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.

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March 31, 2021 02:00 ET (06:00 GMT)