 2019, the Company announced a share placing of
175,000,000 new ordinary shares of 0.1 pence each, at a price of
0.40 pence per share, raising GBP700,000.
In July 2020, the Company announced it had raised GBP1,000,000
through a subscription of 210,526,316 new ordinary shares of 0.1
pence each at a price of 0.475 pence per share.
In July 2020, the Company acquired an option providing a right
to earn-in up to a 75% interest in the Alamo Gold project. The
Company paid the vendors a total consideration of GBP48,000 for the
option, through the issue of 8,000,000 new ordinary shares at a
price of 0.60 pence per share.
On 17 August 2020, the Company paid for a 30-day exclusivity
period for due diligence in respect of the Silver Peak project, for
GBP14,319 in cash and GBP12,500 payable through the issue of
1,000,000 shares in the Company at a price of 1.25 pence per
share.
In August and September 2020, 31,100,000 were issued in relation
to warrant exercises; 16,100,000 were exercised at a price of 1.0
pence per share, and 15,000,000 were exercised at a price of 0.70
pence per share.
On 14 September 2020, the Company exercised the option over the
Silver Peak project, enabling the Company to earn-in to a 30%
interest. The Company acquired the option for total consideration
of GBP129,683, comprising GBP17,183 in cash and GBP112,500 through
the issue of 9,000,000 new ordinary shares at a price of 1.25 pence
per share.
In September 2020, the Company acquired a 50% interest in four
Botswana prospecting licences with a view to holding them in a
Botswana private holding company as a joint venture with Kavango
Resources plc. Consideration for the acquisition consisted of
GBP75,000 cash and the issue of 6,000,000 shares in the Company to
Kavango Resources plc, at a price of 1.25 pence each, totalling
GBP75,000.
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 GBP1,381,290
(2019: GBP1,539,176), and a weighted average number of ordinary
shares in issue of 558,893,170 (2019: 278,814,166).
9. Trade and other payables
2020 2019
GBP'000 GBP'000
Trade payables 24 20
Accrued expenses 137 46
---------
161 66
========= =========
10. Subsequent events
Drilling programme commencement at the Molopo Farms Complex
Project in Botswana (announced October 2020), the Silver Peak
Project in Canada (November 2020) and the Haneti Nickel Project in
Tanzania (December 2020);
Next stage exploration programmes commenced at the Kalahari
Copper Belt and Ditau Projects in Botswana, the Alamo Gold Project
in Arizona, USA and the Kisinka Project in The Democratic Republic
of the Congo ("DRC");
Continuation of corporate activities since the year end with
participation in a rights issue for Kalahari Key Mineral
Exploration (Pty) Limited and expansion of the Australian Gold
Joint Venture with an application to
increase the JV footprint by a further 148 km(2) surrounding the Ballarat mine area;
Option agreement signed in January 2021 providing 60 business
days for due diligence which if successful would lead to the
acquisition of First Development Resources Pty Limited, a private
Australian company with copper-gold exploration interests in
Paterson Province, Australia;
Agreement signed by Power Metal Resources in January 2021 to
acquire a package of gold exploration properties in Ontario Canada,
followed by an option agreement providing 30 days for due diligence
which if successful would lead to the acquisition of four
additional exploration projects also in Ontario, Canada. In
February 2021, the Company announced it had exercised the Option to
acquire the McKellar Property by transferring total consideration
of CAD$100,000 in cash and shares;
In February 2021 RRAL received confirmation that three licence
applications had been granted enabling the commencement of ground
exploration in the Victoria Goldfields, Australia;
In February 2021, the Company announced, subject to shareholder
approval, a capital reduction to take place in order for
distributions to be made to shareholders; and
Warrant exercises since the financial year end have raised a
further GBP2,638,470 for the Company.
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February 23, 2021 07:25 ET (12:25 GMT)
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