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Erris Resources PLC - Final Results

RNS Number : 2573V
Erris Resources PLC
05 April 2019
 

Erris Resources plc / EPIC: ERIS.L / Market: AIM / Sector: Mining

5 April 2019

Erris Resources plc

("Erris Resources" or the "Company")

Final Results

 

Erris Resources plc, the European focused mineral exploration company with a portfolio of zinc and base metals projects in Ireland and gold projects in Sweden and Finland, is pleased to announce its final audited results for the year ended 31 December 2018.

 

The Company's Annual Report and Financial Statements for the year ended 31 December 2018 will be posted to shareholders today and will be available on the Company's website at https://www.errisresources.com/annual-interim-reports.

 

Overview

·    Significant work undertaken at Abbeytown zinc-lead-silver-copper project in Northwest Ireland, resulting in the successful delineation of new mineralisation

Surface and underground drill programmes demonstrated that mineralisation extends south from the old mine and returned several high-grade drill intersections

Post period end, soil sampling work in a new target area near the Ox Mountains Fault, generated several new targets

Post period end, a metallurgical study indicated that production of a good quality, saleable concentrate can be achieved

Currently evaluating alternatives to advance the project

·    Acquired 18 contiguous prospecting licences covering 673km2 in an area prospective for base metal mineralisation east of Galway, County Galway

Preliminary prospecting of geophysical targets underway

·    Continued to work with partner, TSX listed Centerra Gold, in Sweden and Finland

Agreed 2019 US$250,000 generative exploration work programme

Targets under review with several Reservation Permit applications submitted

·    Identifying and reviewing new opportunities that show synergies and the potential to add value

·    Strengthened team with the appointment of a new CEO, Anton du Plessis, who has +20 years' experience in the finance sector

·    Maintained a disciplined approach to expenditure and well-funded for 2019 with a £2 million cash position

 

Chairman's Statement

 

Erris Resources has had an active year with significant work undertaken at the Abbeytown zinc-lead-silver-copper project in Northwest Ireland, that resulted in the successful delineation of new mineralisation.  Parallel to this, we continued to work with our partner, Centerra Gold ('Centerra') in Sweden, where a number of new gold targets have been tested.  More recently, this partnership has been expanded into two new districts in Finland where several targets are under review.  Additionally, we are actively seeking and evaluating new projects that fit the Erris Resources model.

 

Ireland

Erris Resources holds six licence areas covering an area of 159km2 comprising the Abbeytown Project in County Sligo.  The area hosts the Abbeytown Mine located within an active limestone quarry operated by the Harrington Group. The old zinc-silver-lead mine is a brownfields exploration project with recently assessed underground workings and new evidence of mineralisation extending southwards from the historic workings as drilled by Erris Resources over the last year.

 

During the year, Erris Resources has focused on expanding its knowledge of the mineralisation at Abbeytown with the objective of delineating a high-grade Zinc-Silver-Lead resource that has the potential to support a new commercial operation.  To this end, the 2018 work programme included both a surface and an underground diamond drilling programme.

 

The surface diamond drilling programme was designed to test the strike and depth extensions of the mineralisation away from the old mine and consisted of ten angled holes on an area between 140m and 375m south of the old mine.  Many holes intersected strong mineralisation and helped to improve our understanding of the controls on mineralisation.

 

The underground drilling programme was intended to test the continuity of the mineralisation identified via the surface drill programme and the original mine workings and consisted of 12 drill holes. The programme involved re-accessing the underground workings, ensuring that the portal entrances to the underground mine were safe, scaling down the main drives, installing radio systems, reconditioning access and working areas, improving ventilation, and taking face channel samples from twelve pillars in the main Index Bed Workings. Additionally, underground mapping, surveying, and 3D modelling were concluded.  Post period end, on 30 January 2019, we announced the results of this programme.  We are excited by the developments from this work and how it ties in the mineralisation from underground to the extension of mineralisation identified by drilling 375m away to the south.

 

The surface and underground drill programmes have successfully demonstrated that mineralisation extends south from the old mine, which was previously unknown. The programmes returned several high-grade drill intersections including:

·    10.85% Zn & Pb combined and 31.1g/t Ag over 4.0m in ERAB001

·    15.63% Zn & Pb combined and 90.68 g/t Ag over 4.1m in ERAB005

·    9.14% Zn & Pb combined with 92.89 g/t Ag over 4.5m in ERAB007 and

·    14.37 % Zn & Pb combined and 67.25g/t Ag over 2.0m in ABUG009 from underground

 

Post period end, we also completed soil sampling work in a new target area near the Ox Mountains Fault, an important basin bounding fault with large displacement, a feature which is commonly considered favourable for mineralisation as large faults are good conduits for mineralising hydrothermal fluids.  Circa 270 soil samples were taken at 10m spacing along north south lines across an area where previous wide spaced soil samples indicated anomalism in lead and zinc. A number of new targets have been generated, with one very strong anomaly showing up to 1200ppm Pb, 1500ppm Zn and 10ppm Ag in two adjacent samples coincident with a fault inferred from the reprocessed airborne EM data.  These results confirm that structures within the Ox Mountains Fault zone are targets for mineralisation while the very strong anomaly is a priority drill target to extend the footprint of known mineralisation ~900m south of the mine.  The identification of strong anomalies coincident with structures in this area is confirmation that the Company's exploration model and soil sampling methodology is working to expand the known system at Abbeytown.

 

Results were also announced post period end on 13 March 2019 from a metallurgical study by Wardell Armstrong, which defined the potential zinc, lead and silver recoveries enabling us to begin assessment of the economic potential of the project.   The results were very positive as they demonstrated that a good recovery can be achieved at a very coarse grind size (212um) while the ore is relatively soft requiring a minimum grind time. The tests are preliminary in nature as the sample type is limited, however the ore characteristics are favourable for the project.  Mineralisation drilled along strike from the mine does not differ significantly in style or mineralogy to that in the metallurgical sample so a similar outcome may be expected.

 

The work that we have undertaken at Abbeytown continues to indicate that there is potential to expand the mineralised system. The surface and underground drilling has provided us a good understanding of the geology with the scope to extend the known footprint of the mineralisation further south.  The high grades near surface and the nature of the mineralisation, combined with the underground development that Erris has made safe, all have the potential to lead to the development of a low-cost operation.

 

In line with our strategy focused on accelerating resource delineation and development, we are now focused on evaluating alternatives to advance the project. This could be through a joint venture or industry partnership or further drilling to further expand the footprint of the project.

 

In addition to Abbeytown, we acquired 18 contiguous prospecting licences covering 673km2 in an area prospective for base metal mineralisation east of Galway, County Galway ('the Galway Project').  While the licences are located 40km west of the Tynagh Mine, which hosted 9.4Mt at 3.2% Zn, 3.0% Pb, 0.3% Cu and 1 oz/ton Ag and cover similar geology to Tynagh, the area is not well explored.  Prior to developing drill targets, preliminary prospecting of geophysical targets is underway.

 

Sweden and Finland

Erris Resources has a strategic alliance with TSX listed Centerra, whereby Centerra funds an ongoing generative programme, typically US$250,000 per annum, to discover new base or precious metal assets in Sweden and Finland.  Work involves data reviews and target generation, mapping, sampling, geochemical and geophysical surveys and permit applications.  Erris Resources is the initial operator of these programmes and receives a management fee comprising 10% of eligible expenses.

 

During the year under review, the Company undertook work programmes at several targets in Sweden; this is low cost exploration whereby targets are tested in a rapid and efficient way, and if they do not deliver the required criteria we move onto the next target.   Unfortunately, results from our various programmes did not return the potential for a plus million-ounce gold deposit in line with Centerra's size criteria so we decided to relinquish the exploration grounds and move on with generating new targets.

 

2019 has seen Centerra support us once again as it acknowledges Erris Resources' cost-effective and time efficient methods of testing targets and our ability to generate new targets, a key factor for exploration success.   To this end, it committed to spend $250,000 on generative exploration work in 2019 with the option to elect individual projects to earn a 70% interest by spending US$3 million (51% by spending US$1 million and an additional 19% by spending US$2 million).

 

In addition to ongoing work in Sweden, the strategic alliance will now focus its efforts on two areas in Finland: the Laivakangas district in Central Finland; and the Central Lapland Greenstone belt in Northern Finland.  Within these districts, several targets are under review. A number of Reservation Permit applications have been submitted with one already granted. Under the Finnish Mining Act, an area of land can be reserved for a period of up to two years while an exploration permit application is being prepared.  Additionally, Erris Resources is actively reviewing new potential targets in Sweden.

 

Board

Anton du Plessis joined the team as Chief Executive Office in October 2018, following the resignation of Merlin Marr-Johnson, who stepped down from his position to pursue other business interests.  With over 20 years' experience in the finance sector, holding senior positions at several international investment banks, Anton has worked on transactions across a range of commodities and for a number of leading global players including Anglogold Ashanti, Rio Tinto and BHP Billiton.  Attracting someone of Anton's calibre, with a track record of advising leading mining companies, has been a very positive step for us; his invaluable specialist knowledge, experience and a wealth of international industry contacts, is proving to be of particular benefit as we look to develop our asset portfolio and deliver on our strategy to identify high value opportunities.

 

Post period end, on 28 February 2019, Andrew Partington stepped down from his position as Non-Executive Director.  I would like to thank Andrew for his valuable contribution to the Company and look forward to maintaining contact with him and his links to the North American markets.  At the same time, Jeremy Taylor-Firth assumed the position of Chairman of the Audit Committee and Graham Brown joined the Audit Committee.

 

Financial Overview

The Company maintains a disciplined approach to expenditure and as such is well funded for the remainder of 2019 with a £2 million cash position.  In line with current market conditions, the Company has been reducing its costs across all areas.

 

Outlook

We are fully aware that the share price performance of the Company since IPO has been challenging, much of this beyond the Company's control linked to macro events and a hard sell down in the junior exploration and mining markets in Q3 and Q4 2018.

 

However, with its strong cash position and team with a proven track record of discovery and value creation, Erris Resources continues to advance its strategy focused on value creation through exploration and discovery.  In line with this, we have already demonstrated the potential of Abbeytown, and we are now reviewing other projects that fit our investment criteria in low-risk jurisdictions internationally.  With the right strategy we believe that significant value can be created for shareholders.

 

I would like to thank our shareholders for their continued support, including industry major, Osisko Gold Royalties, and I look forward to providing further updates on our progress.

 

 

 

Jeremy Martin

Non-Executive Chairman

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

12 months

 

15 months

 

 

ended

 

ended

 

 

31 December

 

31 December

 

 

2018

 

2017

 

Continuing operations

Notes

 

 

 

 

Revenue

4

 

165,216

 

111,676

 

Cost of sales

 

(129,569)

 

(53,005)

 

 

 

 

 

 

 

Gross profit

 

35,647

 

58,671

 

 

Exploration projects impairment

 

(317,396)

 

-

 

Administrative expenses

 

(696,083)

 

(204,725)

IPO costs

 

 

-

 

(340,044)

Share based payments charge

24

 

(124,901)

 

(70,955)

 

 

 

 

 

 

 

Operating loss

6

 

(1,102,733)

 

(557,053)

 

Finance income

9

 

1,289

 

54

 

 

 

 

 

 

 

 

Loss before taxation

 

(1,101,444)

 

(556,999)

 

Tax on loss

10

 

-

 

27,720

 

 

 

 

 

 

 

 

Loss for the financial year

27

 

(1,101,444)

 

(529,279)

 

Other comprehensive income

 

-

 

-

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

(1,101,444)

 

(529,279)

 

 

 

 

 

 

 

Earnings per share from continuing operations attributable to the owners of the parent company

11

 

Basic (cents per share)

 

(3.54)

 

(2.65)

Diluted (cents per share)

 

(3.54)

 

(2.65)

 

Total (loss)/profit and comprehensive (loss)/income for the year is attributable to the owners of the parent company.

 

 

 

 

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

 

 

31 December 2018

 

31 December 2017

 

 

Notes

 

 

 

 

Non-current assets

 

Intangible assets

12

 

1,745,118

 

1,047,708

 

Property, plant and equipment

13

 

-

 

77

 

 

 

 

 

 

 

 

 

1,745,118

 

1,047,785

 

 

 

 

 

 

 

 

Current assets

 

Trade and other receivables

17

 

59,334

 

200,956

 

Cash and cash equivalents

 

2,366,893

 

4,090,143

 

 

 

 

 

 

 

 

 

2,426,227

 

4,291,099

 

 

 

 

 

 

 

 

Total assets

 

4,171,345

 

5,338,884

 

 

 

 

 

 

 

 

Current liabilities

 

 

Borrowings

20

 

-

 

1,139

 

Current tax liabilities

 

30,648

 

30,648

 

Trade and other payables

19

 

112,873

 

241,556

 

Amounts owed to Strategic Alliance partner

21

 

3,794

 

64,968

 

 

 

 

 

 

 

 

 

147,315

 

338,311

 

 

 

 

 

 

 

 

Net current assets

2,278,912

 

3,952,788

 

 

 

 

 

 

 

 

Total liabilities

 

147,315

 

338,311

 

 

 

 

 

 

 

 

Net assets

 

4,024,030

 

5,000,573

 

 

 

 

 

 

 

 

Equity

 

Share capital

25

 

351,133

 

351,133

 

Share premium

 

 

4,151,045

 

4,151,045

 

Other reserves

26

 

827,376

 

759,687

 

Retained earnings

27

 

(1,305,524)

 

(261,292)

 

 

 

 

 

 

 

Total equity

 

4,024,030

 

5,000,573

 

 

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

Share capital

Share premium account

Other reserves

Retained earnings

Total

 

 

Notes

 

 

Balance at 1 October 2016

 

183,932

673,889

-

267,987

1,125,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended 31 December 2017:

 

Loss and total comprehensive income for the period

 

-

-

-

 

(529,279)

(529,279)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

-

 

(529,279)

(529,279)

 

 

 

 

 

 

 

 

 

 

 

 

 

Issue of share capital

25

182,044

4,369,081

-

-

4,551,125

 

Issue costs

 

-

 

(218,036)

-

-

 

(218,036)

Credit to equity for equity settled share-based payments

24

-

-

70,955

-

70,955

 

Merger reserve

 

(14,843)

(673,889)

688,732

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total transactions with owners recognised directly in equity

 

167,201

3,477,156

759,687

-

4,404,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2017

351,133

4,151,045

759,687

 

(261,292)

5,000,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2018:

 

Loss and total comprehensive income for the year

 

-

-

-

 

(1,101,444)

(1,101,444)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

-

-

-

 

(1,101,444)

(1,101,444)

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit to equity for equity settled share-based payments

24

-

-

124,901

-

124,901

 

Transfer of lapsed share options

 

-

-

 

(57,212)

57,212

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total transactions with owners recognised directly in equity

-

-

67,689

57,212

124,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2018

351,133

4,151,045

827,376

 

(1,305,524)

4,024,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

Year ended 31 December 2018

 

15 months ended 31 December 2017

 

 

Notes

 

 

Cash flows from operating activities

 

 

Cash used in operations

32

 

(704,956)

 

(407,068)

 

 

 

 

 

 

 

Net cash outflow from operating activities

 

(704,956)

 

(407,068)

 

Cash flows from investing activities

 

Exploration expenditure

 

(1,014,729)

 

(320,812)

 

Exploration expenditure utilising funds from Strategic Alliance Agreement

 

(1,493,877)

 

(907,265)

 

Interest received

1,289

 

54

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(2,507,317)

 

(1,228,023)

 

Cash flows from financing activities

 

Proceeds from issue of shares

56,319

 

4,494,806

 

Share issue costs

-

 

(218,036)

 

Repayment of borrowings

-

 

(1,429)

 

Funds received from Strategic Alliance Agreements

1,432,704

 

886,715

 

 

 

 

 

 

 

 

Net cash generated from financing activities

 

1,489,023

 

5,162,056

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(1,723,250)

 

3,526,965

 

 

Cash and cash equivalents at beginning of year

 

4,090,143

 

546,194

 

Effect of foreign exchange rates

 

-

 

16,984

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

2,366,893

 

4,090,143

 

 

 

 

 

 

 

 

 

Notes to the financial statements can be found in the Company's Annual Report and Financial Statements on the Company's website at https://www.errisresources.com/annual-interim-reports.

 

*ENDS*

 

For further information visit www.errisresources.com or contact:

 

Anton du Plessis /Aiden Lavelle

Erris Resources plc

+353 (0) 94 902 8481

David Hart/Liz Kirchner

Allenby Capital (Nominated Adviser)

+44 (0) 20 3328 5656

Erik Woolgar

Shard Capital (Joint Broker)

+44 (0) 20 7186 9952

Andy Thacker

Turner Pope Investments (TPI) Ltd (Joint Broker)

+44 (0) 20 3621 4120

Isabel de Salis/Gaby Jenner

St Brides Partners (Financial PR)

+44 (0) 20 7236 1177

 

Notes

Erris Resources plc (EPIC: ERIS.L) is an AIM quoted, European focused, discovery driven exploration company.  Supported by Canadian mining majors, Osisko Gold Royalties, which has a 18.9% interest in the Company, and Centerra Gold KB Inc, a wholly owned subsidiary of TSX listed Centerra Gold Inc., the Company has an established portfolio of zinc and base metals assets in Ireland and gold projects in Sweden, which it is looking to further build on.  Led by a highly qualified team with extensive corporate and sector experience, Erris Resources' strategy is to create shareholder value through commercial discovery of base or precious metal assets in proven mineral districts and in favourable European jurisdictions.


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.
 
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