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Alba Min Res PLC - Final Results

RNS Number : 2157I
Alba Mineral Resources PLC
31 March 2020
 

 

Alba Mineral Resources plc

("Alba" or "the Company")

Final Results for the year ended 30 November 2019

 

The Board of Alba Mineral Resources plc is pleased to report the results for the financial year ended 30 November 2019. 

 

References to the "Company" or "Alba" are to Alba Mineral Resources plc and references to the "Group" are to Alba collectively with its Subsidiary Companies.

 

1.   REVIEW OF ACTIVITIES

 

1.1      OVERVIEW

We made significant progress across our range of assets and investments during the 2019 financial year.  This included the following achievements:

 

·      At Clogau, our regional exploration resulted in the discovery of 10 new gold anomalies across the Dolgellau Gold Belt.  We also successfully drilled the Llechfraith mine area, which confirmed that the known gold-bearing geological setting at Llechfraith continues for some 25 metres below the deepest historic workings.

 

·      At Thule Black Sands, we published a maiden Mineral Resource Estimate from mineral sands experts IHC Robbins, which confirmed an Inferred Resource of 19 million tonnes at an in-situ ilmenite grade of 8.9%, translating to 1.7 million tonnes of contained ilmenite.  This would be enough ore to sustain a 12-year mine life at a mining rate of 1.5 million tonnes per annum.

 

·      At Amitsoq, we completed the latest phase of metallurgical testwork which confirmed that concentrate produced from Amitsoq graphite contains a significant proportion (36%) of larger-size, higher-value flake.  This should assist us greatly in the development of a positive economic model for the project.

 

·      At Horse Hill, a new well, HH-2z, was drilled during the year, and we also saw continuous test production at the original HH-1 well surpass 78,000 barrels by year end.

The only real reverse was encountered at Brockham, where the Operator failed in its bid to flow oil from the Kimmeridge limestones at that particular location in the Weald Basin.  However, our investment in Brockham has never been a focus for the Group.  It is true also that we did not intersect zinc-lead mineralisation in our drilling programme at Limerick during the year.  However, the setbacks we encountered at both those projects are part and parcel of the risk-reward nature of mineral exploration and will not divert us from exploration activities, such as those which led to the above successes and which can add real value to the Company's net worth.

 

1.2      CLOGAU GOLD PROJECT (WALES, 90% OWNED)

 

We made significant progress at the Clogau Gold Project during 2019.  Our regional exploration campaign identified 10 significant anomalies away from known major mines, with gold mineralisation confirmed so far over about a six mile section of the Dolgellau Gold Belt.  The largest new anomaly identified is about two kilometres long, which is four times longer than the length of the anomaly over the historic Clogau-St David's Mine. Given Clogau-St David's was far and away the UK's largest source of historic gold production, that anomaly is clearly going to be a focus of future exploration activity. 

 

We also identified potential extensions to the existing footprint of the mine area, with infill sampling confirming continuity of an anomaly (the "Lowri Target") lying parallel to the Llechfraith adit and a major anomaly (the "Eryn Target") lying above historic Llechfraith workings. 

 

Late in 2019, we drilled a target within the historic Llechfraith mine area.  This short drilling campaign successfully intersected the known geological setting for all historic gold mining at Clogau, being intrusive greenstones and shear zones dominated by intermixed Clogau shale and quartz veining.  This setting was intersected up to 25 metres below the lowest known mined areas, thus confirming the continuity of the mined shear zone structure for at least that distance down-dip of the historic mine workings.

 

During 2019, we also completed an extensive underground rehabilitation programme at Clogau.  Those safety works are an essential precursor to any decision to re-open the mine for commercial production. 

 

The Board has determined that the Clogau Gold Project remains a key focus of the Company's business moving forward, for the following principal reasons:

 

·      There is significant existing underground development in place across five connected mine areas at Clogau, which development would cost many millions of pounds to put in place at today's prices.

 

·      The commercial potential of Clogau is significant, and is underpinned by a number of factors:  the fact that historic production was from very high-grade pods, and that we believe there to be real potential to discover unexploited high-grade pods; the fact that Welsh gold typically attracts a significant premium over normal gold spot rates; and the rally in the price of gold in the second half of 2019 and into the start of 2020, which can only help with the economics for restarting mining for gold at Clogau.

 

·      There is great potential to discover new economic gold resources within the wider Clogau licence area, as illustrated by the 10 new gold anomalies that we have so far discovered across the Dolgellau Gold Belt.

Exploration at the Clogau Gold Project will continue this year in order to refine the plan to reopen the Clogau-St David's Gold Mine for commercial production, including a trenching programme across a selection of our 10 new regional gold targets (see also Section 4 (Outlook) below, regarding the impact of COVID-19 on our planned field activities).

 

1.3      THULE BLACK SANDS PROJECT (GREENLAND, 100% OWNED)

 

In May 2019, we announced a maiden JORC-compliant inferred resource for our Thule Black Sands Ilmenite Project ("TBS").  We were delighted to be able to achieve this result after just one full field season at the Project. 

 

The Mineral Resource Estimate prepared by mineral sands specialist IHC Robbins breaks down into three components:

 

·      an Inferred Resource of 19.0 million tonnes at 43.6% Total Heavy Minerals;

·      an in-situ ilmenite grade of 8.9%; and

·      1.7 million tonnes of contained ilmenite. 

A 19 million tonne Inferred Resource represents a huge step forward for this high-grade ilmenite project.  For a 1.5 million tonne per annum mining operation, this would already mean a mine life of more than 12 years. 

 

Our work at TBS in 2020 will include pursuing off-take discussions with strategic investors and industrial groups.

 

1.4      AMITSOQ GRAPHITE PROJECT (GREENLAND, 90% OWNED)

 

With its exceptionally high grades and the fact that it incorporates a historic producing mine, Alba management and our technical team retain great belief in the potential of the Amitsoq Graphite Project.   

 

During 2019 we completed a Phase 2 metallurgical testwork programme at Amitsoq which built on the preliminary testwork programme we carried out in 2018.  That initial testwork had confirmed that a saleable (97.3% Total Graphitic Carbon) concentrate could be produced from Amitsoq graphite.  Our 2019 programme was designed to build on that result by maximising the amount of high-value flake graphite in the concentrate.  The programme was an unqualified success, as we were able to show that a significant proportion (36%) of the refined product consisted of large, jumbo and super-jumbo flakes, which attract a premium price in the graphite market.  This will greatly assist in our development of a positive technical economic model for the Amitsoq Project.

 

In February 2020 we announced the appointment of leading graphite experts ProGraphite GmbH for the next testwork phase, which will be focused on developing an optimised method for the production of graphite that is suitable for lithium-ion batteries ("LIBs").  The electric vehicle ("EV") sector is a major growth market for graphite.  LIBs use small to medium flake graphite, so if we are able to confirm the amenability of Amitsoq graphite for use in LIBs, it will mean we will have a ready market both for our large to super-jumbo flake (which is used in traditional industries such as steel manufacture and refractories) and for our small to medium flake (used in the EV sector).

 

In terms of field work at Amitsoq, as previously reported we have been in the process of finalising a drilling programme for this summer, with the objective being to define a maiden JORC resource at Amitsoq.  However, see also Section 4 (Outlook) below, regarding the impact of COVID-19 on our planned field activities.

 

1.5      INGLEFIELD MULTI-ELEMENT PROJECT (GREENLAND, 100% OWNED)

 

During the year, we commissioned a detailed technical review of our Inglefield Project from South Africa-based TECT Geological Consulting and XPotential Geoscientific Consulting, who are experts respectively in structural geology and geophysical data interpretation.  Through the systematic assimilation of data from our maiden exploration campaign in 2018 and data sets from previous field programmes, they were able to identify a number of high-priority targets at Inglefield for both iron ore-copper-gold ("IOCG") and carbonate-hosted zinc-lead deposits. 

 

As our focus in Greenland for the coming year has been on preparations for field activities at Amitsoq, we do not have plans currently to go into the field at TBS or Inglefield this season.

 

In terms of our overall strategy in Greenland, Alba's Board believes the Company's Greenland mining portfolio to comprise some of the best assets in the country.  However, as it is not currently feasible to allocate significant funds to all of the Company's projects, we made it clear during the year that we will be seeking expressions of interest for external investment into our Greenland assets, with a view to substantially de-risking them while retaining a material stake in the upside. 

 

1.6      LIMERICK BASE METALS (IRELAND, 100% OWNED)

 

In May 2019, we undertook a short exploration drilling campaign at our Limerick Zinc-Lead Base Metals Project which did not intersect mineralised zones. While there remain a number of other interesting targets at the Limerick Project which have never been drilled, the Group plans to target its spending elsewhere in the current period and therefore under IFRS 6 criteria the project should be impaired in value.

 

1.7      OIL & GAS INVESTMENTS

 

(a)      Horse Hill Oil Project (England, 11.765% interest)

Significant progress was made at Horse Hill during 2019 towards the goal of establishing permanent commercial oil production at the site.  Extended well test operations continued at both the Portland Sandstone and the Kimmeridge Limestone intervals, and in August 2019 it was announced that aggregate oil production had reached a milestone of 60,000 barrels.

 

In September 2019 we announced that operations had commenced for the drilling of the new Horse Hill-2z ("HH-2z") Portland horizontal well.  In mid-November we reported that the drilling had been successfully completed, with 2,500 ft of horizontal trajectory drilled wholly within the Portland reservoir's most oil productive zone. 

 

We also announced in September 2019 that Surrey County Council had granted full planning consent for long-term oil production at Horse Hill.  The consent grants permission to produce oil over a period of 25 years at up to 3,500 barrels of oil per day from a total of six wells within the Portland and Kimmeridge oil pools, including the existing Horse Hill-1 ("HH-1") well and the HH-2z horizontal well.

 

As at the financial year end, we reported that total HH-1 test production stood at over 78,000 barrels stretching back to the start of test production in July 2018. 

 

Post year end, we reported that during a scheduled shut-in for a long-duration pressure build-up test at HH-2z, evidence of formation water ingress was recorded. For that reason, an additional well intervention was planned to shut-off the water source. On 9 March 2020 it was announced that that intervention was successful and dry oil had flowed to surface. It was also announced that further clean-up activities would be carried out prior to a shut-in.  We expect extended well test ("EWT") operations from HH-2z to commence directly thereafter.  Production from the horizontal section of the Portland Sandstone reservoir has the potential to exceed production from a vertical Portland producer such as HH-1.

 

In January 2020 we reported that, subject to receipt of regulatory approvals, the Operator now planned to bring HH-1 into commercial production this spring, to be followed by HH-2z in the third quarter of this year, subject to the successful completion of the planned HH-2z EWT programme.   Shortly before the publication of this report, the Operator confirmed that the Oil and Gas Authority ("OGA") had approved the Horse Hill Field Development Plan ("FDP") and consented to the start of long-term production ("Production") from the field.  This should allow net recoverable reserves to be allocated to the field, which should assist with attracting debt finance to the project.  The Operator has said that Portland oil pool Production will commence via HH-1, with Kimmeridge Production planned to be added in late spring 2020 by converting the well to a dual completion.  Production from HH-2z is planned to follow upon completion of the current EWT campaign.

 

Turning to corporate matters in relation to Horse Hill, in June 2019 we announced our decision not to fund the latest cash call received from the Operator, Horse Hill Developments Limited ("HHDL" or the "Operator").  While we have not decided whether we will fund future cash requirements at Horse Hill, it is possible that we will decide not to fund, for a number of reasons including our desire to focus our efforts and expenditure on the mining projects which are under Alba's sole control.  But regardless of whether Alba does or does not fund future cash calls, our investment in Horse Hill remains a near-term cash-generative opportunity for Alba.  As such, and as we announced during the year, we are open to either retaining our stake in the Project through to permanent commercial production, when HHDL should generate material oil sales revenues, or to giving serious consideration to any third-party offer received prior to production which properly reflects the value of our stake.

 

(b)     Brockham Oil Project (England, 5% interest)

 

During the year, the Operator at Brockham, Angus Energy, announced that it had successfully perforated the Brockham BRX4Z well ("BRX4Z") as the precursor to commencing commercial flow test operations from the Kimmeridge limestones at BRX4Z.  However, the Operator subsequently announced that part of the perforated interval was producing water, which was believed to be inhibiting the flow of oil.  Despite subsequently successfully isolating the water-producing zone, Angus was still unable to recover oil to surface, leading it to conclude that in its view it would not be likely for commercial hydrocarbon flow to be achieved from the Kimmeridge layer at Brockham by conventional means.

 

The Group's investment in the Brockham oil field has been fully impaired in value during the period, due to the unsuccessful flow testing of the Kimmeridge formation. While the Board is naturally disappointed by this outcome, Alba's investment in Brockham has always been a small part of Alba's asset portfolio at just 4.3% of the Group's total net assets of £8.75 million prior to the impairment charge.

 

2.   CORPORATE AND FINANCIAL

In March 2019 we announced that my fellow Director Michael Nott and I had subscribed for shares in the Company (in Mike's case 6,666,667 shares, and in my case 8,333,333 shares), at a price of £0.003 per share, being 28% above the most recent mid-market closing price for Alba shares prior to the placement.

 

In June 2019 we announced that we had raised £500,000 (before expenses) through the issue of 250,000,000 new ordinary shares at a price of 0.2 pence per ordinary share. 

 

The appointment in June 2019 of SVS Securities plc as Joint Broker to the Company was subsequently terminated in August 2019, when the Company was informed that SVS had been placed into Special Administration.

 

In November 2019 we announced that we had raised £350,000 (before expenses) through the issue of 218,750,000 new ordinary shares at a price of 0.16 pence per ordinary share.  Share warrants were also issued to each subscriber in the placing, with one warrant being issued for each share subscribed for, for a total of 218,750,000 warrants.  The warrants have an exercise price of 0.32 pence per share and an expiration date of 24 months from the date of issue. The warrants will be subject to an accelerator provision, such that if at any time during their 24 month duration the 10-day volume-weighted average price ("VWAP") of Alba ordinary shares exceeds 0.64 pence, Alba may give warrant holders notice to exercise their warrants, failing which they will automatically expire.

 

After the financial year end we announced that we had entered into an unsecured financing of up to £767,000 (which can be increased by mutual consent to up to £1,054,500) with US-based institutional investment fund, Bergen Global Opportunity Fund, LP (the "Investor") (the "Financing").  The Financing is structured by way of the issue by Alba to the Investor of up to five zero-coupon, unsecured convertible securities.  Upon its issue, the Investor pays Alba a fixed purchase price for the convertible security, namely £192,000 for the first convertible security (which has a nominal value of £223,000), £192,000 for the second Convertible Security (nominal value £192,000), £153,000 for the third Convertible Security (nominal value £153,000) and £115,000 for each of the fourth and fifth Convertible Securities (nominal value £115,000 each).  The Investor will then have the right to convert those convertible securities into Alba ordinary shares based on the VWAP of Alba shares during a specified period prior to conversion or, in respect of up to £192,000 of the Convertible Securities, at a fixed price of £0.001625

 

The Financing is structured in such a way as to provide Alba with access to capital at regular intervals over the next 18 months, allowing us to fund key value-enhancing work activities across our mining portfolio. The issue of the second to fifth tranches of funding is subject to the fulfilment by Alba, at each funding stage, of certain specified conditions and warranties.

 

On 3 March 2020, we announced that we had closed the first tranche of funding under the Financing, with Alba issuing the first convertible security referred to above and receiving payment of £192,000 from the Investor.  Subject to the fulfilment of the specified conditions and warranties, the second funding tranche will be issued four months after the Company's 2020 AGM (which will be held in April) with each of the third, fourth and fifth funding tranches being issued in further four monthly intervals thereafter.

 

As in prior years, our results for the year were impacted by significant accounting adjustments.  As shown in our Consolidated Income Statement, the Group's loss of £1.3m included £0.5m of impairment charges from providing against the value of our share of the Brockham Oil Project and our Limerick Base Metals Project.  Underlying administrative expenditure remained relatively consistent year on year.

 

3.   EVENTS AFTER THE REPORTING PERIOD

Key announcements after the reporting period are noted in Section 1 (Review of Activities) and Section 2 (Corporate and Financial) above, and in Note 5 of the Notes section below.

 

 

4.   OUTLOOK

The past 12 months have been challenging ones for Alba.  The markets have been capricious, and lately of course we have seen some of the biggest UK stock market falls in decades, the reasons for which I will return to later.  Putting that aside, we did not see the bounce in our share price that we would have expected from the significant advances we were able to make across our projects during the year, such as when we confirmed a maiden JORC Resource at Thule Black Sands, when we identified gold mineralisation across a six-mile stretch of the Dolgellau Gold Belt or when continued progress at Horse Hill saw that oil field obtain planning permission for 25 years of production and where continued test production is now approaching its two year anniversary. 

 

To illustrate this point, contrast the market's reaction to the Horse Hill Consortium's drilling of the HH-1 well in 2014 with the market's reaction to the drilling of the HH-2z well in 2019.  While HH-1 was being drilled, in around September 2014, we saw a fourfold increase in our share price, whereas during the drilling of the second well, in September 2019, we (and other Consortium members, for that matter) saw no appreciable improvement in share price performance.

 

While it is difficult to maintain the excitement felt by investors in the early stages of a new discovery, such as when we struck oil at Horse Hill in 2014, it is also bound up in the very nature of the resources sector, where it typically takes years to turn an initial exploration discovery into a development asset with the Resources and Reserves and economics to support a Bankable Feasibility Study, which in turn can attract the debt finance needed to build a mine.  Even in onshore oil and gas projects, where the infrastructure requirements are typically more modest, it can still take several years to move into commercial production, not least as the regulatory hurdles, as we have seen in the Weald Basin, can be significant. These realities can be hard to square with the average AIM investor's desire to see a material return on his or her investment in fairly short order, probably within a 6 to 12 month timeline.  As an investor myself, I can completely understand that perspective.  

 

The bottom line, however, is that we retain a solid belief in our core projects at Alba and we will employ the technical skill and endeavour of our highly experienced team of mining professionals to keep pushing our projects forward until such time as our successes are properly reflected in our share price.  Even then, as I alluded to earlier, those successes can be completely drowned out by the much more powerful macro-economic factors which loom from time to time and which can easily overwhelm any otherwise positive developments, such as we have seen in recent times with the US-China trade wars, the self-inflicted Brexit wound and now the coronavirus pandemic.

 

On 23 March 2020, the UK Prime Minister announced that UK residents will only be allowed to leave their home for certain very limited purposes.  In respect of workers, this includes travelling to and from work, but only where absolutely necessary.  He also announced the immediate closure of all shops selling non-essential goods and a prohibition on all gatherings of more than two people in public.  We will need to consider the precise effect of these, and other, announced measures upon Alba's business and affairs.  I know that the PM also committed to keep these restrictions under review, to look at them again after a period of three weeks and to relax them if the evidence shows this to be possible.  However at Alba we are operating on a working assumption that our ability to work in the field at our mining projects will be severely compromised, if not rendered impossible, in the next three month period at least. 

 

At the time of writing, the number of confirmed cases of COVID-19 in the United Kingdom is in the thousands, and the number of deaths is now, tragically, over one thousand.  This is an unprecedented situation for many of us, certainly for those of us not old enough to have lived through the Second World War or its aftermath.  The impact of the COVID-19 pandemic upon Alba is one that we not only feel in the UK, where we are headquartered and where our Clogau Gold Project and oil and gas investments are located, but also in Ireland and Greenland where we also own and operate projects.  At present, the Irish Government is advising that anyone coming into Ireland will be required to either restrict their movements or to self-isolate on arrival for 14 days, with only essential supply chain services such as hauliers, pilots and maritime staff being exempt from these restrictions.  In Greenland, the authorities have announced a cessation of all non-emergency domestic and international air traffic for an initial two-week period from 20 March 2020.  

 

The COVID-19 pandemic, and the ongoing measures imposed by the Government agencies in those countries in which Alba operates, will have an inevitable impact upon our planned work activities.  On 15 January 2020, we announced details of our planned work activities for 2020, including the following key field programmes:

 

·      In relation to Clogau, we announced plans to undertake a trenching programme across a selection of the 10 new gold targets identified from the Company's regional exploration, as well as continued environmental baseline studies and ongoing discussions with the Mineral Planning Authority detailing the works required to re-open the Mine and the proposed operations once the Mine is re-opened; and

 

·      In relation to Amitsoq, we announced that plans were being advanced to undertake a maiden drilling campaign with the objective of enabling a maiden JORC mineral resource estimate to be declared.

Subsequent to that announcement, the rapidly developing situation in relation to the COVID-19 pandemic has placed some considerable doubt upon our ability to execute these programmes in full this year.  This is for a host of reasons, including the curtailment of international flights to and from the countries in which we operate our projects, the possibility that we will be unable to secure exploration personnel, equipment or materials necessary to undertake our planned work activities and the ongoing restrictions imposed by the authorities in the countries in which we operate (which restrictions may well be increased in the coming weeks and months).

 

Alba's management continues to monitor these developments on a daily basis.  Our overriding concern during this time is to ensure the health and safety of our personnel and of all members of the public with whom they may come into contact.  Our field teams have to work in close proximity with one another, undertaking manual labour and often operating in constrained settings, such as when working underground at Clogau.  For these reasons, we will not send our personnel into the field unless we are satisfied that their welfare and that of the general public will not be compromised.

 

The COVID-19 pandemic has also, of course, had a massive impact on global stock markets in recent weeks, and Alba's share price has been caught up in the cross-winds of the sudden slump in investor confidence across the board.  While these market conditions continue to hold, our ability to progress our planned joint venture or divestment programme across our asset portfolio will likely be affected, as potential joint venture partners and buyers will be far less likely to want to consider any new investments during this time.  In relation to the funding of our work activities, our ability to raise capital through the equity markets must now be considered severely constrained, although we do have the benefit of the financing package arranged with Bergen Global Opportunity Fund, LP, as announced only last month. Shareholders' attention is also drawn to the wording in the Going Concern section of Note 2 to this announcement, below.

 

Despite these conditions, we do continue to work across our project portfolio.   At Clogau, for instance, prior to the most recent restrictions on non-essential travel, our contractors were able to complete water tests in and around the Clogau mine adits.  Initial indications are that the water is fairly clean, which are promising signs as we investigate the dewatering of the lower Llechfraith mine area where we drilled in late 2019, in terms of the level of treatment of the water that will be required.  We await the return of the assays from the laboratory before deciding on the next steps.  In respect of our discussions with the Mineral Planning Authority ("MPA") regarding the re-opening of the Clogau mine for commercial production, we have now received detailed responses from the MPA to our formal Pre-Application Enquiries, and our planning consultants and technical team are working through those with a view to refining our overall plan for the re-opening of the mine, which will form the basis of a formal planning application.  Last month we also announced a new testwork programme for Amitsoq. 

 

In short, there is a lot of work we can usefully progress in relation to our projects even while we are constrained in our field activities.

 

Alba was first listed on the AIM stock market in 2005.  As such, the Company has been through the last serious global financial crisis that occurred in 2007-08 and Alba's management has first-hand experience of the measures needed to protect the Company in a period of sustained economic downturn such we currently face.  We will take all measures reasonably within our control to protect the Company's projects and finances so that we will emerge strong once the worst of the COVID-19 pandemic and the ensuing global financial crisis is over.

 

We firmly believe that the strategy we have implemented at Alba over the past 5 or 6 years, during which time we have identified and then moved to secure majority stakes in a range of undervalued assets with real production potential, has been the right one to pursue.  With the current turmoil in the investment markets, our strategy may take a little longer to execute, however we remain confident that it will ultimately bear fruit for Alba and its shareholders.

 

On behalf of the Board, I would like to take this opportunity to thank Alba shareholders for their ongoing support. 

 

 

 

George Frangeskides

Executive Chairman

30 March 2020

 

 

 

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

Forward-Looking Statements

 

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's or any third party's ability to execute and implement future plans, and the occurrence of unexpected events.  Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.

 

 

For further information, please contact:

 

Alba Mineral Resources plc

George Frangeskides, Executive Chairman                        +44 20 7907 4297

 

Cairn Financial Advisers LLP (Nomad)     

James Caithie / Liam Murray                                            +44 20 7213 0880

 

First Equity Limited (Broker)

Jason Robertson                                                             +44 20 7374 2212

 

 

    

CONSOLIDATED INCOME STATEMENT

For the year ended 30 November 2019

 

 

 

2019

2018

 

 

£

£

Revenue

 

-

-

Cost of sales

 

-

-

Gross loss

 

-

-

Administrative expenses

 

(772,849)

(885,314)

Impairment of intangible assets

 

(539,554)

-

Operating loss

 

(1,312,403)

(885,314)

Revaluation of investment

 

-

825,533

Share of net loss of joint venture

 

-

(15,325)

Loss for the year before tax

 

(1,312,403)

(75,106)

Taxation

 

-

-

Loss for the year

 

(1,312,403)

(75,106)

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

 

(1,311,172)

(72,823)

Non-controlling interests

 

(1,231)

(2,283)

 

 

(1,312,403)

(75,106)

 

 

 

 

Loss per ordinary share

 

 

 

Basic

 

(0.039) pence

(0.003) pence

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 November 2019

 

 

 

2019

2018

 

 

£

£

Loss after tax

 

(1,312,403)

(75,106)

Items that may subsequently be reclassified to profit or loss:

 

 

 

-       Foreign exchange movements

 

39,040

2,707

Total comprehensive loss

 

(1,273,363)

(72,399)

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

Equity holders of the parent

 

(1,272,132)

(70,116)

Non-controlling interests

 

(1,231)

(2,283)

 

 

(1,273,363)

(72,399)

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 November 2019

 

 

 

2019

2018

 

 

£

£

Non-current assets

 

 

 

Property, plant and equipment

 

85,000

85,000

Intangible fixed assets

 

3,050,430

3,076,783

Investments - Horse Hill Developments Limited

 

5,430,000

5,430,000

Investments - other

 

11,125

7,161

Total non-current assets

 

8,576,555

8,598,944

 

 

 

 

Current assets

 

 

 

Trade and other receivables

 

81,460

61,894

Cash and cash equivalents

 

211,333

585,795

Total current assets

 

292,793

647,689

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

(356,232)

(493,195)

Financial liabilities

 

(137,312)

(287,250)

Total current liabilities

 

(493,544)

(780,445)

 

 

 

 

Net current (liabilities) / assets

 

(200,751)

(132,756)

 

 

 

 

Net assets

 

8,375,804

8,466,188

 

 

 

 

Capital and reserves

 

 

 

Called up share capital

 

4,582,983

4,099,233

Share premium account

 

7,128,257

6,786,382

Warrant reserve

 

722,998

624,039

Retained losses

 

(4,273,794)

(3,167,943)

Merger reserve

 

-

200,000

Foreign currency reserve

 

230,018

190,978

Equity attributable to equity holders of the parent

 

8,390,462

8,732,689

Non-controlling interests

 

(14,658)

(266,501)

 

 

 

 

Total equity

 

8,375,804

8,466,188

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 November 2019

 

 

Share

Share

Warrant

Profit and

Merger

Foreign

Attributable

Non

Total

 

capital

premium

reserve

loss

reserve

currency

to equity

controlling

 

 

 

 

 

 

 

reserve

holders

interest

 

 

 

 

 

 

 

 

of parent

 

 

 

£

£

£

£

£

£

£

£

£

At 1 December 2017

3,086,246

4,655,702

231,969

(3,095,120)

200,000

193,685

5,272,482

(264,218)

5,008,264

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

(72,823)

-

-

(72,823)

(2,283)

(75,106)

Translation differences

-

-

-

-

-

(2,707)

(2,707)

-

(2,707)

Comprehensive loss for the period

-

-

-

(72,823)

-

(2,707)

(75,530)

(2,283)

(77,813)

 

 

 

 

 

 

 

 

 

 

Shares issued

1,012,987

2,253,680

148,914

-

-

-

3,415,581

-

3,415,581

Share issue costs

-

(123,000)

-

-

-

-

(123,000)

-

(123,000)

Equity settled share-based payments

-

-

243,156

-

-

-

243,156

-

243,156

At 30 November 2018

4,099,233

6,786,382

624,039

(3,167,943)

200,000

190,978

8,732,689

(266,501)

8,466,188

 

 

 

 

 

 

 

 

 

 

Profit / (loss) for the period

-

-

-

(1,311,172)

-

-

(1,311,172)

(1,231)

(1,312,403)

Translation differences

-

-

-

-

-

39,040

39,040

-

39,040

Comprehensive loss for the period

-

-

-

(1,311,172)

-

39,040

(1,272,132)

(1,231)

(1,273,363)

 

 

 

 

 

 

 

 

 

 

Shares and warrants issued

483,750

389,875

21,875

-

-

-

895,000

-

895,000

Share issue costs

-

(47,500)

-

-

-

-

(47,500)

-

(47,500)

Transfer on write-down of investment

-

-

-

200,000

(200,000)

-

-

-

-

Equity settled share-based payments

-

-

82,405

-

-

-

82,405

-

82,405

Transfer on expiry of warrants

-

-

(5,321)

5,321

-

-

-

-

-

Owner's contribution

-

-

-

-

-

-

-

253,074

253,074

At 30 November 2019

4,582,983

7,128,257

722,998

(4,273,794)

-

230,018

8,390,462

(14,658)

8,375,804

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 November 2019

 

 

 

 

 

 

2019

2018

 

 

£

£

 

 

 

 

Cash flows from operating activities

 

 

 

Operating loss

 

(1,312,403)

(885,314)

 

 

 

 

Share based payment charge

 

82,405

243,156

Impairments of intangible assets

 

539,554

-

Change in fair value of other investments

 

(3,964)

7,174

Foreign exchange revaluation adjustment

 

45,614

(2,707)

Increase/(decrease) in creditors

 

44,474

120,032

Decrease/(increase) in debtors

 

(19,566)

(26,619)

Net cash used in operating activities

 

(623,886)

(544,278)

 

 

 

 

Cash flows from investing activities

 

 

 

Payments for deferred exploration expenditure

 

(522,179)

(733,527)

Payments for intangible fixed assets

 

(165,897)

-

Cash on acquisition of subsidiary

 

-

44,661

Investments

 

-

(985,002)

Net cash used in investing activities

 

(688,076)

(1,673,868)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from the issue of shares and warrants

 

895,000

2,300,000

Proceeds from short term borrowings

 

90,000

-

Costs of issue

 

(47,500)

(123,000)

Net cash generated from financing activities

 

937,500

2,177,000

 

 

 

 

Net decrease in cash and cash equivalents

 

(374,462)

(41,144)

Cash and cash equivalents at beginning of period

 

585,795

626,939

Cash and cash equivalents at end of year

 

211,333

585,795

 

 

Significant non-cash transactions were the impairment charge against intangible assets shown above.

 

Accruals includes capital items of £59,025 (2018: £227,326).

 

 

 

NOTES

 

1. BASIS OF PREPARATION

 

Alba Mineral Resources plc is a public limited company incorporated and domiciled in England & Wales, whose shares are publicly traded on the AIM market of the London Stock Exchange plc. The registered office address is 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR.

 

The financial information set out in this announcement does not constitute the statutory accounts of the Group for the years ended 30 November 2019 or 30 November 2018. The financial information has been extracted from the statutory accounts of the Group for the years ended 30 November 2019 and 30 November 2018.

 

The auditor, Nexia Smith & Williamson, has reported on the statutory accounts for the years ended 30 November 2019 and 2018; the audit reports were unqualified and did not contain statements under either section 498(2) or 498(3) of the Companies Act 2006.  However, in their report on the statutory accounts for both the year ended 30 November 2019 and 30 November 2018 the auditor drew attention to the material uncertainty which exists with respect to the ability of the group to continue as a going concern, as explained below.

 

The consolidated financial statements have been prepared on the historical cost basis, save for the revaluation of certain financial assets.

 

During the year ended 30 November 2019 the Group adopted IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers but neither standard had a material effect on the results of the Group. Otherwise there were no changes to the Group's accounting policies for the year ended 30 November 2019 as compared to those published in the statutory financial statements for the year ended 30 November 2018.

 

This announcement was approved by the Board on 30 March 2020.

 

2. GOING CONCERN

 

Going concern

Based on financial projections prepared by the Directors, the Group's current cash resources are insufficient to enable the Group to meet its recurring outgoings and projected exploration expenditure for the entirety of the next twelve months. However, the Directors have a reasonable expectation that the Group will continue to be able to meet its commitments for the foreseeable future by raising funds when required from the equity capital markets. The Group and Company may also consider future joint venture funding arrangements in order to share the costs of the development of its exploration assets, or to consider divesting of certain of its assets and realising cash proceeds in that way in order to support the balance of its exploration and investment portfolio. 

 

Given the current share price of the Company trades below its par value of £0.001, the ability of the Company to raise funds by the issuance of shares is currently constrained since, under the Companies Act 2006, the Company may not allot shares for an issue price less than their par or nominal value.  However, it is noted that the Company intends to put forward a resolution to reduce the par value of its ordinary shares to £0.0001 at its forthcoming Annual General Meeting to be held in April 2020.  Assuming that resolution is passed, the Company will thereafter be able to issue ordinary shares at or above that new par value.

 

COVID-19, and the uncertainty over its duration, is creating volatility in equity markets and will make raising additional funds from any source significantly more challenging.

 

The Directors continue to adopt the going concern basis of accounting in preparing the financial statements, but note that there is a material uncertainty over the ability of the Company and the Group to fund the recurring and projected expenditure, including development of the Group's exploration assets. If the Company and the Group are unable to raise necessary funds, the ability of the Company and the Group to continue as going concerns would be in significant doubt and they may be unable to realise their assets and discharge their liabilities in the normal course of business. In particular, the inability to fund the continued development of the Group's exploration assets may result in them becoming impaired and any failure to contribute its share of future exploration and development activities in respect of the oil and gas investments would result in the dilution of the Group's interests in those assets.

 

3. LOSS PER SHARE

 

Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of £1,311,172 (2018: £72,823 loss) by the weighted average number of shares of 3,403,506,056 (2018: 2,717,353,000) in issue during the year. The diluted loss per share calculation is identical to that used for basic loss per share as warrants are not dilutive due to the losses incurred.

 

4. RELATED PARTY TRANSACTIONS

 

Stirling Corporate Limited, a company which George Frangeskides, a director of the Company, controls, charged the Group £39,191 (2018: £30,319) for the provision of financial and administrative services. As at the year end £17,185 (2018: £21,395) was owed to Stirling Corporate Limited and £8,702 was accrued for invoices expected. The independent Directors, having consulted with the Company's Nomad, consider that the terms of this transaction are fair and reasonable insofar as the Company's shareholders are concerned. 

Aetos Consulting Limited, a company which George Frangeskides, a director of the Company, jointly controls, charged the Group fees for consultancy services of £37,853 (2018: £36,225). Of these fees, £28,514 are not reported as director's fees as they represent work carried out specifically on the advancement of the Group's project portfolio and have therefore been capitalised. As at the yearend £18,710 (2018: £36,225) was owed to Aetos Consulting Limited and £37,853 was accrued for invoices expected.

 

Woodridge Associates, a business which Michael Nott, a director of the Company, controls, charged the Group fees for consultancy services of £nil (2018: £58,750). As at the year end, £50,500 (2018: £58,750) was due to Woodridge Associates

 

5. EVENTS AFTER THE REPORTING PERIOD

 

Corporate

After the financial year end, in February 2020 we announced that we had entered into an unsecured financing for £767,000 (which can be increased by mutual consent to up to £1,054,500) with US-based institutional fund, Bergen Global Opportunity Fund, LP (the "Financing").   In March 2020 we announced that we had closed the first tranche of funding under the Financing, with Alba issuing the first convertible security and receiving payment of £192,000 from the Investor. 48 million ordinary shares were issued in accordance with the terms of the agreement.  Subject to the fulfilment of the specified conditions and warranties, the second funding tranche will be issued four months after the Company's 2020 AGM (which will be held in April) with each of the third, fourth and fifth funding tranches being issued in further four monthly intervals thereafter.

 

Horse Hill Developments Limited

Since January 2020 we have seen the price of Brent crude oil drop from a high of $70 per barrel to a low of $27 per barrel earlier this month.   

 

Post year end, we reported in relation to Horse Hill that a well intervention to shut-off a water ingress at HH-2z had been successful and that dry oil had flowed to surface.  It was also announced by the Operator, HHDL, that further clean-up activities would be carried out prior to a shut-in. 

 

Shortly before the publication of this report, HHDL confirmed that the Oil and Gas Authority ("OGA") had approved the Horse Hill Field Development Plan ("FDP") and consented to the start of long-term production ("Production") from the field which should allow net recoverable reserves to be allocated to the field.  The Operator further stated that Portland oil pool Production will commence via HH-1, with Kimmeridge Production planned to be added in late spring 2020 by converting the well to a dual completion.  Production from HH-2z is planned to follow upon completion of the current EWT campaign.

 

Exploration licences

In March 2020 the Group confirmed the reduction of certain of its Greenlandic licence areas with effect from 31 December 2019, as follows: 

-       Amitsoq Graphite Project (Mineral Exploration Licence ("MEL") 2013-06): licence area reduced from 146 km² to ~48 km².

-       Inglefield Multi-Element Project (MEL 2017-40 and MEL 2018-25): MEL 2018-25 reduced from 466 km² to ~88 km².   Application has been made for MEL 2017-40 to be relinquished in full.  The Company is in discussions with the Mineral Licence and Safety Authority of Greenland to formalise this.

-       Melville Bay Iron Ore Project (MEL 2017-41): licence area reduced from 53 km² to ~17km².

 

These reductions have not affected the key deposits and targets held within the Group's Greenlandic licence portfolio, which have all been retained.

 

In respect of the Group's Limerick Base Metals Project, held by subsidiary Aurum Mineral Resources Limited ("AMR") under exploration licence PL3824, this licence was due for renewal by 26 March 2020.  Given that renewal would have involved a commitment by AMR to expend further sums on exploration, and given the current COVID-19 global pandemic makes it uncertain when the Group will be able to resume field operations, in March 2020 AMR wrote to the Exploration and Mining Division ("EMD") of the Department of Communications, Climate Action and Environment of The Republic of Ireland, to request an extension of time for AMR to make a decision on whether to apply for renewal.  At the time of writing, the EMD's advice is awaited.

 

Amitsoq (the Greenland graphite project)

In February 2020 we announced the appointment of leading graphite experts ProGraphite GmbH for the next testwork phase in respect of our high-grade Amitsoq graphite project. The testwork programme will be focused on developing an optimised method for the production of graphite suitable for lithium-ion batteries. 

 

COVID-19

The potential impact of the COVID-19 pandemic is discussed in the Chairman's statement preceding these notes.

 

The ability of the Company to raise funds through equity capital raisings, joint ventures or divestments can be expected to remain constrained for so long as current market conditions prevail.  However the Company does have the benefit of the financing package arranged with Bergen Global Opportunity Fund, LP, as described above.

 

Aside from these funding constraints, the COVID-19 pandemic may adversely affect the Group's ability to implement its planned exploration programmes for the coming year, whether due to logistical challenges, such as the curtailment of international flights, because of the unavailability of exploration personnel, equipment or materials or because of Governmental restrictions which are imposed from time to time in any of the jurisdictions in which the Group or its personnel or contractors operate.

 

On 23 March 2020, the UK Prime Minister announced that UK residents will only be allowed to leave their home for certain very limited purposes.  In respect of workers, this includes travelling to and from work, but only where this is absolutely necessary and cannot be done from home.  The Prime Minister also announced the immediate closure of all shops selling non-essential goods and a prohibition on all gatherings of more than two people in public.  The Company will need to consider the precise effect of these, and other, announced measures upon its business and affairs for so long as these measures remain in place, including by reviewing in detail the final provisions of the COVID-19 emergency response legislation which is currently passing through the Houses of Parliament. 

 

In his announcement of 23 March 2020, the Prime Minister committed to keep the announced restrictions under constant review, to look at them again after a period of three weeks and to relax them if the evidence shows this to be possible.

 

In terms of the Company's forward planning, the Company has adopted a working assumption that these restrictions will remain in place for a period of at least three months and that work on site at the Group's UK operations, namely at the Clogau Gold Project, will not be possible during that time.  As the Group does not operate the oil and gas projects in which the Group has investments, namely the Horse Hill and Brockham Projects in the Weald Basin in England, the Company is not able to comment upon what impact the Government's restrictions will have on ongoing operations at those sites.  The Company awaits the advice of the Operators of those projects in that regard.

 

The Directors' view is that being unable to undertake field work in the next three months should not have a material impact on the valuation of the Group's assets.  In this regard, the following considerations apply:

 

In respect of the Clogau Gold Project in Wales, there is a significant amount of technical and geological work and studies that can be undertaken which does not involve field work, building on the significant technical database that has been generated by the Group.  Also, given the weather conditions in north Wales allow for field activities all year round, if the Government restrictions are lifted within three months, the Group would then expect to be able to resume its field activities for the remainder of the year.

 

In respect of the Group's Greenlandic exploration licences, restrictions on travel and field activities for a period of three months would, in the Company's opinion, likely mean that work on site will not be possible this calendar year, not least due to the amount of time needed to prepare for a significant field programme in Greenland, which typically requires months of forward-planning.  It is possible, however, that the Greenlandic authorities will grant a waiver to all licensees in respect of the requirement to fulfil expenditure commitments in the current calendar year, as it has done in previous years when global financial markets were impacted by serious adverse conditions.  But even if this is not the case and the Group is unable to undertake field work during the 2020 field season, there is a significant amount of other technical, geological and economic work and studies which can be undertaken and which would constitute qualifying expenditure on those licences.  Further, if there remains any shortfall on expenditure commitments at the end of this calendar year, the Group may elect (on certain conditions) to carry forward any under-expenditure to 2021, to reduce the size of the licence area such that the expenditure commitment is met or to pay a fine of 50% of any underspend. 

 

Should the COVID-19 pandemic result in the Group's field work activities being suspended for a considerably longer period than the Group's current working assumption of up to three months, the Group will revisit its assessment of whether this is likely to have a material impact on the valuation of the Group's assets. If an impairment is recognised in respect of any of the Group's assets, it is probable that impairments may be required in respect of the Company's investments in and loans to subsidiaries.

 

Both the COVID-19 pandemic and significant reduction in the oil price are considered to be non-adjusting post balance sheet events and therefore have not been taken into account in preparing the statement of financial position as at 30 November 2019.

 

6. REPORTS AND ACCOUNTS

 

The statutory accounts for the year ended 30 November 2019 were approved by the Board of Directors on 30 March 2020, will be sent to shareholders of the Company in due course and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The report and accounts will also be made available on the Company's website: www.albamineralresources.com. The statutory accounts for the year ended 30 November 2018 have been delivered to the Registrar of Companies.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
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Quick facts: Alba Mineral Resources PLC

Price: 0.075

Market: AIM
Market Cap: £3.05 m
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