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Audited results for the year ended 31 December 2018 and Notice of Annual General Meeting

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Audited results for the year ended 31 December 2018 and Notice of Annual General Meeting

31 May 2019

Metal Tiger Plc

(“Metal Tiger”, the “Company” or the “Group”)

Audited results for the year ended 31 December 2018 and Notice of Annual General Meeting

Metal Tiger plc (LON: MTR), the London Stock Exchange AIM listed investor in strategic natural resource opportunities, is pleased to announce its audited results for the year ended 31 December 2018.

Highlights:

  • Sale of the Group’s 30 per cent. interest in the T3 Copper Project in Botswana to MOD Resources Limited (“MOD”) for shares, options and royalty interests amounting to £16.8million, generating a profit of £12.5 million.
  • Increased interest in the Kalahari Copper Belt through a £859,000 investment into Kalahari Metals Limited (“KML”) in exchange for a 34 per cent. interest in KML, with an option to increase its interest to 50 per cent. for a further US$500,000 which was exercised post the year end.
  • In August 2018, successfully raised £6.1million, including £2.6million from the Sprott Group of Companies.
  • Significant progress achieved in our joint ventures with our partners, MOD and KML, through exploration workflows around the Kalahari Copper Belt, leading to the identification of multiple potential high-grade exploration targets.
  • Thai Government’s Minerals Management Master Plan completed in December 2018, giving clarity for forward planning for the Group’s interests in the Boh Yai lead-zinc-silver mine.
  • Continued investment across both Direct Projects and Direct Equites, creating a balanced portfolio of opportunities with varied exposure to several strong management teams and commodity classes, with the potential for significant returns.
  • The Group recorded a loss for 2018 of approximately £4.0million before tax despite the recorded gain on the sale of its interest in T3, partially due to the decline in the MOD share price between the recorded gain and the financial year end.
  • Net asset value of the Company increased to £18,951,000 (2017: £15,443,000) equating to 1.40p per share on a fully diluted basis (2017: 1.33p per share).

Post Period

  • Raised £1million through a private placing conducted by SI Capital Limited.
  • Raised £2million through a non-brokered private placement conducted by Sprott Capital Partners LP and one of its affiliates, Sprott Global Resource Investments Ltd.
  • Definitive Feasibility Study for the T3 Copper Project completed in March 2019. MOD expects to update the T3 Resource Model during the third quarter of 2019, following the completion of the ongoing T3 infill drilling programme and ongoing metallurgical recovery test work. MOD expects these workstreams will also permit the upgrading of part of production within the first two stages of the T3 open pit into the higher confidence JORC compliant Measured Resource category.
  • Significant operational progress achieved by KML at the Okavanago and Ngami Copper Projects, with several potentially high-value targets identified by airborne electromagnetic surveys and diamond drilling of 2,100m planned to commence shortly.
  • Exploration work began at the Logrosán Project, Spain, with encouraging results that could significantly add value to the project, with five high grade tungsten intersections averaging 3m @ 0.3% WO3, plus associated tin credits, confirmed at depth. Logrosán also yielded three high grade, one metre wide, gold intersections (ranging between 9.7g/t and 96.2g/t Au), across two separate targets, delineating subsurface gold for the first time in the Logrosán area.

Michael McNeilly CEO of Metal Tiger stated:

The Board believes that 2018 was a transformational year for the Group with significant progress being achieved across our investment portfolio thanks to the hard work of the Metal Tiger team, as well as the continued support of its shareholders. Most notably, the sale of the T3 Project has set the Group up for potential future success through the Group’s increased footprint in the highly prospective Kalahari Copper Belt, whilst eliminating the cash exposure associated with funding the development of the T3 project. We have continued to make good progress in 2019 across both our Direct Projects and Direct Equities Divisions and look forward to further value realisation across our portfolio.

The Annual Report and Accounts for the year ended 31 December 2018 will be available shortly to view and download from Metal Tiger’s website (www.metaltigerplc.com), along with a notice of Annual General Meeting. The Company has implemented electronic voting and full instructions, including how to request a paper proxy form, are set out in the notice of AGM. The AGM is scheduled to take place at 10.00 a.m. on 28 June 2019 at the Oriental Club, Stratford House, Stratford Place, London, W1C 1ES. Copies of the abovementioned documents will be posted next week to shareholders.

Competent Person's Statement

The technical information contained in this announcement has been read and approved by Mr Nick O’Reilly (MSc, DIC, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Mr O’Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Metal Tiger PLC to provide technical support.

For further information on the Company, visit: www.metaltigerplc.com:

Enquiries:          
Michael McNeilly (Chief Executive Officer) Tel: +44 (0)20 7099 0738
Mark Potter (Chief Investment Officer)
 
Richard Tulloch Strand Hanson Limited Tel: +44 (0)20 7409 3494
James Dance (Nominated Advisor)
Jack Botros
 
Nick Emerson SI Capital Limited Tel: +44 (0)1483 413 500
(Joint Broker)
 

Paul Shackleton

Arden Partners plc Tel: +44 (0)20 7614 5900
Steve Douglas (Joint Broker)
 

Gordon Poole

Camarco

Tel: +44 (0)20 3757 4980

James Crothers (Financial PR)
Monique Perks

Notes to Editors:

Metal Tiger plc is listed on the London Stock Exchange AIM Market (“AIM”) with the trading code MTR and invests in high potential mineral projects with a base, precious and strategic metals focus.

The Company’s target is to deliver a high return for shareholders by investing in significantly undervalued and/or high potential opportunities in the mineral exploration and development sector. The Company’s key strategic objective is to ensure the distribution to shareholders of major returns achieved from disposals. Metal Tiger has two investment divisions: Direct Equities and Direct Projects.

The Direct Equities division invests in undervalued natural resource companies listed on AIM, the ASX and the TSX, which includes its 10.48% interest in MOD Resources Limited (“MOD”). Through the trading of equities and warrants, Metal Tiger seeks to generate cash for investment in the Direct Projects division.

Metal Tiger’s Direct Projects division is focused on the development of its key project interests in Botswana, Spain and Thailand. In Botswana, Metal Tiger, through its JV with MOD and its interest in Kalahari Metals Limited, has a growing interest in the large and highly prospective Kalahari copper/silver belt. In Spain, the Company has tungsten and gold interests in the highly mineralised Extremadura region. In Thailand, Metal Tiger has interests in two potentially near-production stage lead/zinc/silver mines as well as licences, applications and critical historical data covering antimony, copper, gold, lead, zinc and silver opportunities.

The Company actively assesses new investment opportunities on an on-going basis and has access to a diverse pipeline of new opportunities in the natural resources and mining sectors. For pipeline opportunities deemed sufficiently attractive, Metal Tiger may invest in the project or entity by buying publicly listed shares, by financing privately and/or by entering into a joint venture.

CHAIRMAN’S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2018

I am pleased to present the Group’s annual report and audited financial statements for the year ended 31 December 2018.

In July 2018, we were delighted to announce the sale of the Group’s 30% interest in the T3 Copper Project in Botswana, which we held in a joint venture with MOD Resources Limited (“MOD”) of Australia to MOD. In consideration for the sale of its 30% interest, Metal Tiger received shares, options and royalty interests amounting to £16.8million and generating a profit of £12.5million. The sale has increased the opportunity for the Group to invest in other projects, to reduce its cash exposure to funding the development of the T3 resource whilst continuing to benefit from the potential upside in those assets as reflected in our resulting enlarged stake in MOD. The Group retains its interests in the remaining exploration assets through a new joint venture company where the Group holds a 30% interest and MOD holds 70%.

The Group also invested £859,000 during the year to acquire 34% of Kalahari Metals Limited (“KML”) with interests in the Kalahari Copper Belt in Botswana close to the MOD property. The acquisition agreement provided for an option to increase this interest to 50% for a further US$500,000, which was exercised following the year end.

As reported last year, development of the Group’s interests in Thailand were delayed pending the Thai Government’s ratification of its new Minerals Management Master Plan, which was only effectively completed in December 2018. We believe there is the potential to increase significantly the resources at the Boh Yai lead-zinc-silver mine through a modest exploration drill campaign and we, in conjunction with our joint venture partner, continue to determine the optimal path forward.

The drilling programme at our Spanish sites, held via a 50% interest in Logrosán Minerals in Spain, during 2018 and early 2019, has provided some exciting results with high grade tungsten and gold intersections.

The profits made in the sale of the T3 interests have been offset by a decline in the price of MOD shares during the course of the year and by a more general reduction in the market price of our quoted equity portfolio. The decline, across the market, has been caused by a number of external factors, including but not limited to, US-China trade tensions and, closer to home, Brexit. With that said, and in spite of some negative sentiment with regard to the global economy, demand for copper is anticipated to remain strong and we would hope to see the price start to recover in 2019.

The Group also incurred a loss on the sale of its equity stake in Kingsgate Consolidated Limited although the majority of this loss, as reflected in these financial statements, represents an unwinding of a gain reported as at 31 December 2017 on marking to market at that date.

Whilst we have reduced our operating costs during the year, the overall effect of these gains and losses is to record a loss for the year, before tax, of £3.96million, although it should be appreciated that this is after recording £12.4million of unrealised losses in our Direct Equities portfolio, which may reverse during the holding period.

We are continuing to work hard in realising value from the Group’s investments and to make new strategic investments in the market. Shareholders will appreciate, however, that investments in early stage mining projects and companies which carry out such projects are not short term players and may take some years to realise their full potential.

On corporate governance, shareholders will note that we have joined the Quoted Company Alliance and we have included in our Report and Accounts this year a detailed description of our corporate governance practices and how it aligns with the QCA code. We have also taken the opportunity this year to introduce on-line voting for the Annual General Meeting, which will both make it easier for shareholders to vote and cut down on our use of paper. Full details of how to vote on-line are given in the notes at end of the Annual General Meeting Notice which is included with this Report and Accounts. Shareholders who are unable to take advantage of on-line voting may still vote by paper and details of how to do this are also included in the Annual General Meeting notes.

I should like to take this opportunity to thank all our shareholders, business partners and staff for their continued support of the Company and look forward to our future together.

Charles Hall
Chairman
30 May 2019

CHIEF EXECUTIVE OFFICER’S COMMENTARY

FOR THE YEAR ENDED 31 DECEMBER 2018

I am pleased to present the audited results for the year ended 31 December 2018.

Alongside the financial statements and supporting notes, a full review of business activities during the year is provided within the Strategic Report.

Given that the results are for the period ended 31 December 2018, they reflect a historical position in terms of the Group’s progress and indeed its financial position. Accordingly, to assist, therefore, we have included within the Strategic Report further information on the key events post year end.

This highlights the substantial progress achieved by the Group’s copper/silver investments in Botswana and, in particular, the sale of its 30% interest in the T3 Copper Project in Botswana to MOD Resources Limited (“MOD”).

This sale represented a shift in direction for the Company in relation to one of its key Direct Project investments. The Board was cognisant of the complexities that would have been faced trying to fund and co-develop the T3 Copper Project. The structure of the deal set pre-defined terms for MOD to acquire exploration assets along pre-determined valuation guidelines from Metal Tiger, further details of which are set out in the Strategic Report.

The first half of 2018 saw renewed enthusiasm for copper, with prices reaching peak levels in June 2018, followed by a sharp drop and sustained suppression thereafter. Many pundits have blamed the US-China trade war for the falls in several commodity prices, especially copper, and yet this drastic drop seems to be decoupled from the medium to long term supply demand story, which, in the Board’s opinion, remains very strong. As such, the Board believes that its opportune repositioning to one which is more likely to be rewarded by the increased M&A activity that is typical where a disconnect between short term price and long term forecasts and supply and demand fundamentals establishes itself.

The Board considers the Kalahari Copper Belt to remain largely under-explored and believes that the T3 discovery has resulted in a paradigm shift in terms of exploration which opens up the possibility that the tonnage required for larger copper producers may exist in a form in the ground that can be mined economically and with vast scale. This conviction actively led the Board and its technical consultants to identify in Kalahari Metals Limited (“KML”) an investable operational team with a significant land package in the Kalahari Copper Belt. In 2018, this investment bore fruit as the money invested was spent rigorously identifying drill targets, progressing environmental permissions and strategic opportunities to double KML’s land package in the Kalahari Copper Belt.

2018 saw some important management changes, with a reduction in Board size and the transition of Mark Potter from a Non-Executive Director to Chief Investment Officer. Furthermore, the Company switched from having a full-time technical director to using technical consultants on an as-needed basis to assist the existing technical knowledge of the Board and team at Metal Tiger.

In early 2018, Metal Tiger attempted unsuccessfully to remove certain members of the board of Kingsgate Consolidated Limited and subsequently exited its position in the company.

The Board made the tough but necessary decision to cut back costs and staff in Thailand in 2018 whilst waiting for the implementation of the new Minerals Act and associated regulations. The Board believes that the work undertaken by the team in Thailand has created significant value and looks forward to progressing the project as the opportunity arises.

In 2018, the Company made several investments with a view to the future and to generating substantial returns for the Group, which are set out in the Strategic Report. It is our belief that the Group has a diverse and varied exposure to several strong management teams, commodity classes, some excellent geology and a diverse range of jurisdictions, with the potential for significant returns from several of the investments. A key challenge of the Company remains finding suitable Direct Project investments where it can properly implement its strategy given its relative size and limited access to finance on suitable terms.

In 2018, we continued to be active in Direct Equities, making a number of investments over the year, as well as three further investments post year end. We continue to seek opportunities, be that through new or further investments or divestments of existing investments, to create shareholder value. Further details of our Direct Equities activity are set out in the Strategic Report.

We have continued to make good progress in 2019 across both our Direct Project and Direct Equities Divisions and further details of our activities post year end are set out in the “Post Year End Developments” section of the Strategic Report.

I would like to place on record my thanks to all the team at Metal Tiger and its advisors who have worked incredibly hard to bring the Company to its present strong position.

And finally, but most importantly, my thanks to the shareholders who have continued to support the Company and to those investors who helped finance the Company. We continue to deliver our strategic objectives of generating value in the resource sector for the benefit of Metal Tiger shareholders.

Michael McNeilly
Chief Executive Officer
30 May 2019

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2018

RESULTS

The results of the Group for the year ended 31 December 2018 are set out the Consolidated Statement of Comprehensive Income and show a loss before taxation for the year ended 31 December 2018 of £3,958,000 (2017: loss £347,000).

The net asset value of the Company rose to £18,951,000 from £15,443,000 being 1.40p per share from 1.33p per share in 2017 on a fully diluted basis.

REVIEW OF THE BUSINESS DURING THE YEAR

The Group’s operations are carried out within two divisions.

Direct Projects are direct investments into mineral exploration and development projects either through subsidiaries, associates or joint venture companies, operated by the Group’s in-country partners who have the requisite knowledge and expertise to advance projects.

Direct Equities are either strategic investments or part of an on-market portfolio. Strategic investments are those where Metal Tiger seeks to influence positively the management of investee companies to enhance shareholder value. The on-market portfolio investments in listed mining equities and warrants, with a view to making capital gains both in the short and long term as a result of market mispricing or an increase in underlying commodity prices. The on-market portfolio consists of investments in listed mining equities and warrants where the Board believes the underlying investments are attractive. The goal is to make capital gains both in the short and long term as a result of market mis-pricing or an increase in underlying commodity prices.

The following sections of the review cover the operations of both divisions during the year, the Group’s general investment policy and central operations including administrative costs and working capital.

Direct Projects

BOTSWANA

Joint venture operations with MOD Resources Limited

Having announced binding terms in July 2018, in November 2018, Metal Tiger completed a transaction with its 70% joint venture partner and operator, ASX-listed MOD Resources Limited (“MOD”) to sell its 30% interest in the T3 Copper Project (circa 24km2 within prospecting licence PL190) for 17,090,000 MOD shares and unquoted options to receive a further 40,673,566 new ordinary shares for nil consideration, exercisable under certain conditions for a total value equivalent to £15.57million as at the date of the deal. In addition, Metal Tiger obtained a US$2million capped net smelter royalty over the T3 Project as part of the transaction.

Furthermore, Metal Tiger and MOD established a new exploration joint venture company, Metal Capital Exploration Limited (“Metal Capital Exploration”), held 30% by Metal Tiger and 70% by MOD, and operated by Metal Capital Exploration’s wholly owned subsidiary Tshukudu Exploration Botswana (Pty) Limited (“Tshukudu Exploration”).

Metal Tiger is restricted from holding more than 12.5% of MOD’s issued share capital until 16 November 2021 (“Prohibited Voting Restriction”).

Following completion of the transaction, Metal Tiger’s direct interest in MOD, consisting of the shares and options, falls within Direct Equities, whilst the new joint venture remains within Direct Projects.

Metal Tiger granted MOD contractual rights over the new joint venture company, exercisable under certain conditions, including the rights (subject to any requisite shareholder and regulatory approvals/waivers) to purchase:

  • 100% of further discoveries on Prospecting Licences held by Tshukudu Exploration, which progress to an announced scoping study (the “Mineral Resource Option”);
  • Metal Tiger’s 30% interest in Tshukudu Exploration as a one-time election on the third anniversary of the transaction (the “JV Roll-up Option”); and
  • Metal Tiger’s 30% interest in Tshukudu Exploration in the event of a board endorsed change of control of MOD (the “JV Consolidation Option”).

Mineral Resource Option

MOD has a right to purchase any asset held by Tshukudu Exploration that is the subject of a scoping study announced to the ASX. MOD may exercise the option by paying cash, issuing ordinary shares or cashless options or any combination of cash, shares and cashless options at MOD’s election and subject to any applicable laws (including the ASX and LSE Listing Rules). The contract includes provisions to ensure that appropriate waivers are made should MOD’s choice of consideration place Metal Tiger in a position where it would breach Metal Tiger’s Prohibited Voting Restriction. The consideration to be paid on such exercise of the Mineral Resource Option is to be calculated according to the relative proportion of MOD’s enterprise value that independent brokers attribute to the value of the asset, the subject of the Mineral Resource Option at the time of exercise, multiplied by MOD’s actual trading enterprise value based on its 20-day VWAP and applied to Metal Tiger’s percentage ownership in the asset. All Mineral Resource Options will lapse following a bidder acquiring at least 51% of MOD pursuant to a change of control offer to acquire 100% of MOD.

Each Mineral Resource Option may be exercised by MOD at any time between 60 and 150 days following the announcement of the results of the scoping study. A Mineral Resource Option not exercised within this time period will lapse but will not affect the Company’s right to exercise a future Mineral Resource Option arising from:

  • a different scoping study; or
  • a materially revised scoping study based on the same exploration asset, as defined, always provided that there shall be a maximum of two relevant scoping study results announcements for the same asset.

JV Roll-up Option

For the three years following completion of the sale of T3 and the establishment of the new JV, (for a period of 90 days), MOD has a one-off right to acquire Metal Tiger’s 30% interest in Tshukudu Exploration (held via Metal Capital Exploration). MOD may exercise this option by paying cash, issuing ordinary shares, cashless options or any combination of cash, shares and cashless options at MOD’s election and subject to any applicable laws (including ASX and LSE Listing Rules). The consideration to be paid by MOD on exercise of the JV Roll-Up Option will be calculated based on the relative proportion of MOD’s enterprise value that independent brokers attribute to the value of Tshukudu Exploration at the time of exercise multiplied by MOD’s trading enterprise value based on its 20-day VWAP and applied to Metal Tiger’s percentage ownership in the asset. Metal Tiger will receive a 2% net smelter return royalty in respect of any future production from the assets of Tshukudu Exploration (excluding those assets already acquired under a Mineral Resource Option). The JV Roll-up Option will lapse following a bidder acquiring at least 51% of MOD pursuant to a change of control offer to acquire 100% of MOD.

JV Consolidation Option

In the event of any MOD board-recommended change of control offer to acquire 100% of the shares of MOD, then MOD will have a right to acquire Metal Tiger’s 30% stake in Tshukudu Exploration at any time prior to the bidder acquiring 51% of MOD pursuant to the change of control. If the change of control event fails to complete, the completion of the JV Consolidation Option will not occur but the JV Consolidation Option will not be extinguished for any future change of control events. Consideration on exercise can only be paid in cash. Consideration will be calculated according to the relative proportion of MOD’s enterprise value that independent brokers attribute to the value of Tshukudu Exploration at the time of exercise multiplied by the implied enterprise value of the change of control offer and applied to Metal Tiger’s percentage ownership in the asset. Metal Tiger will also receive a 2% net smelter royalty in respect of any future production from the assets which are the subject of the JV Consolidation Option (excluding those assets already acquired under a Mineral Resource Option).

Unquoted MOD Options

The unquoted options have:

  • no voting or dividend rights until they are converted into ordinary shares;
  • may be exercised at any time following completion for nil consideration provided that it will not cause the Company to have voting power in excess of 12.5% of the issued ordinary shares in MOD upon issue of the resulting ordinary shares;
  • may not be exercised unless the number of ordinary shares to be issued to the Company upon exercise would be at least 2% of the issued ordinary shares, provided that if the Company only holds unquoted options which are capable of exercise into less than 2% of MOD’s issued ordinary shares, such restriction will not apply; and
  • have an expiry date which is three years from the date of completion, being 16 November 2021.

Operation of New Exploration Joint Venture

The New Joint Venture is governed by a shareholders’ agreement entered into between MOD and the Company in respect of their shareholdings in Metal Capital Exploration and Metal Capital Exploration’s 100% interest in Tshukudu Exploration, incorporating the following key terms:

a) the board of Metal Capital Exploration comprises two directors nominated by MOD and one nominated by Metal Tiger; and:

i) if the Company’s shareholding in Metal Capital Exploration is reduced to 10% or less then the Company shall not be entitled to nominate any directors (and its representatives on the board shall immediately resign as directors of Metal Capital Exploration);

ii) if the Company’s shareholding in Metal Capital Exploration is reduced to 30% or less then the Company shall only be entitled to nominate one director (and any other of its directors on the board shall immediately resign as directors of Metal Capital Exploration); and

iii) if the Company’s shareholding in Metal Capital Exploration is reduced to 10% or less then the Company shall not be entitled to nominate any Metal Capital Exploration directors (and its representatives on the board shall immediately resign as directors of Metal Capital Exploration);

b) MOD is the manager of all operations and activities pertaining to the exploration assets;

c) all funding required will be by way of equity contributions and/or shareholders’ loans and contributed to pro rata by MOD and Metal Tiger in accordance with their shareholding in Metal Capital Exploration, with:

i) a standard dilution formula for a non-contributing party to apply until any right granted in respect of the exploration assets has lapsed; and

ii) following the lapse of any right granted in respect of the exploration assets, the dilution for a non-contributing party shall be determined by two experts based on the value of the assets of the joint venture;

d) if Metal Tiger’s or MOD’s shareholding in Metal Capital Exploration is diluted to less than 10% then Metal Tiger or MOD, as the case may be, must transfer their shares in Metal Capital Exploration to the non-diluting shareholders (on a pro-rata basis) in consideration for the grant by Metal Capital Exploration of a 2% NSR royalty in favour of the diluting Metal Capital Exploration shareholder; and

e) the sale or transfer of a shareholder’s shares in Metal Capital Exploration is subject to customary pre-emptive rights and drag and tag rights.

The Company has appointed Michael McNeilly as its MOD board representative, and maintains the right to an MOD board representative provided that the Group owns at least a 10% interest in MOD (including shares and MOD options).

The Company has committed to support MOD Board recommendations until November 2021, with certain restrictions also having been placed on the Company’s ability to sell MOD shares. The lock up on Metal Tiger’s 17,090,000 MOD shares no longer applies from 16 November 2019.

The Company is restricted from holding over 12.5% of MOD’s issued share capital until 16 November 2021, except that waivers will be made should MOD's choice of consideration on the exercise of Mineral Resource Option cause a breach of this restriction.

Strategically, the transaction placed the Group with an effective 47% interest in the new exploration JV, whilst removing the requirement to fund the T3 Copper Project.

The Definitive Feasibility Study (“DFS”) for the T3 Copper Project was completed and announced by MOD Resources at the end of March 2019. Further details of this are given in the review of post year end developments later in this report. Upon completion, results of the T3 infill programme will be incorporated into an updated resource model during the third quarter of 2019, when MOD expects to upgrade a significant proportion of production within the first two stages of the open pit into the higher confidence JORC compliant Measured Resource category. This may result in upgrading part of the current Probable Ore Reserve to the Proved Ore Reserve category.

Regional Exploration (Metal Tiger 30%)

The Kalahari Copper Belt is one of seven sediment hosted copper belts that have demonstrated potential to host deposits with over 2,000,000 tonnes of contained copper.

During the last quarter of 2018, the Minister for the Department of Mineral Resources, Green Technology and Energy Security renewed 18 key licences for a minimum of two years and transferred these licences from Tshukudu Metals Botswana (Pty) Ltd to Tshukudu Exploration.

Tshukudu Exploration’s extensive landholding in the Kalahari Copper Belt includes several regional soil and Airborne Electromagnetic (“AEM”) anomalies that occur scattered within a zone extending over >140km along the Central Structural Corridor. This includes the 50km long T3 Dome hosting the T3 deposit and the interpreted ~60km long anomalous soil zone within the T20 Dome. This land package increased in 2018 when Tshukudu Metals Botswana (Pty) Ltd, acquired a 100% interest in two exploration licences PL126/2013 and PL127/2013 over the centre of T20 Dome.

In Q2 2018 and Q3 2018, Tshukudu Exploration received long-awaited Environmental Management Permits, which provide the necessary permission to commence drill testing, for ~680km2 around T3 and for ~700km2 at the T20 “dome complex”, respectively. Since then, the company drilled three regional targets (A4, A1, T23) within trucking distance of a nearby processing plant and encountered significant copper (plus silver) mineralisation in all three, hitting 52m at 1.5% Cu in A4, 130m at 0.52% Cu in A1, and 25m at 0.36% Cu in T23 (Figure 1). Economic tonnages and grades have yet to be demonstrated, however the technical success rate is considered to be impressive, especially as numerous similar targets remain to be tested.

During 2018, the joint venture completed exploration activities on selected targets within two well defined areas, the T3 Expansion Project and the T20 Exploration Project. At the T3 Expansion Project the priority targets drilled during 2018 were at the A4 Dome and the A1 Dome. Minor drilling was completed within the T20 Exploration Project area.

The A4 Dome is located 8km from the T3 Copper Project, with 20 holes having been drilled in 2018. It remains a high priority target with 18 of the completed holes being successful in identifying both vein hosted and Ngwako Pan Formation (“NPF”) contact mineralisation. It is believed by the joint venture that the A4 Dome could represent future underground mine potential as feed for the T3 Copper Project. Therefore, viewed in the context of the Company’s deal with MOD, the A4 Dome represents a highly strategic project for drilling.

The A1 Dome is located 22km to the northeast of the T3 Copper Project. In 2018, six widely spaced holes were drilled, intersecting copper and NPF contact mineralisation with one drill hole intersecting 52m at 0.61% Cu from 624m and included two individual assays of 3.66% Cu and 4.29% Cu on the NPF contact from 673m down-hole.

T20 Exploration Area

The T20 Exploration Area, located approximately 100km west of the T3 Dome and interpreted to occur within the same structural corridor, remains a high priority for future drilling. T20 Dome includes multiple copper and zinc soil anomalies, several with similar or higher values to those associated with the original T3 discovery. More than 80,000 soil samples were taken across the T20 Exploration Area, identifying multiple copper and zinc anomalies displaying similar or higher values to those associated with the original T3 discovery. These samples occur in a ~60km long zone extending from the T20 Dome to the T4 Copper Prospect. These results were announced on 25 January 2018.

The T20 Exploration Area is interpreted to be underlain by shallow dipping sediments including the prospective D’Kar Formation (“D’Kar”) and NPF contact. This contact hosts high grade, structurally related, copper deposits in the eastern part of the Kalahari Copper Belt. The combined strike length of the zone that hosts the T20 soil anomalies and the T3 AEM anomalies is interpreted to extend >140km.

A surface calcrete layer covers large areas of the T20 Area and there is no known previous exploration drilling apart from at the adjacent T4 Copper Prospect. From experience gained at T3, it appears that zinc is more mobile than copper in the weathering profile and may be detected above the calcrete layer more readily than copper. The peak soil value that led to the discovery of T3 at shallow depth below calcrete was 28ppm Cu, with 27ppm Zn.

During 2018, the joint venture drilled three holes within the T23 Dome, a priority target within the T20 Exploration Area, at 600m sections to test the potential of the prospective NPF contact interpreted from AEM to occur at shallow depth. Drill results intersected disseminated copper mineralisation supporting the potential of the structural corridor to host further copper mineralisation.

Kalahari Metals Limited

On 6 June 2018, Metal Tiger announced that it had entered into an investment agreement to acquire up to 50% of Botswanan focused explorer, Kalahari Metals Limited (“KML”). At the time of the investment, KML owned 100% of two licences in the Kalahari Copper Belt situated along strike of Cupric Canyon Capital’s (exploration) projects (circa 50km) and our joint venture projects with MOD covering 1,996km2. In addition, KML had a binding earn-in agreement with Triprop Holdings (Pty) Limited (“Triprop”) in relation to five exploration licences covering a combined area of 2,067km2. KML has a right to earn up to 80% of Triprop and has the right to purchase the remaining 20% of Triprop at an independent valuation. As part of the Stage 1 Earn-in with Triprop, KML was entitled to earn 51% of Triprop (through Triprop issuing new shares to KML) if KML completed US$600,000 of spend in respect of agreed work programmes and budgets by 25 May 2019. As noted in the “Post Year End Developments”, the Stage 1 Earn-in requirement has been met and Triprop has exercised its rights to acquire this interest since the year end.

The initial acquisition resulted in Metal Tiger investing US$600,000 and issuing 1,188,118 new shares in Metal Tiger to the shareholders of Triprop for 18% of the shares in KML previously held by Triprop.

Details of Exploration Licences in the KML Joint Venture

Licence ID   Holder   KML Earn-in   Valid for   Valid from   Valid to   Duration (years)   Licence Area (km”)   Work Area Block
PL148/2017 KML 100% Prospect Metals 1/7/2017 30/6/2020 3 998 Eastern
PL149/2017 KML 100% 1/7/2017 30/6/2020 3 998
Sub-total: 1,996  
 
PL035/2012 Triprop 100% Base Metal, Precious Metals & PGMs 1/4/2018 31/3/2020 2 756 Western
PL036/2012 Triprop 100% 1/1/2018 31/12/2019 2 252
PL041/2012 Triprop 100% 1/4/2018 31/3/2020 2 103 Eastern
PL042/2012 Triprop 100% 1/4/2018 31/3/2020 2 483
PL043/2012 Triprop 100% 1/4/2018 31/3/2020 2 473
Sub-total: 2,067  
Total Area 4,063  

In July 2018, KML commenced its Phase 1 exploration programme for Cu-Ag mineralisation. New Resolution Geophysics was contracted to conduct airborne high resolution heliborne magnetic and electromagnetic surveys (“AEM”) on the prospective Okavango Copper Project (“OCP”) and Ngami Copper Project (“NCP”). The surveys covered a total of 16,700 line-km of magnetics and 1,982 line-km of AEM. This phase of work was followed up with an additional 1,830 line-km of high resolution magnetics and 1,830 line-km of detailed AEM completed in December 2018.

Airborne geophysical data has been successfully used in the Kalahari Copper Belt for targeting the basin wide NPF/D’Kar contact, the basin-wide REDOX change from oxidised below to reduced above, near where copper sulphides potentially precipitate. The NPF/D’Kar contact undulates, along a NE-SW axis, implying NW-SE compression and folding (orientation of the Pan African orogeny). In addition, it can be inferred that a NW-SE compression has also occurred, resulting in a classic ‘dome and basin’ fold interference pattern. The superposition of these two approximately perpendicular folding events produces domes that are ideal basinal fluid traps. Magnetic data provide a means for mapping the contact due to the magnetic susceptibility contrast between D’Kar and underlying, weakly magnetic, NPF. Marker conductors in the lower D’Kar can be mapped in 3D using a combination of inversion methods applied to AEM data.

High resolution magnetic surveys were carried out at a 75m line spacing, providing the necessary detail to map subtle structure, NNW trending Karoo dyke swarms, estimate cover thickness and, importantly, distinguish between magnetic units in the lower D’Kar and weakly magnetic NPF ultimately providing a detailed lithostructural map of the geology under Kalahari Group cover.

AEM surveys were flown in two parts. Initially, licence wide regional surveys were completed at 2km or 4km spacing to estimate Kalahari cover thickness and to exclude regions where perched saline water or conductive cover may limit the effectiveness of the method before embarking on detailed surveys. Detailed 400m surveys were then flown over priority areas in both the OCP and NCP. Processing of AEM data included layered earth inversions which proved highly successful in mapping out folded targets where lower D’Kar stratigraphy is preserved, providing potential trapsites for mineralisation. In addition, weak conductors associated with the lower D’Kar contact were effectively mapped from known deposits (Zones 5 and 5N) into the OCP licence area. Results from the AEM surveys have been used to generate drill targets on both the OCP and NCP.

On 31 October 2018, the Company elected to invest a further US$500,000 bringing the Group’s holding up to 34% (from 18%) and agreed a second phase of exploration.

The board of KML was initially of the opinion that it would have been in a position, following Metal Tiger’s investment, to test drill new copper targets at the end of Q1 2019. This has been delayed later into 2019.

Furthermore, Loci Environmental (PTY) Ltd, a Botswanan-based environmental consultancy, was engaged to prepare and obtain environmental permitting over both projects.

On 30 November 2018, KML signed an Earn-in Agreement with Resource Exploration and Development Ltd (“RED”) to acquire an interest in five recently granted exploration licences (Figure 2), with a total area of 4,661km2. Since the year end, KML has entered into a binding agreement with RED to acquire 100% of Kitlanya (Pty) Ltd (its 100% subsidiary) and has executed a conditional Share Purchase Agreement which terminates the Earn-in Agreement and allows for KML to purchase Kitlanya (Pty) Ltd for US$700,000 to be satisfied by the issue of shares representing approximately 13.4% of KML as enlarged by the acquisition. Post completion, the transaction will value KML at US$5,200,000. The acquisition is conditional on approval of the change of control of Kitlanya being granted by the authorities in Botswana and receipt of an updated letter of good standing for the licences.

Work completed over the Kitlanya ground includes a compilation of historical exploration data, reprocessing and interpretation of available geophysical data, and a short soil sampling programme totalling 3,240 samples. Results highlight the potential for further ‘dome’ targets on this licence package.

THAILAND

The new Minerals Act in Thailand came into effect in August 2017, but certain provisions of the Act required interpretation and implementation. Core among these were the determination of Mineral Deposit Areas (“MDAs”) within which mining leases can be granted, the creation of a five year Minerals Management Master Plan, the appointment of members to the National Board of Mineral Resource Policy and Administration (“NBMRPA”), and the making of downstream bureaucratic changes at the various agencies affected. The Master Plan confirming that the mining lease applications for the Thai lead-zinc-silver mines (“Kemco”) are considered MDAs was ratified by the Thai Cabinet early in 2018 but the entire implementation process, allowing for the resumption of licence and lease application processing, was only completed in December 2018. Evidence of bureaucratic functionality in this context became apparent at the first monthly meeting of the NBMRPA in January 2019, with the granting of highest priority applications first.

In order to minimise costs at the Bangkok office during this period of government inactivity and uncertainty, field exploration programmes, environmental work at the Kemco site and engagement with third parties for studies necessary for the advancement of mining lease applications were put on hold. Staff was reduced and technical activities were limited to those that could be conducted at the desktop level with data already accumulated or readily available. These activities included:

  • creation of detailed drilling plans aimed at increasing the resource at the Boh Yai mine at various budget levels and for alternate land access scenarios using 3D modelled grade shells for the existing resource, structural interpretations and historical drill core data coverage;
  • modelling of temporal historical Kemco production from ore extraction to concentrate production incorporating tonnes, grades, recoveries, reagent consumption and energy usage for analysis of variations according to ore type/location and concentrate type produced;
  • spatial trend and correlation analyses for geological features identified from historical drill core logs and interpretive cross sections;
  • creation of comprehensive Thailand-wide exploration plans to act as the basis for potential future exploration programmes in Thailand unrelated to the Kemco project; and
  • performance of due diligence assessments of geological datasets and economic models for several exploration projects in Thailand, in the gold and tin spaces.

The Company is very confident about the potential to increase significantly the resource at the Boh Yai mine through a modest drill campaign targeting modelled ore extensions and gaps in the data (Figure 3). The joint venture partner is currently exploring legal options which allow the implementation of exploration plans at Boh Yai before formally restarting the mining licence application process for which the next step will be holding public hearings. The Board is in active discussions with our joint venture partner about renegotiating the joint venture agreement terms and the Company will update the market in due course should these discussions bear fruit. At the same time, Metal Tiger Thailand is exploring downstream processing options which could potentially have a positive impact on the economics of the project.

SPAIN

Logrosán Minerals Limited (“LML” or “Logrosán Minerals”) is the joint venture operating company for the Logrosán Exploration Project (“Logrosán Project”) and Maria Gold & Antimony Project (“Maria Project”). It is held 50/50 by Metal Tiger and its joint venture partner, Mineral Exploration Network (Finland) Ltd (“MEN”), and has four exploration concessions and two exploration licence applications held through LML’s wholly-owned Spanish subsidiary Logrosán Minera S.L. as set out in the table below. The licences cover all Group C minerals including Au, Ag, Pb, Sn, W, Pt and Cu.

Licences held by Logrosán Minera S.L.

Asset   Status   Licence Expiry Date   Licence Area (km2)   Comments
Antonio Caño Exploration Licence (#10C 10314-00) Exploration 6 December 2019 37.22 Renewable three times to maximum of nine years from 2/12/2013.
Zorita Exploration Licence (#10C 10332-00) Exploration 18 June 2021 85.08 Renewable to maximum nine years from 18/06/2015

San Cristóbal

(#10C 10321-00)

Exploration 16 June 2019 43.81 Renewable to maximum nine years from 10/6/2016

“Maria Project”
Mari Hernández Permit (#10313-00)

Exploration 14 November 2019 40.09 Renewable to maximum nine years from 31/10/2013

San Cristóbal Sur (#10358-00)

Exploration 10 April 2022 28.11 Renewable to maximum nine years from 10/04/2019
Logrosán Norte (#10C10367-00) Exploration Licence Application n/a 30.72 Exploration Licence Application stamped 11/9/2017

Metal Tiger announced that it had completed the proposed €500,000 of exploration funding into the Logrosán Project on 15 March 2016, to earn the 50% holding in LML. On 31 May 2016, Metal Tiger announced it had concluded negotiations to include the Maria Gold and Antimony Project ("Maria" or "Maria Project") licence (40.09km2) into the Logrosán Minerals JV. Maria is located approximately 15km north of the Logrosán Project.

During the 18 months prior to the joint venture commencing, Metal Tiger's joint venture partner, MEN, had carried out more than 40,000 soil samples, hundreds of pan-concentrate samples, covered thousands of linear kilometres with ground magnetic survey and assessed electro-magnetic tomography. The presence of tungsten mineralisation had been confirmed by soil sampling, outcrop sampling, trenching and historical drill holes. Gold mineralisation had been indicated by pan-concentrate sampling which delineated three areas with anomalous gold.

Prior to concluding the Maria deal, Metal Tiger’s due diligence Rotary Air Blast (“RAB”) drilling had indicated that the area has high prospectivity for antimony-gold div mineralisation; six RAB drill holes had returned intersections between 1g/t Au and 3.94g/t Au and nine drill holes with antimony intersections >1% Sb (with grades up to 2.6% Sb and the largest Sb intersection 4m at 1.2% Sb).

Under the Maria deal, Metal Tiger provided €500,000 over the balance of 2016 and first quarter of 2017 in exploration expenditure, split over the Maria and Logrosán Project areas.

On 19 July 2016, Metal Tiger announced that the San Cristóbal Exploration Licence (43.81km2) certificate had been received.

Between 24 April 2015 and 12 November 2016, the joint venture drilled 384 RAB drill holes totalling 6,879m to an average depth of 17.9m and analysed over 2,500 drill samples, spread across the licence holdings. The drilling had the purpose of confirming the presence and indicative scale of sub-surface mineralisation intersections only, and not for the purposes of Resource definition, but as a minimal environmental impact alternative to deep trenching. The drill holes were arranged on profiles set across the soil geochemistry and ground magnetic anomalies with the azimuth of each drill hole perpendicular to the perceived mineralised trend.

During the 2017 spring season, work focused on the delineation of gold anomalies at the Logrosán licence group. With the shallow RAB drilling on hold, the field programme concentrated on soil sample gold analysis, with infill soil sampling and mapping to laterally delineate the existing gold anomalies as part of target generation for a potential deep drill programme planning and costing. A total of 7,345 samples were assayed for gold comprising the infill soil samples and analysis of XRF sample pulps from samples not previously analysed for gold.

This infill sampling helped to delineate a new regional scale gold anomaly and a new tungsten anomaly at Logrosán East. The infill soil sampling and gold analysis effectively joined El Seranillo North and El Seranillo East into a single, 5km long gold anomaly. The new tungsten anomaly has been named “W Target 3”, it measures 2.3km long and 0.9km wide, with up to 466ppm W in the soil, and is located 3km NE and along strike from the La Dehesa Target deposit which was RAB drilled during 2015.

It is noteworthy that a large scale, 19km long, arsenic anomaly coincides with a regional magnetic structure linking Logrosán South in the southwest of the Project area to the north of Logrosán East, in the northeast of the Project area passing through both the existing La Dehesa Target and the new W Target 3.

Field operations during the autumn of 2017 consisted of infill soil sampling in the north of Logrosán East (3,117 samples) and systematic sampling from road cuttings across this anomaly (total of 780m sampled at 5m intervals).

In the autumn of 2018, work at the Logrosán Project focused on planning a Reconnaissance Drilling Programme with the objective to show whether mineralisation continues to depth ahead of deciding next steps. No further work was conducted at the Maria Project in 2018.

The Reconnaissance Drilling Programme commenced in December 2018, before the Christmas break, completing in February 2019. The programme comprised 12 diamond drill (“DD”) holes, for a total 2,283m, drilled with the objective of determining the potential extent and tenor of mineralisation at depth within an initial four broad mineralised targets qualified at near surface depths by geochemistry, geophysics, trenching and the previous RAB drilling. Two of these four targets were selected for gold, one target for gold and tungsten and one target for tungsten. Individual DD holes varied between 30m–300m in depth, with an average of 190m and between 40-50 degrees inclination. The programme utilised a single Geomachine Oy GM-200 diamond core drilling rig with a Finnish WL-56 size drilling bit to produce a 39mm diameter core. Core was geologically logged and photographed in detail. As this was a reconnaissance drilling programme, core sample intervals were submitted to accredited ALS Laboratory (“ALS”) in Seville as whole core. Pulps from selected high grade samples were re-analysed and ALS ran their own internal QA/QC. Results received since the year end have been encouraging and further details are given in “Post Year End Developments” below.

Reconnaissance Diamond Drill Programme Results

The objective of the Reconnaissance Drill Programme was to show mineralisation continues to depth at four of eight specific target areas ahead of deciding next steps for the Logrosán Project. Details of the various target areas were originally announced 27 June 2017.

The four broad targets, selected on the basis of existing work permits, were:

Logrosán East Targets (gold) consisting of a 5km long, 50m–80m wide gold anomaly (formerly El Seranillo North and El Seranillo East). The current diamond drilling has tested the anomaly at two points (El Serranillo North and El Serranillo East - approximately 2.5km separation) below prospective results in surface trenches (up to 1.88g/t Au and 7.16g/t Au).

In the El Serranillo North target area a total of 22 chip samples had previously confirmed anomalous gold background over an area of 0.3km2 ranging up to a maximum of 4.45g/t Au. Two deep holes (LDD001 and LDD002) targeted the southern limb of this anomaly with a single 1m intersection above 1g/t Au, but with four separate 3m-4m wide zones averaging 0.06g/t Au that could possibly vector to higher mineralisation in the vicinity.

At the El Serranillo East target a single drill hole LDD009 intersected 1m at 96.2g/t Au in a 1.5m wide vuggy, oxidised, quartz-carbonate vein, which also contained traces of the copper oxide malachite. Previous soil sampling in this area also delineated anomalous copper (Au-Cu-As soil association).

On a regional scale the Logrosán East anomaly also marks the eastern most edge of a strontium depletion front emanating from the San Cristobal intrusion.

Logrosán East Targets (for gold) key intersections:

  • Hole LDD009 (El Serranillo South)
    • 1m at 96.2g/t Au from 54m
  • Hole LDD002 (El Serranillo North)
    • 1m at 1.65g/t Au from 200m

Zorita Target (previously called W Target 1 / Logrosán South RAB target) is a 1.2km long by 200m wide soil tungsten anomaly. Previous RAB drilling, 17 holes (268m), on two profiles drilled perpendicular to the tungsten anomaly strike at a 380m separation confirmed near surface high-grade tungsten mineralisation in the north and the centre of the target. The anomaly remains open (untested by drilling) for 700m to the south and for 120m to the north.

The diamond drilling (totalling three holes) has shown the high grade tungsten mineralisation continues to at least 44m down-hole depth (hole LDD011), with narrow high grade gold mineralisation intersected (hole LDD012) beneath the Logrosán South arsenic soil anomaly to the east of the tungsten anomaly.

Zorita Target (for gold and tungsten) key intersections:

  • Hole LDD011
    • 3m at 0.35% WO3 from 44m including:
      • 2m at 0.45% WO3 and 0.01% SnO2 from 45m
  • Hole LDD012
    • 1m at 23.2g/t Au from 191m
    • 1m at 9.73g/t Au from 237m

La Dehesa Target (previously called W Target 2) consists of a 700m long by up to 150m wide soil anomaly orientated NE-SW. It coincides with a 1.6km long geophysical structure and three further weaker anomalies associated with parallel structures.

Previous RAB drilling, 65 holes with average 20m depth (1,300m in total), returned 8m at WO3 0.32% near surface.

The diamond drilling, totalling six holes between 30m-300m depth, has shown that the high grade tungsten mineralisation has the potential to extend from surface to at least 99m down-hole depth (hole LDD004), possibly past 262m down-hole depth (hole LDD007). Intersections from four diamond holes show significant potential to build out a deposit over at least 400m strike length.

La Dehesa Target (for tungsten) key intersections:

  • Hole LDD004
    • 6m at 0.29% WO3 and 0.05% SnO2 from 61m including:
      • 1m at 0.52% WO3 & 0.08% SnO2 from 61m and
      • 2m at 0.51% WO3 and 0.06% SnO2 from 65m
    • 3m at 0.30% WO3 and 0.05% SnO2 from 85m
    • 4m at 0.38% WO3 and 0.07% SnO2 from 95m including:
      • 2m at 0.64% WO3 and 0.07% SnO2 from 97m
  • Hole LDD007
    • 1m at 0.40% WO3 and 0.04% SnO2 from 249m
    • 3m at 0.42% WO3 and 0.05% SnO2 from 259m

Location and Region

The Logrosán Project and Maria Project areas are located approximately three hours’ drive west of Madrid, in a geologically prospective, under-explored and mining-friendly jurisdiction in west-central Spain within the province of Cáceres in the Extremadura autonomous region. The projects are served by a well-developed and maintained road network, with good power, water and telecommunications infrastructure and enjoys the full support of the regional and local government and administration.

Neighbouring Properties

There are two publicly listed exploration and pre-production development companies located within the surrounding region. W Resources Plc’s La Parrilla tungsten mine (49Mt at 0.1% WO3) and mill which is currently under development, is 43km southwest of the project areas and Berkeley Energia’s Gambuta uranium deposit is 30km north.

Summary

Work during 2018 and Q1 2019 centred on a short Reconnaissance Drilling Programme designed to support a decision on further work at the Logrosán tungsten and gold project. The work was conducted in a cost-effective manner, utilising spare drill rig capacity and with direct staffing by our joint venture partner, MEN.

Metal Tiger believes that the drill findings have added significantly to the value of the project with five high grade tungsten intersections averaging 3m at 0.3% WO3, plus associated tin credits, confirmed at depth. As a comparison, commercial tungsten deposits typically grade from 0.1% WO3.

Drilling also yielded three high grade, one metre wide, gold intersections (ranging between 9.7g/t and 96.2g/t Au), across two separate targets which have delineated subsurface gold for the first time in the Logrosán area.

Metal Tiger will be considering the next steps for the project with its JV partner and will provide further updates during the course of 2019.

Direct Equities

During the period 1 January to 31 December 2018, the Direct Equities Division increased its net assets to £12,241,000 from £9,345,000 but reported a loss of £12,946,000 before finance and administrative costs, primarily driven by unrealised losses relating to its listed equity investments in MOD Resources Limited and Thor Mining plc. The unrealised losses were the result of deteriorating macro-economic conditions for metals markets primarily the result of the US-China trade war and a general lack of investor interest in small cap mining companies.

The Direct Equities Division continues to invest in high potential mining exploration and development companies during these difficult market conditions for junior miners. The focus is to invest in mining companies that are significantly undervalued by the market and where there is substantial upside potential through exploration success and/or development of a mining project towards commercial production.

Equity investments are generally comprised of companies that are at exploration, pre-feasibility and definitive feasibility study stage. No mining companies in the investment portfolio are currently at production stage. The portfolio is therefore considered high risk as the future value of investments is often dependent on financing and/or exploration success.

Key events during 2018

The division acquired a significant interest in MOD shares during the year as a result of the sale of the MOD T3 interests outlined above. During the period from 18 July 2018 to 31 December 2018 the MOD share price declined from A$0.48 to A$0.25, a decline of approximately 48%, which has had a significant impact on the value of Metal Tiger’s investment in MOD, reducing the value of the listed equity stake by £7,597,000 and offsetting the gain of £12,530,000 recorded on sale.

Six non-core minority equity investments were partially or completely exited in 2018 raising gross proceeds of £4million. The majority of disposal proceeds related to the sale of an activist minority investment in ASX-listed Kingsgate Consolidated Limited in January 2018, which realised gross proceeds of £3,504,000 and realised a gross loss of £168,000 on original investment cost. A reported loss of £1,136,000 has been recorded in the 2018 results from the Kingsgate disposal reflecting the unwinding of the gain against market value of £830,000 in 2017 recorded at 31 December 2017 and the loss on sale, plus associated costs, of £306,000 in 2018.

Along with the acquisition of additional stock in MOD, three new listed minority equity investments were made in 2018 at a total investment cost of £503,000. Two new minority private equity investments were made in 2018 at a total investment cost of £562,000. In addition, an investment of US$150,000, shown in the financial statements as a non-current investment within the division, was made to acquire a 10% interest in Sita Capital Partners LLP, a UK based investment advisor that is seeking to raise a private equity fund to invest in mining companies. Metal Tiger has been granted beneficial co-investment rights.

Outlook

The majority of Metal Tiger’s investment portfolio is invested in MOD Resources Limited. MOD completed a definitive feasibility study on the T3 Copper Project at the end of March 2019 and is currently considering all strategic and financing options in order to advance the project to commercial production.

Metal Tiger also has a number of Direct Equity Division investments in early stage, exploration-focused mining companies. These investments are higher risk and may result in substantial gains or a significant loss of value. Many of these companies are actively pursuing exploration drilling campaigns and we look forward to reporting significant results during the course of 2019.

Summary of listed investments held at 31 December 2018

Investment   Listing   Description   No. of securities held   Value at
year end £
MOD Resources Limited LSE/ASX T3 Copper Project and exploration 31,064,220 ordinary shares

40,673,566 options
(nil exercise price, expiry 15/11/2021)

154,167 warrants
(A$0.6, expiry 15/4/2019)

4,288,000

5,615,000


-

Thor Mining plc AIM/ASX Molyhil tungsten project 80,100,000 ordinary shares

10,000,000 warrants
(5p, expiry 29/1/2020)

1,041,000

13,000

Greatland Gold plc AIM Gold exploration 14,700,000 ordinary shares 266,000
Sable Resources Limited TSX-V Gold and silver exploration 650,000 ordinary shares 75,000
Arkle Resources plc
(was Connemara Mining plc)
AIM Zinc exploration 4,869,952 ordinary shares

4,819,277 warrants
(7p, expiry 9/3/2020)

75,000


-

Summary of unlisted investments held at 31 December 2018

Investment   Listing   Description   No. of securities held   Value at
year end £
Pan Asia Metals Limited Private Lithium and tungsten exploration 7,627,447 ordinary shares 460,000
Veta Resources Inc. Private Gold exploration 1,666,667 ordinary shares 144,000
Tally Limited
(was Lionsgold Limited)
Private Gold currency 3,840,909 ordinary shares

9,090,909 warrants
(2.2p, expiry 29/1/19)

102,000

-

Investment Policy

Proposed investments to be made by the Group may be: either quoted or unquoted; made by direct acquisition or through farm-ins; may be in companies, partnerships, joint ventures; or direct interests in mining projects. Target investments will generally be involved in projects in the exploration and/or development stage and/or producing mines.

The Group’s Direct Projects Division currently remains focused on projects located in South East Asia, Australia, Africa and Europe but will also consider investments in other geographical regions. The Directors identify and assess potential investment targets and, where they believe further investigation is required, appoint appropriately qualified advisors to assist.

The Group carries out a comprehensive and thorough project review process in which all material aspects of any potential investment are subject to appropriate due diligence.

The Group’s Direct Equities Division invests in both strategic and on-market investments. In considering acquisitions and hold/sell decisions the Group considers the commodity price outlook, the track record of management, the ability for the Metal Tiger management team to “add value” through corporate governance, financial and technical expertise, the potential to increase substantially the value of any mining asset through exploration and development regardless of commodity price performance, and the ability to exist. Investments are made in low and medium risk geographic jurisdictions.

The Company intends to deliver shareholder returns principally through capital growth rather than income distribution via dividends and actively manages its investment portfolio to achieve this aim. Given the nature of the investing policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value. The Board considers that, in due course, the Company may require additional funding as investments are made and new investment opportunities arise.

Administrative Expenses

Administrative costs in the year can fluctuate significantly depending on the level of activity as regards the work carried out on acquisitions and disposals, in managing Direct Project investments, in our subsidiaries on Direct Project operational costs and on the level of professional costs, principally legal costs, involved with project acquisition and with direct equity purchases and sales. Direct Project operational costs are included within administrative costs and expensed unless they comply with the Group’s capitalisation policy as set out in note 2 to the financial statements.

The administrative costs for the year have also been affected by the Company’s VAT position. During the year HMRC challenged the approach the Company has been using in respect of its partial exemption calculations for VAT recovery. We have opposed, and are continuing to oppose, HMRC’s position on this. Whilst we would hope for a positive outcome, in view of the uncertainty we have fully provided against VAT incurred in the year of £207,000 and against £150,000 of claims in respect of past years. Of the total charge £140,000 relates to costs incurred on the T3 MOD joint venture and has been included within the calculation of the profit on the sale of those interests, with £216,000 being included as an increase in administrative expenses.

After taking VAT provisions into account, administrative expense in 2018 amounted to £3,431,000 compared to £4,783,000 in 2017, a decrease of 39%.

The reduction in expenses principally arose as a result of the reduction in direct costs relating to the Group’s Thai operations (£771,000 reduction in total, of which £144,000 related to staff costs) for the reasons more fully explained on page 14 of the annual report and the absence of expenditure on the proposed IPO of the Thai assets which in 2017 amounted to £712,000. There was an increase in remuneration costs in the year as set out in note 6 to the financial statements reflecting changes in the board and responsibilities but this was primarily offset by a reduction in other administrative expenses including external legal and professional costs.

Finance and Working Capital

During 2018, Metal Tiger received a net £6,547,000 through placings undertaken with third-party investors and the exercise of warrants and options by Directors and others (2017: £7,642,000). £3,967,000 (2017: £5,402,000) was raised from the disposal of Direct Equities investments.

Of the total cash generated from operating activities, principally overhead costs including expensed exploration costs relating to Thailand, consumed £3,652,000 (2017: £3,889,000), £946,000 was incurred in the disposal of the T3 assets in Botswana, £3,466,000 (2017: £5,939,000) on new Direct Equity Division investments and £3,438,000 (2017: £1,750,000) on funding Direct Projects Division operations.

POST YEAR END DEVELOPMENTS

Direct Projects

Botswana - Joint venture with MOD

On 7 May 2019, the joint venture announced planned work for the T20 Exploration Project with drilling to start in May 2019, with nine wide spaced reverse circulation (“RC”) holes planned and four diamond drill holes, following up shallow copper and silver mineralisation intersected in three previous holes. Where the proposed T23 Prospect re-drilling is successful, it is planned to extend the drilling eastwards to the T4 West target approximately 7km east of T23. T4 West shows similar geophysical signatures to the T4 Copper Prospect and is located intermediately between the T23 and T4 prospects.

A programme for proposed drilling at the A4 Dome, which is expected to start during the second half of 2019, will seek to test for the widespread NPF contact mineralisation below the A4 Dome and comprises:

  • six shallow RC holes to follow up shallow vein hosted mineralisation in hole MO-A4-019D (announced on 20 December 2018); and
  • one deep DD hole to follow up the high-grade vein hosted mineralisation intersected in holes MO-A4-003D and MO-A4-008D (announced on 20 December 2018).

If successful, it is expected that a further drilling programme would follow on with the objective of delineating a maiden JORC Resource on the A4 Dome. Given the proximity to T3, it is envisaged that such a JORC Resource could potentially feed into the planned T3 Processing Plant.

Botswana – Kalahari Metals Limited

On 11 March 2019, Metal Tiger exercised its option to acquire a further 16% of the voting rights and ordinary share capital in KML for US$500,000 bringing its total investment to US$1.6million and increasing its holding in the company to 50%. As announced on 23 May 2019, KML exercised its rights to acquire 51% of Triprop. This is subject to receiving change of control approval from the Botswanan Government. Upon receiving this approval, KML and Triprop will enter into a joint venture agreement which, inter alia, will give KML the right to appoint two of the four directors to the Triprop Board, one of whom will be the Chairman.

Also on 23 May 2018, it was announced that, following the approval of the Environmental Management Plan for the Ngami Copper Project by the Botswana Department of Environmental Affairs, diamond drilling can now commence with mobilisation scheduled for the first week of June 2019. This first phase of diamond drilling, with an initial 2,100m planned, will test priority fold hinge targets at NCP.

Spain

On 25 April 2019, the results of diamond drilling at the Logrosán gold tungsten project in Spain completed during the winter work programme of 2018/2019 confirmed high grade tungsten intersections and significant gold intersections at depth. We consider that the findings have added significantly to the value of the project with five high grade tungsten intersections averaging 3m at 0.3% WO3, plus associated tin credits, confirmed at depth. Drilling also yielded three high grade, one metre wide, gold intersections (ranging between 9.7g/t and 96.2g/t Au), across two separate targets, delineating subsurface gold for the first time in the Logrosán area. We are currently considering the next steps for the project with our JV partner.

New opportunity pipeline

Opportunities continue to grow and Metal Tiger is considering ways to capture value from pipeline opportunities within Metal Tiger and also from third parties.

Direct Equities

On 28 March 2019, MOD Resources announced the results of the completed feasibility for the T3 Copper Project which includes a proposed 11.5-year open pit mine, 3Mt per annum conventional processing plant and all associated infrastructure. The feasibility study has demonstrated the opportunity to develop a copper mine that is expected to generate revenue of US$2.3billion at a margin of over 47% across the 11.5 year mine life using a long-term consensus copper price of US$3.08/lb. Over the life of the mine, average all-in sustaining costs (“AISC”) are expected to be in the lowest quartile of the cost curve at a very competitive US$1.56/lb of copper produced, after silver credits. The current estimated direct and indirect capital cost for the establishment of the mine, the construction of the process plant and associated infrastructure is US$142million (excluding mining pre-strip costs).

In Q1 2019 the value of the listed minority equity stake in MOD recovered in value as a result of an indicative offer from Sandfire Resources NL at A$0.38 per share.

Three minority equity investments have been made subsequent to the year end in Barkerville Gold Mines Ltd. (£124,000 investment cost), iMetal Resources Inc. (£54,000 investment cost) and Aurelius Minerals Inc. (£57,000 investment cost), all gold exploration companies operating in Canada.

ACCOUNTING TREATMENT

Given the nature of our investments, the tendency is for investors to look at the Group’s net assets and compare this to market capitalisation. For Metal Tiger this simplistic valuation metric does not work as the Group is focused on investment in major resource projects where the value of an interest can increase very rapidly with successful ground exploration or corporate developments.

Where a project or investment has been made to acquire commercially valuable interests, or where the Group has acquired valuable project data and strategic positioning in exploration licences, mining licences and licence applications, then the costs of investment will be capitalised in the Statement of Financial Position at the period end.

Shareholders should note therefore that at present the published net asset position of the Group will largely comprise the working capital representing predominantly cash, investments in joint ventures and associates and liquid tradeable resource shares. Metal Tiger carries no material debt or trade creditors.

KEY PERFORMANCE INDICATORS

 

 
The key performance indicators are set out below:
  31 December 2018   31 December
2017
  Change
%
Net asset value £18,951,000 £15,443,000 +23%
Net asset value – fully diluted per share 1 1.40p 1.33p +6%
Closing share price 1.25p 2.33p -46%
Share price premium/(discount) to net asset value – fully diluted (11)% 75% -114%
Market capitalisation £16,874,000 £25,326,000 -335%

1 Fully diluted net asset value is calculated on the aggregate number of shares in issue at the year end and the number of warrants and options in the money at the year end. There were no warrants or options in the money at the year end (2017: 32,199,000 and 43,780,000 respectively).

PRINCIPAL RISKS AND UNCERTAINTIES

The main business risk is considered to be investment risk.

The Company faces external risks which are those that can materially impact or influence the investment environment within which the Company operates and can include changes in commodity prices and the numerous factors which can influence those changes, including economic recession and investor sentiment.

The Company’s Direct Projects are located in jurisdictions other than the UK and therefore carry with them country risk, regulatory/permitting risk and environmental risk. Direct Project investments tend to be at different stages of development and each stage within the mining exploration and development cycle can carry its own risks. These risks are mitigated by the Metal Tiger Board, Executive Board, senior management and where needed consultants actively working as the operators of projects.

It should be noted that the Company does not operate its Direct Projects on a day-to-day basis and whilst the Board looks to structure investments in a format in which Metal Tiger’s senior management and the Board can influence, obtain high level oversight (often at board level) and use legal agreements to provide control mechanisms (often negative control) to protect the Company’s investments, there is a risk that the operator does not meet deadlines or budgets, fails to propose or pursue the appropriate strategy, or does not provide accurate or sufficient information to Metal Tiger. There is always the risk that an operator does not adhere to the legal agreements in place.

The Company’s Direct Equities Division is exposed to interest rate changes, liquidity risk and volatility particularly in Australia, the UK and Canada.

The Directors intend to mitigate risk by carrying out a comprehensive and thorough project review of any potential investment in which all material aspects will be subject to rigorous due diligence. The Directors believe that the Company has sufficient cash resources to pursue its investment strategy.

GOING CONCERN

As disclosed in note 2, after making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

On behalf of the Board
Michael McNeilly
Chief Executive Officer
30 May 2019

CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2018

In September 2018, the Company adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) in line with the London Stock Exchange’s changes to the AIM Rules requiring all AIM quoted companies to adopt and comply with a recognised corporate governance code and to explain how it complies with that code or, where it departs from its chosen corporate governance code, to explain the reasons for so doing.

The Board is fully committed to a high standard of corporate governance based on practices which are proportional to the size, risks and operation of the business. In adopting the QCA Code, the Board recognises its principles which seek to focus on the creation of medium to long term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as Metal Tiger, have been created.

In this section of the Report and Accounts we detail the approach the Board takes to corporate governance and set out how the Company complies with the majority of principles within the QCA Code. It also explains where we have decided that the recommendations in the Code in relation to evaluating board performance are not appropriate to our size and operations at present.

My role as Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Group. I am also responsible for the implementation and practice of sound corporate governance. As an independent non-executive director, I maintain an adequate degree of separation from the day-to-day management of the Company in performing that role.

In the spirit of the QCA Code it is the Board’s job to ensure that the Group is managed for the long term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to the Group. The Board will continue to monitor the governance framework of the Group as it grows.

Charles Hall
Chairman
30 May 2019

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2018

The Directors present their report together with the audited financial statements for the year ended 31 December 2018.

A review of the business and principal risks and uncertainties has been included in the Strategic Report.

DIVIDENDS

No interim dividend was paid (2017: £none) and the Directors do not propose a final dividend (2017: £none) for the 12 months ended 31 December 2018.

DIRECTORS

The Directors of the Company who held office during the year and to the date of this report were as follows:

Charles Patrick Stewart Hall (Chairman)    
Terrence Ronald Grammer
David Michael McNeilly
Mark Roderick Potter
Neville Keith Bergin appointed 1 March 2018
Geoffrey Stephen McIntyre resigned 1 March 2018
Alistair Middleton resigned 27 June 2018
Keith Springall resigned 1 October 2018

Further details of the Directors’ remuneration are given in note 6, details of Directors’ share options are given in note 25 and the Directors' interests in transactions of the Group and the Company are given in note 27.

FUTURE DEVELOPMENTS

The future developments of the business are set out in the Strategic Report under “Post Year End Developments” and are incorporated into this report by reference.

FINANCIAL INSTRUMENTS

Details of the Group’s financial instruments are given in note 26.

SIGNIFICANT SHAREHOLDERS

As at 30 May 2019 the following were, as far as the Directors are aware, interested in 3% or more of the issued share capital of the Company

Name   Number of ordinary shares   % of issued ordinary share capital
Exploration Capital Partners 206,361,942 13.25%
Michael Joseph 95,979,890 6.16%
Terry Grammer 80,963,426 5.20%
RIBO Trust (beneficially owned by Rick Rule) 60,000,000 3.85%

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Details of the Group's financial risk management objectives and policies are set out in note 26 to these financial statements.

POST YEAR END EVENTS

Since 31 December 2018, the following post year end events have taken place.

On 11 February 2019, the Company announced the placing of 70,010,345 new ordinary shares at a price of 1.45p raising approximately £1million. The participants in the placing also received one warrant for every two placing shares subscribed at an exercise price of 2p and valid for a period of two years from the date of admission of the placing shares.

On 11 March 2019, the Company announced a further placing of 137,162,552 new ordinary shares at a price of 1.45p raising approximately £2million. The participants in the placing also received one warrant for every two placing shares subscribed at an exercise price of 2p and valid for a period of two years from the date of admission of the placing shares. In addition, a further 9,629,960 warrants were issued on the same terms to advisors for services related to the fundraising.

On 5 April 2019, the Company announced the issue of a further 384,615 new ordinary shares in lieu of cash for professional services provided to the Company.

INTERNAL CONTROL

The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The Company has well established procedures which are considered adequate given the size of the business.

DIRECTORS’ INDEMNITY INSURANCE

As permitted by Section 233 of the Companies Act 2006, the Company has purchased insurance cover on behalf of the Directors indemnifying them against certain liabilities which may be incurred by them in relation to the Group.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare Group and Company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies quoted on AIM. In preparing these financial statements, the Directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgements and accounting estimates that are reasonable and prudent;
  • state whether they have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the case of each person who was a Director at the time this report was approved:

  • so far as that Director is aware there is no relevant audit information of which the Company’s auditor is unaware; and
  • that Director has taken all steps that the Director ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

The Directors are responsible for ensuring that the annual report and the financial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website are the responsibility of the Directors. The Directors’ responsibilities also extend to the on-going integrity of the financial statements contained therein.

AUDITOR

Crowe Clark Whitehill LLP changed its name to Crowe U.K. LLP on 25 June 2018.

A resolution to re-appoint Crowe U.K. LLP as auditor of the Company for the year ended 31 December 2018 will be proposed at the forthcoming annual general meeting.

By order of the Board

Malcolm Bacchus
Secretary
30 May 2019

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF METAL TIGER PLC

FOR THE YEAR ENDED 31 DECEMBER 2018

OPINION

We have audited the financial statements of Metal Tiger plc (the “Parent Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2018, which comprise:

  • the Group statement of comprehensive income for the year ended 31 December 2018;
  • the Group and Parent Company statements of financial position as at 31 December 2018;
  • the Group and Parent Company statements of cash flows and statements of changes in equity for the year then ended; and
  • the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the Group and Parent Company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion:

  • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company's affairs as at 31 December 2018 and of the Group’s loss for the period then ended;
  • the Group’s financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
  • the Parent Company’s financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union as applied in accordance with the requirements of the Companies Act 2006; and
  • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

  • The Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
  • The Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s and the Parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

OVERVIEW OF OUR AUDIT APPROACH

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to be £300,000, which represents approximately 2% of the Group’s net assets.

We use a different level of materiality (“performance materiality”) to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. We agreed with the Audit Committee to report to it all identified errors in excess of £10,000. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

Overview of the scope of our audit

The Parent Company is accounted for from one central operating location, the group’s registered office. Our audit was conducted from this main operating location.

The Group also has significant components accounted for in Thailand where the audit was undertaken by a local audit firm. Audit instructions were issued to the component auditor, the instructions detailed the significant risks to be addressed through the audit procedures and indicated the information we required to be reported back to the Group audit team. As part of our audit we reviewed component auditor working papers. Telephone conference meetings were then held with the component auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

Key audit matter   How the scope of our audit addressed the key audit matter
Income recognition

There is a presumption that there is always a risk of material misstatement due to improper recognition.

Given the nature of the business the key group income generated relates to the gain on investments primarily composing of gain on investments and movements in fair value of investments held for trading.

Our procedures included:

 

  • Agreeing of a sample of the disposal of investments during the year to supporting documentation and re-performing the gain or loss arising;
  • Reviewing disposals either side of the year end ensuring that the income has been appropriately accounted for within the correct period.

Movements in fair value were also considered and are discussed within ‘Measurement and valuation of investments’ below.

Key Audit Matters (continued)

Key audit matter   How the scope of our audit addressed the key audit matter
Measurement and valuation of investments

The group holds a number of different types of investment where judgement is required when determining the accounting treatment and whether they are accounted for as investments in subsidiaries, investments in joint ventures, investments in associates or Direct Equities Division investments.

In addition certain investments cannot be agreed to third party market data, in particular investments in the associates, investments in joint ventures and the investments held in share warrants. For these investments management has determined alternative approaches to ensure that these are appropriately valued at the year end.

Our procedures included:

 

  • For a sample of investments during the year considering the classification determined by management, which included consideration of their structure, legal form, contractual agreement and any other fact and circumstances available.
  • Reviewing the value stated in the financial statements for a sample of investments. Where this information cannot be agreed to market information we have discussed the assumptions determined by management in assessing the value, challenging where appropriate, as well considering whether there is any evidence investments may be impaired.
  • Considering the adequacy of the disclosures made in the financial statements over this as a significant area of judgement.

Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matt ers individually and we express no such opinion.

OTHER INFORMATION

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion based on the work undertaken in the course of our audit

  • the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
  • the Directors’ Report and Strategic Report have been prepared in accordance with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION:

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

  • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
  • the Parent Company financial statements are not in agreement with the accounting records and returns; or
  • certain disclosures of Directors' remuneration specified by law are not made; or
  • we have not received all the information and explanations we require for our audit.

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

USE OF OUR REPORT

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Stephen Bullock (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
30 May 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

 

  Note   2018
£’000
  2017

£’000

Sale of interests in exploration operations in Botswana 4 12,530 -
(Loss)/Gain on disposal of investments 18 (511) 3,916
Movement in fair value of Direct Equities Division investments 18 (12,434) 1,541
Share of post-tax (losses)/profits of equity accounted associates 14 (176) 79
Share of post-tax losses of equity accounted joint ventures 15 (33) (100)
Investment income   - 1
Net (loss)/gain before administrative expenses (624) 5,437
Administrative expenses   (3,647) (4,927)
OPERATING (LOSS)/PROFIT 3,5 (4,271) 510
Finance income 7 313 1
Finance costs 8 - (164)
(LOSS)/PROFIT FOR THE YEAR BEFORE TAXATION (3,958) 347
Tax on (loss)/profit on ordinary activities 9 545 (545)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION 5 (3,413) (198)
OTHER COMPREHENSIVE INCOME
ITEMS WHICH MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS:
Exchange differences on translation of foreign operations   (152) (8)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD   (3,565) (206)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION
IS ATTRIBUTABLE TO:
Owners of the Company (3,404) (180)
Non-controlling interests   (9) (18)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION   (3,413) (198)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
IS ATTRIBUTABLE TO:
Owners of the Company (3,554) (188)
Non-controlling interests   (11) (18)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD   (3,565) (206)
 
LOSS PER SHARE
Basic loss per share 11 (0.28p) (0.02p)
Fully diluted loss per share 11 (0.28p) (0.02p)

All amounts relate to continuing activities.

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

AT 31 DECEMBER 2018

 

Note

 

2018
Group
£’000

 

2018
Company
£’000

 

2017
Group
£’000

 

2017
Company
£’000

NON­CURRENT ASSETS
Intangible assets 12 33 - 34 -
Property, plant and equipment 17 - 31 -
Deferred tax asset 9 - - 97 97
Investment in subsidiaries 13 - 564 - 536
Investment in associates 14 1,668 1,668 2,203 2,203
Investment in joint ventures 15 2,049 2,049 1,224 1,224
Other fixed asset investments 16 107 107 - -
Royalties receivable 17 1,285 1,285 - -
    5,159 5,673 3,589 4,060
CURRENT ASSETS
Direct Equities Division investments 18 12,079 12,079 10,062 10,062
Trade and other receivables 19 339 102 482 242
Amounts due from related parties 27 - 2,743 - 2,111
Cash and cash equivalents 20 1,859 1,831 2,845 2,835
    14,277 16,755 13,389 15,250
CURRENT LIABILITIES
Trade and other payables 21 162 143 725 666
Amounts due to related parties 27 146 146 - -
Loans and borrowings 22 52 - 49 -
    360 289 774 666
NET CURRENT ASSETS   13,917 16,466 12,615 14,584
NON-CURRENT LIABILITIES
Deferred tax liability 9 - - 642 642
Contingent consideration 23 125 125 119 119
    125 125 761 761
NET ASSETS   18,951 22,014 15,443 17,883
EQUITY
Share capital 24 135 135 109 109
Share premium account 24 10,639 10,639 6,125 6,125
Share based payment reserve 1,484 1,484 928 928
Warrant reserve 5,173 5,173 3,348 3,348
Translation reserve (137) - 13 -
Retained profits*   1,565 4,583 4,912 7,373
TOTAL SHAREHOLDERS’ FUNDS 18,859 22,014 15,435 17,883
Equity non-controlling interests   92 - 8 -
TOTAL EQUITY   18,951 22,014 15,443 17,883

*Retained profits/losses include the Company ’s loss for the year after taxation of £2,942,000 (2017: profit £1,010,000).

These Financial Statements were approved by the Board of Directors on 30 May 2019

and were signed on its behalf by:

Michael McNeilly, Director
Company number: 04196004

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

    2018
Group
  2018
Company
  2017
Group
  2017
Company
    £’000 £’000 £’000 £’000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/Profit before taxation (3,958) (3,487) 347 1,555
Adjustments for:
Net (profit) on sale of exploration operations in Botswana (12,530) (12,530) - -
Loss/(Profit) on disposal of Direct Equities Division investments 511 511 (3,916) (3,916)
Movement in fair value of investments 12,434 12,434 (1,541) (1,541)
Share of post-tax losses/(profits) of equity accounted associates 176 176 (79) (79)
Share of post-tax losses of equity accounted joint ventures 33 33 100 100
Share based payment charge for year 708 708 468 445
Cost of warrant extension - - 263 263
Equity settled trading liabilities 119 119 63 63
Issue of KEMCO Mining plc warrants (59) (59) 59 59
Depreciation and amortisation 19 - 19 -
Write off of assets - - 2 -
Investment income - - (1) (1)
Finance income (313) (301) (1) -
Finance costs   - - 164 161
Operating cash flow before working capital changes (2,860) (2,396) (4,053) (2,891)
Increase in trade and other receivables (146) (162) (76) (36)
(Decrease)/Increase in trade and other payables (676) (522) 284 336
Increase in amounts due from subsidiaries - (656) - (1,099)
Unrealised foreign exchange gains and losses   30 68 (44) (39)
Net cash outflow from operating activities   (3,652) (3,668) (3,889) (3,729)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investment disposals 3,967 3,967 5,402 5,402
Purchase of intangible assets - - (11) -
Purchase of fixed assets - - (1) -
Purchase of investment in subsidiary - - - (174)
Purchase of investment in, and loans to, associates (2,579) (2,579) (1,522) (1,522)
Purchase of investment in, and loans to, joint ventures (859) (859) (228) (228)
Purchase of other fixed asset investments (107) (107) - -
Purchase of investments (3,359) (3,359) (5,939) (5,939)
Costs relating to the disposal of exploration operations in Botswana (946) (946) - -
Finance income   1 - 1 1
Net cash outflow from investing activities   (3,882) (3,883) (2,298) (2,460)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 6,992 6,992 8,028 8,028
Share issue costs   (445) (445) (386) (386)
Net cash inflow from financing activities   6,547 6,547 7,642 7,642
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (987) (1,004) 1,455 1,453
Cash and cash equivalents brought forward 2,845 2,835 1,390 1,382
Effect of exchange rate changes   1 - - -
CASH AND CASH EQUIVALENTS CARRIED FORWARD   1,859 1,831 2,845 2,835

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

  Share
capital
  Share
premium
  Share based payment
reserve
 
Warrant
reserve
 
Translation
reserve
  Retained profits/
(losses)
  Total equity
shareholders’
funds
  Non-controlling interests   Total
equity
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
BALANCE AT 1 JANUARY 2017 78 1,275 532 1,087 (68) 4,527 7,431 26 7,457
 
Loss for the year ended 31 December 2017 - - - - - (180) (180) (18) (198)
Other comprehensive income - - - - 81 (89) (8) - (8)
TOTAL COMPREHENSIVE INCOME - - - - 81 (269) (188) (18) (206)
Share issues 31 4,592 - 2,965 - - 7,588 - 7,588
Warrant issues - - - 522 - - 522 - 522
Share issue expenses - (386) - - - - (386) - (386)
Cost of share based payments - - 468 - - - 468 - 468
Transfer of reserves relating to exercise and expiry of options and warrants - 644 (72) (1,226) - 654 - - -
TOTAL CHANGES DIRECTLY TO EQUITY 31 4,850 396 2,261 - 654 8,192 - 8,192
BALANCE AT 31 DECEMBER 2017 109 6,125 928 3,348 13 4,912 15,435 8 15,443
 
Loss for the year ended 31 December 2018 - - - - - (3,404) (3,404) (9) (3,413)
Other comprehensive income - - - - (150) - (150) (2) (152)
TOTAL COMPREHENSIVE INCOME - - - - (150) (3,404) (3,554) (11) (3,565)
Share issues 26 4,835 - 2,135 - - 6,996 - 6,996
Warrant issues - - - 73 - - 73 - 73
Share issue expenses - (445) - - - - (445) - (445)
Cost of share based payments - - 708 - - - 708 - 708
Transfer of reserves relating to exercise and expiry of options and warrants - 124 (152) (383) - 152 (259) - (259)
Change of interest without loss of control - - - - - (95) (95) 95 -
TOTAL CHANGES DIRECTLY TO EQUITY 26 4,514 556 1,825 - 57 6,978 95 7,073
BALANCE AT 31 DECEMBER 2018 135 10,639 1,484 5,173 (137) 1,565 18,859 92 18,951

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

  Share
capital
  Share premium account   Share based
payment
reserve
  Warrant
reserve
  Retained
profits/
(losses)
  Total
equity
  £’000 £’000 £’000 £’000 £’000 £’000
BALANCE AT 1 JANUARY 2017 78 1,275 532 1,087 5,709 8,681
Profit for the year and total comprehensive income
for the year ended 31 December 2017

-

-

-

-
1,010 1,010
Share issues 31 4,592 - 2,965 - 7,588
Warrant issues - - - 522 - 522
Share issue expenses - (386) - - - (386)
Cost of share based payments - - 468 - - 468
Transfer of reserves relating to exercise and expiry of options and warrants - 644 (72) (1,226) 654 -
TOTAL CHANGES DIRECTLY TO EQUITY 31 4,850 396 2,261 654 8,192
BALANCE AT 31 DECEMBER 2017 109 6,125 928 3,348 7,373 17,883
Loss for the year and total comprehensive income
for the year ended 31 December 2018
- - - - (2,942) (2,942)
Share issues 26 4,835 - 2,135 - 6,996
Warrant issues - - - 73 - 73
Share issue expenses - (445) - - - (445)
Cost of share based payments - - 708 - - 708
Transfer of reserves relating to exercise and expiry of options and warrants - 124 (152) (383) 152 (259)
TOTAL CHANGES DIRECTLY TO EQUITY 26 4,514 556 1,825 152 7,073
BALANCE AT 31 DECEMBER 2018 135 10,639 1,484 5,173 4,583 22,014

NOTES TO THE FINANCIAL STATEMENTS

1

 

GENERAL INFORMATION

Metal Tiger plc is a public limited company incorporated in the United Kingdom. The shares of the Company are listed on the AIM market of the London Stock Exchange. The Group’s principal activities are described in the Report of the Directors.

2

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and IFRIC interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have also been prepared under the historical cost basis, except for investments in the Direct Equities Division, share options and warrants which are recognised at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed later in these accounting policies.

The financial statements are presented in UK pounds, which is also the Company’s functional currency.

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.

A number of amendments to IFRS became effective for the financial year beginning on 1 January 2018:

  • IFRS 9 Financial Instruments
  • IFRS 15 Revenue from Contracts with Customers
  • IFRIC 22 Foreign Currency Transactions and Advance Consideration
  • Annual Improvements to IFRS 2014-2016.

IFRS 9 Classification and measurement of financial assets and liabilities

The classification of financial assets under IFRS 9 allows such assets to be measured at amortised cost, fair value through the profit and loss account or fair value through other comprehensive income. The Group’s existing accounting policies provide for investments in the Direct Equities Division as accounted for at fair value through the profit and loss account and for trade receivables and loans to be carried at amortised cost.

Trade and other receivables are held at amortised cost in line with IAS 39 and IFRS 9 which replaces it.

IFRS 9 also requires an “expected credit loss” model to be applied to financial assets measured at amortised cost other than those held as investments in equity instruments. The financial instruments held by the Group at amortised cost consist of short term trade receivables mainly relating to tax recoverable and prepayments, cash and cash equivalents. The nature of these assets is such that the change in the model does not affect the amount at which they are held in the financial statements.

Accordingly no re-classification or changes to the current or prior year results, assets or liabilities shown in these financial statements are required in order to comply with IFRS 9.

IFRS 15 Revenue from Contracts with Customers

The Group has no revenue from customers which falls to be accounted for under the new standard and the introduction of the standard has no effect on current or prior year results, assets or liabilities shown in these financial statements. The value attributed to future royalty payments receivable under the agreement for the sale of the Group’s interests in certain exploration operations in Botswana has been treated in accordance with the principles underlying IFRS 15 (see “Royalties Receivable” below and note 4).

IFRIC 22 Foreign Currency Transactions and Advance Consideration and the Annual Improvements to IFRS 2014-2016

The adoption of IFRIC 22 and the Annual Improvements 2014-2016 have no effect on the current or prior year results, assets or liabilities shown in these financial statements.

An overview of standards, amendments and interpretations to IFRS issued but not yet effective, and which have not been adopted early by the Company, is presented below under “Statement of Compliance”.

GOING CONCERN

The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do so. At the year end the Group had net current assets of £13,917,000 including cash balances of £1,859,000 and quoted investments of £11,360,000 compared with borrowings of £52,000. Since the year end the Company has raised a further £3million, before costs, from placings. The Directors have prepared cash flow forecasts through to 31 December 2020 which demonstrate that the Group is able to meet its commitments as they fall due. On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group’s financial statements.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management’s knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In certain circumstances, where fair value cannot be readily established, the Directors are required to make judgements over carrying value impairment and evaluate the size of any impairment required.

SALE OF INTERESTS IN EXPLORATION OPERATIONS IN BOTSWANA

The calculation of the proceeds from the sale of interests in exploration operations in Botswana includes an estimate of the value of share options received in MOD Resources Limited, the acquirer of those interests, and the value of the royalty payments that the acquirer is contractually obliged to make to the Group when those interests come into production. The assumptions used in making those estimates are set out in note 4.

SHARE BASED PAYMENTS AND SHARE WARRANTS

The calculation of the fair value of equity-settled share based awards and warrants issued in connection with share issues and the resulting charge to the Statement of Comprehensive Income or reserves requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company’s share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards at the date of grant.

FAIR VALUE OF INVESTMENTS

The Group’s investments in the Direct Equities Division require measurement at fair value. Investments in shares in quoted entities traded in an active market and unquoted shares are valued as set out in “Current Assets Investments” below. The unquoted share warrants (Level 3) are shown at Directors’ valuation based on a value derived from either Black-Scholes or Monte Carlo pricing models depending on the suitability of the method to the specific warrant taking into account the terms of the warrant and discounting for the non-tradability of the warrants where appropriate. Both pricing models use inputs relating to expected volatility that require estimations. No value is ascribed to warrants which include terms which cause the exercise price to be dependent on events outside the control of the Group and outcomes which are unable to be predicted with any certainty. The nil price options to acquire shares in MOD Resources Limited received as part of the disposal for certain of the Group’s exploration interests in Botswana are valued at the open market value of the shares in MOD Resources Limited as the shares and options are considered to be intrinsically equivalent (see note 4).

CLASSIFICATION OF JOINT ARRANGEMENTS

For all joint arrangements structured in separate vehicles the Group must assess the substance of the joint arrangement in determining whether it is classified as a joint venture or joint operation. This assessment requires the Group to consider whether it has rights to the joint arrangement’s net assets (in which case it is classified as a joint venture), or rights to and obligations for specific assets, liabilities, expenses, and revenues (in which case it is classified as a joint operation). Factors the Group must consider include:

  • structure;
  • legal form;
  • contractual agreement; and
  • other facts and circumstances.

Upon consideration of these factors, the Group has determined that all its joint arrangements structured through separate vehicles give it rights to the net assets and are therefore classified as joint ventures.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE INVESTMENTS

In arriving at the carrying value of investments in subsidiaries, associates and joint ventures, the Group determines the need for impairment based on the level of geological knowledge and confidence of the mineral resources (as further described in its accounting policy). Such decisions are taken on the basis of the exploration and research work carried out in the period utilising expert reports.

BUSINESS COMBINATIONS

Contingent consideration on acquisitions is recognised at fair value.

STATEMENT OF COMPLIANCE

The Financial Statements comply with IFRS as adopted by the European Union.

Details of new standards applied during the year and their effect on the financial statements are set out under “Basis of Preparation” above.

At the date of authorisation of these financial statements, a number of Standards and Interpretations were in issue but not yet effective. The adoption of these standards and interpretations, or any of the amendments made to existing standards as a result of the annual improvements cycle, including the introduction of IFRS 16 will not have a material effect on the financial statements in the year of initial application nor will require restatement of prior year results, assets or liabilities.

BASIS OF CONSOLIDATION

The Consolidated Statement of Comprehensive Income and Statement of Financial Position include the financial statements of the Company and its subsidiary undertakings made up to 31 December 2018.

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to non-controlling interests, even if this results in non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in ownership interest of a subsidiary without a loss of control is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

  • derecognises the assets (including goodwill) and liabilities of the subsidiary;
  • derecognises the carrying amount of any non-controlling interests;
  • derecognises the cumulative translation differences recorded in equity;
  • recognises the fair value of the consideration received;
  • recognises the fair value of any investment retained;
  • recognises any surplus or deficit in the Statement of Comprehensive Income; and
  • reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may require that the amounts previously recognised in other comprehensive income be reclassified to profit or loss.

BUSINESS COMBINATIONS

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the date of acquisition and the amount of any non-controlling interest in the acquired entity. Non-controlling interests (“NCI”) may be initially measured either at fair value or at the NCI’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Acquisition costs incurred are expensed and included in administrative expenses except where they relate to the issue of debt or equity instruments in connection with the acquisition, in which case they are included in finance costs.

When the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in determination of goodwill.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Any subsequent changes to the fair value of the contingent consideration are adjusted against the cost of the acquisition if they occur within the measurement period of twelve months following the date of acquisition. Any subsequent changes to the fair value of the contingent consideration after the measurement period are recognised in the Income Statement. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

SEGMENTAL REPORTING

The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors. In identifying its operating segments, management generally follows the Company's service lines which represent the main products and services provided by the Company.

EXPLORATION COSTS

Exploration costs incurred by Group companies, associates and joint ventures are expensed in arriving at profit or loss for the period.

Investments made are capitalised as an asset where the underlying projects have mineral resources which are compliant with internationally recognised mineral resource standards (JORC and NI 43-101) or where the investment is to acquire an interest in an investment or associate that holds commercial information, assets or strategic features against which a current commercial value can be reasonably assessed.

The JORC Code, the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, is a professional code of practice that sets minimum standards for public reporting of mineral exploration results, mineral resources and ore reserves. NI 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada which provides a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada.

TAXATION

Current taxation is the taxation currently payable on taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Company controls the reversal of the difference and it is not expected for the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the Statement of Financial Position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Statement of Comprehensive Income, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.

FOREIGN CURRENCY TRANSLATION

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.

The results of overseas operations are translated at rates approximating to those ruling when the transactions took place. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position reporting date. All exchange differences are dealt with through the Statement of Comprehensive Income as they arise.

INTANGIBLE ASSETS

Software Licences

Expenditure is stated at cost, less amortisation and provision for any impairment. Amortisation is provided at rates calculated to write off the cost of the software over its expected useful life as follows:

Software 10 years straight line

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the Statement of Comprehensive Income in arriving at profit or loss for the year.

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Associates are entities, other than subsidiaries or joint ventures, over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not amount to control or joint control of the investee.

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial decisions require the unanimous consent of the parties sharing control. In some situations, joint control exists even though the Company has an ownership interest of more than 50% because joint venture partners have equal control over management decisions. The Company’s joint venture interests are held through one or more Jointly Controlled Entities (a “JCE”). A JCE is a joint venture that involves the establishment of a corporation, partnership or other entity in which each venturer has a long term interest.

Exploration costs in respect of investments in associates and joint ventures are capitalised or expensed according to the policy set out above in respect of Group exploration costs. For associates and joint ventures which are equity accounted for, any share of losses are offset against cost of investment or loans advanced.

FINANCIAL ASSETS

The Company's financial assets comprise investments held in the Direct Equities Division, royalties receivable, trade receivables and cash and cash equivalents.

OTHER FIXED ASSET INVESTMENTS

Other fixed asset investments comprise equity interests which are primarily held for strategic purposes and not for short term trading. The method of accounting for these assets is set out below under “Accounting for Direct Equity Division investments”.

ROYALTIES RECEIVABLE

Royalties receivable are stated at the expected amounts to be received based on existing committed contracts and discounted at an appropriate discount rate which reflects the estimated risk-weighted cost of capital relevant to that asset. The amortisation of the discount over the period to the receipt of the royalty payments is credited to the Statement of Comprehensive Income as finance income.

The expected amounts to be received, the period over which they will be received and the appropriate discount rate are assessed on the date of acquisition of the royalty interests and re-assessed at each reporting date.

CURRENT ASSET INVESTMENTS

All investments, except those primarily held for strategic purposes or not for short term trading, are designated as current asset investments. The method accounting for these assets is set out below under “Accounting for Direct Equity Division investments”.

ACCOUNTING FOR DIRECT EQUITY DIVISION INVESTMENTS

Investment transactions are accounted for on a trade date basis. Incidental acquisition costs are expensed. Assets are derecognised at the trade date of the disposal. Where investments are traded in a liquid market, the fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Non-traded investments are valued by the Directors using primary valuation techniques such as, where possible, comparable valuations, recent transactions, last price and net asset value.

Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income.

TRADE AND OTHER RECEIVABLES

Trade and other current asset receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. The amount of any impairment provided is based on the expected loss on an item-by-item basis for significant receivables and using a risk-based provision matrix where appropriate.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

IMPAIRMENT OF FINANCIAL ASSETS

The carrying values of the Company’s assets are reviewed annually for any indicators of impairment. Where the carrying value of an asset exceeds the recoverable amount (i.e. the higher of value in use and fair value less cost to sell), the asset is written down accordingly. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income.

FINANCIAL LIABILITIES

The Company’s financial liabilities comprise trade and other payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the instruments.

Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

SHARE BASED PAYMENTS

All share based payments are accounted for in accordance with IFRS 2 – “Share based payments”. The Company issues equity-settled share based payments in the form of share options and warrants to certain Directors, employees and advisors. Equity-settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.

Equity-settled share based payments are made in settlement of professional and other costs. These payments are measured at the fair value of the services provided which will normally equate to the invoiced fees and charged to the Statement of Comprehensive Income, share premium account or are capitalised according to the nature of the fees incurred.

Fair value is estimated using the Black-Scholes valuation model. The expected life used in the model has been adjusted on the basis of management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

WARRANTS

Share warrants issued to shareholders in connection with share capital issues are measured at fair value at the date of issue and treated as a separate component of equity. Fair value is determined at the grant date and is estimated using the Black-Scholes valuation model. Share warrants issued separately to Directors, employees and advisors are accounted for in accordance with the policy on share based payments above.

EQUITY

Equity comprises the following:

“Share capital” representing the nominal value of equity shares;

“Share premium” representing the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

“Share based payment reserve” representing the cumulative cost of share based payment;

“Warrant reserve” representing the outstanding cost of warrants issued in connection with share capital issues; and

“Retained losses" representing retained losses.

3

 

SEGMENTAL INFORMATION

DIVISIONAL SEGMENTS

Year ended 31 December 2018
Group
  Direct Equities

£’000

  Direct Projects

£’000

  Central costs

£’000

  Inter-
company
£’000
 
Total

£’000

COMPREHENSIVE INCOME
Net (loss)/gain on investments (12,945) 12,321 - - (624)
Intercompany sales - 152 - (152) -
Administrative expenses (434) (1,436) (1,929) 152 (3,647)
Net finance income/expense (39) 380 (28) - 313
(Loss)/gain for the year before taxation (13,418) 11,417 (1,957) - (3,958)
Taxation 642 - (97) - 545
(Loss)/gain for the year after taxation (12,776) 11,417 (2,054) - (3,413)
 
FINANCIAL POSITION
Intangible assets - 33 - - 33
Property, plant and equipment - 17 - - 17
Investment in associates - 1,668 - - 1,668
Investment in joint ventures - 2,049 - - 2,049
Other fixed asset investments 107 - - - 107
Royalties receivable - 1,285 - - 1,285
Total non-current assets 107 5,052 - - 5,159
Current assets 12,134 3,013 1,873 (2,743) 14,277
Current liabilities - (3,007) (96) 2,743 (360)
Non-current liabilities - (125) - - (125)
Net assets 12,241 4,933 1,777 - 18,951
 
CASH FLOWS
Net cash flows 69 (5,793) 4,737 - (987)

Direct Equities include strategic investments in resource exploration and development companies including equity and warrant holdings. Direct Projects are mainly by way of joint venture arrangements and include interests in precious, strategic and energy metals, with projects located in Botswana, Thailand and Spain. Central costs comprise those costs which cannot be allocated directly to either operating division and include office rent, audit fees, AIM costs and a proportion of employee and Directors’ remuneration relating to managing the business as a whole.

Year ended 31 December 2017
Group
  Direct Equities

£’000

  Direct Projects

£’000

  Central costs

£’000

  Inter-
company
£’000
 
Total

£’000

COMPREHENSIVE INCOME
Net gain/(loss) on investments 5,457 (21) 1 - 5,437
Intercompany sales - 256 - (256) -
Administrative expenses (585) (3,120) (1,478) 256 (4,927)
Net finance income/expense (7) (132) (24) - (163)
Gain/(loss) for the year before taxation 4,865 (3,017) (1,501) - 347
Taxation (642) - 97 - (545)
Gain/(loss) for the year after taxation 4,223 (3,017) (1,404) - (198)
 
 
FINANCIAL POSITION
Intangible assets - 34 - - 34
Property, plant and equipment - 31 - - 31
Deferred tax asset - - 97 - 97
Investment in associates - 2,203 - - 2,203
Investment in joint ventures - 1,224 - - 1,224
Total non-current assets - 3,492 97 - 3,589
Current assets 10,089 2,360 3,050 (2,110) 13,389
Current liabilities (102) (2,602) (180) 2,110 (774)
Non-current liabilities (642) (119) - - (761)
Net assets 9,345 3,131 2,967 - 15,443
 
CASH FLOWS
Net cash flows (1,045) (4,454) 6,954 - 1,455

GEOGRAPHICAL SEGMENTS

Year ended 31 December 2018

Group   UK
£’000
  EMEA
£’000
  Asia-
Pacific
£’000
  Austral-asia

£’000

 
Americas

£’000

  Inter-company
£’000

 


£

  Total

£’000

COMPREHENSIVE INCOME
Net (loss)/gain on investments (2,223) 12,497 46 (10,914) (30) - (624)
Intercompany sales - - 152 - - (152) -
Administrative expenses (2,820) (24) (650) (296) (9) 152 (3,647)
Net finance income/expense 1 23 148 139 2 - 313
(Loss)/gain for the year before taxation (5,042) 12,496 (304) (11,071) (37) - (3,958)
Taxation 545 - - - - - 545
(Loss)/gain for the year after taxation (4,497) 12,496 (304) (11,071) (37) - (3,413)
 
FINANCIAL POSITION
Intangible assets - - 33 - - - 33
Property, plant and equipment - - 17 - - - 17
Investment in associates - 1,668 - - - - 1,668
Investment in joint ventures - 1,318 731 - - - 2,049
Other fixed asset investments 107 - - - - - 107
Royalties receivable - 1,285 - - - - 1,285
Total non-current assets 107 4,271 781 - - - 5,159
Current assets 3,428 - 3,472 9,902 218 (2,743) 14,277
Current liabilities (130) (150) (2,817) (6) - 2,743 (360)
Non-current liabilities (125) - - - - - (125)
Net assets 3,280 4,121 1,436 9,896 218 - 18,951

Year ended 31 December 2017

Group   UK
£’000
  EMEA
£’000
  Asia-
Pacific
£’000
  Austral-asia

£’000

 
Americas
£’000
  Inter-company
£’000


£

  Total

£’000

COMPREHENSIVE INCOME
Net gain/(loss) on investments 4,313 (21) - 1,145 - - 5,437
Intercompany sales 256 - - - - (256) -
Administrative expenses (3,181) (118) (1,663) (221) - 256 (4,927)
Net finance income/expense (11) (144) 13 (21) - - (163)
Gain/(loss) for the year before taxation 1,377 (283) (1,650) 903 - - 347
Taxation (545) - - - - - (545)
Gain/(loss) for the year after taxation 832 (283) (1,650) 903 - - (198)
 
FINANCIAL POSITION
Intangible assets - - 34 - - - 34
Property, plant and equipment - - 31 - - - 31
Deferred tax asset 97 - - - - - 97
Investment in associates - 2,203 - - - - 2,203
Investment in joint ventures - 493 731 - - - 1,224
Total non-current assets 97 2,696 796 - - - 3,589
Current assets 5,848 - 2,360 7,291 - (2,110) 13,389
Current liabilities (566) (6) (2,237) (75) - 2,110 (774)
Non-current liabilities (761) - - - - - (761)
Net assets 4,618 2,690 919 7,216 - - 15,443
4   SALE OF INTERESTS IN EXPLORATION OPERATIONS IN BOTSWANA
      2018   2017
  £’000 £’000
Equity interest acquired 4,607 -
Options acquired 10,963 -
Royalty rights acquired 1,200 -
Sale proceeds 16,770 -
 
Book value of net assets sold 3,294 -
Direct costs of sale 946 -
Costs attributable to sale 4,240 -
     
Profit on sale 12,530 -

In July 2018, the Company entered into a binding agreement to sell its interests in certain exploration operations in Botswana, known as the T3 Copper Project, held in a joint venture with MOD Resources Limited of Australia ( “MOD”), through the sale of the Company’s 30% interest in Metal Capital Limited.

The sale was conditional, inter alia, on the approval of MOD's shareholders and certain approvals from the Government of Botswana. Those conditions were met on 16 November 2018. The sale of the interests was achieved by the establishment of a new associated company, Metal Capital Exploration Limited, and the transfer of the remaining interests in the original joint venture to a subsidiary of that company, Tshukudu Exploration Botswana (Pty) Limited. The Group's interest in Metal Capital Limited, which then held only the interests in the T3 Dome, was then sold to MOD Resources Limited.

In consideration for the disposal of the T3 Copper Project, Metal Tiger was issued with 17,090,000 shares in MOD (the “Consideration Shares”), and 40,673,566 unquoted MOD options with a nil exercise price and expiring on 15 November 2021 (the “Options”) and was granted a 2% smelter royalty, up to a maximum of US$2,000,000 on production from the T3 resource when brought into production. Following the issue of the Consideration Shares, Metal Tiger was interested in 31,064,220 MOD shares, representing 12.5% of MOD’s then enlarged share capital. Metal Tiger is restricted from disposing of any of the Consideration Shares, as well as any MOD shares issued pursuant to the conversion of the Options, for a period of 12 months from completion. The Options represent approximately 16% of MOD’s enlarged share capital (as enlarged by the Consideration Shares). Metal Tiger may exercise the Options by converting them into one MOD share each, provided Metal Tiger owns equal to or less than 12.5% of MOD after completing such conversion in order to comply with ownership limits for issued shares (if such conversion occurs before 16 November 2021). In arriving at the fair value of the consideration for the disposal of the T3 Copper Project management considers the Consideration Shares and the Options to be intrinsically equivalent and has therefore attributed a fair value of A$0.47 to each of the Consideration Shares and the Options. No discount has been applied to the Options because in the opinion of the Directors any such discount which might appropriately be applied would be immaterial. The option price is equivalent to the valuation that would be obtained using the Black-Scholes methodology with a nil option price.

The royalty has been valued on a discounted cash flow basis assuming an 8% discount rate and recovery in the second half of 2021.

5

  OPERATING LOSS/PROFIT  

 

2018

 

 

2017

  £’000 £’000
Loss/Profit from operations is arrived at after charging:
Wages and salaries (see note 6) 1,481 1,120
Share based payment expense – options 708 468
Share based payment expense – warrants - 263
Amortisation of intangible assets 4 4
Depreciation 15 15
  During the year the Group obtained the following services from the Company’s auditor:
2018 2017
  £’000 £’000
Fees payable to the Company’s auditor for:
the audit of the Group’s financial statements 45 40
tax services 12 6
other assurance services - 140

6

 

EMPLOYEE AND DIRECTORS’ REMUNERATION

The expense recognised for employee benefits for continuing operations is analysed below:

      2018   2017
  £’000 £’000
Short term employee benefits (including Directors) 1,343 1,022
Pension costs 6 11
Social security costs 132 87
1,481 1,120
Share based remuneration 708 731
  2,189 1,851
    DIRECTORS’ REMUNERATION    
2018 2017
  £’000 £’000
Remuneration 610 448
Consultancy fees 43 46
Bonuses 318 182
Pension costs 3 10
Other benefits 11 9
985 695
Share based remuneration 636 716
1,621 1,411
Social security costs 113 73
  1,734 1,484

Details of Directors’ employment benefits expense are as follows:

Name of Director  

Remuneration

£ ‘000

  Consultancy

fees

£’000

 
Bonuses
£’000
  Pension

costs

£’000

  Other

benefits

£’000

  Total

2018

£’000

  Total

2017

£’000

 
Charles Hall 50 - 25 - 1 76 47
Terry Grammer - 40 20 - - 60 36
Michael McNeilly 172 - 150 - 1 323 247
Mark Potter 90 - 73 - 2 165 47
Neville Bergin 29 - - - - 29 -
Keith Springall 145 - 25 - 5 175 153
Alastair Middleton 124 - 25 3 2 154 127
Geoffrey McIntyre - 3 - - - 3 38
  610 43 318 3 11 985 695

Details of share options and warrants granted to Directors during the year are given in note 25.

Average number of persons employed during the year:

   
2018 2017
  Number Number
Direct Projects operations 4 10
Office and management 12 10
  16 20

Key management are the Directors of the Company.

7

 

FINANCE INCOME

 

 

2018

 

 

2017

£’000 £’000
Bank interest 1 1
Amortisation of discount on royalties receivable (see note 4) 39 -
Foreign exchange gains 273 -
  313 1
8   FINANCE COSTS  

 

2018

 

 

2017

  £’000 £’000
Bank interest - -
Foreign exchange losses - 164
  - 164
9   TAXATION  

 

2018

 

 

2017

£’000 £’000
Current tax on income for the year - -
Deferred tax 545 (545)
Total tax charge for the year 545 (545)

The tax on the Group’s (loss)/profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Group or Company as follows:

  2018   2017
Factors affecting the tax charge £’000 £’000
 
(Loss)/profit before tax (3,958) 347
(Loss)/profit before tax multiplied by rate of corporation tax in the UK of 19%
(2017: 19.25%)
752 (67)
Overseas profits/losses taxed at different rates (1) (54)
Changes in rate at which deferred tax is provided (288) 72
Income not chargeable to tax 2,415 -
Expenses not allowable for tax (288) (414)
Other permanent timing differences 3 (20)
Unprovided prior year deferred tax - 104
Tax losses carried forward (2,048) (166)
Total tax 545 (545)

Movements in deferred tax assets and liabilities during the year and the amounts outstanding at the year end are as follows:

  Assets   Liabilities   Net
Deferred tax asset/(liability) £’000 £’000 £’000
At 1 January 2017 - - -
Year ended 31 December 2017:
Share based payments 17 - 17
Direct Equities Division investments unrealised gains - (642) (642)
Tax losses carried forward 80 - 80
Charge for the year 97 (642) (545)
At 31 December 2017 97 (642) (545)
Year ended 31 December 2018:
Credit for the year (97) 642 545
At 31 December 2018 - - -

The deferred tax assets and liabilities and the credit/charge for the year relate to Metal Tiger plc.

No deferred tax asset or liability is provided at 31 December 2018 owing to the availability of losses carried forward and the uncertainty of the timing of future profits. As at 31 December 2018 the Group has unprovided tax losses carried forward of approximately £4,400,000 (2017: £2,400,000) of which £2,400,000 relate to subsidiaries in Thailand and expire over the period to 31 December 2023 (2017: £2,400,000 over the period to 31 December 2022).

10

 

PROFIT/(LOSS) ACCOUNTED FOR IN THE PARENT COMPANY

As permitted under Section 408 of the Companies Act 2006, a Statement of Comprehensive Income for the Company is not presented as part of these financial statements.

11

 

(LOSS)/EARNINGS PER SHARE

The basic earnings per share is based on the profit or loss for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year assumes that all shares have been included in the computation based on the weighted average number of days since issue.

  2018   2017
  £’000 £’000
Loss attributable to equity holders of the Company:
Continuing and total operations (3,404) (180)
No of shares No of shares
Weighted average number of ordinary shares in issue for basic earnings 1,199,134,506 930,169,942
Weighted average of exercisable share options and warrants n/a n/a
Weighted average number of ordinary shares in issue for fully diluted earnings n/a n/a

No share options and warrants outstanding at 31 December 2018 or 31 December 2017 were dilutive in view of the loss for the year and all such potential ordinary shares were excluded from the weighted average number of ordinary shares in calculating diluted earnings per share.

  2018   2017
  Pence per

share

Pence per

share

Loss per ordinary share - basic:

 

 

Continuing and total operations (0.28p) (0.02p)
Loss per ordinary share - fully diluted:
Continuing and total operations (0.28p) (0.02p)

12

 

INTANGIBLE ASSETS

Group   Software

£’000

COST
At 1 January 2017 27
Acquisitions in the year 11
At 31 December 2017 38
Translation differences 3
At 31 December 2018 41
 
AMORTISATION
At 1 January 2017 -
Charge for the year 4
At 31 December 2017 4
Charge for the year 4
At 31 December 2018 8
   
NET BOOK VALUE
At 31 December 2016 27
At 31 December 2017 34
At 31 December 2018 33

13

 

SUBSIDIARY UNDERTAKINGS

The following were subsidiary undertakings at the end of the year. All subsidiaries have year ends which are coterminous with that of the parent Company. Except where indicated all companies are engaged in mineral exploration. Metal Tiger plc controls those companies where its proportion of voting rights is less than 50% by virtue of shareholder agreements.

Name   Registered office   Country of incorporation or registration  
Effective dividend rights held
 
Type of shares held
  Proportion of voting rights and ordinary share capital held
KEMCO Mining plc*
(non-trading)
107 Cheapside
London
EC2V 6DN
England and Wales 100% Ordinary 100%
Metal Tiger Australia Pty Limited*
(non-trading)
Level 2
267 St Georges Terrace
West Perth
WA 6000
Australia
Australia 100% Ordinary 100%
Metal Tiger Exploration and Mining Co. Ltd. 75/32 Richmond Office Building
12th Floor
Soi Sukhumvit 26 Sukhumvit Road
Klongton
Klongtoey Bangkok, Thailand
Thailand 100% Ordinary
Preference
49%
100%
Metal Tiger IHQ Co. Ltd.* 100% Ordinary 100%
Metal Group Co. Ltd. 99% Ordinary 49%
Metal Tiger Resources Co. Ltd. 100% Ordinary 88%

* Directly owned by the Company.

As part of a reorganisation of the Company’s interests in Thailand, Metal Holdings Co. Ltd., Metal Tiger Ventures Co. Ltd. and Metal Tiger Resources Co. Ltd., subsidiaries of Metal Tiger plc, were dissolved during the year. The effect attributable to the members of the Group has been reflected in the Statement of Changes in Equity.

INVESTMENT IN SUBSIDIARY UNDERTAKINGS   2018   2017
Company £’000 £’000
At 1 January 536 339
Increase in capital 28 174
Share based payments - 23
At 31 December 564 536

14

 

INVESTMENT IN ASSOCIATES

The Group and the Company held the following interests in associates at the end of the year:

Name   Registered office   Country of incorporation or registration   Proportion of voting rights and ordinary share capital held   Nature of business
Held directly:
Metal Capital Exploration Limited * 107 Cheapside
London EC2V 6DN
England and Wales 30% Mineral exploration

Held indirectly through Metal Capital Exploration Limited:

Tshukudu Exploration Botswana (Pty) Limited Plot 64518 Fairground
Gaborone, Botswana
Botswana 30% Mineral exploration

*ASX and LSE listed MOD Resources Limited owns the remaining 70% of Metal Capital Exploration Limited.

Group and Company   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 1 January 2017 45 699 744
Additions in the year 249 1,273 1,522
Share of comprehensive income 79 - 79
Translation differences - (142) (142)
At 31 December 2017 373 1,830 2,203
Additions in the year 290 2,498 2,788
Share of comprehensive losses (176) - (176)
Transfers (see note 4) 1,312 (1,312) -
Disposals (see note 4) (373) (2,921) (3,294)
Translation differences - 147 147
At 31 December 2018 1,426 242 1,668

As more fully explained in note 4, Metal Tiger sold its interests in Metal Capital Limited during the year and acquired a 30% interest in Metal Capital Exploration Limited, which holds those licences previously owned by Metal Capital Limited which were not sold. The effects of the transfer of assets, the disposal of Metal Capital Limited and the acquisition of Metal Capital Exploration Limited are set out below.

Metal Capital Limited   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 1 January 2017 45 699 744
Additions in the year 249 1,273 1,522
Share of comprehensive income 79 - 79
Translation differences - (142) (142)
At 31 December 2017 373 1,830 2,203
Additions in the year 284 2,278 2,562
Share of comprehensive losses (169) - (169)
Transfers (see note 4) (115) (1,312) (1,427)
Disposals (see note 4) (373) (2,921) (3,294)
Translation differences - 125 125
At 31 December 2018 - - -

The consolidated results and net assets of Metal Capital Limited were as follows:

  2018   2017
  £’000 £’000
Revenue - -
Operating costs (200) (109)
Finance (expense)/income (362) 374
(Loss)/Profit before taxation (562) 265
Tax on loss on ordinary activities - -
(Loss)/Profit for the year (562) 265
 
 
- 2017
  - £’000
Non-current assets - 6,478
Current assets - 365
Current liabilities - (6,675)
Net assets - 168
Metal Capital Exploration Limited   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 31 December 2017 - - -
Transfers (see note 4) 1,427 - 1,427
Additions in the year 6 220 226
Share of comprehensive losses (7) - (7)
Translation differences - 22 22
At 31 December 2018 1,426 242 1,668

The consolidated results and net assets of Metal Capital Exploration Limited were as follows:

  2018
  £’000
Revenue -
Operating costs (1)
Finance expense (4)
Loss before taxation (5)
Tax on loss on ordinary activities -
Loss for the year (5)
 
 
2018
  £’000
Non-current assets 4,957
Current assets 286
Current liabilities (809)
Net assets 4,434

15

 

INVESTMENT IN JOINT VENTURES

The companies in which Metal Tiger’s joint venture interests are held are set out below. All are engaged in mineral exploration.

Joint venture   Registered
office
  Country of incorporation
or
registration
  Principal place of business   Proportion of ownership interest and voting rights held by the Group/Company
  31 Dec 2018   31 Dec 2017
Held directly:
Boh Yai Mining Company Ltd. 89/2 Soi Rajvithee
2 Rajvithee Road
Kwaeng Samsen Nai
Khet Payathai
Bangkok 10400
Thailand Thailand Option to acquire 80% Option to acquire 80%
Kalahari Metals Limited 25-29 Maddox Street
London W1S 2PP
UK UK 34% * -
Logrosán Minerals Limited 28 Fidlas Avenue
Cardiff CF14 0NY
UK UK 50% 50%
Held indirectly through Logrosán Minerals Limited:
Logrosán Minera SL Calle Dr. Reiro de Sorapán 2

10120 Logrosán Cáceres, Spain

Spain Spain 50% 50%

* At 31 December 2018, Metal Tiger held an option to acquire a further 16% of the voting rights and ordinary share capital in Kalahari Metals Limited for US$500,000. This option was exercised on 11 March 2019.

Group and Company   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 1 January 2017 1,098 - 1,098
Additions in the year - 228 228
Share of losses (100) - (100)
Provisions - (2) (2)
At 31 December 2017 998 226 1,224
Additions in the year 859 - 859
Share of losses (33) - (33)
Translation differences - (1) (1)
At 31 December 2018 1,824 225 2,049

The fair value of investments in joint ventures at the year end is considered by the Directors not to be materially different to the carrying amounts.

Boh Yai   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 1 January 2017 731 - 731
Additions - - -
At 31 December 2017 731 - 731
Additions - - -
At 31 December 2018 731 - 731

The Boh Yai joint venture has yet to start operations and the above amounts represent the cost of investment to the year end. The Group has an option to acquire 80% of the issued share capital of Boh Yai Mining Company Ltd. and a hire purchase agreement with Kanchanaburi Exploration and Mining Company Limited to use equipment at the mine site in Kanchanaburi Province, Thailand.

Kalahari Metals Limited   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 31 December 2017 - - -
Additions in the year 859 - 859
Share of comprehensive losses (26) - (26)
Translation differences - - -
At 31 December 2018 833 - 833

The consolidated results and net assets of Kalahari Metals Limited were as follows:

  2018
  £’000
Revenue 19
Operating costs (88)
Finance expense (4)
Loss before taxation (73)
Tax on loss on ordinary activities -
Loss for the year (73)
2018
  £’000
Non-current assets 653
Current assets 161
Current liabilities (18)
Net assets 796
Logrosán Minerals Limited   Cost of investment   Loan advances   Total
  £’000 £’000 £’000
At 1 January 2017 367 - 367
Share of losses (100) - (100)
Additions in the year - 228 228
Translation differences - (2) (2)
At 31 December 2017 267 226 493
Share of losses (7) - (7)
Translation differences - (1) (1)
At 31 December 2018 260 225 485

Metal Tiger owns 50% of Logrosán Minerals Ltd (“LML”). Metal Tiger's joint venture partner in LML is Mineral Exploration Network (Finland) Ltd. LML owns 100% of a subsidiary in Spain, Logrosán Minera SL, which owns exploration licences in Logrosán, San Cristobal and Zorita in the Extremadura autonomous region of Spain for gold and tungsten.

The consolidated results and year end position of Logrosán Minerals Ltd and its subsidiary were as follows:

  2018   2017
  £’000 £’000
Revenue - -
Operating costs (14) (200)
Loss before taxation (14) (200)
Tax on loss on ordinary activities - -
Loss and total comprehensive income for the year (14) (200)
 
 
2018 2017
  £’000 £’000
Non-current assets 303 -
Current assets - 8
Current liabilities (804) (495)
Net assets (501) (487)
16   OTHER FIXED ASSET INVESTMENTS

Other non-current fixed asset investments comprise an investment in Sita Capital Partners LLP, an asset management partnership which is not held for short term trading and is valued under the IFRS 13 fair value hierarchy by reference to valuation techniques using inputs that are not based on observable market data. Mr Mark Potter, a director of the Company, is the controlling partner of Sita Capital Partners LLP.

17 ROYALTIES RECEIVABLE
Group and Company           Royalties

£’000

   
At 1 January 2017 and 31 December 2017 -
Acquisitions in the year 1,200
Amortisation of discount on acquisition 39
Translation differences     46
At 31 December 2018     1,285

Further details are given in note 4 to the financial statements.

18   DIRECT EQUITIES DIVISION INVESTMENTS
          2018   2017
Group and
Company
Group and
Company
      £’000 £’000
At 1 January – investments at fair value 10,062 4,068
Acquisitions 18,929 5,939
Disposal proceeds (3,967) (5,402)
Gain on disposal of investments (511) 3,916
Movement in fair value of investments     (12,434) 1,541
At 31 December – investments at fair value     12,079 10,062
Categorised as:
Level 1 – Quoted investments 11,360 9,342
Level 2 – Unquoted investments - -
Level 3 – Unquoted investments - equity 706 -
Level 3 – Unquoted investments – share warrants     13 720
      12,079 10,062

The table of investments sets out the fair value measurements using the IFRS 13 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of th e relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets and includes the options in MOD Resources Limited acquired as a result of the sale of the exploration operations in Botswana for the reasons set out in note 4;

Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1; and

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

The maximum credit risk as regards these investments is not considered to be materially different from the carrying value of those investments.

  LEVEL 3 FINANCIAL ASSETS
Reconciliation of Level 3 fair value measurement of financial assets:
          2018   2017
Group and Company Group and Company
      £’000 £’000
At 1 January 720 1,547
Purchases 764 19
Transfer from/(to) Level 1 393 (28)
Disposal proceeds (240) -
Warrants exercised (20) (262)
Loss on disposal of investments (272) -
Movement in fair value     (626) (556)
At 31 December     719 720

Level 3 valuation techniques used by the Group are explained in note 2 (Fair value of investments). The following key input has been used in the valuation model: volatilities ranging between 51% and 103% depending on the investment (2017: 43% to 107%). A 20% increase in the volatility estimate would result in a £10,000 increase in the fair value (2017: £91,000) and a 20% decrease would result in a £17,000 decrease in fair value (2017: £182,000).

19

  TRADE AND OTHER RECEIVABLES        
2018 2018 2017 2017
Group Company Group Company
  £’000 £’000 £’000 £’000
Tax and social security 157 1 326 182
Other receivables 23 6 53 50
Prepayments and accrued income 159 95 103 10
  339 102 482 242

The fair value of trade and other receivables, using the expected credit loss model, is considered by the Directors not to be materially different to carrying amounts. Included in other receivables at 31 December 2017 was £42,000 in respect of share capital called up but not fully paid at the year end, received in full in 2018. Also included in other receivables at 31 December 2018 and 31 December 2017 is an amount of £179,000 (2017: £179,000) which has been fully provided against.

20   CASH AND CASH EQUIVALENTS      
2018 2018 2017   2017
Group Company Group Company

 

  £’000 £’000 £’000 £’000
Cash at investment brokers 55 55 27 27
Cash at bank 1,804 1,776 2,818 2,808
  1,859 1,831 2,845 2,835

The fair value of cash and cash equivalents is considered by the Directors not to be materially different to carrying amounts.

21  

TRADE AND OTHER PAYABLES

  2018   2018   2017   2017
Group Company Group Company
  £’000 £’000 £’000 £’000
Trade payables 40 40 263 260
Tax and social security 6 - 27 23
Other payables 12 11 18 15
Accrued charges 104 92 417 368
  162 143 725 666

The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts.

22

 

LOANS AND BORROWINGS

       
2018 2018 2017 2017
Group Company Group Company
  £’000 £’000 £’000 £’000
At 1 January 49 - 48 -
Translation differences 3 - 1 -
At 31 December 52 - 49 -

The loan is non-interest bearing and is repayable on demand.

23

 

CONTINGENT CONSIDERATION

On 16 February 2016, the Company exercised its option to acquire the remainder of the Thai based assets of SouthEast Asia Mining Corporation (“SEAM”), comprising its investment in SouthEast Asia Exploration and Mining Co. Ltd (now called Metal Tiger Exploration and Mining Co. Ltd.) and certain fellow subsidiaries, to provide an increased portfolio of base metal interests in Thailand through joint venture interests with Boh Yai Mining Company Ltd. in Thailand. The consideration was a cash payment of US$200,000 and a payment of US$300,000 in 23,799,000 new ordinary shares of the Company. A potential further cash payment of US$100,000, a US$60,000 working capital contribution and issue of 23,799,000 warrants over the Company’s ordinary shares at an exercise price of 1.74p per share may be issued to SEAM subject to the grant of the primary target prospecting licence 1/2557 in the Kanchanaburi province in Western Thailand.

24   SHARE CAPITAL  

 

 

 

Number of Share   Share
CALLED UP, ISSUED AND FULLY PAID ordinary shares capital premium
    £’000 £’000
At 1 January 2017 774,655,180 78 1,275
Share issues 312,277,354 31 4,592
Warrant reserve release - - 644
Share issue expenses - - (386)
At 31 December 2017 1,086,932,534 109 6,125
Share issues 263,023,531 26 4,835
Warrant reserve release - - 124
Share issue expense - - (445)
At 31 December 2018 1,349,956,065 135 10,639

SHARE ISSUES

The following issues of ordinary shares of 0.01p took place during the year:

Date       Issue price
(p)
  Number issued   Amount gross
£’000
22 February 2018 KEMCO Mining plc warrants converted (see note 25) 1.627 12,259,617 200
7 August 2018 Placing 2.800 125,573,737 3,516
30 August 2018 Placing 2.800 93,425,714 2,616
Various dates Warrants exercised (see note 25) 2.000 8,399,999 167
Various dates Options exercised (see note 25) 2.856 * 18,330,000 388
Total issued for cash 257,989,067 6,887
Various dates For remuneration, professional and other fees and acquisition of investments 2.157 * 5,034,464 109
      263,023,531 6,996

* Average price.

Details of warrants issued with the placing and further details of warrants and options exercised during the year are given in note 25.

Details of share issues since the year end are given in note 28.

Share issues in the year ended 31 December 2017 were as follows:

Date       Issue price (p)   Number issued   Amount gross
£’000
21 April 2017 Placing 3.000 161,666,666 4,850
Various dates Placing warrants exercised 1.814 * 128,096,150 2,324
13 October 2017 KEMCO Mining plc warrants exercised 1.950 16,174,279 315
Various dates Options exercised 1.000 3,670,000 37
Total issued for cash 309,607,095 7,526
Various dates For remuneration and professional and other fees 2.338 * 2,670,259 62
      312,277,354 7,588

*Average price.

25

 

SHARE OPTIONS AND WARRANTS

SHARE OPTIONS

  2018   2017
 


Number
  Weighted average
exercise price (p)



Number
  Weighted average
exercise price (p)
At 1 January 104,530,000 3.57 48,700,000 2.05
Issued in year 78,000,000 4.10 59,500,000 4.66
Exercised in year (18,330,000) 2.12 (3,670,000) 1.00
Cancelled or expired in year (4,000,000) 2.00 - -
At 31 December 160,200,000 4.03 104,530,000 3.57
Exercisable at 31 December 82,200,000 3.98 45,030,000 2.15
Average life remaining at
31 December
4.13 years   3.37 years  

The Company issued further shares under the existing Directors and Staff Share Option Schemes during the year to enable Directors and staff to subscribe for ordinary shares in the Company. The fair values of the options granted were determined using the Black-Scholes pricing model. The significant inputs to the model in respect of the options were as follows:

Grant date and vesting date   21 July 2018   21 July 2018
Share price at date of grant 2.97p 2.97p
Exercise price per share 3.50p 4.50p
No. of options 31,500,000 46,500,000
Risk free rate 1% 1%
Expected volatility 88% 88%
Life of option 3 years 3 years
Calculated fair value per share option 1.952p 1.825p

The following schemes remain in existence from prior years:

Grant date and vesting date   18 January 2017   18 January 2017   11 May 2017
Share price at date of grant 1.65p 1.65p 2.175p
Exercise price per share 3.00p 2.00p 6.00p
No. of options 26,000,000 500,000 33,000,000
Risk free rate 1% 1% 1%
Expected volatility 95% 95% 93%
Life of option 3 years 3 years 5 years
Calculated fair value per share option 0.770p 0.914p 1.181p
Grant date and vesting date     3 March 2016   22 June 2016   22 June 2016
Share price at date of grant 1.175p 3.25p 3.25p
Exercise price per share 2.00p 1.70p 2.00p
No. of options originally granted 10,000,000 7,500,000 5,750,000
Risk free rate 1% 1% 1%
Expected volatility 87% 98% 98%
Life of option 3 years 3 years 3 years
Calculated fair value per share option   0.507p 2.365p 2.275p

Options outstanding to Directors at 31 December 2018 are as follows:

Current Directors at the year end:

   
Exercise
price
(p)
 
At
1 January
Number
 

Granted
Number
 

Exercised
Number
 
At 31 December
Number
Charles Hall 3.00 3,000,000 - (3,000,000) -
3.50 - 3,000,000 - 3,000,000
4.50 - 4,500,000 - 4,500,000
6.00 5,000,000 - - 5,000,000
Terry Grammer 2.00 8,330,000 - (3,330,000) 5,000,000
3.00 2,000,000 - - 2,000,000
3.50 - 2,000,000 - 2,000,000
4.50 - 3,000,000 - 3,000,000
6.00 2,000,000 - - 2,000,000
Michael McNeilly 2.00 2,000,000 - - 2,000,000
3.00 7,500,000 - - 7,500,000
3.50 - 10,000,000 - 10,000,000
4.50 - 15,000,000 - 15,000,000
6.00 10,000,000 - - 10,000,000
Mark Potter 3.00 1,000,000 - - 1,000,000
3.50 - 10,000,000 - 10,000,000
4.50 - 15,000,000 - 15,000,000
6.00 4,000,000 - - 4,000,000
Neville Bergin 3.50 - 2,000,000 - 2,000,000
  4.50 - 3,000,000 - 3,000,000
    44,830,000 67,500,000 (6,330,000) 106,000,000

Based on the difference between the price of the share options and the share price on the date of exercise, the options exercised by Directors during the year would have given rise to a gain of £28,000 on exercise (2017: £nil).

Directors ceasing during the year in respect of their period as Directors:

   
Exercise
price
(p)
  Held at 1 January 2018
and on cessation
as Director
Number
Keith Springall 2.00 2,500,000
3.00 5,000,000
6.00 5,000,000
Geoffrey McIntyre 3.00 3,000,000
6.00 2,000,000
7.50 1,750,000
Alistair Middleton 2.00 500,000
3.00 4,500,000
  6.00 5,000,000
    29,250,000

The total share based payment expense recognised in the income statement for the year ended 31 December 2018 in respect of options granted was £708,000 (2017: £468,000).

PLACING WARRANTS

    2018   2017
 


Number
  Weighted average
exercise price (p)



Number
  Weighted average
exercise price
(p)
At 1 January 260,621,468 4.001 308,064,104 2.472
Issued in year (see below) 235,175,341 5.000 166,516,666 5.913
Exercised in year (8,399,999) (2.000) (128,096,150) (1.814)
Expired in year (23,799,000) (1.740) (85,863,152) (5.899)
At 31 December 463,597,810 4.660 260,621,468 4.001
Exercisable at 31 December 463,597,810 4.660 246,158,301 3.023
Average life remaining at
31 December
  2.6 years   3.2 years

In addition, up to 4,850,000 Secondary warrants are potentially issuable on a one for one basis to existing holders of Brokers’ warrants when the Brokers' warrants are exercised. These warrants will have, on issue, an exercise price of 6p per share and will be valid for a further 5 years from the date of issue. A value attributable to these Secondary warrants was included in arriving at the fair value of the Brokers’ warrants issued on 27 April 2017 in connection with the placing on 26 April 2017.

Warrants exercised in the year included the remaining warrants in respect of those issued by the Company on 7 March 2017 in connection with the potential initial public offer (“IPO”) for KEMCO Mining plc intended to be the listing vehicle for the Group's Thai operations. Following the announcement of the postponement of the IPO on 2 February 2018, the 199,500 outstanding warrants converted into 12,259,617 ordinary shares in the Company on 28 February 2018 equivalent to an issue price of approximately 1.63p per ordinary share.

The warrants issued during the year were in connection with the placings of the Company's ordinary shares as detailed in note 24 and have been charged as a component of equity. The fair values of the warrants were determined using the Black-Scholes pricing model. The significant inputs to the model were as follows:

    Placing warrants   Placing warrants   For fees
Grant date 13 August 2018 30 August 2018 1 November 2018
Share price at date of grant 2.825p 2.35p 1.875p
Exercise price per share 5.00p 5.00p 5.00p
No. of options originally granted 128,250,067 93,425,714 13,499,560
Risk free rate 1% 1% 1%
Expected volatility 80% 81% 80%
Life of option 5 years 5 years 5 years
Calculated fair value per share option 1.083p 0.799p 0.541p

26

 

FINANCIAL INSTRUMENTS

CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of debt and equity funding. Currently the Company’s capital structure consists entirely of shareholders’ equity, comprising issued share capital and reserves.

The Company uses financial instruments, other than derivatives, to provide funding for its operations.

The main risks arising from the Company’s financial instruments are credit risk, liquidity risk, market risk and foreign exchange risk. The Company does not have any significant other risks. The Directors agree policies for managing these risks and they are summarised below.

CREDIT RISK

The Group's exposure to credit risk is limited to the carrying amounts of trade and other receivables, and cash and cash equivalents recognised at the balance sheet date, as follows:

    2018

£’000

  2017

£’000

Trade and other receivables 23 53
Cash and cash equivalents 1,859 2,845

 

1,882 2,898

The Group's management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

No impairment provision was required against trade and other receivables in the year (2017: none). None of the Group's financial assets are secured by collateral or other credit enhancements.

The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

26

 

FINANCIAL INSTRUMENTS

LIQUIDITY RISK

The Group makes both short term and long term investments. Short term investments are all quoted investments and such investments may be sold to meet the Group’s funding requirements. However, the market in small capitalised companies can be illiquid. Long term investments are joint ventures through unquoted investment vehicles and are subject to greater liquidity risk. Directors perform extensive due diligence prior to investment.

As the Group has no significant interest bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.

The following table shows the contractual maturities of the Group's financial liabilities, including repayments of both principal and interest where applicable:

 

  2018

£’000

  2017

£’000

Six months or less:
Trade and other payables 58 308
Loans and borrowings 52 49
Total contractual cash flows 110 357

MARKET RISK

The Company is exposed to market risk as a result of investing in listed resource companies. The fair value of each investment will fluctuate as a result of factors specific to the investment. The Company actively reviews its portfolio of investments to manage this risk. An increase of 10% in the valuation of investments held at the year end would increase the profit before tax for the year by £1,208,000 (2017: £1,006,000).

FOREIGN CURRENCY RISK

The Group is exposed to movements in exchange rates in respect of direct equity investments, overseas subsidiaries, investments in joint ventures and associates, and cash held in foreign currencies..

The following table illustrates the sensitivity of net assets to changes in exchange rates at the year end:

CHANGE IN EQUITY

  2018

£’000

  2017

£’000

5% Increase in AUD fx rate against GBP 495 304
5% Decrease in AUD fx rate against GBP (495) (304)
5% Increase in BWP fx rate against GBP 74 73
5% Decrease in BWP fx rate against GBP (74) (73)
5% Increase in CAD fx rate against GBP 11 -
5% Decrease in CAD fx rate against GBP (11) -
5% Increase in EUR fx rate against GBP (30) (1)
5% Decrease in EUR fx rate against GBP 30 1
5% Increase in THB fx rate against GBP 13 (3)
5% Decrease in THB fx rate against GBP (13) 3
5% Increase in USD fx rate against GBP 111 (3)
5% Decrease in USD fx rate against GBP (111) 3

Exposure to foreign exchange rates varies during the year depending on the volume and nature of foreign transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.

CATEGORIES OF FINANCIAL INSTRUMENTS

FINANCIAL ASSETS

The IFRS 9 categories of financial asset included in the Statement of Financial Position and the headings in which they are included are as follows:

  2018   2017
  £’000 £’000
HELD AT AMORTISED COST
Cash and bank balances 1,859 2,845
Loans and receivables 180 379
HELD AT FAIR VALUE
Other fixed asset investments 107 -
Royalties receivable 1,285 -
Direct Equities Division current asset investments 12,079 10,062

FINANCIAL LIABILITIES HELD AT AMORTISED COST

The IFRS 9 categories of financial liabilities included in the Statement of Financial Position and the headings in which they are included are as follows:

  2018   2017
  £’000 £’000
Trade and other payables 162 725
Trade and other payables – amounts due to related companies 146 -
Loans and borrowings 52 49

27

 

RELATED PARTY TRANSACTIONS

GROUP AND PARENT COMPANY

A list of significant shareholders is included in the Report of the Directors. No ultimate controlling party has been identified by the Directors.

Details of the Directors’ remuneration and consultancy fees are disclosed in note 6 and share options granted to Directors are disclosed in note 25. In the opinion of the Board, only the Directors of the parent Company fall to be regarded as key employees.

During the year the Company acquired a 10% equity interest in Sita Capital Partners LLP, of which Mr Mark Potter is the controlling partner, for US$150,000 (see note 16). Other than the investment there have been no transactions with the partnership during the year.

No amounts were owed by any Director to the Group at 31 December 2018 or 31 December 2017.

The following amounts were owed by the Group to Directors at the year end in respect of expenses and outstanding salaries:

  2018   2017
  £’000 £’000
Charles Hall - -
Terry Grammer 12 14
Michael McNeilly 1 -
Mark Potter - -
Neville Bergin 3 -

PARENT COMPANY TRANSACTIONS WITH SUBSIDIARIES

The Company charged Metal Tiger Exploration and Mining Co. Ltd. £157,000 (2017: £256,000) during the year in respect of fees for consultancy services and for travel and similar costs incurred in respect of their operations.

In addition, the Company has funded the operations of subsidiaries during the year.

   
  Amounts due to the Company at 31 December 2018   Amounts due to the Company at 31 December 2017
Subsidiary £’000 £’000
KEMCO Mining plc - -
Metal Horse Limited - -
Metal Partners Co. Ltd. - 3
Metal Tiger Exploration and Mining Co. Ltd. 1,379 1,034
Metal Tiger IHQ Co. Ltd. 1,018 789
Metal Ventures Co. Ltd. - -
Metal Group Co. Ltd. 311 222
Metal Holdings Co. Ltd. - 30
Metal Tiger Resources Co. Ltd. 35 33
Metal Tiger Australia Pty Limited - -
  2,743 2,111

No amounts were due by the Company to its subsidiary companies. Amounts due from subsidiary companies included within current assets and current liabilities represent amounts advanced for operational activities and repayable on demand and interest free or for management fees and interest thereon and are repayable on normal commercial terms.

PARENT COMPANY TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES

Details of transactions with associates and joint ventures are given in notes 14 and 15 respectively.

Company and Group

  2018

£’000

  2017

£’000

Amounts due by the Company and Group at 31 December:
Kalahari Metals Limited (146) -

The amount outstanding represented uncalled amounts relating to the investment made during the year which has been called and paid since the year end.

28

 

POST YEAR END EVENTS

On 11 February 2019 the Company announced the placing of 70,010,345 new ordinary shares at a price of 1.45p raising approximately £1.0million. The participants in the Placing also received one warrant for every two placing shares subscribed at an exercise price of 2p and valid for a period of two years from the date of admission of the placing shares.

On 11 March 2019, the Company announced a further placing of 137,162,552 new ordinary shares at a price of 1.45p raising approximately £2.0million. The participants in the Placing also received one warrant for every two placing shares subscribed at an exercise price of 2p and valid for a period of two years from the date of admission of the placing shares. In addition, a further 9,629,960 warrants were issued on the same terms to advisors for services related to the fundraising.

On 11 March 2019, the Company exercised its option to acquire a further 16% of the voting rights and ordinary share capital in Kalahari Metals Limited for US$500,000 bringing its total interests to 50%.

On 5 April 2019, the Company announced the issue of a further 384,615 new ordinary shares in lieu of cash for professional services provided to the Company.

Metal Tiger plc

Quick facts: Metal Tiger Plc

Price: 1.35

Market: AIM
Market Cap: £21.05 m
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