TIDMADT1
RNS Number : 0323U
Adriatic Metals PLC
31 March 2021
Adriatic Metals PLC
('Adriatic Metals' or 'Company')
Annual Report and Audited Financial Statements
for the Six Months Ended 31 December 2020
Adriatic Metals PLC (ASX:ADT & LSE:ADT1) is pleased to
announce its Annual Report and Audited Financial Statements for the
six months ended 31 December 2020.
The Board advises all shareholders and interested stakeholders
that the Company's Annual Report including the audited results for
the six months ended 31 December 2020 is available on the Company's
website:
https://www.adriaticmetals.com/investors/financial-reports-2/
An abridged version of the results for the six months ended 31
December 2020 is included below.
By order of the Board
Geoff Eyre
Chief Financial Officer and Joint Company Secretary
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2020
(In GBP) Note 31 December 2020 (Restated) 30 June 2020
======================================================= ============= ================ =======================
Assets
======================================================= ============= ================ =======================
Current assets
======================================================= ============= ================ =======================
Cash and cash equivalents 29,580,538 9,942,729
======================================================= ============= ================ =======================
Other receivables and prepayments 5 654,514 451,546
======================================================= ============= ================ =======================
Financial asset at fair value through profit and loss 6 - 1,241,514
------------------------------------------------------- ------------- ---------------- -----------------------
Total current assets 30,235,052 11,635,789
------------------------------------------------------- ------------- ---------------- -----------------------
Non-current assets
======================================================= ============= ================ =======================
Property, plant and equipment 8 969,464 910,920
======================================================= ============= ================ =======================
Right of use asset 12 236,349 251,898
======================================================= ============= ================ =======================
Exploration and evaluation assets 9, 10 36,479,724 9,045,169
======================================================= ============= ================ =======================
Total non-current assets 37,685,537 10,207,987
======================================================= ============= ================ =======================
Total assets 67,920,589 21,843,776
======================================================= ============= ================ =======================
Equity and liabilities
======================================================= ============= ================ =======================
Current liabilities
======================================================= ============= ================ =======================
Accounts payable and accrued liabilities 11 1,900,437 682,402
======================================================= ============= ================ =======================
Lease liability 12 35,609 10,530
------------------------------------------------------- ------------- ---------------- -----------------------
Option Liability 10 2,515,399 -
======================================================= ============= ================ =======================
Borrowings 7 105,515 -
======================================================= ============= ================ =======================
Total current liabilities 4,556,960 692,932
======================================================= ============= ================ =======================
Non-current liabilities
======================================================= ============= ================ =======================
Lease liability 12 219,731 255,091
------------------------------------------------------- ------------- ---------------- -----------------------
Borrowings 7 11,590,172 -
======================================================= ============= ================ =======================
Derivative Liability 7 3,045,213 -
======================================================= ============= ================ =======================
Total non-current liabilities 14,855,116 255,091
======================================================= ============= ================ =======================
Total liabilities 19,412,076 948,023
======================================================= ============= ================ =======================
Capital and reserves attributable to shareholders of the parent
=================================================================================================================
Share capital 15 2,772,186 2,401,777
======================================================= ============= ================ =======================
Share premium 15 51,471,748 23,992,967
======================================================= ============= ================ =======================
Share-based payment reserve 15 5,756,069 4,426,185
======================================================= ============= ================ =======================
Warrants Reserve 15 2,797,086 -
======================================================= ============= ================ =======================
Other Equity 10 (2,515,399) -
======================================================= ============= ================ =======================
Foreign currency translation reserve 225,580 219,805
======================================================= ============= ================ =======================
Retained deficit ( 13,995,045 ) ( 10,144,981 )
------------------------------------------------------- ------------- ---------------- -----------------------
46,512,225 20,895,753
------------------------------------------------------- ------------- ---------------- -----------------------
Non-controlling interest 10 1,996,288 -
------------------------------------------------------- ------------- ---------------- -----------------------
Total equity 48,508,513 20,895,753
======================================================= ============= ================ =======================
Total equity and liabilities 67,920,589 21,843,776
======================================================= ============= ================ =======================
See note 24 for details of the restatement of the prior year
comparatives.
The above Consolidated Financial Statements should be read in
conjunction with the accompanying notes.
The Consolidated Financial Statements of Adriatic Metals PLC,
registered number 10599833, were approved and authorised for issue
by the Board of Directors on 30 March 2021 and were signed on its
behalf by:
Paul Cronin Geoff Eyre
Managing Director & Chief Executive Officer Chief Financial Officer & Joint Company Secretary
Consolidated Statement of Comprehensive Income
FOR THE SIX MONTHSED 31 DECEMBER 2020
Six Months Ended 31 Year
(In GBP) Note December 2020 Ended 30
June
2020
-------------------------- --------------------------- ------ -------------------------- -------------------------
Exploration costs 17 (798,028) -
======================================================= ====== ========================== =========================
General and administrative expenses 18 (2,115,707) (3,315,634)
======================================================= ====== ========================== =========================
Share-based payment expense 15e (2,267,239) (3,443,359)
======================================================= ====== ========================== =========================
Other income 21 4,816 6,131
======================================================= ====== ========================== =========================
Operating loss (5,176,158) (6,752,862)
======================================================= ====== ========================== =========================
Finance income 19 - 203,131
======================================================= ====== ========================== =========================
Finance expense 19 (197,039) (11,580)
======================================================= ====== ========================== =========================
Revaluation of fair value asset 6,7 (322,987) 322,987
======================================================= ====== ========================== =========================
Loss before tax (5,696,184) (6,238,324)
======================================================= ====== ========================== =========================
Tax charge 16 1,681 -
======================================================= ====== ========================== =========================
Loss for the period (5,694,503) (6,238,324)
------------------------------------------------------- ------ -------------------------- -------------------------
Other comprehensive income that might be reclassified to profit or loss in subsequent periods:
======================================================================================================================
Exchange gain arising on translation of foreign
operations 5,775 145,563
======================================================= ====== ========================== =========================
5,775 145,563
------------------------------------------------------- ------ -------------------------- -------------------------
Total comprehensive loss for the period (5,688,728) (6,092,761)
------------------------------------------------------- ------ -------------------------- -------------------------
Total comprehensive loss attributable to:
======================================================= ====== ========================== =========================
Owners of the parent (5,169,617) (6,092,761)
======================================================= ====== ========================== =========================
Non-controlling interest (519,111) -
======================================================= ====== ========================== =========================
(5,688,728) (6,092,761)
======================================================= ====== ========================== =========================
Net loss per share Basic and diluted (pence) 15f (2.99) (3.69)
========================== =========================== ====== ========================== =========================
The above Consolidated Financial Statements should be read in
conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
FOR THE SIX MONTHSED 31 DECEMBER 2020
Other Capital And Non-
Share- Equity Foreign Reserves Controlling
(Restated) Based Warrants Currency (Restated) Attributable Interest
Number Of Share Share Payment Translation Retained To Owners Of Total
(In GBP) Note Shares Capital Premium Reserve Reserve Earnings The Parent Equity
---------------- ------ ----------- --------- ------------ ----------- ---------- ----------- ------------ ------------ ------------- ------------ -----------
30 June 2019 150,782,587 2,013,701 11,084,777 1,714,826 - 74,242 (4,638,657) 10,248,889 - 10,248,889
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Comprehensive income for the year:
============== ====== ====================== ==========================================================================================================================
Loss for the
year - - - - - (6,238,324) (6,238,324) - (6,238,324)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Other
comprehensive
income - - - - - 145,563 - 145,563 - 145,563
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Total
comprehensive
loss - - - - - 145,563 (6,238,324) (6,092,761) - (6,092,761)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Contributions by and distributions to owners:
============== ====== ====================== ==========================================================================================================================
Issue of share
capital 15 25,083,400 334,989 13,015,388 - - - - 13,350,377 - 13,350,377
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Share issue
costs 15 - - (797,655) - - - - (797,655) - (797,655)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Exercise of
options 15 3,975,000 53,087 690,457 (732,000) - - 732,000 743,544 - 743,544
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Issue of options 15 - - - 3,443,359 - - - 3,443,359 - 3,443,359
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
30 June 2020 179,840,987 2,401,777 23,992,967 4,426,185 - 219,805 (10,144,981) 20,895,753 20,895,753
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Comprehensive income for the Period:
============== ====== ====================== ==========================================================================================================================
Loss for the
period - - - (5,175,392) (5,175,392) (519,111) (5,694,503)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Other
comprehensive
income - - - - - 5,775 - 5,775 - 5,775
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Total
comprehensive
loss - - - - - 5,775 (5,175,392) (5,169,617) ( 519,111 ) (5,688,728)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Contributions by and distributions to owners:
============== ====== ====================== ==========================================================================================================================
Issue of share
capital 15 5,276,595 70,469 6,129,531 - - - - - 6,200,000 6,200,000
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Settlement
Placement 15 4,830,156 64,507 4,791,547 - - - - - 4,856,054 4,856,054
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Share issue
costs - (1,598,603) - - - 151,402 (1,447,201) (1,447,201)
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Exercise of
options 15 4,350,000 58,093 1,203,817 (1,173,926) - - - 1,173,926 1,261,910 1,261,910
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Issue of options 15 - - - 2,267,239 - - - - 2,267,239 2,267,239
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
Acquisition of
subsidiary 15 13,278,937 177,340 16,952,489 236,571 2,797,086 (2,515,399) - - 17,648,087 2,515,399 20,163,486
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
31 December 2020 207,576,675 2,772,186 51,471,748 5,756,069 2,797,086 (2,515,399) 225,580 (13,995,045) 46,512,225 1,996,288 48,508,513
================ ====== =========== ========= ============ =========== ========== =========== ============ ============ ============= ============ ===========
See note 24 for details of the restatement of the prior year
comparatives.
The above Consolidated Financial Statements should be read in
conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
FOR THE SIX MONTHSED 31 DECEMBER 2020
Six Months Ended 31 December
(In GBP) Note 2020 Year Ended 30 June 2020
=================================== ========== ================================== =================================
Cash flows from operating
activities
=================================== ========== ================================== =================================
Loss for the period (5,694,503) (6,238,324)
=================================== ========== ================================== =================================
Adjustments for:
======================================================================================================================
Loss on Disposal of
Fixed Asset 1,106 -
=================================== ========== ================================== =================================
Depreciation of
property, plant and
equipment 8 36,157 52,645
=================================== ========== ================================== =================================
Amortisation of
exploration &
evaluation assets 9 11,469 23,317
=================================== ========== ================================== =================================
Amortisation of
right-of-use assets 12 15,549 13,714
=================================== ========== ================================== =================================
Share-based payment
expense 15 2,267,239 3,443,359
=================================== ========== ================================== =================================
Finance income 19 - (203,131)
=================================== ========== ================================== =================================
Finance expense 19 197,039 11,580
=================================== ========== ================================== =================================
Revaluation of fair
value asset and
liability 6,7 322,987 (322,987)
=================================== ========== ================================== =================================
Changes in working capital items:
======================================================================================================================
Increase in other
receivables and
prepayments (151,833) (85,438)
=================================== ========== ================================== =================================
Increase in accounts
payable and accrued
liabilities 687,582 498,074
----------------------------------- ---------- ---------------------------------- ---------------------------------
Net cash used in operating
activities (2,307,208) (2,807,191)
=================================== ========== ================================== =================================
Cash flows from investing activities:
======================================================================================================================
Cash acquired on
acquisition 10 311,964 -
=================================== ========== ================================== =================================
Purchase of property,
plant and equipment 8 (90,864) (235,117)
=================================== ========== ================================== =================================
Purchase of exploration
& evaluation assets 9 (3,052,019) (4,942,689)
=================================== ========== ================================== =================================
Sale of Property, plant
and equipment 1,970 -
=================================== ========== ================================== =================================
Loans issued 6 (723,300) (876,201)
=================================== ========== ================================== =================================
Interest received - 37,742
----------------------------------- ---------- ---------------------------------- ---------------------------------
Net cash used in investing
activities (3,552,249) (6,016,265)
=================================== ========== ================================== =================================
Cash flows from financing activities:
======================================================================================================================
Net proceeds from the
issue of ordinary
shares 15i 12,317,964 13,296,266
=================================== ========== ================================== =================================
Gross proceeds from
loans and borrowings 7 14,956,849 -
=================================== ========== ================================== =================================
Transaction costs
arising from financing
activities 15i (1,447,201) -
=================================== ========== ================================== =================================
Interest paid on lease
liabilities (10,523) (11,580)
----------------------------------- ---------- ---------------------------------- ---------------------------------
Net cash flows from financing
activities 25,817,089 13,284,686
=================================== ========== ================================== =================================
Net increase in cash and cash
equivalents 19,957,632 4,461,230
=================================== ========== ================================== =================================
Exchange (losses) / gains on cash
and cash equivalents (319,823) 111,740
=================================== ========== ================================== =================================
Cash and cash equivalents at
beginning of the period 9,942,729 5,369,759
=================================== ========== ================================== =================================
Cash and cash equivalents at end
of the period 29,580,538 9,942,729
----------------------------------- ---------- ---------------------------------- ---------------------------------
The above Consolidated Financial Statements should be read in
conjunction with the accompanying notes.
Notes to the Consolidated Financial Statements
1. Corporate information
The consolidated financial statements present the financial
information of Adriatic Metals PLC and its subsidiaries detailed in
Section 3 (collectively, the Group) for the period ended 31
December 2020. Adriatic Metals PLC (the Company or the parent) is a
public company limited by shares and incorporated in England &
Wales. The Registered office has changed during the year. The
registered office is located at Ground Floor, Regent House, 65
Rodney Road, Cheltenham GL50 1HX, United Kingdom.
The Group's principal activity is precious and base metals
exploration and development. The Group owns the world-class
advanced Vares Silver Project in Bosnia & Herzegovina. The
Vares Silver Project consists of two high-grade polymetallic
deposits, located at Rupice and Veovaca. The Group expanded its
exploration activities to Serbia during the period with the
acquisition of the Tethyan Resource Corp to order to advance the
former Kizevak and Sastavci polymetallic mines in the Raska
District of southern Serbia.
Bosnia & Herzegovina and Serbia are well-positioned in
central Europe and boast strong mining history, pro-mining
environment, highly skilled workforce as well as extensive existing
infrastructure and logistics.
The Vares Silver Project's captivating economics and impressive
resource inventory have attracted Adriatic's highly experienced
team, which is expediting exploration efforts to expand the current
JORC resource. Results of a recent Pre-Feasibility study indicate
an NPV(8) of US$1,040 million and IRR of 113%. Leveraging its
first-mover advantage, Adriatic is rapidly advancing the project
into the development phase and through to production.
2. Basis of preparation
a Statement of compliance
These consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union in accordance with the provisions of
the Companies Act 2006. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board
("IASB") and the IFRS Interpretations Committee, and there is an
ongoing process of review and endorsement by the European
Commission.
The Consolidated Financial Statements were authorised for issue
by the Board of Directors on 30 March 2021.
b Basis of measurement
These Consolidated Financial Statements have been prepared on a
historical cost basis, except for certain financial instruments
that have been measured at fair value.
These Consolidated Financial Statements are presented in Great
Britain Pounds ("GBP"). The functional currency of the Company is
the Great Britain Pound.
c Going Concern
The Group incurred a loss in the period of GBP5,694,503 (30 June
2020 - GBP6,238,324). However, the Group also had a net asset
position at the balance sheet date of GBP 46,512,225 (30 June 2020
- GBP20,895,753 ).
The Company and Group continue to meet their working capital
requirements with the support of investors completed a GBP6.2
million equity private placement with the European Bank for
Reconstruction and issue of US$20 million in convertible debentures
to Queens Road Capital during Q4 2020. The results from the October
2020 Vares Silver Project Pre-Feasibility study indicated a project
NPV(8) of US$1,040 million and IRR of 113% further underline the
Group's future potential as producing mine generating health cash
flows.
The Group's operations have been largely unaffected by COVID-19
with exploration and development work continuing with only minor
disruption. The Vares Silver Project's economics, the resource
based of which includes a substantial element attributable to
precious metals, remain attractive notwithstanding the impact that
COVID-19 has had on commodity prices and demand.
Cash flow forecasts prepared inclusive of discretionary
expenditure, based on planned levels of future activity including
commencement of construction of the Vares Silver Project, indicate
that the Group will need to raise additional finance within the
next 12 months. However, the Directors' believe that the Group can
secure the additional funding necessary to continue in operational
existence for the next 12 months at planned activity level from the
date of this report and would defer the acceleration in cash burn
rate that would arise on the commencement of construction until
adequate funding is in place to do so.
Cash flow forecasts prepared based on current committed
expenditure and non-discretionary spend only, indicate that the
Company has sufficient cash resources to continue in operation for
a period in excess of 12 months from the date of signing the
Consolidated and Parent Company Financial Statements. The Directors
therefore believe there is not a material uncertainty regarding
going concern that it is appropriate to prepare the financial
statements on a going concern basis.
3. Significant accounting policies
The preparation of Consolidated Financial Statements in
compliance with IFRS requires management to make certain critical
accounting estimates. It also requires management to exercise
judgement in applying the Group's accounting policies. Below are
the significant accounting policies applied by management. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
Consolidated Financial Statements are disclosed in note 4 .
a Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the
practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining
whether de-facto control exists the company considers all relevant
facts and circumstances, including:
-- The size of the company's voting rights relative to both the
size and dispersion of other parties who hold voting rights
-- Substantive potential voting rights held by the company and
by other parties
-- Other contractual arrangements
-- Historic patterns in voting attendance.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
The Consolidated Financial Statements comprise the Financial
Statements of the Company and following subsidiaries at 31 December
2020:
Country of Shareholding on 31 Shareholding on 30 Nature of business
Name of subsidiary incorporation December 2020 June 2020
======================= ======================= ===================== ====================== =====================
Mineral exploration
Eastern Mining d.o.o. Bosnia and Herzegovina 100% 100% & development
======================= ======================= ===================== ====================== =====================
0% Holding company -
financing mining
exploration of
Tethyan Resource Corp Canada 100% subsidiary
======================= ======================= ===================== ====================== =====================
0% Holding company -
financing mining
Tethyan Resources exploration of
Limited England & Wales 100% subsidiary
======================= ======================= ===================== ====================== =====================
0% Holding company -
financing mining
Tethyan Resources exploration of
Jersey Ltd Jersey 100% subsidiary
======================= ======================= ===================== ====================== =====================
Mineral exploration
Taor d.o.o. Serbia 100% 0% and development
======================= ======================= ===================== ====================== =====================
Tethyan Resources Mineral exploration
d.o.o. Serbia 100% 0% and development
======================= ======================= ===================== ====================== =====================
Global Mineral Mineral exploration
Resources d.o.o. Serbia 100% 0% and development
======================= ======================= ===================== ====================== =====================
Tethyan Resources Mineral exploration
Bulgaria EOOD Bulgaria 100% 0% and development
======================= ======================= ===================== ====================== =====================
Kosovo Resource Mineral exploration
Company Kosovo 100% 0% and development
======================= ======================= ===================== ====================== =====================
Serbia 0% Mineral exploration
Ras Metals d.o.o. 10%* and development
======================= ======================= ===================== ====================== =====================
* The Group holds 10% of the equity in Ras Metals d.o.o. and has
an option to acquire remaining 90% it does not hold. The Group has
substantive control of Ras Metals d.o.o. and has consolidated the
net assets into the Group financial statements.
The Group also owns 10% of the equity in EFPP d.o.o. with an
option to acquire the remaining 90%. However, the Group does not
have substantive control over this entity and has not consolidated
the net assets into the Group financial statements. See Section 4
for more details on critical accounting judgements.
Entities in which the Group has a shareholding that are not
included in consolidation are as follows:
Country of Shareholding on 31 Shareholding on 30 Nature of business
Name of subsidiary incorporation December 2020 June 2020
===================== ======================= ====================== ====================== ======================
EFPP d.o.o. Serbia 10%* 0% Mineral exploration
and development
===================== ======================= ====================== ====================== ======================
b Standards, amendments and interpretations adopted
During the period, the following new standards and amendments
have been implemented.
Standard Detail Effective date
=================================== ================================================================= ==============
IAS 1 IAS 1 Presentation of Financial Statements and IAS 8 Accounting 1 January 2020
Policies, Changes in Accounting
Estimates and Errors (Amendment - Disclosure Initiative -
Definition of Material)
=================================== ================================================================= ==============
IFRS 3 Business Combinations (Amendment - Definition of Business) 1 January 2020
=================================== ================================================================= ==============
N/A Conceptual Framework for Financial Reporting (Revised) 1 January 2020
=================================== ================================================================= ==============
IFRS 9, IFRS 7, IFRS 4 and IFRS 16 IBOR Reform and its Effects on Financial Reporting - Phase 1 1 January 2020
=================================== ================================================================= ==============
IFRS 16 Covid-19-Related Rent Concessions - Amendment to IFRS 16 1 June 2020
=================================== ================================================================= ==============
c Standards, amendments and interpretations effective in future periods
At the date of authorisation of these Consolidated Financial
Statements, the following new standards, amendments and
interpretations to existing standards have been published but are
not yet effective and have not been adopted early by the Group.
Standard Detail Effective date
==================================== ============================================================ ==============
IFRS 17 Insurance contracts 1 January 2021
==================================== ============================================================ ==============
IAS 1 Amendment - regarding the classification of liabilities 1 January 2022
==================================== ============================================================ ==============
IAS 37 Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
==================================== ============================================================ ==============
IAS 16 Property, Plant and Equipment: Proceeds before Intended Use 1 January 2022
==================================== ============================================================ ==============
IFRS 1, IFRS 9, IFRS 16 and IAS 41) Annual Improvements to IFRS Standards 2018-2020 1 January 2022
==================================== ============================================================ ==============
IFRS 3 References to Conceptual Framework 1 January 2022
==================================== ============================================================ ==============
Management anticipates that all the pronouncements will be
adopted in the Group's accounting policies for the first period
beginning after the effective date of the pronouncement. The group
does not expect these Standard or Interpretation to have a material
impact on the entity's financial statements in the period of
initial application.
d Foreign currency transactions and translations
The Group's consolidated financial statements are presented in
GBP (GBP), which is considered to be the Company's functional
currency. For each entity the Group determines the functional
currency and items included in the financial statements of each
entity are measured using that functional currency which is the
currency of the primary economic environment in which the entity
operates ('the local functional currency').
i) Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group's entities at their respective functional currency spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of
exchange at the reporting date.
Differences arising on settlement or translation of monetary
items are recognised in profit or loss.
ii) Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into GBP (GBP) at the rate of exchange
prevailing at the reporting date and their income statements are
translated at average exchange rates prevailing during the period.
The exchange differences arising on translation for consolidation
are recognised in other comprehensive income.
e Cash and cash equivalents
Cash and cash equivalents are comprised of cash held on deposit
and other short-term, highly liquid investments with original
maturities of three months or less. These deposits and investments
are readily convertible to known amounts of cash and subject to an
insignificant risk of change in value.
f Other receivables
All receivables are held at amortised cost less any provision
for impairment. A loss allowance for expected credit losses is made
to reflect changes in credit risk since the initial
recognition.
g Exploration and evaluation assets
Pre-license costs
Pre-license costs relate to costs incurred before the Group has
obtained legal rights to explore in a specific area. Such costs may
include the acquisition of exploration data and the associated
costs of analysing that data. These costs are expensed in the
period in which they are incurred.
Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for
mineral resources, the determination of technical feasibility and
the assessment of commercial viability of an identified
resource.
Exploration and evaluation activity includes:
-- Researching and analysing historical exploration data
-- Gathering exploration data through geophysical studies
-- Exploratory drilling and sampling
-- Determining and examining the volume and grade of the resource
-- Surveying transportation and infrastructure requirements
-- Conducting market studies
License costs paid in connection with a right to explore in an
existing exploration area are capitalised and amortised over the
term of the permit.
Where the purchase of a business or group of assets provides the
group exploration rights, these costs are capitalised in
exploration and evaluation expenditure.
Once the legal right to explore has been acquired, exploration
and evaluation expenditure is charged to profit or loss as
incurred, unless the Group concludes that a future economic benefit
is more likely than not to be realised. These costs include
directly attributable employee remuneration, materials and fuel
used, surveying costs, drilling costs and payments made to
contractors.
In evaluating whether the expenditures meet the criteria to be
capitalised, several different sources of information are used. The
information that is used to determine the probability of future
benefits depends on the extent of exploration and evaluation that
has been performed.
Exploration and evaluation expenditure on licenses where a
JORC-compliant resource has not yet been established is expensed as
incurred until sufficient evaluation has occurred in order to
establish a JORC-compliant resource.
Costs expensed during this phase are included in 'Other
operating expenses' in the statement of profit or loss and other
comprehensive income.
Upon the establishment of a JORC-compliant resource (at which
point, the Group considers it probable that economic benefits will
be realised), the Group capitalises any further evaluation
expenditure incurred for the particular license as exploration and
evaluation assets up to the point when a JORC-compliant reserve is
established. Capitalised exploration and evaluation expenditure is
considered to be an intangible asset and measured at cost less
accumulated impairment.
Exploration and evaluation assets acquired in a business
combination are initially recognised at fair value, including
resources and exploration potential that is considered to represent
value beyond proven and probable reserves. Similarly, the costs
associated with acquiring an exploration and evaluation asset (that
does not represent a business) are also capitalised and
subsequently measured at cost less accumulated impairment.
Once JORC-compliant reserves are established and development is
sanctioned, exploration and evaluation assets are tested for
impairment and transferred to 'Mines under construction' which is a
sub-category of 'Mine properties' and will be subsequently
amortised in line with the useful economic life of the mine and
rate of depletion of resources. Exploration and evaluation assets
are not amortised during the exploration and evaluation phase and
are considered to have an indefinite life until determine as part
of a mine plan.
h Property, plant and equipment
i) Land
Land is held at cost less accumulated impairment losses. Once
JORC-compliant reserves are established and development is
sanctioned, land is tested for impairment and transferred to 'Mines
under construction' which is a sub-category of 'Mine properties'
and will be subsequently depreciated in line with the useful
economic life of the mine and rate of depletion of resources. Land
is not depreciated during the exploration and evaluation phase and
is considered to have an indefinite life until determine as part of
a mine plan.
ii) Short lived property, plant and equipment
Short lived property, plant and equipment consists of buildings,
plant and machinery, office furniture and equipment, transportation
assets and computer equipment. Short lived property, plant and
equipment are carried at cost less accumulated depreciation and
accumulated impairment losses. The cost of an item of short lived
property, plant and equipment consists of the purchase price and
any costs directly attributable to bringing the asset to the
location and condition necessary for its intended use and an
estimate of the costs of dismantling and removing the item and
restoring the site on which it is located.
iii) Depreciation and amortisation
Land is not depreciated. All other short-lived property, plant
and equipment depreciation is provided at rates calculated to
expense the cost of property, plant and equipment, less their
estimated residual value, using the straight-line method over their
estimated useful life of the asset giving the following rates:
Land Not depreciated
----------------------------------- ------------------------------------------------
Buildings & Leasehold improvements Shorter of 10% or lease term
----------------------------------- ------------------------------------------------
Plant and equipment 15% - 33%
----------------------------------- ------------------------------------------------
Assets under construction Not depreciated
----------------------------------- ------------------------------------------------
The assets' residual values, useful lives and methods of
depreciation are reviewed at each financial year-end and adjusted
prospectively if appropriate.
i Leases
The Group applied IFRS 16 for the first time in the comparative
period using the modified retrospective approach, with recognition
of transitional adjustments on the date of initial application (1
July 2019), without restatement of comparative figures. There were
no adjustments to prior periods as a result of the application of
this standard because the Group did not have any leases in the
prior year.
The Group assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration.
i) Transition Method and Practical Expedients Utilised
The Group adopted IFRS 16 using the modified retrospective
approach, with recognition of transitional adjustments on the date
of initial application (1 July 2019), without restatement of
comparative figures. The Group elected to apply the practical
expedient to not reassess whether a contract is, or contains, a
lease at the date of initial application. Contracts entered into
before the transition date that were not identified as leases under
IAS 17 and IFRIC 4 were not reassessed. The definition of a lease
under IFRS 16 was applied only to contracts entered into or changed
on or after 1 July 2019.
IFRS 16 provides for certain optional practical expedients,
including those related to the initial adoption of the standard.
The Group applied the following practical expedients when applying
IFRS 16 to leases previously classified as operating leases under
IAS 17:
-- Apply a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- Exclude initial direct costs from the measurement of
right-of-use assets at the date of initial application for leases
where the right-of-use asset was determined as if IFRS 16 had been
applied since the commencement date;
-- Reliance on previous assessments on whether leases are
onerous as opposed to preparing an impairment review under IAS 36
as at the date of initial application; and
-- Applied the exemption not to recognise right-of-use assets
and liabilities for leases with less than 12 months of lease term
remaining as of the date of initial application.
As a lessee, the Group previously classified leases as operating
or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of
ownership. Under IFRS 16, the Group recognises right-of-use assets
and lease liabilities for most leases. However, the Group has
elected not to recognise right-of-use assets and lease liabilities
for some leases of low value assets based on the value of the
underlying asset when new or for short-term leases with a lease
term of 12 months or less.
ii) Group as a lessee
The Group applies a single recognition and measurement approach
for all leases, except for short-term leases and leases of
low-value assets which, are either expensed as incurred though the
income statement or capitalised in exploration and evaluation
assets. The Group recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the
underlying assets.
iii) Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use
assets are amortised on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets.
The Company has a single right of use asset, relating to the
lease of an office premised in the UK. Given the nature of the
asset, the amortisation charge is included in general and
administrative expenses.
If ownership of the leased asset transfers to the Group at the
end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated
useful life of the asset.
The right-of-use assets are also subject to impairment.
iv) Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating the lease, if
the lease term reflects the Group exercising the option to
terminate. Variable lease payments that do not depend on an index
or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition
that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement date
because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the lease
payments (e.g., changes to future payments resulting from a change
in an index or rate used to determine such lease payments) or a
change in the assessment of an option to purchase the underlying
asset.
v) Revision of lease term
When the group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate
remains unchanged. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease
term. If the carrying amount of the right-of-use asset is adjusted
to zero, any further reduction is recognised in profit or loss.
j Rehabilitation provision
The Group recognises provisions for contractual, constructive or
legal obligations, including those associated with the reclamation
of mineral interests and property, plant and equipment, when those
obligations result from the acquisition, construction, development
or normal operation of the assets. Initially, a provision for the
rehabilitation is recognised at its present value in the period in
which it is incurred. Upon initial recognition of the liability,
the corresponding provision is added to the carrying amount of the
related asset and the cost is amortised as an expense over the
economic life of the asset. Following the initial recognition of
the rehabilitation provision, the carrying amount of the liability
is increased for the passage of time and adjusted for changes to
the current market-based discount rate, and amount or timing of the
underlying cash flows needed to settle the obligation. Currently
the Group has not done any significant mining and thus management
have assessed that no rehabilitation provision is necessary.
k Interest income
Interest income is recorded on an accrual basis using the
effective interest method.
l Financial instruments
Financial assets and liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial
instrument. Financial assets are derecognised when the contractual
rights to the cash flows from the financial asset expire, or when
the financial asset and all substantial risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expired.
Except for trade and other receivables which do not contain a
significant financing component, financial assets and financial
liabilities are measured initially at fair value plus or minus, in
the case of a financial asset or financial liability not at fair
value through profit or loss, transactions costs that are directly
attributable to the acquisition or issue of the financial
instrument. Trade receivables which do not contain a significant
financing component are recognised at their transaction price.
Financial assets and financial liabilities are subsequently
measured as described below.
i) Financial assets
Financial assets are subsequently recognised at amortised cost
under IFRS 9 if it meets both the hold to collect and contractual
cash flow characteristics tests. A financial asset is measured at
fair value through other comprehensive income if the financial
asset is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets and the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
If neither of the above classification are met the asset is
classified as fair value through the profit and loss or unless
management elect to do so provided the classification eliminates or
significantly reduces a measurement or recognition
inconsistency.
a) Cash and cash equivalents and trade and other receivables
Cash and cash equivalents and trade and other receivables are
non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. After initial recognition
these are measured at amortised cost using the effective interest
method, less provision for impairment, if any.
b) Fair value through profit or loss
Financial assets measured at fair value through profit or loss
are subsequently measured at fair value with changes in those fair
values recognised in the profit and loss statement.
Assets held at fair value through profit or loss comprise of the
convertible loan asset.
ii) Financial liabilities
Financial liabilities are subsequently measured at amortised
cost using the effective interest method, except for financial
liabilities designated at fair value through profit or loss, that
are carried subsequently at fair value with gains and losses
recognised in the profit and loss statement.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or, where
appropriate, a shorter period.
The Group's financial liabilities initially measured at fair
value and subsequently recognised at amortised cost include
accounts payables and accrued liabilities, and the liability
associated with the right of use asset (note 11).
Iii) Convertible debt
The proceeds received on issue of the Group's convertible debt
are allocated into their liability and derivative liability
components. The amount initially attributed to the debt component
equals the discounted cash flows using a market rate of interest
that would be payable on a similar debt instrument that does not
include an option to convert. Subsequently, the debt component is
accounted for as a financial liability measured at amortised cost
until extinguished on conversion or maturity of the bond. The
remainder of the proceeds is allocated to the conversion option and
is recognised as a derivative liability.
m Impairment of assets
i) Financial assets
A financial asset that is not carried at fair value through
profit or loss is assessed at each reporting date to determine a
loss allowance for expected credit losses. If the credit risk on a
financial instrument has increased significantly since initial
recognition, the loss allowance is equal to the lifetime expected
credit losses. If the credit risk has not increased significantly,
the loss allowance is equal to the twelve month expected credit
losses.
The expected credit losses are measured in a way that reflects
the unbiased and probability weighted amount that is determined by
evaluating a range of possible outcomes; the time value of money
and reasonable and supportable information that is available about
past events, current conditions and forecasts of future economic
conditions.
ii) Non-financial assets
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is an indication that the assets are impaired. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment, if
any. Where the asset does not generate largely independent cash
inflows, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. A cash-generating
unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash inflows from
other assets or groups of assets.
The recoverable amount is the higher of fair value less costs to
sell, and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than the carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in the profit
and loss statement.
With the exception of goodwill, all assets are subsequently
reassessed for indications that an impairment loss previously
recognised may no longer exist. Where an impairment loss is
subsequently reversed, the carrying amount of the asset (or
cash-generating unit) is increased to the revised estimate of its
recoverable amount, but to an amount that does not exceed the
carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in
prior periods. A reversal of an impairment loss is recognised in
the profit and loss statement.
n Income taxes
Current income tax is the expected tax payable or receivable on
the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable or receivable in respect of previous years.
Deferred income taxes are calculated based on temporary
differences between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not recognised on the
initial recognition of goodwill, on the initial recognition of
assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit
or loss at the time of the transaction, and on temporary
differences relating to investments in subsidiaries and jointly
controlled entities where the reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future.
Deferred income tax assets and liabilities are measured, without
discounting, at the tax rates that are expected to apply when the
assets are recovered, and the liabilities settled, based on tax
rates that have been enacted or substantively enacted by the
reporting date.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow the related tax benefit
to be utilised.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to set off current tax assets against
current tax liabilities, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different
taxable entities which intend either to settle current tax
liabilities and assets on a net basis, or to realise the assets and
settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities and assets
are expected to be settled or recovered.
The Group has no deferred tax assets or liabilities.
o Earnings/loss per share
Basic loss per share is calculated by dividing the loss
attributable to the common shareholders of the Group by the
weighted average number of common shares outstanding during the
reporting period. Diluted earnings per share is calculated by
adjusting the loss attributable to common shareholders and the
weighted average number of common shares outstanding for the
effects of all dilutive potential common shares, which comprise
share options and warrants granted.
p Share premium
Share premium represents the excess of proceeds received over
the nominal value of new shares issued.
q Share-based payments & Warrants payments
i) Share-based payment transactions
The Company grants share options and performance rights to
Directors, Officers, Consultants and employees ("equity-settled
transactions"). The company grants warrants to institutions issued
as part of an equity raise as part of overall in connection with
the acquisition of Tethyan. The Board of Directors determines the
specific grant terms within the limits set by the Company's share
option plans.
ii) Equity-settled transactions
The costs of equity-settled transactions are measured by
reference to the fair value at the grant date and are recognised,
together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled,
ending on the date on which the relevant persons become fully
entitled to the award (the "vesting date"). The cumulative expense
recognised for equity-settled transactions at each reporting date
until the vesting date reflects the Company's best estimate of the
number of equity instruments that will ultimately vest. The profit
or loss charge or credit for a period represents the movement in
cumulative expense recognised as at the beginning and end of that
period and the corresponding amount is represented in share option
reserve. No expense is recognised for awards that do not ultimately
vest.
Where the terms of an equity-settled award are modified, the
minimum expense recognised is the expense as if the terms had not
been modified. An additional expense is recognised for any
modification which increases the total fair value of the
share-based payment arrangement or is otherwise beneficial to the
employee as measured at the date of modification.
Where equity-settled transactions are awarded to employees, the
fair value of the options at the date of grant is charged to the
profit and loss statement over the vesting period. Performance
vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each reporting date so
that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of the options that will eventually
vest.
Where equity-settled transactions are entered into with
non-employees and some or all of the goods or services received by
the entity as consideration cannot be specifically identified, they
are measured at the fair value of the equity instruments issued.
Otherwise, share-based payments to non-employees are measured at
the fair value of the goods or services received.
Upon exercise of share options or warrants, the proceeds
received are allocated to share capital, and premium if applicable
together with any associated balance in share-based payments
reserve are transferred to retained earnings. The dilutive effect
of outstanding options is reflected as additional dilution in the
computation of diluted earnings per share.
r Non-controlling Interest
The Group has the choice, on a transaction by transaction basis,
to initially recognise any non-controlling interest in the acquiree
which is a present ownership interest and entitles its holders to a
proportionate share of the entity's net assets in the event of
liquidation at either acquisition date fair value or, at the
present ownership instruments' proportionate share in the
recognised amounts of the acquiree's identifiable net assets. Other
components of non-controlling interest such as outstanding share
options are generally measured at fair value.
The total comprehensive income of non-wholly owned subsidiaries
is attributed to owners of the parent and to the non-controlling
interests in proportion to their relative ownership interests.
s Segmental reporting
The reportable segments identified make up all of the Group's
activities. The reportable segments are an aggregation of the
operating segments within the Group as prescribed by IFRS 8. The
reportable segments are based on the Group's management structures
and the consequent reporting to the Chief Operating Decision Maker,
the Board of Directors. These reportable segments also correspond
to geographical locations such that each reportable segment is in a
separate geographic location. Income and expenses included in
profit or loss for the period are allocated directly or indirectly
to the reportable segments.
The group has reviewed its operating segments following the
acquisition of the Tethyan Resource Corp and subsidiaries in
October 2020 and as a result of the expansion in the group's range
to operating activities and determined that there are now three
distinct reporting segments as follows:
-- Bosnia (principally the Vares Project)
-- Serbia (principally the Raska Project)
-- Corporate (which supports the activities of the other two segments)
The Vares and Raska projects operate in two separate distinct
jurisdictions and are at different points in their respective
project life cycles.
The reportable segments are based on the Group's management
structures and the consequent reporting to the Chief Operating
Decision Maker, the Board of Directors.
Non-current segment assets comprise the non-current assets used
directly for segment operations, including intangible assets and
property, plant and equipment. Current segment assets comprise the
current assets used directly for segment operations, including
other receivables and deferred costs. Inter-company balances
comprise transactions between operating segments making up the
reportable segments. These balances are eliminated to arrive at the
figures in the Consolidated Financial Statements.
4. Critical accounting estimates and judgements
The preparation of the Consolidated Financial Statements in
accordance with IFRS requires management to make certain
judgements, estimates, and assumptions about recognition and
measurement of assets, liabilities, income and expenses. The actual
results are likely to differ from these estimates. Information
about the significant judgements, estimates, and assumptions that
have the most significant effect on the recognition and measurement
of assets, liabilities, income and expenses are discussed
below.
Estimates
a Exploration and evaluation asset impairment testing
The Group reviews and tests the carrying value of exploration
and evaluation assets when events or changes in circumstances
suggest that the carrying amount may not be recoverable in terms of
IFRS 6. Indicators of impairment the group assesses for are as
follows:
a) the period for which the entity has the right to explore in
the specific area has expired during the period or will expire in
the near future, and is not expected to be renewed.
b) substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned.
c) exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area.
d) sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
When such indicators exist, management determine the recoverable
amount by performing value in use and fair value calculations.
These calculations require the use of estimates and assumptions.
When it is not possible to determine the recoverable amount for an
individual asset, management assesses the recoverable amount for
the cash generating unit to which the asset belongs. The key
estimates made includes discount rates, being the Group's weighted
average cost of capital, future prices, E&E costs, production
levels and foreign currency exchange rates.
b Convertible loan valuation
The financial instrument was valued at fair value through the
profit and loss account in the prior year. The Group has utilised
the Black-Scholes Option Pricing Model to estimate the fair value
of the conversion option associated with a loan granted to Tethyan
Resource Corp. The use of the Black-Scholes option pricing model
requires management to make various estimates and assumptions that
impact the value assigned to the loan granted to Tethyan Resource
Corp. including the forecast future volatility of the share price
and the risk-free interest rate. This financial instrument was
eliminated on consolidation on the acquisition of Tethyan Resource
Corp in the current period for the Group. The conversion option was
not enacted, the loan agreement was amended to remove this option
and the conversion value was released to the profit and loss in the
current period.
c Convertible bond valuations
The Group issued USD 20 million 8.5% Convertible bonds through a
deed of covenant dated 30 November 2020. The bonds are convertible
into fully paid equity securities in the share capital of the
issuer, subject to and in accordance with the Conditions and the
Deed of Covenant. Management engaged experts to assist with the
valuation of the bond holders call option imbedded within this
agreement. The option is recognised as a derivative liability in
the Group and company accounts and required a separate fair
valuation.
See note 6 for further details regarding these inputs.
d Share-based payments
The Group utilises the Black-Scholes Option Pricing Model to
estimate the fair value of share options and performance rights
granted to Directors, Officers and employees. The use of the
Black-Scholes Option Pricing Model requires management to make
various estimates and assumptions that impact the value assigned to
the share options and performance rights including the forecast
future volatility of the share price, the risk-free interest rate,
dividend yield, the expected life of the share options and
performance rights and the expected number of share which will
vest. See note 15 for further details regarding these inputs.
Judgements
a Functional currency
The Group transacts in multiple currencies. The assessment of
the functional currency of each entity within the consolidated
Group involves the use of judgement in determining the primary
economic environment each entity operates in. The Group first
considers the currency that mainly influences sales prices for
goods and services, and the currency that mainly influences labour,
material and other costs of providing goods or services. In
determining functional currency, the Group also considers the
currency from which funds from financing activities are generated,
and the currency in which receipts from operating activities are
usually retained. When there is a change in functional currency,
the Group exercises judgement in determining the date of change.
This assessment is driven by the primary economic environment of
each entity including products, labour, materials and professional
services and the currency they are primarily transacted in.
Name of entity Country of incorporation Functional currency
================================ ========================= ====================
Adriatic Metals PLC England & Wales GBP
================================ ========================= ====================
Eastern Mining d.o.o. Bosnia and Herzegovina BAM*
================================ ========================= ====================
Tethyan Resource Corp Canada CAD
================================ ========================= ====================
Tethyan Resources PLC England & Wales GBP
================================ ========================= ====================
Tethyan Resources Jersey Ltd Jersey GBP
================================ ========================= ====================
Taor d.o.o. Serbia RSD*
================================ ========================= ====================
Tethyan Resources d.o.o. Serbia RSD*
================================ ========================= ====================
Global Mineral Resources d.o.o. Serbia RSD*
================================ ========================= ====================
Tethyan Resources Bulgaria EOOD Bulgaria EUR
================================ ========================= ====================
Kosovo Resource Company Kosovo EUR
================================ ========================= ====================
Ras Metals d.o.o. Serbia RSD*
================================ ========================= ====================
* Bosnian Marks (BAM) and Republic of Serbia Dinars (RSD)
currencies are pegged to the Euro.
b Capitalisation of exploration costs
The group uses its judgement to determine whether costs meet the
capitalisation requirements in terms of the standard and its
accounting policy on exploration and evaluation assets to determine
whether exploration and evaluation costs should be capitalised or
expensed based on whether the activities performed are directly
attributable to increasing the value of the project.
c Option Agreement Treatment - Control of Ras Metals
As part of the Tethyan Resource Corp acquisition, the Group
became the beneficiary of three mutually exclusive option
agreements under which it could acquire, at its sole discretion,
the entire share capital of Ras Metals d.o.o., EFPP d.o.o. and Deep
Research d.o.o.
The Group assessed each option agreement to determine whether it
provided the Company with control over each respective entity and
if so from what point in time as follows:
i. Ras Metals d.o.o. (Ras)
The Group determined that Ras was controlled by the Group from 8
October 2020, being the date at which Tethyan Resource Corp (the
option holder) was acquired by the Company, because the Group had
the ability and intent to acquire the remaining equity interest in
Ras. On 23 February 2021, the Company completed the acquisition of
the entire issued share capital of Ras further details of which are
provided in note 25.
The consideration paid in order to exercise right to purchase of
the remaining equity contains both fixed and variable elements. As
a result of the variable element of the consideration payable the
Group did not have access to present returns in Ras at 31 December
2020 and has therefore recognised a non-controlling interest in
this.
ii. EFPP d.o.o. (EFPP)
EFPP was determined to be outside the control of the Group
because the option agreement holder, Tethyan Resource Corp, was
unlikely to exercise its rights under the agreement. This position
was further justified when on 22 February 2021, the Group disposed
of its 10% equity stake in EFPP for a nominal amount.
iii. Deep Research d.o.o. (DR)
DR was determined to be outside of the control of the Group
because although Tethyan Resource Corp (the option agreement
holder) had the ability to control DR via exercise of the option it
did not have the intent to do so at present until further
exploration work has been completed to determine the economic value
of DR to the Group relative to the consideration that would be
payable on exercise of the option.
5. Other receivables and prepayments
(In GBP) 31 December 2020 30 June 2020
========================== ================ ============
Other receivables 8,729 17,853
========================== ================ ============
Prepayments and deposits 138,088 95,202
========================== ================ ============
Taxes receivable 507,698 338,491
========================== ================ ============
Total 654,514 451,546
========================== ================ ============
All receivables are due within one year.
The Group has three reporting segments and two operating
locations which are Bosnia & Herzegovina and Serbia.
Split of other receivables and prepayments as follows as at 31
December 2020:
Bosnia Serbia Corporate Total
------------------- -------- -------- ---------- --------
Other receivables 829 7,900 - 8,729
------------------- -------- -------- ---------- --------
Prepayments and
deposits 29,475 38,196 70,416 138,088
------------------- -------- -------- ---------- --------
Taxes receivable 300,426 109,200 98,072 507,698
------------------- -------- -------- ---------- --------
Total 330,730 155,296 168,488 654,514
------------------- -------- -------- ---------- --------
Split of other receivables and prepayments as follows as at 30
June 2020:
Bosnia Serbia Corporate Total
------------------- -------- ------- ---------- --------
Other receivables 790 N/A 17,063 17,853
------------------- -------- ------- ---------- --------
Prepayments and
deposits 47,999 N/A 47,203 95,202
------------------- -------- ------- ---------- --------
Taxes receivable 300,997 N/A 74,994 338,491
------------------- -------- ------- ---------- --------
Total 349,786 N/A 139,260 451,546
------------------- -------- ------- ---------- --------
6. Financial assets at fair value through profit and loss
Tethyan Resources Corp Loan
As part of the agreement to acquire 100% of TSX-V listed Tethyan
Resource Corp. via a plan of arrangement in British Columbia, the
Company provided a convertible loan facility to Tethyan during the
prior year and had advanced EUR1.8 million under the facility to
the date of acquisition on 8 October 2020. Effective the same date
this loan was amended removing the convertible option from the loan
and the conversion value was released to the profit and loss in the
current period. As at 31 December 2020, this financial instrument
was eliminated on consolidation for the Group.
(In GBP) Tethyan Loan Receivable
========================================================= =======================
At 30 June 2019 -
========================================================= =======================
Additions 876,201
========================================================= =======================
Interest 12,624
========================================================= =======================
Foreign exchange gain 29,702
========================================================= =======================
Revaluation of fair value asset through profit and loss 322,987
At 30 June 2020 1,241,514
Additions 723,300
Interest 7,129
Foreign exchange gain 32,091
Revaluation of fair value asset through profit and loss (322,987)
========================================================= =======================
Acquisition (loan eliminated on consolidation) (1,681,047)
========================================================= =======================
At 31 December 2020 -
========================================================= =======================
The loan is revalued at its fair value each period end using the
following inputs to the Black-Scholes valuation model:
31 December 2020 30 June 2020
----------------------- -------------
Term - 1 year
======================
Share Price (CAD) - CAD 0.22
======================
Exercise Price (CAD) - CAD 0.15
======================
Volatility - 140%
======================
Risk Free rate - 0.17%
====================== =============
7. Financial liabilities at fair value through profit and loss
QRC Convertible Loan
The Group issued USD 20 million 8.5% Convertible bonds through a
deed of covenant dated 30 November 2020. The bonds are convertible
into fully paid equity securities in the share capital of the
issuer, subject to and in accordance with the Conditions and the
Deed of Covenant. Key terms and conditions of the Bond agreement
between the Company and Queens Road Capital (QRC) is provided
below.
Voluntary conversion
The bonds shall be convertible into equity securities of the
company at the option of the bondholder at any time from the issue
date 1 December 2020 until 30 November 2024. The number of equity
securities to be issued on exercise of a conversion price in effect
on the relevant conversion date. The initial conversion price is
AUD 2.7976 per ordinary share.
Redemption and Purchase
a) Final redemption: Where the bonds are not converted,
redeemed, purchased, or cancelled by the company prior to the final
maturity date, the bonds shall be redeemed by the company at their
principal amount
b) Redemption at the option of the issuer: Option to the issuer
to redeem all the bonds outstanding, prior to the final maturity
date, at their principal amount together with accrued but unpaid
interest to such date if:
a. At any time prior to maturity date, the volume weighted
average price of the equity securities for 20 consecutive days has
exceeded 125% of the Conversion Price;
b. The issuer delivers an optional redemption notice that
contains an optional redemption date which falls on or after the
third anniversary of the issue date; or
c. A project refinancing has occurred
c) Redemption at the option of bondholder in change of control
event: the bondholder receives an option to require the issuer to
redeem the bonds prior to the final maturity date. In the event of
a change of control, the bonds shall be redeemed at:
a. 130% of the principal amount, if the change of control event
occurs on or prior to the second anniversary of the issuance date,
together with accrued and unpaid interest till such date
b. 115% of the principal amount, if the change of control event
occurs after the second anniversary of issuance date, together with
accrued and unpaid interest till such date
d) Redemption at the option of the bondholder in the event of
project financing: In any event where the company secures a project
financing before the final maturity date of the bonds, the
bondholder can require the issuer to redeem the bonds at its
principal amount together with the accrued but unpaid interest to
such date
Accounting Consideration and Results
QRC's option to convert the bonds into equity and the associated
potential issue of shares give rise to a variable amount of cash
that would be received by the Company and therefore the bonds fail
to meet the requirements to be classified as equity. The conversion
feature of the bonds has therefore been accounted for as a
derivative liability, with the value of the conversion feature
dependent on foreign exchange rates and other factors as set out
below.
Management engaged external experts to review the terms of the
agreement and perform a valuation. It was concluded that the call
option in the hands of the bondholder satisfied the conditions
stipulated by IFRS 9 Financial Instrument - Recognition and
Measurement for the recognition as a derivative liability in the
Group and company accounts and required a separate fair
valuation.
The redemption options in the hands of the bondholder were
concluded to be falling outside of the exemptions of IFRS 9 and
closely related to the debt host contract. Therefore, the
redemption options need not be separated from the debt host
contract and hence need not be valued separately. The Group has
elected to account for both the imbedded option and loan liability
at fair value in the profit and loss.
Valuation Model
The Black Scholes model was chosen as the most appropriate
pricing model to value the company call options. The main
assumptions and inputs used in the options pricing model were as
follows:
-- Dividend yield - assumed to be nil because the Company has
not declared or paid any dividends in prior years on ordinary
shares
-- Strike price - The initial conversion price of AUD 2.7976 per ordinary share
-- Expected term - Judgement applied to assign probability to
the various redemption and put options in the contract. The Group
will be seeking to raise finance to progress the Vares project.
Expected term of redemption calculated as 1.15 years from the
valuation date.
-- Expected volatility - Weekly volatility over the 1.15 years
(60 weeks) was calculated as 74.65% prevailing on ASX as of the
valuation date.
-- Risk-free rate - Risk free yield obtained from Australian
Treasury bond issues converted into continuous compound yields.
-- Value of underlying common stock price - The closing price of
ordinary shares AUD 2.33 on the valuation date on the ASX
Using the assumptions set out above, Black Scholes value of call
option in hands of Bondholder is GBP3,045,213.
Sensitivity Analysis
Inputs to the Black Scholes model are based on management
judgements regarding probabilities of future events. The results
are sensitive to changes in key assumptions, namely the expected
term of the bonds and the volatility of the Company's share
price.
Sensitivity of the loan value to reasonably possible changes in
the assumptions of expected term and volatility of the Company's
share price are as follows:
Change in v olatility of Company's share price
50% Unchanged ( 74.65%) 100%
-------------------- ---------------------- --------------------
Change in e xpected t erm 26 Weeks GBP 2.15 m Decrease GBP1.73m Decrease GBP 0.45 m Decrease
---------------------- -------------------- ---------------------- --------------------
Unchanged (60 weeks) GBP1. 28 m Decrease - GBP 1.27 m Increase
------------------------------------------------- -------------------- ---------------------- --------------------
91 Weeks GBP 0.67 m Decrease GBP 0 . 89 m Increase GBP 2.38 m Increase
------------------------------------------------- -------------------- ---------------------- --------------------
(In GBP) QRC Loan Payable
=========================================== ================
At 30 June 2020 -
Additions (14,956,849)
Interest (105,515)
Foreign Exchange gain 321,464
=========================================== ================
Recognition of fair value embedded option 3,045,213
=========================================== ================
At 31 December 2020 (11,695,687)
=========================================== ================
Short term borrowings at 31 December 2020 are GBP105,515 (30
June 2020: GBPnil). Long term borrowings at 31 December 2020 are
GBP11,590,172 (30 June 2020: GBPnil). Derivative liabilities as at
31 December 2020 are GBP3,045,213 (30 June 2020: GBPnil).
8. Property, plant and equipment
Cost (In GBP) Land & Buildings Plant & Machinery Total
============================= ================== =================== =========
30 June 2019 630,978 105,341 736,319
============================= ================== =================== =========
Additions 97,989 139,554 237,543
============================= ================== =================== =========
Foreign exchange difference 7,987 1,296 9,283
----------------------------- ------------------ ------------------- ---------
30 June 2020 736,954 246,191 983,145
============================= ================== =================== =========
Acquisition Assets - 87,648 87,648
============================= ================== =================== =========
Additions 29,037 61,827 90,864
============================= ================== =================== =========
Disposals - (9,378) (9,378)
============================= ================== =================== =========
Foreign exchange difference (10,500) (2,649) (13,465)
============================= ================== =================== =========
31 December 2020 755,491 383,639 1,139,130
============================= ================== =================== =========
Depreciation
--------------------------------------------------------
30 June 2019 - 15,191 15,191
----------------------------- ------- ------- -------
Charge for the year 14,481 38,164 52,645
============================= ======= ======= =======
Foreign exchange difference 68 4,321 4,389
----------------------------- ------- ------- -------
30 June 2020 14,549 57,676 72,225
----------------------------- ------- ------- -------
Acquisition Assets 0 70,004 70,004
============================= ======= ======= =======
Charge for the period 6,769 29,388 36,157
============================= ======= ======= =======
Disposals - (6,054) (6,054)
============================= ======= ======= =======
Foreign exchange difference (342) (2,323) (2,665)
============================= ======= ======= =======
31 December 2020 20,976 148,691 169,667
============================= ======= ======= =======
Net Book Value
--------------------------------------------------------
30 June 2019 630,978 90,150 721,128
============================= ======= ======= =======
30 June 2020 722,405 188,515 910,920
============================= ======= ======= =======
31 December 2020 734,516 234,948 969,464
============================= ======= ======= =======
The Group has three reporting segments and two operating
locations which are Bosnia & Herzegovina and Serbia.
Split of Land and buildings net book value as follows:
Bosnia Serbia Corporate Total
30 June 2019 630,978 N/A - 630,978
-------- ------- ---------- --------
30 June 2020 705,951 N/A 16,454 722,405
-------- ------- ---------- --------
31 December
2020 718,939 15,577 734,516
-------- ------- ---------- --------
Split of Property Plant and equipment assets net book value as
follows:
Bosnia Serbia Corporate Total
30 June 2019 67,664 N/A 22,487 90,151
-------- ------- ---------- --------
30 June 2020 157,840 N/A 30,675 188,515
-------- ------- ---------- --------
31 December
2020 185,129 24,317 25,502 234,948
-------- ------- ---------- --------
9. Exploration and evaluation assets
Cost (In GBP) Vares Silver Project Raska Project in Serbia Exploration & Evaluation
in Bosnia Assets
============================== =========================== ========================= ============================
30 June 2019 4,055,997 - 4,055,997
============================== =========================== ========================= ============================
Additions 5,048,523 - 5,048,523
============================== =========================== ========================= ============================
Foreign exchange difference 49,522 - 49,522
============================== =========================== ========================= ============================
30 June 2020 9,154,042 - 9,154,042
============================== =========================== ========================= ============================
Acquisition (note 10) - 24,456,506 24,456,506
============================== =========================== ========================= ============================
Additions 3,052,019 - 3,052,019
============================== =========================== ========================= ============================
Foreign exchange difference (63,870) (63,870)
============================== =========================== ========================= ============================
31 December 2020 12,142,191 24,456,506 36,598,697
============================== =========================== ========================= ============================
Amortisation
----------------------------- ------------------------------------------------------------------------------------
30 June 2019 84,787 - 84,787
============================== =========================== ========================= ============================
Charge for the year 23,317 - 23,317
============================== =========================== ========================= ============================
Foreign exchange difference 769 - 769
------------------------------ --------------------------- ------------------------- ----------------------------
30 June 2020 108,873 - 108,873
============================== =========================== ========================= ============================
Charge for the period 11,469 - 11,469
============================== =========================== ========================= ============================
Foreign exchange difference (1,369) - (1,369)
============================== =========================== ========================= ============================
31 December 2020 118,973 - 118,973
============================== =========================== ========================= ============================
Net Book Value
============================= ====================================================================================
30 June 2019 3,971,210 - 3,971,210
------------------------------ =========================== ========================= ----------------------------
30 June 2020 9,045,169 - 9,045,169
============================== =========================== ========================= ============================
31 December 2020 12,023,218 24,456,506 36,479,724
============================== =========================== ========================= ============================
Exploration and evaluation assets include amount of
GBP24,456,506 added in the period in respect of Tethyan exploration
rights for the TAOR d.o.o. Kremice licence (measured at historical
cost GBP1,587,934) and Ras Metals d.o.o. licences Kizevak &
Sastavci measured as the consideration paid for the combined
Tethyan group minus the net book value of assets, being 22,868,571.
The remaining exploration and evaluation assets are in respect of
the Vares Silver Project concession, located in Bosnia &
Herzegovina. The concession is 100% owned by Eastern Mining d.o.o.
From 25 May 2020, the Vares Silver Project became subject to a
minimum annual concession fee of EUR199,325 per annum. Concession
fees are included in additions to exploration and evaluation assets
and amortisation charged over the life of the concession granted.
All other exploration and evaluation assets are not amortised until
beginning of the production phase.
Additions during the period include BAM 481,800 paid to the
Zenica-Doboj Canton following the award of the new concession area
in October 2020 which adds some 32.12km2 of land in close proximity
to the existing Rupice and Veovaca deposits of the Vares
Project.
10. Acquisition note
On 11 May 2020, the Company entered into an agreement to acquire
100% of TSX-V listed Tethyan Resource Corp. (TSX-V:TETH) (Tethyan)
via a plan of arrangement in British Columbia. The acquisition was
finalised on 8 October 2020.
The Transaction confirms the enlarged Company as the leading
Balkan polymetallic explorer and developer expanding the Company
operations to the Raska region of Serbia by bringing the Kizevak
& Sastavci projects into the group.
As part of the agreement the Company provided a secured
convertible loan facility of EUR1.8 million to Tethyan was
advanced. The funding provided to Tethyan is being used for
confirmation and expansion drilling, geophysics, baseline
environmental studies at the Raska project in Serbia and general
working capital purposes.
Tethyan had entered into an option agreement with EFPP d.o.o.
(EFPP) the holders of the Kizevak & Sastavci licences, first
closing was completed on 14 May 2020 to acquire 10% equity in EFPP
d.o.o. Immediately prior to the completion of the acquisition of
Tethyan by the Company the Kizevak & Sastavci licences were
spun out to a newly formed company Ras Metals d.o.o. (Ras) in which
Tethyan also held a 10% equity interest, which had been a condition
precedent to closing of Tethyan acquisition.
As at 31 December 2020 Tethyan continued to hold a 10% equity
interest in Ras and EFPP with the option to acquire the remaining
90% equity in each.
On 23 February 2021, the Company completed the acquisition of
the entire issued share capital of Ras, further details of which
are provided in note 25, and also disposed of its 10% equity stake
in EFPP for a nominal amount.
Management performed an assessment and deemed that substantive
control of the Tethyan Group, including Ras, was obtained on 8
October 2020. The acquisition of Tethyan was classified as an asset
acquisition due to not meeting the definition of a business in line
with IFRS 3. See Significant estimates note for further
details.
Cost of Acquisition
Total cost of acquisition is measured as follows:
Consideration Value
Shares issued GBP17,129,828
--------------------
Share options issued GBP236,571
--------------------
Warrants issued GBP2,797,086
--------------------
Total equity consideration GBP20,163,485
--------------------
Value of consideration payable under Ras Metals d.o.o. option GBP2,515,399
--------------------
Total consideration to be paid GBP22,678,884
--------------------
Adriatic has allotted 13,278,937 new ordinary shares pursuant to
the Arrangement. The opening LSE share price on the acquisition
date was GBP1.29 giving value of total shares issued
GBP17,129,828.
Pursuant to the Arrangement, on Admission Adriatic will also
issue 4,128,633 warrants and 469,779 options to Tethyan warrant
holders and Tethyan option holders. Management used the
Black-Scholes formula to determine the fair value of the warrants
and options issued under IFRS 2. The following assumptions were
used:
-- Strike price & length of contract determined by each individuals option contracts
-- Underlying price (GBP1.29) determined by the opening share price on date of transaction
-- 82.3% volatility determined by 100 day LSE ADT1 volatility
-- Risk free rate 0.01% used (on basis of short term UK gilt rate giving negative rates)
Fair value of options issued GBP236,571, fair value of warrants
issued GBP2,797,086.
At any time within 12 months of the first closing, the Company
may acquire the remaining 90% ownership stake in Ras Metals by:
-- making a payment of EUR1,375 to the sellers of Ras;
-- grant a 2% NSR over the licenses
-- issue 664,000 shares of the Company to the sellers in four
equal tranches every six months commencing on second closing;
and
-- make a EUR 500,000 payment on the two-year anniversary of the first closing.
With the exception of the 2% NSR grant over the licenses which
can't be reliably estimated at this stage, the fair value of
remaining consideration payable under Ras Option agreement was
estimated at GBP2,515,399
Measurement of assets and liabilities
IFRS 10 requirement to record assets acquired at cost; cost is
allocated over the group of assets at relative fair value. In the
case of an asset acquisition (rather than business combination),
the consideration equals the combined fair value of assets
acquired. Consideration above the historical book value of assets
should be recognised as an exploration and evaluation asset
(representing the value of the rights contained within licenses
acquired).
The Kremice and Kaznovice licenses were historically accounted
for as an asset acquisition by the Tethyan Group when originally
acquired. The fair value of the consideration paid was determined
and allocated as to Exploration and evaluation assets of 250,000
EUR cash plus 12,000,000 shares issued in Tethyan, equating to
GBP1,587,934. The net asset position of 100% owned Tethyan
companies when acquired was (GBP189,687) which includes the
aforementioned exploration and evaluation assets. The Kizevask
& Sastavci licenses held by Ras Metals d.o.o. have been
assigned the balancing value between Tethyan net assets
(GBP189,687) and the total consideration payable GBP22,678,884,
being GBP22,868,571. The combined exploration and evaluation assets
capitalised totals GBP24,456,505.
Treatment of Ras Metals Option Agreement
The company recognises an investment for the fair value of the
equity acquired (being 10% share of Ras Metals and 100% share of
equity in all other Tethyan entities) totalling GBP2,097,170. The
excess value of the transaction over the investment is recognised
as a call option asset totalling GBP20,581,714. The fair value of
the remaining consideration to be paid of GBP2,515,399 has been
recognised as an option liability. When the option liability is
paid the amount will be capitalised in exploration and evaluation
assets and any difference arising from future foreign exchange
movements will be recognised in the profit & loss.
Apportioned fair value to Ras Metals d.o.o. 10% owned GBP2,286,857
--------------
Total investment recognised in company accounts GBP2,097,170
--------------
Remaining fair value apportioned to 90% call option Ras Metals GBP20,581,714
--------------
Total Fair Value of Consideration to be paid GBP22,678,884
--------------
Net liability position of Tethyan 100% owned 189,687
--------------
Exploration assets included within the net assets of Tethyan 100% owned entities GBP1,587,934
--------------
Total exploration and evaluation asset value GBP24,456,505
--------------
Asset Acquisition
The net cash used in the acquisition of subsidiaries and the
provisional fair value of assets acquired and liabilities assumed
on the acquisition date is detailed below:
Fair Value
Cash and cash equivalents GBP311,964
---------------
Other receivables and prepayments GBP56,349
---------------
Property, plant and equipment GBP17,644
---------------
Exploration & evaluation asset GBP1,587,934
---------------
Accounts payable and accrued liabilities (GBP506,900)
---------------
Related party borrowings (GBP1,640,838)
---------------
Other Equity (GBP15,840)
---------------
Total Assets acquired (GBP189,687)
---------------
Management have determined there is no present access to returns
in Ras Metals d.o.o. owing to the variable consideration included
in the exercise price. As such the Group recognises a 90%
non-controlling interest in Ras Metals d.o.o. totalling
GBP2,515,399 measured as the balancing figure between the fair
value of the acquisition, fair value of Tethyan assets acquired,
the investment recognised in the company accounts.
Total assets acquired net of consolidation adjustments (GBP189,687)
Investment eliminated for Group accounts (GBP2,097,170)
---------------
Mining and intangible assets recognised on acquisition GBP24,456,505
---------------
Non-controlling Interest recognised GBP2,515,399
---------------
Total loss attributable to non-controlling interest post 8
October 2020 acquisition in the period totals (GBP519,111),
combined with the amount recognised on acquisition of GBP2,515,399,
the balance of non-controlling interest at 31 December 2020 was
1,996,288.
11. Accounts payable and accrued liabilities
(In GBP) 31 December 2020 30 June 2020
===================== ================ ============
Trade payables 1,222,012 466,610
===================== ================ ============
Accrued liabilities 639,743 132,826
===================== ================ ============
Other payables 38,682 82,966
===================== ================ ============
1,900,437 682,402
===================== ================ ============
12. Right of use asset
Set out below are the carrying amounts of right-of-use assets
recognised and the movements during the period:
(In GBP) Land & buildings
================= ================
30 June 2019 -
================= ================
Additions 265,612
----------------- ----------------
Amortisation (13,714)
================= ================
30 June 2020 251,898
================= ================
Amortisation (15,549)
================= ================
31 December2020 236,349
================= ================
The right of use asset relates to the new lease for the Group's
head office. Under IFRS 16 this has been recognised as a right of
use asset.
Set out below are the carrying amounts of lease liabilities and
the movements during the year:
(In GBP)
------------------ --------
30 June 2019 -
================== ========
Additions 265,612
------------------ --------
Interest expense 11,580
================== ========
Payments (11,571)
================== ========
30 June 2020 265,621
================== ========
Interest expense 10,523
================== ========
Payments (20,803)
================== ========
31 December2020 255,341
================== ========
Of this amount, GBP35,609 is recognised as a current liability
and the remainder GBP219,731 is shown within non-current
liabilities.
The following are the amounts recognised in profit or loss:
Cost (In GBP) 31 December 2020 30 June 2020
============================================= ================ ============
Depreciation expense of right-of-use assets 15,549 13,714
============================================= ================ ============
Interest expense on lease liabilities 10,523 11,580
============================================= ================ ============
Total amount recognised in profit or loss 26,072 25,294
============================================= ================ ============
13. Financial instruments
IFRS 13 requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level 3)
Fair value is the amount at which a financial instrument could
be exchanged in an arm's length transaction. Set out below are the
financial instruments held at amortised cost and fair value through
profit or loss and their fair value measurement hierarchy
(excluding short term assets and liabilities).
See note referenced for further detail on inputs to fair value
for each financial instrument.
As at 31 December 2020 At fair value Fair Value
(In GBP) Note At amortised cost through profit or loss Total Hierarchy
==================================== ===== ================== ========================== =========== ============
Financial assets
==================================== ===== ================== ========================== =========== ============
Cash and cash equivalents 29,580,538 - 29,580,538 N/A
==================================== ===== ================== ========================== =========== ============
Other receivables and prepayments 5 146,816 - 146,816 N/A
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
Total financial assets 29,727,354 - 29,727,354 -
==================================== ===== ================== ========================== =========== ============
Financial liabilities
======================================================================================================== ============
Accounts payable and accrued
liabilities 11 1,900,437 - 1,900,437 N/A
==================================== ===== ================== ========================== =========== ============
Borrowings 7 11,695,687 11,695,687 Level 3
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
Borrowings - derivative liability 7 - 3,045,213 3,045,213 Level 3
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
FV Option Liability -acquisition of
Ras Metals 10 - 2,515,399 2,515,399 Level 3
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
Lease liabilities 12 255,341 255,341 Level 3
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
Total financial liabilities 13,851,465 5,560,612 19,412,077
------------------------------------ ----- ------------------ -------------------------- ----------- ------------
Net financial assets 15,875,889 ( 5,560,612 ) 10,315,277
==================================== ===== ================== ========================== =========== ============
At fair value Fair Value
As at 30 June 2020 (In GBP) Note At amortised cost through profit or loss Total Hierarchy
====================================== ==== =================== =========================== ========== ==========
Financial assets
====================================== ==== =================== =========================== ========== ==========
Financial asset at fair value through
profit and loss 6 - 1,241,514 1,241,514 Level 3
====================================== ==== =================== =========================== ========== ==========
Cash and cash equivalents 9,942,728 - 9,942,728 N/A
====================================== ==== =================== =========================== ========== ==========
Other receivables and prepayments 5 113,055 - 113,055 N/A
-------------------------------------- ---- ------------------- --------------------------- ---------- ----------
Total financial assets 10,055,783 1,241,514 11,297,297
====================================== ==== =================== =========================== ========== ==========
Financial liabilities
========================================================================================================== ==========
Accounts payable and accrued
liabilities 11 682,402 - 682,402 N/A
====================================== ==== =================== =========================== ========== ==========
Lease liabilities 12 265,621 - 265,621 Level 3
-------------------------------------- ---- ------------------- --------------------------- ---------- ----------
Total financial liabilities 948,023 - 948,023
-------------------------------------- ---- ------------------- --------------------------- ---------- ----------
Net financial assets 9,107,760 1,241,514 10,349,274
====================================== ==== =================== =========================== ========== ==========
14. Financial risk management
a Credit risk
Credit risk arises from the risk that a counter party will fail
to perform its obligations. Financial instruments that potentially
subject the Group to concentrations of credit risk consist of cash
and cash equivalents and other receivables.
Due to the nature of the business, the Company's exposure to
credit risk arising from routine operating activities is currently
inherently low. However, the Audit & Risk Committee considers
the risks associated with new material counterparties where
applicable to ensure the associated credit risk is of an acceptable
level.
The Group's cash is held in major UK, Australian, Serbian and
Bosnian financial institutions, and as such the Group is exposed to
credit risks of those financial institutions. Under Standard &
Poor's short-term credit ratings, the Group's cash balances are all
held in institutions with either an A-1 or A-2 rating and as such
are considered to have low credit risk.
The total carrying amount of cash and cash equivalents, other
receivables and the fair value financial asset in respect of
Tethyan Resource Corp. represents the Group's maximum credit
exposure.
The Group's other receivables predominantly relate to value
added tax receivables due from governments in the UK and Bosnia.
These amounts are excluded from the definition of financial
instruments in the accounts and in and event are considered to have
low credit risk. Of the remaining other receivables and
prepayments, any changes in management's estimate of the
recoverability of the amount due will be recognised in the period
of determination and any adjustment may be significant.
The Board of Directors, with input from the Audit & Risk
Committee is ultimately responsible for monitoring exposure to
credit risk on an ongoing basis and does not consider such risk to
be significant at this time. As such, the Group considers all if
its accounts financial assets to be fully collectible.
b Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The Group's
approach to managing liquidity risk is to ensure, as far as
possible, that it will have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses.
The following table illustrates the contractual maturity
analysis of the Group's gross financial liabilities based on
exchange rates on the reporting date. Contractual gross financial
liabilities, shown below, are undiscounted estimated cash outflows
which were applicable includes estimated future interest
payments.
30 days 6 to 12 Over 12
As at 31 December 2020 Within 30 days to months months
(In GBP) 6 months
======================== ================ ======================= ======================== =======================
Accounts payable and
accrued liabilities 2,172,496 - - -
======================== ================ ======================= ======================== =======================
Borrowings 105,515 11,590,172
Derivative liability 3,045,213
=======================
Lease liabilities - 17,805 17,805 219,731
======================== ================ ======================= ======================== =======================
2,172,496 123,320 17,805 14,855,116
======================== ================ ======================= ======================== =======================
30 days 6 to 12 Over 12
As at 30 June 2020 (In Within 30 days to months months
GBP) 6
months
======================== ================ ======================= ======================== =======================
Accounts payable and
accrued liabilities 682,402 - - -
======================== ================ ======================= ======================== =======================
Lease liabilities - - - 369,745
======================== ================ ======================= ======================== =======================
682,402 - - 369,745
======================== ================ ======================= ======================== =======================
c Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, commodity prices, and interest rates will
affect the value of the Group's financial instruments. The
objective of market risk management is to manage and control market
risk exposures within acceptable limits, while maximising long term
returns.
The Group conducts development and exploration projects in
Bosnia. As a result, a portion of the Group's expenditures, other
receivables, cash and cash equivalents, accounts payables and
accrued liabilities are denominated in Bosnian Marks, Great Britain
Pounds, Australian Dollars, US Dollars, and euros and are therefore
subject to fluctuation in exchange rates.
As at 31 December 2020, a 10% change in the exchange rate
between the Great Britain Pound and the Bosnian Mark and Serbian
Dinar, which is a reasonable estimation of volatility in exchange
rates, would have an approximate GBP0.1 million change to the
Group's total comprehensive loss.
d Fair values
The fair value of cash, other receivables, accounts payable and
accrued liabilities approximate their carrying values due to the
short-term nature of the instruments.
Fair value measurements recognised in the statement of financial
position subsequent to initial fair value recognition can be
classified into Levels 1 to 3 based on the degree to which fair
value is observable.
Level 1 - Fair value measurements are those derived from quoted
prices in active markets for identical assets and liabilities.
Level 2 - Fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly, or
indirectly.
Level 3 - Fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
The level 3 fair value for the loan receivable is disclosed in
note 6.
There were no transfers between any levels of the fair value
hierarchy in the current or prior years.
e Capital management
The Group's objectives in managing capital are to safeguard its
ability to operate as a going concern while pursuing exploration
and development and opportunities for growth through identifying
and evaluating potential acquisitions of assets or businesses. The
Company defines capital as the equity attributable to equity
shareholders of the Company which at 31 December 2020 was
GBP29,526,658 (30 June 2020: GBP20,895,753).
The Group sets the amount of capital in proportion to risk and
corporate growth objectives. The Group manages its capital
structure and adjusts it in light of changes in economic conditions
and the risk characteristics of the underlying assets.
15. Equity
a Authorised share capital
The authorised share capital of the Company consists of an
unlimited number of voting ordinary shares with a nominal value of
GBP0.013355.
b Common shares issued
Share Capital (Restated)
Shares (In GBP) Share Premium
(In GBP)
======================================================= =========== =========================== ===================
30 June 2019 150,782,587 2,013,701 11,084,777
======================================================= =========== =========================== ===================
Issue of share capital 25,083,400 334,989 13,015,388
======================================================= =========== =========================== ===================
Share issue costs - - (797,655)
======================================================= =========== =========================== ===================
Shares issued on exercise of options and performance
rights 3,975,000 53,087 690,457
======================================================= =========== =========================== ===================
30 June 2020 179,840,987 2,401,777 23,992,967
======================================================= =========== =========================== ===================
Issue of share capital 5,276,595 70,469 6,129,531
======================================================= =========== =========================== ===================
Shares issued on acquisition of subsidiary 13,278,937 177,340 16,952,489
======================================================= =========== =========================== ===================
Settlement placement 4,830,156 64,507 4,791,547
======================================================= =========== =========================== ===================
Share issue costs 0 (1,598,603)
======================================================= =========== =========================== ===================
Shares issued on exercise of options and performance
rights 4,350,000 58,093 203,817
======================================================= =========== =========================== ===================
31 December 2020 207,576,675 2,772,186 51,471,748
======================================================= =========== =========================== ===================
The average price paid for shares issued in the period was
GBP1.06 per share (30 June 2020: GBP0.49 per share)
c Share options and performance rights
All share options and performance rights are issued under the
Group's share option plan.
The following tables summarise the activities and status of the
Company's share option plan as at and during the six months ended
31 December 2020
Weighted
average Number of Number of Total options
exercise price options performance and performance
of options rights rights
(A$)
====================== ==================== ===================== =========================== ====================
30 June 2019 0.33 19,200,000 - 19,200,000
====================== ==================== ===================== =========================== ====================
Issued 1.19 4,000,000 6,560,000 10,560,000
====================== ==================== ===================== =========================== ====================
Exercised 0.42 (3,225,000) (750,000) (3,975,000)
====================== ==================== ===================== =========================== ====================
Expired 0.60 (375,000) (2,000,000) (2,375,000)
====================== ==================== ===================== =========================== ====================
30 June 2020 0.46 19,600,000 3,810,000 23,410,000
====================== ==================== ===================== =========================== ====================
Issued 2.20 1,000,000 2,575,000 3,575,000
====================== ==================== ===================== =========================== ====================
Acquired Tethyan
Acquisition 0.66 469,779 - 469,779
====================== ==================== ===================== =========================== ====================
Exercised 0.61 (3,700,000) (650,000) (4,350,000)
====================== ==================== ===================== =========================== ====================
Expired - - (2,000,000) (2,000,000)
====================== ==================== ===================== =========================== ====================
31 December 2020 0.53 17,369,779 3,735,000 21,104,779
====================== ==================== ===================== =========================== ====================
On exercise, holders of performance rights are required to pay
GBP0.013355 for each performance right exercised, being the nominal
value of one ordinary share.
Options and performance rights granted in the Period were valued
using the Black-Scholes method (section f).
As at 31 December 2020
Weighted average
Exercise remaining contractual Number exercisable
Grant date Options outstanding price life (Years) Expiry date
================== ===================== =========== ====================== ================ ====================
27 April 2018 9,000,000 A$0.20 2.5 1 July 2023 9,000,000
================== ===================== =========== ====================== ================ ====================
27 April 2018 1,900,000 A$0.30 0.5 1 July 2021 1,900,000
================== ===================== =========== ====================== ================ ====================
27 April 2018 1,000,000 A$0.40 0.5 1 July 2021 1,000,000
================== ===================== =========== ====================== ================ ====================
29 May 2018 1,000,000 A$0.40 0.4 5 June 2021 1,000,000
================== ===================== =========== ====================== ================ ====================
29 November 2019 1,000,000 A$1.00 1.9 28 November 2022 1,000,000
================== ===================== =========== ====================== ================ ====================
29 November 2019 2,000,000 A$1.25 1.9 28 November 2022 2,000,000
================== ===================== =========== ====================== ================ ====================
8 October 2020 182,600 GBP GBP0.88 0.6 16 August 2021 182,600
================== ===================== =========== ====================== ================ ====================
8 October 2020 27,666 GBP GBP0.85 1.0 21 December 2021 27,666
================== ===================== =========== ====================== ================ ====================
8 October 2020 88,533 GBP GBP1.06 1.9 5 December 2022 88,533
================== ===================== =========== ====================== ================ ====================
8 October 2020 29,880 GBP GBP1.06 2.0 3 January 2023 29,880
================== ===================== =========== ====================== ================ ====================
8 October 2020 91,300 GBP GBP1.80 3.2 28 February 2024 39,010
================== ===================== =========== ====================== ================ ====================
8 October 2020 24,900 GBP GBP2.22 3.2 7 March 2024 2,490
================== ===================== =========== ====================== ================ ====================
8 October 2020 24,900 GBP GBP1.20 3.6 19 August 2024 2,490
================== ===================== =========== ====================== ================ ====================
6 November 2020 1,000,000 A$2.20 2.9 7 November 2023 1,000,000
================== ===================== =========== ====================== ================ ====================
17,369,779 17,272,669
================== ===================== =========== ====================== ================ ====================
As at 30 June
2020
Weighted
average
remaining
contractual
Options Exercise life Number
Grant date outstanding price (Years) Expiry date exercisable
================== ======================== ========== ===================== ================ ===================
27 April 2018 9,000,000 A$0.20 3.0 1 July 2023 9,000,000
================== ======================== ========== ===================== ================ ===================
27 April 2018 2,500,000 A$0.30 1.0 1 July 2021 2,500,000
================== ======================== ========== ===================== ================ ===================
27 April 2018 3,100,000 A$0.40 1.0 1 July 2021 3,100,000
================== ======================== ========== ===================== ================ ===================
29 May 2018 1,000,000 A$0.40 0.9 5 June 2021 -
================== ======================== ========== ===================== ================ ===================
29 November 2019 1,000,000 A$1.00 2.4 28 November 2022 1,000,000
================== ======================== ========== ===================== ================ ===================
29 November 2019 2,000,000 A$1.25 2.4 28 November 2022 2,000,000
================== ======================== ========== ===================== ================ ===================
29 November 2019 500,000 A$1.25 2.4 28 November 2022 500,000
================== ======================== ========== ===================== ================ ===================
29 November 2019 500,000 A$1.25 2.4 28 November 2022 -
================== ======================== ========== ===================== ================ ===================
19,600,000 18,100,000
================== ======================== ========== ===================== ================ ===================
As at 31 December 2020
Weighted average remaining
Performance rights contractual Number exercisable
Grant date outstanding life (Years) Expiry date
======================== ==================== ============================== ================ ====================
29 November 2019 1,160,000 1.9 28 November 2022 410,000
======================== ==================== ============================== ================ ====================
12 June 2020 250,000 4.0 6 January 2025 -
======================== ==================== ============================== ================ ====================
6 August 2020 1,000,000 3.0 31 December 2023 -
======================== ==================== ============================== ================ ====================
6 August 2020 500,000 4.0 31 December 2024
======================== ==================== ============================== ================ ====================
18 November 2020 825,000 2.0 31 December 2022 -
======================== ==================== ============================== ================ ====================
3,735,000 410,000
======================== ==================== ============================== ================ ====================
As at 30 June 2020
Weighted
Performance rights average Number exercisable
Grant date outstanding remaining Expiry date
contractual
life
(Years)
==================== ==================== ============================ ================ ==========================
29 November 2019 1,310,000 2.4 28 November 2022 -
==================== ==================== ============================ ================ ==========================
28 February 2020 2,000,000 0.1 31 July 2020 -
==================== ==================== ============================ ================ ==========================
12 June 2020 250,000 3.5 6 January 2024 -
==================== ==================== ============================ ================ ==========================
12 June 2020 250,000 4.5 6 January 2025 -
==================== ==================== ============================ ================ ==========================
3,810,000 -
==================== ==================== ============================ ================ ==========================
On exercise, holders of performance rights are required to pay
GBP0.013355 for each performance right exercised, being the nominal
value of one ordinary share.
There were no performance rights outstanding at 30 June
2019.
d Warrants reserve
Warrants were issued as part of Tethyan Resource Corp
acquisition.
The following table presents changes in the Group's warrants
reserve during the six months ended 31 December 2020:
(In GBP) Share-based payment reserve
============================================= ===========================
30 June 2020 -
============================================= ===========================
Issue of Warrants on acquisition of Tethyan 4,128,633
============================================= ===========================
31 December 2020 4,128,633
============================================= ===========================
As at 31 December 2020
Weighted
average
remaining
contractual
Warrants Exercise life Number
Grant date outstanding price (Years) Expiry date exercisable
================ ======================== ========== ===================== =============== ======================
8 October 2020 413,642 A$1.23 0.3 20 April 2021 413,642
================ ======================== ========== ===================== =============== ======================
8 October 2020 328,671 A$1.23 0.5 29 June 2021 328,671
================ ======================== ========== ===================== =============== ======================
8 October 2020 527,800 A$1.23 0.6 16 August 2021 527,800
================ ======================== ========== ===================== =============== ======================
8 October 2020 2,858,520 A$0.88 3.1 30 January 2024 2,858,520
================ ======================== ========== ===================== =============== ======================
4,128,633 4,128,633
================ ======================== ========== ===================== =============== ======================
e Share-based payment reserve
The following table presents changes in the Group's share-based
payment reserve during the six months ended 31 December 2020:
(In GBP) Share-based payment reserve
============================= ===========================
30 June 2019 1,714,826
============================= ===========================
Exercise of share options (732,000)
============================= ===========================
Expired options (1) -
============================= ===========================
Share-based payment expense 3,443,359
============================= ===========================
30 June 2020 4,426,185
============================= ===========================
Exercise of share options (1,173,926)
============================= ===========================
Acquisition of subsidiary 236,571
============================= ===========================
Share-based payment expense 2,267,239
============================= ===========================
31 December 2020 5,756,069
============================= ===========================
(1) Expired in the same accounting period as they were granted.
f Share-based payment expense
During the year ended 31 December 2020; the Group recognised
GBP2,267,239 (30 June 2020: GBP3,443,359) of share-based payment
expense. The fair value of the share-based compensation was
estimated on the dates of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:
For the year ended 31 December 2020 30 June 2020
========================= ================= =================
Risk-free interest rate 0.01% 2.01%
========================= ================= =================
Expected volatility (1) 63.65% - 97.76% 78.14% - 115.82%
========================= ================= =================
Expected life (years) 0.85 - 4.41 0.42 - 5.18
========================= ================= =================
Fair value per option GBP0.55 - GBP1.29 GBP0.39 - GBP0.68
========================= ================= =================
(1) Expected volatility is derived from the Company's historical share price volatility.
With the exception of 1,000,000 options granted to non-executive
directors during the year (30 June 2020: 3,000,000) that vested
immediately, all options and performance rights have both market
and non-market vesting conditions. Non-market vesting conditions
include group and individual performance targets such as permitting
milestones, exploration drilling rates or completion of business
improvement projects. Details of the vesting condition relating to
options and performance rights issued to executive Directors are
included in the Remuneration Committee Report.
g Per share amounts
6 months ended Year ended 30 June 2020
31 December 2020
------------------------------------------------------------------------------------------ -----------------------
Loss for the period attributable to owners of equity (In GBP) 5,694,503 6,238,324
============================================================================== =========== =======================
Weighted average number of common shares for the purposes of basic loss per
share 190,619,399 168,915,249
============================================================================== =========== =======================
Weighted average number of common shares for the purposes of diluted loss per
share 213,827,441 185,645,660
============================================================================== =========== =======================
Basic loss per share (pence) (2.99) (3.69)
------------------------------------------------------------------------------ ----------- -----------------------
3,375,000 (30 June 2020: 5,160,000) options and performance
rights have not been included in the calculation of diluted EPS
because their exercise is contingent on the satisfaction of certain
criteria that had not been met at 31 December 2020.
h Foreign Currency Translation Reserve
(In GBP) Foreign Currency Translation Reserve
============================ ====================================
30 June 2019 74,242
============================ ====================================
Other comprehensive income 145,563
============================ ====================================
30 June 2020 219,805
============================ ====================================
Other comprehensive income 5,775
============================ ====================================
31 December 2020 225,580
============================ ====================================
i Cash flow from financing activities
Net cash flow proceeds from the issue of ordinary shares in the
period was GBP12,317,964 (30 June 2020: GBP13,296,266). Transaction
costs arising from financing activities totals GBP1,447,201 (30
June 2020: GBP1,447,201).
16. Taxation
a Current taxation
The tax charge for the period comprises:
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
======================================= ================= =======================
Current tax expense - -
======================================= ================= =======================
Prior year tax expense 1,681 -
======================================= ================= =======================
Overseas tax - -
======================================= ================= =======================
Deferred tax expense - -
======================================= ================= =======================
Adjustments to deferred tax liability - -
======================================= ================= =======================
Total tax expense 1,681 -
======================================= ================= =======================
The reasons for the difference between the actual tax charge for
the period and the standard rate of corporation in the United
Kingdom applied to loss for the year is as follows:
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
=========================================================== ================= =======================
Loss before tax 5,696,184 6,238,324
=========================================================== ================= =======================
Expected income tax recovery at 19% (2019 - 19%) 1,082,275 1,185,282
=========================================================== ================= =======================
Expenses not deductible for tax purposes 19,384 (654,238)
=========================================================== ================= =======================
Different Tax rates applied in overseas jurisdictions (46,601) -
=========================================================== ================= =======================
Unrecognised taxable losses and timing differences (1,055,058) (531,043)
=========================================================== ================= =======================
Adjustment for under/(over) provision in previous periods (1,681) -
=========================================================== ================= =======================
Total income taxes (1,681) -
=========================================================== ================= =======================
b Deferred tax
The Group has no recognised deferred tax balance or gain/loss
for the year ended 30 June 2020 or 2019 because of uncertainty
regarding future taxable profits. As at 31 December 2020, the Group
has, for tax purposes, non-capital losses available to carry
forward to future years as follows:
(In GBP) 31 December 2020 30 June 2020 Expiry Date
========== ================ ============ ==============
UK 12,323,011 4,752,719 Not applicable
========== ================ ============ ==============
Bosnia 1,417,043 1,258,100 5 years
Serbia 3,073,548 - 5 years
==============
Canada 960,972 - 20 years
========== ================ ============ ==============
17,774,574 6,010,819
========== ================ ============ ==============
The expiry of non-capital losses available to carry forward in
Bosnia and Serbia is as follows:
(In GBP) 31 December 2020
================= ========== ================
Serbia Bosnia
================= ========== ================
Within one year 514,525 108,477
================= ========== ================
1-2 years 49,436 205,596
================= ========== ================
2-3 years 653,104 220,180
================= ========== ================
3-4 years 722,580 392,646
================= ========== ================
Within 5 years 1,133,903 490,144
================= ========== ================
3,073,548 1,417,043
================= ========== ================
As a result of the Tethyan acquisition, Tethyan Resource Corp
was acquired, this company is incorporated in Canada, non-capital
losses available to carry forward to future years is GBP960,972
with year of expiry 2040.
17. Exploration activities expensed
Exploration and evaluation expenditure incurred on licences
where a JORC-compliant resource has not yet been established is
expensed as incurred until sufficient evaluation has occurred in
order to establish a JORC-compliant resource.
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
================================= ================= =======================
Exploration activities expensed 798,028 -
18. General and administrative expenses
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
===================================================== ================= =======================
Wages and salaries 616,278 350,526
Consultancy fees 468,047 676,149
Cash remuneration in respect of qualifying services 1,084,325 1,026,675
Professional fees 313,760 1,051,354
Amortisation 27,017 37,031
Depreciation 36,157 52,645
Audit fee 100,175 47,289
Marketing 75,250 161,003
Stock exchange fees 136,166 358,663
Other costs 342,857 580,974
2,115,707 3,315,634
19. Finance income and expense
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
Interest income - 50,366
Foreign exchange gain - 152,765
Finance income - 203,131
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
Interest Expense 82,744 -
Interest expense on lease liabilities 10,523 11,580
Foreign exchange loss 103,772 -
Finance expense 197,039 11,580
20. Segmental information
It is the opinion of the Directors that there are three
reporting segments within the operations of the Group which are
assessed when evaluation performance
Split of performance is below:
Segmental Split
(In GBP) Six months ended 31 December 2020 Year ended 30 June 2020
Bosnia Serbia Corporate Total Bosnia Corporate Total
Exploration activities
expenses (5,015) (793,013) 0 (798,028) 0 0
General and administrative
expenses (249,932) (425,935) (1,440,840) (2,115,707) (465,903) (2,849,731) (3,315,634)
Share-based payment expense 0 (2,267,239) (2,267,239) (3,443,360) (3,443,360)
Other income 4,816 4,816 6,131 6,131
Operating Loss (254,947) (1,217,948) (3,703,263) (5,176,158) (465,903) (6,286,960) (6,752,863)
Finance income - - 203,131 203,131
Finance expense (197,039) (197,039) (11,580) (11,580)
Revaluation of fair value
asset (322,987) (322,987) 322,987 322,987
Loss before tax (254,947) (1,217,948) (4,223,289) (5,696,184) (465,903) (5,772,422) (6,238,325)
Tax charge 0 0 1,681 1,681 0 0
Loss after tax (254,947) (1,217,948) (4,221,608) (5,694,503) (465,903) (5,772,422) (6,238,325)
(In GBP) Period Ended 31 December 2020 Year Ended 30 June 2020
Bosnia Serbia Corporate Total Bosnia Corporate Total
Exploration
and evaluation
assets additions
capitalised 3,052,019 24,456,506 - 27,456,506 5,048,523 - 5,048,523
21. Related party disclosures
a Related party transactions
The Group's related parties include key management personnel,
companies which have directors in common and their
subsidiaries.
The Company engaged Swellcap Limited, a related party controlled
by Paul Cronin to provide the Company with corporate office
facilities and services, payments totalled GBP18,972 for the six
months ended 31 December 2020 (30 June 2020: GBP34,622). Following
the Company entering in to a lease for office premises in December
2019 the Company invoiced Swellcap Limited GBP4,816 for office
facilities and services for the six months ended 31 December 2020
(30 June 2020: GBP6,131).
Balances outstanding with related parties was GBP13,899 at 31
December 2020 (30 June 2020: GBPnil)
Transactions with key management personnel are disclosed
below.
b Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group. Key management personnel are considered to
be the Non-Executive Directors, the Chief Executive Officer and the
Chief Financial Officer, their remuneration is presented below:
6 months ended Year ended 30 June
(In GBP) 31 December 2020 2020
Board fees 104,767 243,594
Consultancy fees 172,991 539,629
Cash remuneration in respect of qualifying
services 277,758 783,223
Share based payments expense 736,715 2,880,487
Social security costs 15,030 16,835
1,029,503 3,680,545
Share based payments expense is stated at fair value at the time
of grant using the Black-Scholes Option Pricing Model. Further
details are available in note 15f of the accounts.
Consultancy fees above include the following amounts paid to
related party companies controlled by key management personnel:
(In GBP) 6 months ended Year ended 30 June 2020
Related party Controlling party 31 December 2020
Swellcap Limited Paul Cronin 84,999 198,998
GPE Consulting Limited Geoff Eyre 87,992 80,830
Gumtree Limited Sean Duffy - 72,718
There were no balances outstanding with related parties as at 31
December 2020 (30 June 2020: GBPnil).
22. Directors and employees
Employees of the Group are all employees including Directors,
key management personnel and personnel in management positions
engaged via management services contracts. The below information
relates to all employees and all costs, including those
capitalised.
(In GBP) 6 months ended Year ended 30 June 2020
31 December 2020
Gross salaries 724,217 416,930
Consultancy fees 305,914 882,432
Cash remuneration in respect of qualifying services 1,030,131 1,299,362
Social security costs 80,813 62,407
Defined contribution pension cost 2,306 2,975
Share based payments expense 2,267,239 3,443,359
Total 3,380,489 4,808,103
Average number of employees 73 39
Average number of employees has increased to 73 in the period
(30 June 2020 - 39 employees) due to increasing staff numbers as
the Vares Project progresses as well as the acquisition of Tethyan
group.
Share based payments expense is stated at fair value at the time
of grant using the Black-Scholes Option Pricing Model. Further
details are available in note 15f of the accounts.
Directors' remuneration totalled the following:
6 months ended Year ended 30 June 2020
(In GBP) 31 December 2020
Board fees 104,767 243,594
Consultancy fees 84,999 386,081
Cash remuneration in respect of qualifying services 189,766 629,675
Average number of Directors 6 6
Additionally, the monetary value of directors' share awards that
vested in the period, calculated as the number of awards vested
multiplied by the share price on the vesting date less options
exercise price or performance rights nominal value payable, was
GBP66,244 (30 June 2020: GBP853,978) of which GBP66,244 relates to
Non-Executive Directors (30 June 2020: GBP233,247).
The highest paid Director in the six months ended 31 December
2020 received cash remuneration, excluding notional gains on share
options or performance rights, of GBP106,859 (30 June 2019:
GBP238,897). The highest paid Director in the year ended 30 June
2020 received remuneration, inclusive of the monetary value of
share awards that vested in the year, of GBP106,859 (30 June 2020:
GBP858,889).
Of the total amount incurred as Directors remuneration, GBPnil
(30 June 2020: GBPnil) remains in accounts payable and accrued
liabilities on 31 December 2020.
23. Commitments and contingencies
The Group had no significant commitments as at 31 December 2020
(30 June 2020: GBPnil), other than the lease of the Group's head
office disclosed in note 12 and annual concession fees disclosed in
note 9.
24. Prior year adjustment
During the year ended 30 June 2020 (the comparative reporting
period) the exercise of share options which had previously
generated a cumulative share based payment expense of GBP732,000
within the share based payment reserve. On exercise the GBP732,000
cumulative charge was incorrectly transferred against the share
premium account.
Under the provisions of the accounting standards and Companies
act, when new shares are issued in connection with an employee
share scheme, the share premium account will normally need to
reflect only the cash subscribed for the shares. The amount
recognised as a cumulative share based payment expense should be
credited to a reserve other than share premium. The basis for this
is that the services undertaken by the employee do not, as a matter
of law, form part of the consideration received for the shares
issued on exercise of the options.
The adjustment to the comparative figures for the year ended 30
June 2020 represents a change in classification within equity only.
With a GBP732,000 decrease in the share premium account and an
equal increase in retained earnings. There is no impact on the
Group and Parent Company Net assets, profit or loss or cash flow
statement for the year ended 30 June 2020.
25. Subsequent events
On 23 February 2021, the Company completed the acquisition of
the entire issued share capital of Ras Metals d.o.o. (Ras) under an
agreement held by Tethyan Resource Corp, a wholly owned subsidiary
of the Company. The consideration paid for the remaining 90% of the
shares in Ras that the Company did not already hold was EUR
1,365,000 in cash plus the allotment of 166,000 Ordinary shares of
GBP0.013355 each in the Company. Additionally, deferred
consideration of EUR 500,000 in cash, is payable on 14 May 2022,
and 498,000 Ordinary shares in the Company that will be allotted in
three equal tranches on or around 22 August 2021, 22 February 2022
& 22 August 2022.
Parent Company Statement of Financial Position
AS AT 31 DECEMBER 2020
(In GBP) Note 31 December 2020 (Restated) 30 June 2020
ASSETS
Current assets
Cash and cash equivalents 27,983,443 9,577,188
Other receivables and prepayments f 5,118,660 139,261
Financial asset at fair value through profit and loss j - 1,241,514
Total current assets 33,102,103 10,957,963
Non-current assets
Investment in subsidiaries i 17,324,405 11,021,333
Fair value option asset on acquisition j 20,581,714 -
Property, plant and equipment g 41,079 47,129
Right of use asset o 236,349 251,898
Total non-current assets 38,183,547 11,320,360
Total assets 71,285,650 22,278,323
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities h 3,740,393 314,047
Lease liabilities p 35,609 10,530
Option liability j 2,515,399
Borrowings j 105,515
Total current liabilities 6,396,916 324,577
Non-current liabilities
Lease liabilities p 219,731 255,091
Borrowings j 11,590,172
Derivative Liability j 3,045,213
Total non-current liabilities 14,855,116 255,091
Total liabilities 21,252,032 579,668
Shareholders' equity
Share capital l 2,772,186 2,401,777
Share premium l 51,471,748 23,992,967
Share-based payment reserve l 5,756,069 4,426,185
Warrants reserve expense l 2,797,086 -
Retained earnings l (12,763,471) (9,122,274)
Total shareholders' equity 50,033,618 21,698,655
Total liabilities and shareholders' equity 71,285,650 22,278,323
See note 24 of the Consolidated Financial Statements for details
of the restatement of the prior year comparatives.
The Company's loss after tax for the six months ended 31
December 2020 was GBP4,957,675 (year ended 30 June 2019:
GBP5,782,084).
The Parent Company Financial Statements of Adriatic Metals PLC,
registered number 10599833, were approved and authorised for issue
by the Board of Directors on 30 March 2021 and were signed on its
behalf by:
Paul Cronin Geoff Eyre
Managing Director & Chief Executive Officer Chief Financial Officer & Joint Company Secretary
Parent Company Statement of Changes in Equity
FOR THE SIX MONTHSED 31 DECEMBER 2020
(Restated) Share-based (Restated)
Number of Share payment Warrants Retained Total
(In GBP) Note shares Value premium reserve Reserve earnings equity
30 June 2019 150,782,587 2,013,701 11,084,777 1,714,826 - (4,072,190) 10,741,114
Loss for the
year - - - - - (5,782,084) (5,782,084)
Total
comprehensive
loss - - - - - (5,782,084) (5,782,084)
Issue of share
capital 15 25,083,400 334,989 13,015,388 - - - 13,350,377
Share issue
costs 15 - - (797,655) - - - (797,655)
Exercise of
options 15 3,975,000 53,087 690,457 (732,000) - 732,000 743,544
Issue of options 15 - - - 3,443,359 - - 3,443,359
30 June 2020 179,840,987 2,401,777 23,992,967 4,426,185 - (9,122,274) 21,698,655
Loss for the
period - - - - - (4,957,675) (4,957,675)
Total
comprehensive
loss - - - - - (4,957,675) (4,957,675)
Issue of share
capital 15 5,276,595 70,469 6,129,531 - - - 6,200,000
Settlement
Placement 15 4,830,156 64,507 4,791,547 - - - 4,856,054
Share issue
costs 15 - - (1,598,603) - - 142,551 (1,456,052)
Exercise of
options 15 4,350,000 58,093 1,203,817 (1,173,926) - 1,173,927 1,261,911
Issue of options 15 - - - 2,267,239 - - 2,267,239
Acquisition of
subsidiary 13,278,937 177,340 16,952,489 236,571 2,797,086 - 20,163,486
31 December 2020 207,576,675 2,772,186 51,471,748 5,756,069 2,797,086 (12,763,471) 50,033,618
See note 24 of the Consolidated Financial Statements for details
of the restatement of the prior year comparatives.
See note t for details of the restatement of the prior year
comparatives.
Parent Company Statement of Cash Flows
FOR THE SIX MONTHSED 31 DECEMBER 2020
Year ended 30
Six months June 2020
(In GBP) Note ended 31
December 2020
Cash flows from operating
activities
Loss for the period e (4,957,675) (5,782,084)
Adjustments for:
Depreciation of
property, plant and
equipment g 6,969 16,946
Amortisation of
right-of-use assets o 15,549 13,714
Share-based payment
expense l 2,267,239 3,443,359
Finance income - (193,468)
Finance expense 134,504 11,580
Revaluation of fair value asset 322,987 (322,987)
Changes in working capital items:
Increase in other receivables and
prepayments (3,110,904) (42,015)
Increase in accounts payable and
accrued liabilities 3,407,207 211,350
Net cash used in operating activities (1,914,124) (2,643,605)
Cash flows from investing activities:
Investment in subsidiaries (3,309,554) (5,390,808)
Purchase of property, plant and equipment (919) (48,789)
Loan issued (1,881,641) (876,201)
Interest received - 28,079
Net cash used in investing activities (5,192,113) (6,287,719)
Cash flows from financing activities
Issues of ordinary shares l 12,317,964 13,296,266
Transaction costs arising from
financing activities l (1,447,201)
Proceeds from loans and borrowings q 14,956,849 -
Interest paid on lease liabilities (10,523) (11,580)
Net cash flows from financing activities 25,817,089 13,284,686
Net increase in cash and cash equivalents 18,710,852 4,353,362
Exchange (losses) / gains on cash and cash
equivalents (304,597) 123,062
Cash and cash equivalents at beginning of the
period 9,577,188 5,100,764
Cash and cash equivalents at end of the
period 27,983,443 9,577,188
Notes to the Parent Company Financial Statements
a. Corporate information
These Financial Statements represent the individual financial
statements of Adriatic Metals PLC (the "Parent Company"), the
parent company of the Adriatic Metals Group for the six months
ended 31 December 2020.
Adriatic Metals PLC (the Company or the parent) is a public
company limited by shares and incorporated in England & Wales.
The registered office is located at Ground Floor, Regent House, 65
Rodney Road, Cheltenham, GL50 1HX.
b. Basis of preparation
i) Statement of compliance
These Parent Company Financial Statements have been prepared in
accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations
(collectively "IFRS") adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union ("EU") applied in
accordance with the provisions of the Companies Act 2006.
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board ("IASB") and the IFRS
Interpretations Committee, and there is an ongoing process of
review and endorsement by the European Commission.
The Parent Company Financial Statements were authorised for
issue by the Board of Directors on 30 March 2021.
ii) Basis of measurement
These Financial Statements have been prepared on a historical
cost basis, except for certain financial instruments that have been
measured at fair value.
The presentation currency of these Financial Statements is Great
Britain pounds ("GBP"). The functional currency of the Company is
deemed to be the GBP under IAS 21.
iii) Going concern
Refer to accounting policies in note 3 of the notes to the
Consolidated Financial Statements.
c. Accounting policies
In addition to the accounting policies in note 3 of the notes to
the Consolidated Financial Statements, the following accounting
policies are relevant only to the Parent Company Financial
Statements.
i) Investments in subsidiaries
Unlisted investments are carried at cost, being the purchase
price, less provisions for impairment. Additional consideration
paid when subscribing for new shares, which is the primary
mechanism used for funding the subsidiary, are made via capital
contributions and recorded as additions to investments in
subsidiaries.
d. Critical accounting estimates and judgements
The preparation of the Parent Company's Financial Statements in
accordance with IFRS requires management to make certain
judgements, estimates, and assumptions about recognition and
measurement of assets, liabilities, income and expenses. The actual
results are likely to differ from these estimates. In addition to
the critical accounting estimates and judgements in note 4 of the
Consolidated Financial Statements, the following information about
the significant judgements, estimates, and assumptions that have
the most significant effect on the recognition and measurement of
assets, liabilities, income and expenses that are relevant only to
the Parent Company Financial Statements are discussed below.
i) Value of investments in subsidiaries
The Parent Company, investments in subsidiary, which are made
via capital contributions, are reviewed for impairment if events or
changes indicate that the carrying amount may not be recoverable.
When a review for impairment is conducted, the recoverable amount
is assessed by reference to the net present value of expected
future cash flows of the relevant generating unit or disposal value
if higher. No impairment indicators were identified in the six
months ended 31 December 2020.
e. Loss for the period
The Parent Company has taken advantage of the exemption under
section 408 (3) of the Companies Act 2006 and thus has not
presented its statement of comprehensive income in these Parent
Company Financial Statements. The Parent Company's loss after tax
for the period is GBP4,957,675 (Year ended 30 June 2020 -
GBP5,782,084).
f. Other receivables and prepayments
Other receivables contain amounts receivable for VAT, prepaid
expenses and deposits paid. All receivables are held at cost less
any provision for impairment. A provision for impairment is made
where there is objective evidence that the receivable is
irrecoverable. All receivables are due within one year.
(In GBP) 31 December 2020 30 June 2020
Other receivables - 17,063
Prepayments and deposits 70,415 47,203
Taxes recoverable 98,072 74,995
Amounts receivable from subsidiaries (note m) 4,950,173 -
5,118,660 139,261
g. Property, plant and equipment
Cost (In GBP) Land & Buildings Plant and machinery Total
30 June 2019 - 26,454 26,454
Additions 17,425 27,405 44,830
30 June 2020 17,425 53,859 71,284
Additions - - -
31 December 2020 17,425 53,859 71,284
Depreciation
30 June 2019 - 3,968 3,968
Charge for the period 970 19,217 20,187
Disposals - - -
30 June 2020 970 23,185 24,155
Charge for the period 878 6,091 6,969
31 December 2020 1,848 29,276 31,124
Net Book Value
30 June 2019 - 22,486 22,486
30 June 2020 16,455 30,674 47,129
31 December 2020 15,577 25,502 41,079
h. Accounts payable and accrued liabilities
(In GBP) 31 December 2020 30 June 2020
Trade payables 238,940 233,058
Accrued liabilities 405,205 74,474
Other payables 14,570 6,515
Amounts payable to subsidiaries (note m) 3,081,678 -
3,740,393 314,047
i. Investments in subsidiaries
The breakdown of the investments in subsidiaries is as
follows:
Cost (In GBP) Eastern Mining d.o.o. Tethyan Resource Corp. Total
30 June 2019 5,623,315 - 5,623,315
Additions 5,398,018 - 5,398,018
30 June 2020 11,021,333 - 11,021,333
Additions 4,205,902 2,097,170 6,303,072
31 December 2020 15,227,235 2,097,170 17,324,405
The list of subsidiaries of the Company is presented in note 3a
of the notes to the consolidated financial statements.
j. Financial Instruments
The Company's financial assets and liabilities are classified as
follows:
As at 31 December 2020 Note At fair value through
(In GBP) At amortised cost profit or loss Total
Financial assets - - -
Related Party Receivables m 1,868,495 1,868,495
FV Option Asset on acquisition r 20,581,714 20,581,714
Cash and cash equivalents 27,983,443 27,983,443
Other Receivables and prepayments f 70,416 70,416
Total financial assets 29,922,354 20,581,714 50,504,068
Financial liabilities
Accounts payable and accrued liabilities h 658,715 658,715
Borrowings q 11,695,687 11,695,687
Derivative Liability q 3,045,213 3,045,213
FV Option Liability on acquisition r 2,515,399 2,515,399
Lease liabilities p 255,340 255,340
Total financial liabilities 12,609,742 5,560,612 18,170,354
Net financial assets 17,312,612 15,021,102 32,333,714
As at 30 June 2020 At fair value through
(In GBP) At amortised cost profit or loss Total
Financial assets
Cash and cash equivalents 9,577,188 - 9,577,188
Other receivables f 139,261 - 139,261
Financial asset at fair value through profit and
loss n - 1,241,514 1,241,514
Total financial assets 9,716,449 1,241,514 10,957,963
Financial liabilities
Accounts payable and accrued liabilities h 314,047 - 314,047
Lease liabilities p 265,621 - 265,621
Total financial liabilities 579,668 - 579,668
Net financial assets 9,136,781 1,241,514 10,378,295
k. Financial Risk Management
The Company is exposed to risks that arise from its use of
financial instruments. The principle financial instruments used by
the Company, from which financial risk arises, are set out in note
k . The types of risk exposure the Company is subjected during the
year are as follows:
i) Credit risk
The credit risk that the Parent Company is exposed to, and the
mitigation thereof, is substantially the same as that of the Group
as a whole. Further details are provided in note 13 of the notes to
the Consolidated Financial Statements.
ii) Liquidity Risk
The liquidity risk that the Parent Company is exposed to, and
the mitigation thereof, is substantially the same as that of the
Group as a whole. Further details are provided in note 13 of the
notes to the Consolidated Financial Statements.
The following table illustrates the contractual maturity
analysis of the Company's gross financial liabilities based on
exchange rates on the reporting date.
As at 31 December 2020 30 days to 6 to 12 months Over 12 months
(In GBP) Within 30 days 6 months
Accounts payables and
accrued liabilities 658,716 - - -
Borrowings - 105,515 - 11,590,172
Derivative Liability - 3,045,213
Lease liabilities - 17,805 17,805 219,731
658,716 123,320 17,805 14,855,116
As at 30 June 2020 30 days to 6 to 12 months Over 12 months
(In GBP) Within 30 days 6 months
Accounts payable and
accrued liabilities 314,047 - - -
Lease liability - - - 369,745
314,047 369,745
iii) Market risk
The market risk that the Parent Company is exposed to, and the
mitigation thereof, is substantially the same as that of the Group
as a whole. Further details are provided in note 14 of the notes to
the Consolidated Financial Statements.
As at 31 December 2020, a 10% change in the exchange rate
between the Great Britain Pound and the Australian Dollar, which is
a reasonable estimation of volatility in exchange rates, would have
an approximate GBP0.6 million change to the Parent Company's total
comprehensive loss.
iv) Fair values
The fair value of cash, other receivables, and accounts payable
and accrued liabilities and joint venture obligation approximate
their carrying values due to the short-term nature of the
instruments.
Fair value measurements recognised in the Statement of Financial
Position subsequent to initial fair value recognition can be
classified into Levels 1 to 3 based on the degree to which fair
value is observable.
Level 1 - Fair value measurements are those derived from quoted
prices in active markets for identical assets and liabilities.
Level 2 - Fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly, or
indirectly.
Level 3 - Fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
The level 3 fair value for the convertible loan asset is
disclosed in note 6 of the Consolidated Financial Statements. There
were no transfers between any levels of the fair value hierarchy in
the current period or prior years.
l. Equity
The movements in share capital, share premium, share based
payment reserve, warrants reserve are as detailed in note 15 of the
notes to the Consolidated Financial Statements. There are no
differences between this and the Parent Company's transactions.
m. Related party disclosures
The Company's related parties include key management personnel,
companies which have directors in common and its subsidiaries.
Transactions with its Directors and key management personnel and
transactions with companies which have directors in common during
the period have been disclosed in note 21 of the notes to the
Consolidated Financial Statements.
The Company had the following related-party balances and
transactions during the six months ended 31 December 2020 and the
year ended 30 June 2020.
(In GBP) Six months Year ended At 31 December At 30 June 2020
ended 31 30 June 2020 2020
December 2020
Balance owed by Balance owed by
Nature of Transaction Transaction / (owed to) / (owed to)
Subsidiary transaction amount amount
Eastern Mining
d.o.o. Trading 3,081,678 - 3,081,678 -
Eastern Mining Capital
d.o.o. contribution 4,205,902 5,398,018 (3,081,678) -
Tethyan Resources
Corp. Loan 1,518,929 - 1,632,007 -
Tethyan Resources
Limited Loan 236,488 - 236,488 -
Tethyan Resources
Jersey Loan 55,700 - - -
Intercompany loan receivables are assessed for impairment at
period end. Intercompany loans were made to fund both corporate
costs and exploration projects undertaken by subsidiaries. In
company subsidiaries other than Eastern Mining (who hold a JORC
resource), exploration expenditure is expensed as incurred and not
capitalised, as a result these companies net asset position is
lower than their loans payable to the company and not recoverable
in the short term. Company policy is to impair intercompany loans
provided to fund corporate costs but not to impair intercompany
loans provided to fund exploration projects on the basis that these
exploration projects will add additional long term value.
Management will assess for any impairment indicators on an ongoing
basis.
n. Financial assets at fair value through profit and loss
The movements in Financial assets at fair value through profit
and loss are as detailed in note 6 of the Consolidated Financial
Statements. There are no differences between this and the Parent
Company's transactions.
o. Right of use asset
The movements in right of use asset are as detailed in note 12
of the Consolidated Financial Statements. There are no differences
between this and the Parent Company's transactions.
p. Lease liabilities
The movements in lease liabilities are as detailed in note 12 of
the Consolidated Financial Statements. There are no differences
between this and the Parent Company's transactions.
q. Borrowings and Derivative Liability
The movements in external loans and imbedded derivative
liability are as detailed in note 7 of the Consolidated Financial
Statements. There are no differences between this and the Parent
Company's transactions.
r. Fair Value of Option Asset and Liability
The movements in fair value of option asset and fair value of
option liability are as detailed in note 10 of the Consolidated
Financial Statements. The Company may acquire the remaining 90%
ownership stake in Ras Metals d.o.o. The excess value of the
Tethyan transaction over the investment recorded is recognised as a
call option asset totalling GBP20,581,714. Value of remaining
consideration payable under Ras Option agreement being GBP2,515,399
held as a call liability.
These balances are eliminated in the Consolidation Group
accounts which includes Ras Metals d.o.o.
s. Commitments
Commitments relating to the Parent Company have been disclosed
in note 23 of the Consolidated Financial Statements.
t. Subsequent events
Subsequent events relating to the Parent Company have been
disclosed in note 25 of the Consolidated Financial Statement
**ends**
Market Abuse Regulation Disclosure
The information contained within this announcement is deemed by
Adriatic (LEI: 549300OHAH2GL1DP0L61) to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. The person responsible for arranging and authorising
the release of this announcement on behalf of Adriatic is Paul
Cronin, Managing Director and CEO.
For further information please visit www.adriaticmetals.com ,
@AdriaticMetals on Twitter, or contact:
Adriatic Metals PLC
Paul Cronin / Thomas Horton Tel: +44 (0) 7866 913207
Tavistock Communications Limited
Charles Vivian Tel: +44 (0) 7977 297903
Edward Lee Tel: +44 (0) 7736 220565
Gareth Tredway Tel: +44 (0) 7785 974264
The Capital Network
Julia Maguire/Lelde Smits Tel: +61 2 8999 3699
ABOUT ADRIATIC METALS
Adriatic Metals Plc (ASX:ADT, LSE:ADT1) is a precious and base
metals explorer and developer that owns the world-class Vares
Silver Project in Bosnia & Herzegovina and the Raska Project in
Serbia.
The Vares project's captivating economics and impressive
resource inventory have attracted Adriatic's highly experienced
team, which is expediting exploration efforts to expand the current
JORC resource. Results of a recent pre-feasibility study announced
on 15 October 2020 indicate a post-tax NPV 8 % of US$1,040 million
and IRR of 113%. Leveraging its first-mover advantage, Adriatic is
rapidly advancing the project into the development phase and
through to production with significant cornerstone investment of
US$28 million from Queen's Road Capital Investment and EBRD.
There have been no material changes to the assumptions
underpinning the forecast financial information derived from the
production target in the 15 October 2020 announcement and these
assumptions continue to apply. There have been no material changes
to the assumptions and technical parameters on the updated Mineral
Resource Estimate announced on 1 September 2020 and these
assumptions continue to apply.
Adriatic Metals acquired TSX-V listed Tethyan Resource Corp in
2020, to advance the former Kizevak and Sastavci polymetallic mines
in the Raska District, southern Serbia.
DISCLAIMER
Forward-looking statements are statements that are not
historical facts. Words such as "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)", "potential(s)"and
similar expressions are intended to identify forward-looking
statements. These statements include, but are not limited to
statements regarding future production, resources or reserves and
exploration results. All of such statements are subject to certain
risks and uncertainties, many of which are difficult to predict and
generally beyond the control of the Company, that could cause
actual results to differ materially from those expressed in, or
implied or projected by, the forward-looking information and
statements. These risks and uncertainties include, but are not
limited to: (i) those relating to the interpretation of drill
results, the geology, grade and continuity of mineral deposits and
conclusions of economic evaluations, (ii) risks relating to
possible variations in reserves, grade, planned mining dilution and
ore loss, or recovery rates and changes in project parameters as
plans continue to be refined, (iii) the potential for delays in
exploration or development activities or the completion of
feasibility studies, (iv) risks related to commodity price and
foreign exchange rate fluctuations, (v) risks related to failure to
obtain adequate financing on a timely basis and on acceptable terms
or delays in obtaining governmental approvals or in the completion
of development or construction activities, and (vi) other risks and
uncertainties related to the Company's prospects, properties and
business strategy. Our audience is cautioned not to place undue
reliance on these forward-looking statements that speak only as of
the date hereof, and we do not undertake any obligation to revise
and disseminate forward-looking statements to reflect events or
circumstances after the date hereof, or to reflect the occurrence
of or non-occurrence of any events.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
FR WPURPWUPGGRU
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