Company No. 5285814
Alba Mineral Resources plc
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2019
Alba Mineral Resources plc
CONTENTS
Officers and professional advisers
Chairman’s Statement
Strategic Report
Directors’ Report
Directors’ Responsibilities Statement
Corporate Governance Statement
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Cash Flow Statement
Company Cash Flow Statement
Notes to the Financial Statements
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Alba Mineral Resources plc
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
George Frangeskides (Chairman)
Michael Nott
Manuel Lamboley
SECRETARY
Ben Harber
REGISTERED OFFICE
6th Floor
60 Gracechurch St
London EC3V 0HR
NOMINATED ADVISERS
Cairn Financial Advisers LLP
Cheyne House, Crown Court
62-63 Cheapside
London EC2V 6AX
BROKERS
First Equity Limited
Salisbury House
London Wall
London EC2M 5QQ
AUDITOR
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London EC2R 6AY
SOLICITORS
Memery Crystal
165 Fleet Street
London EC4A 2DY
PRINCIPAL BANKERS
Allied Irish Bank (GB)
Berkeley Square House
4-19 Berkeley Square
London W1J 6BR
REGISTRARS
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey GU9 7DR
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
The Board of Alba Mineral Resources plc is pleased to report the results for the financial year ended 30 November
2019.
References to the “Company” or “Alba” are to Alba Mineral Resources plc and references to the “Group” are to
Alba collectively with its Subsidiary Companies (as listed in Note 11).
1. REVIEW OF ACTIVITIES
OVERVIEW
1.1
We made significant progress across our range of assets and investments during the 2019 financial year. This
included the following achievements:
o At Clogau, our regional exploration resulted in the discovery of 10 new gold anomalies across the Dolgellau
Gold Belt. We also successfully drilled the Llechfraith mine area, which confirmed that the known gold-
bearing geological setting at Llechfraith continues for some 25 metres below the deepest historic workings.
o At Thule Black Sands, we published a maiden Mineral Resource Estimate from mineral sands experts IHC
Robbins, which confirmed an Inferred Resource of 19 million tonnes at an in-situ ilmenite grade of 8.9%,
translating to 1.7 million tonnes of contained ilmenite. This would be enough ore to sustain a 12-year mine
life at a mining rate of 1.5 million tonnes per annum.
o At Amitsoq, we completed the latest phase of metallurgical testwork which confirmed that concentrate
produced from Amitsoq graphite contains a significant proportion (36%) of larger-size, higher-value flake.
This should assist us greatly in the development of a positive economic model for the project.
o At Horse Hill, a new well, HH-2z, was drilled during the year, and we also saw continuous test production at
the original HH-1 well surpass 78,000 barrels by year end.
The only real reverse was encountered at Brockham, where the Operator failed in its bid to flow oil from the
Kimmeridge limestones at that particular location in the Weald Basin. However, our investment in Brockham has
never been a focus for the Group. It is true also that we did not intersect zinc-lead mineralisation in our drilling
programme at Limerick during the year. However, the setbacks we encountered at both those projects are part
and parcel of the risk-reward nature of mineral exploration and will not divert us from exploration activities, such
as those which led to the above successes and which can add real value to the Company’s net worth.
1.2
CLOGAU GOLD PROJECT (WALES, 90% OWNED)
We made significant progress at the Clogau Gold Project during 2019. Our regional exploration campaign
identified 10 significant anomalies away from known major mines, with gold mineralisation confirmed so far over
about a six mile section of the Dolgellau Gold Belt. The largest new anomaly identified is about two kilometres
long, which is four times longer than the length of the anomaly over the historic Clogau-St David’s Mine. Given
Clogau-St David’s was far and away the UK’s largest source of historic gold production, that anomaly is clearly
going to be a focus of future exploration activity.
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CHAIRMAN’S STATEMENT
We also identified potential extensions to the existing footprint of the mine area, with infill sampling confirming
continuity of an anomaly (the “Lowri Target”) lying parallel to the Llechfraith adit and a major anomaly (the “Eryn
Target”) lying above historic Llechfraith workings.
Late in 2019, we drilled a target within the historic Llechfraith mine area. This short drilling campaign successfully
intersected the known geological setting for all historic gold mining at Clogau, being intrusive greenstones and
shear zones dominated by intermixed Clogau shale and quartz veining. This setting was intersected up to 25
metres below the lowest known mined areas, thus confirming the continuity of the mined shear zone structure
for at least that distance down-dip of the historic mine workings.
During 2019, we also completed an extensive underground rehabilitation programme at Clogau. Those safety
works are an essential precursor to any decision to re-open the mine for commercial production.
The Board has determined that the Clogau Gold Project remains a key focus of the Company’s business moving
forward, for the following principal reasons:
o There is significant existing underground development in place across five connected mine areas at Clogau,
which development would cost many millions of pounds to put in place at today’s prices.
o The commercial potential of Clogau is significant, and is underpinned by a number of factors: the fact that
historic production was from very high-grade pods, and that we believe there to be real potential to discover
unexploited high-grade pods; the fact that Welsh gold typically attracts a significant premium over normal
gold spot rates; and the rally in the price of gold in the second half of 2019 and into the start of 2020, which
can only help with the economics for restarting mining for gold at Clogau.
o There is great potential to discover new economic gold resources within the wider Clogau licence area, as
illustrated by the 10 new gold anomalies that we have so far discovered across the Dolgellau Gold Belt.
Exploration at the Clogau Gold Project will continue this year in order to refine the plan to reopen the Clogau-St
David’s Gold Mine for commercial production, including a trenching programme across a selection of our 10 new
regional gold targets (see also Section 4 (Outlook) below, regarding the impact of COVID-19 on our planned field
activities).
1.3
THULE BLACK SANDS PROJECT (GREENLAND, 100% OWNED)
In May 2019, we announced a maiden JORC-compliant inferred resource for our Thule Black Sands Ilmenite
Project (“TBS”). We were delighted to be able to achieve this result after just one full field season at the Project.
The Mineral Resource Estimate prepared by mineral sands specialist IHC Robbins breaks down into three
components:
(1)
(2)
(3)
an Inferred Resource of 19.0 million tonnes at 43.6% Total Heavy Minerals;
an in-situ ilmenite grade of 8.9%; and
1.7 million tonnes of contained ilmenite.
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CHAIRMAN’S STATEMENT
A 19 million tonne Inferred Resource represents a huge step forward for this high-grade ilmenite project. For a
1.5 million tonne per annum mining operation, this would already mean a mine life of more than 12 years.
Our work at TBS in 2020 will include pursuing off-take discussions with strategic investors and industrial groups.
1.4
AMITSOQ GRAPHITE PROJECT (GREENLAND, 90% OWNED)
With its exceptionally high grades and the fact that it incorporates a historic producing mine, Alba management
and our technical team retain great belief in the potential of the Amitsoq Graphite Project.
During 2019 we completed a Phase 2 metallurgical testwork programme at Amitsoq which built on the
preliminary testwork programme we carried out in 2018. That initial testwork had confirmed that a saleable
(97.3% Total Graphitic Carbon) concentrate could be produced from Amitsoq graphite. Our 2019 programme was
designed to build on that result by maximising the amount of high-value flake graphite in the concentrate. The
programme was an unqualified success, as we were able to show that a significant proportion (36%) of the refined
product consisted of large, jumbo and super-jumbo flakes, which attract a premium price in the graphite market.
This will greatly assist in our development of a positive technical economic model for the Amitsoq Project.
In February 2020 we announced the appointment of leading graphite experts ProGraphite GmbH for the next
testwork phase, which will be focused on developing an optimised method for the production of graphite that is
suitable for lithium-ion batteries (“LIBs”). The electric vehicle (“EV”) sector is a major growth market for graphite.
LIBs use small to medium flake graphite, so if we are able to confirm the amenability of Amitsoq graphite for use
in LIBs, it will mean we will have a ready market both for our large to super-jumbo flake (which is used in
traditional industries such as steel manufacture and refractories) and for our small to medium flake (used in the
EV sector).
In terms of field work at Amitsoq, as previously reported we are in the process of finalising a drilling programme
for this summer, with the objective being to define a maiden JORC resource at Amitsoq. However, see also Section
4 (Outlook) below, regarding the impact of COVID-19 on our planned field activities.
1.5
INGLEFIELD MULTI-ELEMENT PROJECT (GREENLAND, 100% OWNED)
During the year, we commissioned a detailed technical review of our Inglefield Project from South Africa-based
TECT Geological Consulting and XPotential Geoscientific Consulting, who are experts respectively in structural
geology and geophysical data interpretation. Through the systematic assimilation of data from our maiden
exploration campaign in 2018 and data sets from previous field programmes, they were able to identify a number
of high-priority targets at Inglefield for both iron ore-copper-gold (“IOCG”) and carbonate-hosted zinc-lead
deposits.
As our focus in Greenland for the coming year has been on preparations for field activities at Amitsoq, we do not
have plans currently to go into the field at TBS or Inglefield this season.
In terms of our overall strategy in Greenland, Alba’s Board believes the Company’s Greenland mining portfolio to
comprise some of the best assets in the country. However, as it is not currently feasible to allocate significant
funds to all of the Company’s projects, we made it clear during the year that we will be seeking expressions of
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CHAIRMAN’S STATEMENT
interest for external investment into our Greenland assets, with a view to substantially de-risking them while
retaining a material stake in the upside.
1.6
LIMERICK BASE METALS (IRELAND, 100% OWNED)
In May 2019, we undertook a short exploration drilling campaign at our Limerick Zinc-Lead Base Metals Project
which did not intersect mineralised zones. While there remain a number of other interesting targets at the
Limerick Project which have never been drilled, the Group plans to target its spending elsewhere in the current
period and therefore under IFRS 6 criteria the project should be impaired in value. See further Note 9.
1.7
(a)
OIL & GAS INVESTMENTS
Horse Hill Oil Project (England, 11.765% interest)
Significant progress was made at Horse Hill during 2019 towards the goal of establishing permanent commercial
oil production at the site. Extended well test operations continued at both the Portland Sandstone and the
Kimmeridge Limestone intervals, and in August 2019 it was announced that aggregate oil production had reached
a milestone of 60,000 barrels.
In September 2019 we announced that operations had commenced for the drilling of the new Horse Hill-2z (“HH-
2z”) Portland horizontal well. In mid-November we reported that the drilling had been successfully completed,
with 2,500 ft of horizontal trajectory drilled wholly within the Portland reservoir’s most oil productive zone.
We also announced in September 2019 that Surrey County Council had granted full planning consent for long-
term oil production at Horse Hill. The consent grants permission to produce oil over a period of 25 years at up to
3,500 barrels of oil per day from a total of six wells within the Portland and Kimmeridge oil pools, including the
existing Horse Hill-1 (“HH-1”) well and the HH-2z horizontal well.
As at the financial year end, we reported that total HH-1 test production stood at over 78,000 barrels stretching
back to the start of test production in July 2018.
Post year end, we reported that during a scheduled shut-in for a long-duration pressure build-up test at HH-2z,
evidence of formation water ingress was recorded. For that reason, an additional well intervention was planned
to shut-off the water source. On 9 March 2020 it was announced that that intervention was successful and dry oil
had flowed to surface. It was also announced that further clean-up activities would be carried out prior to a shut-
in. We expect extended well test (“EWT”) operations from HH-2z to commence directly thereafter. Production
from the horizontal section of the Portland Sandstone reservoir has the potential to exceed production from a
vertical Portland producer such as HH-1.
In January 2020 we reported that, subject to receipt of regulatory approvals, the Operator now planned to bring
HH-1 into commercial production this spring, to be followed by HH-2z in the third quarter of this year, subject to
the successful completion of the planned HH-2z EWT programme. Shortly before the publication of this report,
the Operator confirmed that the Oil and Gas Authority (“OGA”) had approved the Horse Hill Field Development
Plan (“FDP”) and consented to the start of long-term production (“Production”) from the field. This should allow
net recoverable reserves to be allocated to the field, which should assist with attracting debt finance to the
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CHAIRMAN’S STATEMENT
project. The Operator has said that Portland oil pool Production will commence via HH-1, with Kimmeridge
Production planned to be added in late spring 2020 by converting the well to a dual completion. Production from
HH-2z is planned to follow upon completion of the current EWT campaign.
Turning to corporate matters in relation to Horse Hill, in June 2019 we announced our decision not to fund the
latest cash call received from the Operator, Horse Hill Developments Limited (“HHDL” or the “Operator”). While
we have not decided whether we will fund future cash requirements at Horse Hill, it is possible that we will decide
not to fund, for a number of reasons including our desire to focus our efforts and expenditure on the mining
projects which are under Alba’s sole control. But regardless of whether Alba does or does not fund future cash
calls, our investment in Horse Hill remains a near-term cash-generative opportunity for Alba. As such, and as we
announced during the year, we are open to either retaining our stake in the Project through to permanent
commercial production, when HHDL should generate material oil sales revenues, or to giving serious
consideration to any third-party offer received prior to production which properly reflects the value of our stake.
(b)
Brockham Oil Project (England, 5% interest)
During the year, the Operator at Brockham, Angus Energy, announced that it had successfully perforated the
Brockham BRX4Z well (“BRX4Z”) as the precursor to commencing commercial flow test operations from the
Kimmeridge limestones at BRX4Z. However, the Operator subsequently announced that part of the perforated
interval was producing water, which was believed to be inhibiting the flow of oil. Despite subsequently
successfully isolating the water-producing zone, Angus was still unable to recover oil to surface, leading it to
conclude that in its view it would not be likely for commercial hydrocarbon flow to be achieved from the
Kimmeridge layer at Brockham by conventional means.
The Group’s investment in the Brockham oil field has been fully impaired in value during the period, due to the
unsuccessful flow testing of the Kimmeridge formation. While the Board is naturally disappointed by this
outcome, Alba’s investment in Brockham has always been a small part of Alba’s asset portfolio at just 4.3% of the
Group’s total net assets of £8.75 million prior to the impairment charge.
2. CORPORATE AND FINANCIAL
In March 2019 we announced that my fellow Director Michael Nott and I had subscribed for shares in the
Company (in Mike’s case 6,666,667 shares, and in my case 8,333,333 shares), at a price of £0.003 per share, being
28% above the most recent mid-market closing price for Alba shares prior to the placement.
In June 2019 we announced that we had raised £500,000 (before expenses) through the issue of 250,000,000
new ordinary shares at a price of 0.2 pence per ordinary share.
The appointment in June 2019 of SVS Securities plc as Joint Broker to the Company was subsequently terminated
in August 2019, when the Company was informed that SVS had been placed into Special Administration.
In November 2019 we announced that we had raised £350,000 (before expenses) through the issue of
218,750,000 new ordinary shares at a price of 0.16 pence per ordinary share. Share warrants were also issued to
each subscriber in the placing, with one warrant being issued for each share subscribed for, for a total of
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CHAIRMAN’S STATEMENT
218,750,000 warrants. The warrants have an exercise price of 0.32 pence per share and an expiration date of 24
months from the date of issue. The warrants will be subject to an accelerator provision, such that if at any time
during their 24 month duration the 10-day volume-weighted average price (“VWAP”) of Alba ordinary shares
exceeds 0.64 pence, Alba may give warrant holders notice to exercise their warrants, failing which they will
automatically expire.
After the financial year end we announced that we had entered into an unsecured financing of up to £767,000
(which can be increased by mutual consent to up to £1,054,500) with US-based institutional investment fund,
Bergen Global Opportunity Fund, LP (the “Investor”) (the “Financing”). The Financing is structured by way of the
issue by Alba to the Investor of up to five zero-coupon, unsecured convertible securities. Upon its issue, the
Investor pays Alba a fixed purchase price for the convertible security, namely £192,000 for the first convertible
security (which has a nominal value of £223,000), £192,000 for the second Convertible Security (nominal value
£192,000), £153,000 for the third Convertible Security (nominal value £153,000) and £115,000 for each of the
fourth and fifth Convertible Securities (nominal value £115,000 each). The Investor will then have the right to
convert those convertible securities into Alba ordinary shares based on the VWAP of Alba shares during a specified
period prior to conversion or, in respect of up to £192,000 of the Convertible Securities, at a fixed price of
£0.001625.
The Financing is structured in such a way as to provide Alba with access to capital at regular intervals over the
next 18 months, allowing us to fund key value-enhancing work activities across our mining portfolio. The issue of
the second to fifth tranches of funding is subject to the fulfilment by Alba, at each funding stage, of certain
specified conditions and warranties.
On 3 March 2020, we announced that we had closed the first tranche of funding under the Financing, with Alba
issuing the first convertible security referred to above and receiving payment of £192,000 from the Investor.
Subject to the fulfilment of the specified conditions and warranties, the second funding tranche will be issued
four months after the Company’s 2020 AGM (which will be held in April) with each of the third, fourth and fifth
funding tranches being issued in further four monthly intervals thereafter.
As in prior years, our results for the year were impacted by significant accounting adjustments. As shown in our
Consolidated Income Statement (see page 25), the Group’s loss of £1.3m included £0.5m of impairment charges
from providing against the value of our share of the Brockham Oil Project and our Limerick Base Metals Project.
Underlying administrative expenditure remained relatively consistent year on year.
3. EVENTS AFTER THE REPORTING PERIOD
Key announcements after the reporting period are noted in Section 1 (Review of Activities) and Section 2
(Corporate and Financial) above, and in Note 24 to the accounts.
4. OUTLOOK
The past 12 months have been challenging ones for Alba. The markets have been capricious, and lately of course
we have seen some of the biggest UK stock market falls in decades, the reasons for which I will return to later.
Putting that aside, we did not see the bounce in our share price that we would have expected from the significant
advances we were able to make across our projects during the year, such as when we confirmed a maiden JORC
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CHAIRMAN’S STATEMENT
Resource at Thule Black Sands, when we identified gold mineralisation across a six-mile stretch of the Dolgellau
Gold Belt or when continued progress at Horse Hill saw that oil field obtain planning permission for 25 years of
production and where continued test production is now approaching its two year anniversary.
To illustrate this point, contrast the market’s reaction to the Horse Hill Consortium’s drilling of the HH-1 well in
2014 with the market’s reaction to the drilling of the HH-2z well in 2019. While HH-1 was being drilled, in around
September 2014, we saw a fourfold increase in our share price, whereas during the drilling of the second well, in
September 2019, we (and other Consortium members, for that matter) saw no appreciable improvement in share
price performance.
While it is difficult to maintain the excitement felt by investors in the early stages of a new discovery, such as
when we struck oil at Horse Hill in 2014, it is also bound up in the very nature of the resources sector, where it
typically takes years to turn an initial exploration discovery into a development asset with the Resources and
Reserves and economics to support a Bankable Feasibility Study, which in turn can attract the debt finance needed
to build a mine. Even in onshore oil and gas projects, where the infrastructure requirements are typically more
modest, it can still take several years to move into commercial production, not least as the regulatory hurdles, as
we have seen in the Weald Basin, can be significant. These realities can be hard to square with the average AIM
investor’s desire to see a material return on his or her investment in fairly short order, probably within a 6 to 12
month timeline. As an investor myself, I can completely understand that perspective.
The bottom line, however, is that we retain a solid belief in our core projects at Alba and we will employ the
technical skill and endeavour of our highly experienced team of mining professionals to keep pushing our projects
forward until such time as our successes are properly reflected in our share price. Even then, as I alluded to
earlier, those successes can be completely drowned out by the much more powerful macro-economic factors
which loom from time to time and which can easily overwhelm any otherwise positive developments, such as we
have seen in recent times with the US-China trade wars, the self-inflicted Brexit wound and now the coronavirus
pandemic.
On 23 March 2020, the UK Prime Minister announced that UK residents will only be allowed to leave their home
for certain very limited purposes. In respect of workers, this includes travelling to and from work, but only where
absolutely necessary. He also announced the immediate closure of all shops selling non-essential goods and a
prohibition on all gatherings of more than two people in public. We will need to consider the precise effect of
these, and other, announced measures upon Alba’s business and affairs. I know that the PM also committed to
keep these restrictions under review, to look at them again after a period of three weeks and to relax them if the
evidence shows this to be possible. However at Alba we are operating on a working assumption that our ability
to work in the field at our mining projects will be severely compromised, if not rendered impossible, in the next
three month period at least. More information in this regard is provided in Note 24 to the accounts, at pages 54-
56 below.
At the time of writing, the number of confirmed cases of COVID-19 in the United Kingdom is in the thousands,
and the number of deaths is now, tragically, over one thousand. This is an unprecedented situation for many of
us, certainly for those of us not old enough to have lived through the Second World War or its aftermath. The
impact of the COVID-19 pandemic upon Alba is one that we not only feel in the UK, where we are headquartered
and where our Clogau Gold Project and oil and gas investments are located, but also in Ireland and Greenland
where we also own and operate projects. At present, the Irish Government is advising that anyone coming into
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CHAIRMAN’S STATEMENT
Ireland will be required to either restrict their movements or to self-isolate on arrival for 14 days, with only
essential supply chain services such as hauliers, pilots and maritime staff being exempt from these restrictions.
In Greenland, the authorities have announced a cessation of all non-emergency domestic and international air
traffic for an initial two-week period from 20 March 2020.
The COVID-19 pandemic, and the ongoing measures imposed by the Government agencies in those countries in
which Alba operates, will have an inevitable impact upon our planned work activities. On 15 January 2020, we
announced details of our planned work activities for 2020, including the following key field programmes:
In relation to Clogau, we announced plans to undertake a trenching programme across a selection of the 10
new gold targets identified from the Company’s regional exploration, as well as continued environmental
baseline studies and ongoing discussions with the Mineral Planning Authority detailing the works required to
re-open the Mine and the proposed operations once the Mine is re-opened; and
In relation to Amitsoq, we announced that plans were being advanced to undertake a maiden drilling
campaign with the objective of enabling a maiden JORC mineral resource estimate to be declared.
Subsequent to that announcement, the rapidly developing situation in relation to the COVID-19 pandemic has
placed some considerable doubt upon our ability to execute these programmes in full this year. This is for a host
of reasons, including the curtailment of international flights to and from the countries in which we operate our
projects, the possibility that we will be unable to secure exploration personnel, equipment or materials necessary
to undertake our planned work activities and the ongoing restrictions imposed by the authorities in the countries
in which we operate (which restrictions may well be increased in the coming weeks and months).
Alba’s management continues to monitor these developments on a daily basis. Our overriding concern during
this time is to ensure the health and safety of our personnel and of all members of the public with whom they
may come into contact. Our field teams have to work in close proximity with one another, undertaking manual
labour and often operating in constrained settings, such as when working underground at Clogau. For these
reasons, we will not send our personnel into the field unless we are satisfied that their welfare and that of the
general public will not be compromised.
The COVID-19 pandemic has also, of course, had a massive impact on global stock markets in recent weeks, and
Alba’s share price has been caught up in the cross-winds of the sudden slump in investor confidence across the
board. While these market conditions continue to hold, our ability to progress our planned joint venture or
divestment programme across our asset portfolio will likely be affected, as potential joint venture partners and
buyers will be far less likely to want to consider any new investments during this time. In relation to the funding
of our work activities, our ability to raise capital through the equity markets must now be considered severely
constrained, although we do have the benefit of the financing package arranged with Bergen Global Opportunity
Fund, LP, as announced only last month. Shareholders’ attention is also drawn to the wording in the Going
Concern section of Note 1 to the accounts, at page 33 below.
Despite these conditions, we do continue to work across our project portfolio. At Clogau, for instance, prior to
the most recent restrictions on non-essential travel, our contractors were able to complete water tests in and
around the Clogau mine adits. Initial indications are that the water is fairly clean, which are promising signs as
we investigate the dewatering of the lower Llechfraith mine area where we drilled in late 2019, in terms of the
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CHAIRMAN’S STATEMENT
level of treatment of the water that will be required. We await the return of the assays from the laboratory
before deciding on the next steps. In respect of our discussions with the Mineral Planning Authority (“MPA”)
regarding the re-opening of the Clogau mine for commercial production, we have now received detailed
responses from the MPA to our formal Pre-Application Enquiries, and our planning consultants and technical
team are working through those with a view to refining our overall plan for the re-opening of the mine, which will
form the basis of a formal planning application. Last month we also announced a new testwork programme for
Amitsoq.
In short, there is a lot of work we can usefully progress in relation to our projects even while we are constrained
in our field activities.
Alba was first listed on the AIM stock market in 2005. As such, the Company has been through the last serious
global financial crisis that occurred in 2007–08 and Alba’s management has first-hand experience of the measures
needed to protect the Company in a period of sustained economic downturn such we currently face. We will take
all measures reasonably within our control to protect the Company’s projects and finances so that we will emerge
strong once the worst of the COVID-19 pandemic and the ensuing global financial crisis is over.
We firmly believe that the strategy we have implemented at Alba over the past 5 or 6 years, during which time
we have identified and then moved to secure majority stakes in a range of undervalued assets with real
production potential, has been the right one to pursue. With the current turmoil in the investment markets, our
strategy may take a little longer to execute, however we remain confident that it will ultimately bear fruit for Alba
and its shareholders.
On behalf of the Board, I would like to take this opportunity to thank Alba shareholders for their ongoing support.
George Frangeskides
Executive Chairman
30 March 2020
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Alba Mineral Resources plc
STRATEGIC REPORT
The Directors present the strategic report for Alba Mineral Resources plc for the year ended 30 November 2019.
References to the “Company” or “Alba” are to Alba Mineral Resources plc and references to the “Group” are to
Alba collectively with its Subsidiary Companies (as listed in Note 11).
PRINCIPAL ACTIVITIES
The Group’s principal activity is exploration for and development of natural resources.
BUSINESS REVIEW
The Company operates principally as a holding company and specifically provides support to the Subsidiary
Companies, which own and operate mining projects in Greenland (graphite, ilmenite, base metals, gold and iron
ore), Wales (gold), and Ireland (base metals), as well as having investments in the onshore UK oil and gas sector.
The Directors believe that the Group’s diversified asset and investment portfolio provides access to a range of
assets with potential to add significant value for the Company’s shareholders in the long-term. Our strategy,
where possible, is to target assets that have a production history and are in stable jurisdictions, and which thereby
offer real potential to be brought into commercial production. A review of activities is given in the Chairman’s
Statement on pages 2-10.
The key challenge for the Company is identifying the most effective, including the most cost-effective, methods
for progressing mineral exploration activities at our projects, with the aim being to materially advance the level
of knowledge and confidence in the potential of our projects and thereby justify the committing of further
resources to progress those projects rapidly through exploration and into the development phase.
Principal risks and uncertainties for the group are two-fold:
(i)
(ii)
funding risk and the ability to raise funds to further exploration activities; and
exploration risk, i.e. the risk that exploration programmes are not successful.
Both funding risk and exploration risk can be materially increased by the impact of international geopolitical,
financial and public health developments. Notably, the onset of the Coronavirus (COVID-19) pandemic has had a
very serious effect on global stock markets in recent weeks. As a result, the ability of the Company to raise funds
through equity capital raisings, joint ventures or divestments can be expected to remain constrained for so long
as these market conditions prevail. Aside from these funding constraints, the pandemic may adversely affect the
Company’s ability to implement its planned exploration programmes for the coming year, whether due to the
resulting logistical challenges, such as the curtailment of international flights, or because of the unavailability of
exploration personnel, equipment or materials.
KEY PERFORMANCE INDICATORS (KPIs)
At this stage in the Company’s development, the Directors regularly monitor key performance indicators
associated with funding risk, being primarily projected cash flows associated with general administrative expenses
and projected cash flows on a project by project basis. This year the Company has been able to raise the funds as
needed to finance its activities (see the Corporate section of our review of activities).
Performance of projects is assessed using measures specific to that project. As an exploration group with no
production or proven reserves, evaluation is based on exploration results and technical reports and assessments.
In the review of activities, we have identified for each project the exploration results or assessments that
demonstrate the progress that is being made on that project. These assessments also inform our plans for future
work and assist in determining how much of our funding we allocate to each project.
11
Alba Mineral Resources plc
STRATEGIC REPORT
In the prior year, the Board identified the following specific KPIs or milestones considered to be material indicators
of value having been added to the Company:
(i)
(ii)
that a maiden mineral resource estimate is announced in respect of at least one of Alba’s projects; and
that at least one project which the Board determines during the course of the year to be non-core is joint
ventured to a third party or divested in whole or in part.
We achieved the first KPI with the announcement of a maiden Mineral Resource Estimate for the Thule Black
Sands Project in May 2019. No joint venture partnership has yet been announced but we continue to explore
options with a variety of interested parties on a number of our projects.
For the coming year, the Board will again apply the same KPIs and will broaden the first KPI of declaring a maiden
Resource to include increasing the level of declared Resources on any of our projects.
Approved by the Board of Directors and signed on behalf of the Board
George Frangeskides
Executive Chairman
30 March 2020
12
Alba Mineral Resources plc
DIRECTORS’ REPORT
The Directors present their report and the audited financial statements of Alba Mineral Resources plc for the year
ended 30 November 2019.
References to the “Company” or “Alba” are to Alba Mineral Resources plc and references to the “Group” are to
Alba collectively with its Subsidiary Companies (as listed in Note 11).
RESULTS AND DIVIDENDS
The loss of the Group for the year, after taxation, attributable to equity holders of the parent amounted to
£1,311,172 (2018: £72,823 loss).
The Directors do not recommend the payment of a dividend (2018: £nil).
DIRECTORS
George Frangeskides, Michael Nott and Manuel Lamboley served as Directors throughout the year.
DISCLOSURE OF INFORMATION TO THE AUDITOR
In the case of each person who was a Director at the time this report was approved:
so far as that Director was aware there was no relevant audit information of which the company’s auditor
was unaware; and
that Director had taken all steps that the Director ought to have taken as a director to make himself or
herself aware of any relevant audit information and to establish that the Company’s auditor was aware of
that information.
This information is given and should be interpreted in accordance with the provisions of section 418 of Companies
Act 2006.
FINANCIAL INSTRUMENTS AND RISKS
The disclosure relating to financial instruments and risks have been included in the Notes to the financial
statements (Note 21).
EVENTS AFTER THE REPORTING PERIOD
See Note 24 and the Chairman’s Statement on pages 2-10.
FUTURE DEVELOPMENTS
See Chairman’s Statement from page 2.
AUDITOR
A resolution to re-appoint the auditor, Nexia Smith & Williamson, will be proposed at the next Annual General
Meeting.
Approved by the Board of Directors and signed on behalf of the Board
George Frangeskides
Director
30 March 2020
13
Alba Mineral Resources plc
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial period. Under that law the
Directors have elected to prepare the Group and parent company financial statements in accordance with
applicable law and International Financial Reporting Standards (“IFRSs”) as adopted by the European Union and
as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006. Under company law the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Company and of the Group and of the
profit or loss of the Group for that period.
In preparing those financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable IFRSs as adopted by the European Union have been followed subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company/Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and of the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
14
Alba Mineral Resources plc
CORPORATE GOVERNANCE STATEMENT
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
The Board of Alba Mineral Resources plc (“Alba” or the “Company” and, together with its subsidiaries, the
“Group”) is responsible for the direction and oversight of all of the Company’s activities. The Board seeks, through
effective and efficient decision-making, to ensure that the Company is managed for the long-term benefit of all
shareholders. Ensuring good standards of corporate governance is an important part of the Board’s role, with the
twin objectives being to reduce risk and at the same time to add value to our business.
In September 2018 the Board adopted the Quoted Companies Alliance Corporate Governance Code (the “Code”)
in line with the changes to the AIM Rules for Companies (“AIM Rules”) requiring all AIM-quoted companies to
adopt and comply with a recognised corporate governance code. The Code is available at www.theqca.com. The
Code sets out 10 principles that should be applied. How Alba complies with those principles currently is set out
below. As required by the Code, we will provide annual updates on our compliance with the Code.
At this stage in the Company’s development, the Board does not comply with the principle of the Code which
concerns the size and composition of the Board (see Principle 5). As projects and investments are advanced and
as resources allow, the Board will actively seek to move towards full compliance with the Code.
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
Alba owns and operates mining projects in Greenland (graphite, ilmenite, base metals, gold and cobalt), Wales
(gold), and Ireland (base metals), as well as having investments in the onshore UK oil and gas sector.
The Board believes that the Group’s diversified asset and investment portfolio provides access to a range of assets
with potential to add significant value for the Company’s shareholders in the long-term. Our strategy, where
possible, is to target assets that have a production history, in stable jurisdictions, and which thereby offer real
potential to be brought into commercial production.
The key challenge for the Company is identifying the most effective, including the most cost-effective, methods
for progressing mineral exploration activities at our projects, with the aim being to materially advance the level
of knowledge and confidence in the potential of our projects and thereby justify the committing of further
resources to progress those projects rapidly through exploration and into the development phase. The expertise
of the current Board and management team, and the breadth of their contacts within the natural resources
sector, will assist the Company in meeting this challenge.
Principle 2: Seek to understand and meet shareholders’ needs and expectations
The Board appreciates that it is accountable to shareholders for the performance and activities of the Company
and, to this end, is committed to providing effective communication with Alba shareholders. We publish all
regulatory news promptly through the London Stock Exchange’s Regulatory New Service (“RNS”) and on our
website and we maintain a database of shareholders and other interested parties who have subscribed via our
website to receive our newsletters and updates. We are also active on social media, using Twitter to publicise
RNS announcements after their release via RNS.
In December 2018, the Company held a shareholder evening, an opportunity, in a less formal setting than the
Annual General Meeting, for shareholders to meet Alba’s Board and management team and to listen to the
Company’s latest presentation. The Company plans to hold further in the coming year. Members of our executive
management team also regularly attend and speak at key natural resources conferences, both in the UK and
overseas, throughout the year.
Shareholders can contact the Company via info@albamineralresources.com. The Board welcomes feedback from
shareholders as this helps Alba to better communicate our activities and, where possible, to deal with any
15
Alba Mineral Resources plc
CORPORATE GOVERNANCE STATEMENT
misconceptions in the investment market. We are constrained, however, when responding to shareholder
enquiries, by the requirements of the AIM Rules, and in particular the need to avoid making selective disclosure
of material information.
The Board maintains regular contact with the Company’s advisers, notably our Nominated Adviser (or “Nomad”),
Cairn Financial Advisers, and our retained broker, First Equity, which also assists the Company in understanding
of the views of shareholders and the wider investment market.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term
success
The Board acknowledges that the long-term success of the Company is reliant on the efforts of employees and
contractors, suppliers and other stakeholders. As a natural resources company, we feel that we have a
responsibility to engage openly, transparently and effectively with community stakeholders and local and national
government agencies in the countries in which we conduct operations. The Board is keen to maintain an open
dialogue and co-operation with key stakeholders as the Company seeks to advance its projects and investments.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the
organisation
The Board identifies, assesses and manages various risks in its decision-making and constantly evaluates the
Company’s risk tolerance as part of its strategy as an exploration company. These range from financial and legal
risks, to environmental, exploration, regulatory and management risks. The Board will also seek consultation with
experts in any area where a particular risk is identified.
The financial risks to the Company are addressed in Notes 1 and 21 to the accounts. This covers funding risk,
credit risk, liquidity risk and market risk, all areas which are monitored closely by the Board with a focus on funding
risk. Environmental and exploration risks are considered at project level and are constantly under review as
project work is planned and undertaken. Some elements of regulatory risk are also project-specific and would be
included within that review – local, regional and national regulations impacting on exploration activities.
Regulatory risk at a corporate level is addressed annually during production of the Company’s Report and
Accounts and also at other times such as when as notices are received from relevant regulatory bodies; for
instance, when the GDPR regulations came into effect. This point is addressed further in Principle 10.
Management risks are mitigated by attracting talent and providing stability and continuity through appropriate
remuneration and the awarding of long-term share options, plus a culture of openness within the team, so that
all members of the management team feel comfortable in raising any risk-related issues with the Board and
Chairman.
The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their
adequacy and effectiveness. These internal controls are designed to safeguard the assets of the Group and ensure
the reliability of financial information for both internal and external use and publication.
Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair
The Board comprises the Executive Chairman and two Non-Executive Directors. One of these Non-Executive
Directors, Manuel Lamboley, is considered to be independent. The Board is aware that it is not currently
compliant with the Code in respect of not having two independent Non-Executive Directors, and in having an
Executive Chairman fulfilling the role of Chief Executive. The Directors believe that this is appropriate at this stage
of the Company’s development but both aspects are kept under regular review with a view to moving to full
compliance once the Company has achieved a significant increase in its market capitalisation.
16
Alba Mineral Resources plc
CORPORATE GOVERNANCE STATEMENT
The Board has a wide range of experience directly related to the Group and its activities and its structure ensures
that no one individual dominates the decision-making process. The Board also regularly seeks third-party expert
advice to support its decisions.
The Board meets on an ad-hoc basis as decisions are required, with update Board meetings also held periodically.
During the year five Board meetings were held and all Directors were in attendance.
Each of the Directors has entered into a Service Contract or Letter of Appointment with the Company. Under the
terms of these agreements, each Director has agreed to devote such time and attention as is necessary to carry
out his responsibilities and duties as a director.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities
The Board currently consists of three Directors and, in addition, the Company employs Ben Harber of Shakespeare
Martineau LLP to act as the Company Secretary. The Directors have a range of technical, commercial and
professional skills and all have experience in the public markets. The Board has also engaged technical advisers
whose specialism is in either mining or oil and gas and who are thereby able to assist the Board in making effective
decisions in relation to the Company’s projects and investments.
Further information about the Directors’ experience, skills, capabilities and personal qualities is published on our
website and on page 19 below. The Directors attend industry forums and conferences, in addition to maintaining
strong links within the minerals and investment communities through regular networking. The Company
subscribes to minerals and mining publications for internal use and Directors are encouraged to maintain
individual continuing professional education programmes in their respective disciplines.
In addition to its mining and oil and gas technical advisers (about whom further details can be found on the Alba
website), the Company retains the services of auditors in the UK and in Greenland, a Nomad, broker and solicitors.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
Internal evaluation of the Board and individual Directors is undertaken on an ad-hoc basis in the form of peer
appraisal and discussions. One such evaluation has taken place in the 12 months preceding the date of this
statement. A further evaluation, in the form of a questionnaire-type assessment tool will be undertaken this
coming year.
Individual appraisals will be used to identify key corporate targets relevant to each Director, as well as personal
targets appropriate to their role within the Company. From these reviews, the Board will determine what changes
may need to be implemented to current roles and processes.
Given the current size of the Company, Board and senior management appointments are infrequent and subject
to the individual being the right “fit” for the Company. The Board seeks prospective candidates via its network
of contacts in the industry in the first instance and then via professional search agencies if required.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that it has a responsibility to set the corporate culture of the Company as a whole, and that
sound and ethical behaviour will contribute to the success of Alba’s projects and reputation. The Company
operates internationally and as such is mindful of local cultures and practices when planning and carrying out
activities. The Board also has in place an approved anti-bribery and whistle-blowing policy. Given the size of the
17
Alba Mineral Resources plc
CORPORATE GOVERNANCE STATEMENT
Company, Alba’s management remains close to the day-to-day operations and therefore better able to oversee
the activities of the Company’s representatives. As the Company grows, the Board will oversee the development
of guidance on the Company’s policies to be issued to new employees and contractors.
The Company has in place a share dealing policy for dealings in shares by Directors and senior employees in line
with the framework set by the AIM Rules and the EU Market Abuse Regulation (“MAR”) and also requires
adherence to the same by key suppliers. In addition to abiding by the AIM Rules, as Alba operates in the natural
resources sector, the AIM Note for Mining and Oil and Gas companies is applicable.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-
making by the Board
Ultimate authority for all aspects of the Company’s activities rests with the Board. While the roles of Chairman
and Chief Executive are not separated, the Board receives regular updates on activities both formally and
informally and has unrestricted access to management and to the technical advisers of the Company. Each Board
member also has access to the Company’s solicitors and any independent professional advice they might need to
discharge their duties effectively.
The Executive Chairman is the leading representative of the Company, presenting the Company’s strategy to
external interested parties. His responsibilities also include taking the Chair at Board Meetings and at General
Meetings, where he is responsible for ensuring the appropriate supply of information. The Executive Chairman
is also responsible for the development and execution of the Company’s long-term strategy, overseeing matters
pertaining to the running of the Company and ensuring that the Company meets all legal requirements and
corporate responsibilities. The two Non-Executive Directors do not have specific individual responsibilities or
remits.
All three Directors sit on the Remuneration Committee, although a director whose performance, remuneration
and employment terms are due to be discussed at such a meeting shall absent himself from the discussion and
not vote on any proposed terms which relate to him. The Remuneration Committee reviews the performance of
the Executive Director(s) and makes recommendations to the Board on matters relating to their remuneration
and terms of employment. The Remuneration Committee also considers and approves the granting of share
options pursuant to the Company’s share option plan and the award of shares in lieu of bonuses pursuant to the
Company’s remuneration policy.
Historically, Audit Committee matters have generally been dealt with as part of Board Meetings. However, the
Board did convene a separate Audit Committee meeting in relation to the approval of these Report and Accounts.
Going forward the Board intends to continue to convene separate Audit Committee meetings during the year to
cover relevant matters, strengthening its Corporate Governance framework in line with the QCA guidelines
recently adopted. The Executive Chairman takes responsibility for finance-related matters. All Board members
will attend the Audit Committee meetings.
Given the size of the Board, there is no separate Nominations Committee and therefore recommendations for
appointments to the Board are considered by the Board as a whole.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
For details of the various channels Alba uses for communicating with shareholders, see Principle 2 above. Notices
of AGMs and the results of voting on resolutions proposed at the Company’s AGM are reported via RNS and
recorded in the “Latest News” section on the Company’s website. In the past five years, there has been no
significant level of votes cast against any resolutions put to shareholders at the Company’s AGM (where
“significant” would mean at least 20 per cent of the votes cast being against a particular resolution).
18
Alba Mineral Resources plc
CORPORATE GOVERNANCE STATEMENT
Historical annual reports and interim results, corporate factsheets and presentations are can be accessed via the
Company’s website and are released via RNS and therefore reported in the “Latest News” section of the website.
Board of Directors
George Frangeskides, Executive Chairman
Mr Frangeskides has a broad range of experience gained from over 25 years in the legal and corporate advisory
sectors in Australia and the United Kingdom. He is Executive Director at Berwick Capital, a corporate advisory
firm which for the past 10 years has advised ASX, AIM-listed and private companies on projects and transactions
in the mining and oil and gas sectors. Prior to establishing Berwick Capital, Mr Frangeskides practised as a lawyer
in London and Sydney focusing on corporate finance, commercial and capital market transactions.
With his experience in mergers and acquisitions, Mr Frangeskides leads all corporate negotiations for the
Company. He has an extensive network of contacts across the mineral exploration and investment sectors in the
UK, Asia-Pacific, North America, Middle East and Far East regions, giving the Company wide exposure to both
investors and potential investments.
A confident communicator, Mr Frangeskides regularly makes presentations about the Company and projects to
the media and to shareholders.
Michael Nott, Non-Executive Director
Mr Nott is a geologist and mining engineer by profession and has over 40 years’ experience in the oil and gas,
mining, minerals and quarrying industries. His early career was based in Zambia, including nine years with Roan
Consolidated Mines Limited. He was a regional manager for Pioneer Aggregates (UK) Limited, then an Australian
company, and later a director of Jay Minerals Services Limited and Hills Aggregates Limited, becoming trading
director of ARC (Southern) Limited and production director of C. White Limited.
Mr Nott is currently a Non-Executive Director of Red Rock Resources plc (LON:RRR). Extremely knowledgeable,
he draws on his extensive experience of both the mining industry and the corporate world to offer pragmatic
advice to the Company.
Manuel Lamboley, Non-Executive Director
Mr Lamboley is a financier with over 30 years’ experience in international broking and investment banking. Mr
Lamboley previously served as Head of the Geneva office of Williams de Bröe, as well as holding senior positions
at Bank Julius Bär, Kidder Peabody, Paine Webber International and Prudential-Bache Securities.
Mr Lamboley has previously been a Non-Executive Director of several listed companies in the mining and energy
sectors, including International Mining & Infrastructure Corporation Plc, and was also previously an independent
director of UK-based African Aura Resources Limited.
Mr Lamboley has extensive knowledge of the investment banking industry and long-standing relationships with
major investors and financial advisers worldwide, with a particular focus on the natural resources sector. Mr
Lamboley holds Swiss citizenship.
19
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Opinion
We have audited the financial statements of Alba Mineral Resources plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 30 November 2019 which comprise Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial
Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Cash
Flow Statements and the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs
as at 30 November 2019 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the group and parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 of the financial statements which, under the heading “Going Concern”, indicates that
the current cash resources of the group and parent company are insufficient to meet the forecast expenditure for the
coming year and that they are dependent upon the receipt of future funding to continue as going concerns. If such
funding is not available, the group and parent company may be unable to meet their liabilities as they fall due within
the foreseeable future. The ongoing impact of Covid-19, and the uncertainty over its duration, make the raising of
additional funds more challenging than otherwise.
As stated in note 1, these conditions indicate that a material uncertainty exists that may cast significant doubt on
the group’s and parent company’s ability to continue as going concerns. Our opinion is not modified in respect of
this matter.
Key audit matters
In addition to the matter described in the Material uncertainty related to going concern paragraph above we
identified the key audit matters described below as those that were of most significance in the audit of the financial
statements of the current year. Key audit matters include the most significant assessed risks of material
misstatement, including those risks that had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and the direction of the efforts of the audit team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
20
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Key audit matters (continued)
Valuation of investment in Horse Hill Developments Limited
Description of the risks
As described further in note 1 under the heading “Accounting for Investment in Horse Hill Developments Limited
- £5,430,000”, the investment is stated at valuation; additionally the investment includes a loan element which the
directors have designated as being held at fair value through profit and loss (“FVTPL”). As detailed in note 11, the
valuation is based on recent share transactions and a licence sale, requires judgement and is inherently subjective.
The investment forms a majority of both the group’s and the company’s assets.
Our response to the risk
In respect of the valuation we:
obtained details of the referenced share transactions and compared those to the information used by the directors
in their valuation
obtained details of the directors’ calculation of the imputed value of the shares from the licence transaction, the
total value of the shares comprising the value of the underlying licence and the value of a free-carry arrangement,
and:
o agreed the basis of the calculation of the licence value
o agreed the data used by the directors to the information relating to the licence transaction
o agreed the existence of the free-carry to relevant agreements
o
reviewed the directors’ inputs to the free-carry valuation model and agreed them to supporting
documentation
o considered the impact of reasonable variations in the directors’ estimates
o
reperformed their calculations
considered if there were other factors which ought to have been reflected in the director’s valuation
considered whether the 2019 valuation was level 2 or 3 in the IFRS 13 hierarchy and that disclosures were
appropriately provided.
We reviewed the rationale for the directors’ designation of the loan element of the investment as being held at
FVTPL. We assessed if the designation was consistent with the requirements of the relevant accounting standard
and also with the Group’s / Company’s business model.
Carrying values and impairment of exploration and evaluation costs
Description of the risks
As described further in note 1 under the heading of “Impairment assessment of exploration and evaluation costs -
£3,050,430” the exploration and evaluation costs form a significant part of the group’s assets. The costs relate to
projects which are at an early stage of exploration and there is no certainty as to whether commercially viable
quantities of mineral resources will be discovered, whether the directors will carry on intending to continue each
of the exploration activities, and whether the group will have sufficient funding to undertake the required
exploration activities. In addition, as described in Note 24, if the impact of Covid-19 results in the suspension of
the Group’s exploration activities for an extended duration, the directors would need to re-assess their impairment
considerations.
Our response to the risk
In respect of each material licence, our work included:
by reference to the relevant Government databases of licences we confirmed that the Group still retained its
exploration licences
we agreed a sample of the costs making up the capitalised expenditure for the year to supporting documentation,
assessing whether the capitalisation was appropriate
21
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Key audit matters (continued)
Carrying values and impairment of exploration and evaluation costs (continued)
we considered whether the outcome of the exploration activities to date indicated that the prospective mineral
resources may be commercially unviable
we reviewed the directors’ assessment of future exploration commitments and assessed if they were consistent
with the licence terms, including post year end changes to the licence terms
we considered if the directors intended to undertake further substantive exploration activities in each licence
and obtained a written representation of the directors’ intentions
we assessed whether the financial forecasts used by the directors in their going concern assessment included
these future exploration activities.
Carrying values and impairment of the parent company’s investment in its subsidiaries and loans due to the parent
company from its subsidiaries
Description of the risk
As described in Note 1 under the heading “Impairment assessment of investment in and loans to subsidiaries
(company only) – £2,446,230” the ability of the subsidiaries to repay the Parent Company loans and to provide a
return on the Parent Company’s investment, is dependent on the future success of the subsidiaries’ exploration
activities. If these activities are not successful, then it could lead to these assets on the Parent Company’s statement
of financial position becoming impaired. We refer to the uncertainties relating to the carrying value of these assets
immediately above.
Our response to the risk
We reviewed and challenged the directors’ assessments in respect of the parent company’s investment in and loans
due from the subsidiary companies and, for each subsidiary company, considered whether the directors’ assessment
was consistent with their conclusions regarding the impairments of the subsidiaries’ underlying exploration assets.
We also reviewed in detail, the directors’ expected credit loss provision in respect of the Parent Company loans,
assessing if the impairment was made in accordance with the requirements of the relevant standard and if the
directors’ assumptions were reasonable, and checking the estimates used by the directors to historic information.
Materiality
The materiality for the group financial statements as a whole was set at £270,000. This has been determined with
reference to the benchmark of the group’s total assets, which we consider to be one of the principal considerations
for members of the parent company in assessing the performance of the group. Materiality represents 3% of the
group’s total assets as presented on the face of the consolidated statement of financial position.
The materiality for the parent company financial statements as a whole was set at £216,000. This has been
determined with reference to the benchmark of the parent company’s total assets as the parent company exists as a
holding company for the Group and certain of the group’s assets. Materiality represents 2.7% of total assets as
presented on the face of the parent company’s statement of financial position.
22
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
An overview of the scope of our audit
The Group has eleven reporting components, of which the parent company was subject to a full scope audit and we
directly audited certain assets, liabilities and expenses of six components in the context of the group materiality
and without carrying out individual statutory audits. In total our audit work covered 99.8% of the consolidated
assets, 94.0% of the consolidated liabilities, 96.8%% of the consolidated administrative expenses and 100% of the
impairment of intangible assets. The assets and liabilities of the components not subject to audit procedures are
immaterial to the group.
All group entities have common management and centralised process and controls and all our audit work was all
conducted in the UK.
Other information
The other information comprises the information included in the Report and Consolidated Financial Statements,
other than the financial statements and our auditor’s report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
23
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 14, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company
and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Sancho Simmonds
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
30 March 2020
24
Alba Mineral Resources plc
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2019
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment of intangible assets
Operating loss
Revaluation of investment
Share of net loss of joint venture
Loss for the year before tax
Taxation
Loss for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Loss per ordinary share
Basic
Note
9
3
10
5
2019
£
-
-
-
(772,849)
(539,554)
(1,312,403)
-
-
(1,312,403)
-
(1,312,403)
2018
£
-
-
-
(885,314)
-
(885,314)
825,533
(15,325)
(75,106)
-
(75,106)
(1,311,172)
(1,231)
(1,312,403)
(72,823)
(2,283)
(75,106)
7
(0.039) pence
(0.003) pence
25
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2019
Loss after tax
Items that may subsequently be reclassified to profit or
loss:
-
Foreign exchange movements
Total comprehensive loss
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
2019
£
(1,312,403)
2018
£
(75,106)
39,040
(1,273,363)
2,707
(72,399)
(1,272,132)
(1,231)
(1,273,363)
(70,116)
(2,283)
(72,399)
26
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2019
Note
2019
£
2018
£
Non-current assets
Property, plant and equipment
Intangible fixed assets
Investments – Horse Hill Developments Limited
Investments - other
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Financial liabilities
Total current liabilities
Net current (liabilities) / assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Retained losses
Merger reserve
Foreign currency reserve
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
8
9
10
12
13
14
15
16
17
85,000
3,050,430
5,430,000
11,125
8,576,555
85,000
3,076,783
5,430,000
7,161
8,598,944
81,460
211,333
292,793
61,894
585,795
647,689
(356,232)
(137,312)
(493,544)
(493,195)
(287,250)
(780,445)
(200,751)
(132,756)
8,375,804
8,466,188
4,582,983
7,128,257
722,998
(4,273,794)
-
230,018
8,390,462
(14,658)
4,099,233
6,786,382
624,039
(3,167,943)
200,000
190,978
8,732,689
(266,501)
8,375,804
8,466,188
These financial statements were approved and authorised for issue by the Board of Directors on 30 March 2020.
Signed on behalf of the Board of Directors
George Frangeskides
Director, Company No. 5285814
27
Alba Mineral Resources plc
COMPANY STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2019
Note
2019
£
2018
£
Non-current assets
Intangible fixed assets
Investments – Horse Hill Developments Limited
Investments - other
Investments in and loans to subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Financial liabilities
Total current liabilities
Net current (liabilities) / assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Retained losses
Merger reserve
Equity shareholders’ funds
9
10
11
12
13
14
16
11
-
5,430,000
11,125
2,446,230
7,887,355
346,904
5,430,000
7,161
4,184,719
9,968,784
28,603
211,240
239,843
61,894
574,185
636,079
(353,702)
(96,178)
(449,880)
(480,189)
-
(480,189)
(210,037)
155,890
7,677,318 10,124,674
4,582,983
7,128,257
722,998
4,099,233
6,786,382
624,039
(4,756,920) (1,584,980)
200,000
7,677,318 10,124,674
-
The loss of the parent company for the year was £2,206,194 (2018: a loss of £15,258). For more details see Note
6 to the accounts.
These financial statements were approved and authorised for issue by the Board of Directors on 30 March 2020.
Signed on behalf of the Board of Directors
George Frangeskides, Director, Company No. 5285814
28
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2019
Share
capital
Share
premium
Warrant
reserve
Profit and Merger
reserve
loss
At 1 December 2017
£
£
£
3,086,246
4,655,702
231,969
£
(3,095,120)
£
200,000
Loss for the period
Translation differences
Comprehensive loss for the period
-
-
-
-
-
-
-
-
-
(72,823)
-
(72,823)
-
-
-
Shares issued
Share issue costs
Equity settled share-based payments
At 30 November 2018
1,012,987
-
-
4,099,233
2,253,680
(123,000)
-
6,786,382
148,914
-
243,156
624,039
-
-
-
(3,167,943)
-
-
-
200,000
Foreign
currency
reserve
£
Attributable
to equity
holders
of parent
£
193,685
5,272,482
Total
Non
controlling
interest
£
(264,218)
£
5,008,264
-
(2,707)
(2,707)
-
-
-
190,978
(72,823)
(2,707)
(75,530)
(2,283)
-
(2,283)
3,415,581
(123,000)
243,156
8,732,689
-
-
-
(266,501)
(75,106)
(2,707)
(77,813)
3,415,581
(123,000)
243,156
8,466,188
Loss for the period
Translation differences
Comprehensive loss for the period
-
-
-
-
-
-
-
-
-
(1,311,172)
-
(1,311,172)
-
-
-
-
39,040
39,040
(1,311,172)
39,040
(1,272,132)
(1,231)
-
(1,231)
(1,312,403)
39,040
(1,273,363)
Shares and warrants issued
Share issue costs
Transfer on write-down of investment
Equity settled share-based payments
Transfer on expiry of warrants
Owner’s contribution
At 30 November 2019
483,750
-
-
-
-
-
4,582,983
389,375
(47,500)
-
-
-
-
7,128,257
21,875
-
-
82,405
(5,321)
-
722,998
-
-
200,000
-
5,321
-
(4,273,794)
-
-
(200,000)
-
-
-
-
-
-
-
-
-
-
230,018
895,000
(47,500)
-
82,405
-
-
8,390,462
-
-
-
-
-
253,074
(14,658)
895,000
(47,500)
-
82,405
-
253,074
8,375,804
29
Alba Mineral Resources plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2019
At 1 December 2017
Loss for the period
Comprehensive loss for the period
Shares issued
Share issue costs
Equity settled share-based payments
At 30 November 2018
Change in accounting policy
At 1 December 2018 as restated
Loss for the period
Comprehensive loss for the period
Shares and warrants issued
Share issue costs
Transfer on write-down of investment
Equity settled share-based payments
Transfer on expiry of warrants
At 30 November 2019
Notes
Share
capital
Share
premium
Warrant
reserve
Profit and
loss
Merger
reserve
£
£
3,086,246
4,655,702
£
231,969
£
(1,569,722)
£
200,000
Attributable
to equity
holders
of parent
£
6,604,195
11
-
-
-
-
1,012,987
-
-
4,099,233
2,253,680
(123,000)
-
6,786,382
-
-
148,914
-
243,156
624,039
4,099,233
6,786,382
624,039
-
-
-
-
483,750
-
-
-
-
4,582,983
389,375
(47,500)
-
-
-
7,128,257
-
-
21,875
-
-
82,405
(5,321)
722,998
(15,258)
(15,258)
-
-
-
(1,584,980)
(1,171,068)
(2,756,048)
(2,206,193)
(2,203,193)
-
-
200,000
-
5,321
(4,756,920)
-
-
(15,258)
(15,258)
-
-
-
200,000
200,000
3,415,581
(123,000)
243,156
10,124,674
(1,171,068)
8,953,606
-
-
(2,206,193)
(2,206,193)
-
-
(200,000)
-
-
-
895,000
(47,500)
-
82,405
-
7,677,318
30
Alba Mineral Resources plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2019
Note
2019
£
2018
£
(1,312,403)
(885,314)
Cash flows from operating activities
Operating loss
Share based payment charge
Impairments of intangible assets
Change in fair value of other investments
Foreign exchange revaluation adjustment
Increase/(decrease) in creditors
Decrease/(increase) in debtors
Net cash used in operating activities
Cash flows from investing activities
Payments for deferred exploration expenditure
Payments for intangible fixed assets
Cash on acquisition of subsidiary
Investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares and warrants
Proceeds from short term borrowings
Costs of issue
Net cash generated from financing activities
10
82,405
539,554
(3,964)
45,614
44,474
(19,566)
(623,886)
(522,179)
(165,897)
-
-
(688,076)
895,000
90,000
(47,500)
937,500
(374,462)
585,795
211,333
243,156
-
7,174
(2,707)
120,032
(26,619)
(544,278)
(733,527)
-
44,661
(985,002)
(1,673,868)
2,300,000
-
(123,000)
2,177,000
(41,144)
626,939
585,795
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
13
Non-cash transactions
Significant non-cash transactions were the impairment charge against intangible assets shown above.
Accruals includes capital items of £59,025 (2018: £227,326).
31
Alba Mineral Resources plc
COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2019
Note
2019
£
2018
£
Cash flows from operating activities
Operating loss
Share based payment charge
Impairment of intangible assets
Change in fair value of other investments
Impairment of investments
Increase in expected credit losses on intercompany
balances
Impairment of intercompany loan
Foreign exchange revaluation adjustment
Increase/(decrease) in creditors
Decrease/(increase) in debtors
Net cash used in operating activities
Cash flows from investing activities
Loans to subsidiaries
Payments for intangible fixed assets
Investments in subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares and warrants
Proceeds from borrowings
Costs of issue
Net cash generated from financing activities
11
11
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
13
Non-cash transactions
(2,206,194)
(840,792)
82,405
373,927
(3,964)
232,484
274,688
640,084
45,281
18,566
33,292
243,156
-
7,174
-
-
-
(14,827)
75,443
(26,619)
(509,431)
(556,465)
(625,018)
(165,897)
(99)
(688,141)
-
(985,002)
(791,014)
(1,673,143)
895,000
90,000
(47,500)
937,500
(362,945)
574,185
211,240
2,300,000
-
(123,000)
2,177,000
(52,608)
626,793
574,185
Significant non-cash transactions were impairment charges against intangible assets and investments, a specific
provision against an intercompany receivable and a general expected credit loss provision against the
intercompany receivables portfolio. In the prior period, significant non cash transactions related to investments
in subsidiaries settled by the issue of shares.
Accruals includes capital items of £nil (2018: £138,874).
32
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
Alba Mineral Resources plc is a public limited company incorporated and domiciled in England & Wales, whose
shares are publicly traded on the AIM market of the London Stock Exchange plc. The registered office address is
6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR. The consolidated financial statements have
been prepared on the historical cost basis, save for the revaluation of certain financial assets. The principal
accounting policies applied in the preparation of these financial statements are set out below. These policies have
been applied consistently to all the years presented, except for the adoption of IFRS 9 as explained below under
the heading New standards and interpretations.
Going concern
Based on financial projections prepared by the Directors, the Group’s current cash resources are insufficient to
enable the Group to meet its recurring outgoings and projected exploration expenditure for the entirety of the
next twelve months. However, the Directors have a reasonable expectation that the Group will continue to be
able to meet its commitments for the foreseeable future by raising funds when required from the equity capital
markets. The Group and Company may also consider future joint venture funding arrangements in order to share
the costs of the development of its exploration assets, or to consider divesting of certain of its assets and realising
cash proceeds in that way in order to support the balance of its exploration and investment portfolio.
Given the current share price of the Company trades below its par value of £0.001, the ability of the Company to
raise funds by the issuance of shares is currently constrained since, under the Companies Act 2006, the Company
may not allot shares for an issue price less than their par or nominal value. However, it is noted that the Company
intends to put forward a resolution to reduce the par value of its ordinary shares to £0.0001 at its forthcoming
Annual General Meeting to be held in April 2020. Assuming that resolution is passed, the Company will thereafter
be able to issue ordinary shares at or above that new par value.
COVID-19, and the uncertainty over its duration, is creating volatility in equity markets and will make raising
additional funds from any source significantly more challenging. Further details are included in Note 24.
The Directors continue to adopt the going concern basis of accounting in preparing the financial statements, but
note that there is a material uncertainty over the ability of the Company and the Group to fund the recurring and
projected expenditure, including development of the Group’s exploration assets. If the Company and the Group
are unable to raise necessary funds, the ability of the Company and the Group to continue as going concerns
would be in significant doubt and they may be unable to realise their assets and discharge their liabilities in the
normal course of business. In particular, the inability to fund the continued development of the Group’s
exploration assets may result in them becoming impaired and any failure to contribute its share of future
exploration and development activities in respect of the oil and gas investments would result in the dilution of
the Group’s interests in those assets.
Basis of accounting
The consolidated and parent company financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”) and IFRS Interpretations
Committee (“IFRIC”) interpretations as adopted by the European Union and, as regards the parent company
financial statements, in accordance with the provisions of the Companies Act 2006.
Critical accounting estimates and judgements
The preparation of the financial statements in conformity with generally accepted accounting practice requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well
as the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues
and expenses during the reporting period. Actual outcomes could differ from those estimates.
33
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The areas of
judgement that have the most significant effect on the amounts recognised in the financial statements are as
follows:
i)
JUDGEMENTS
Capitalisation of exploration and evaluation costs - £3,050,430
The capitalisation of exploration costs relating to the exploration and evaluation phase requires management to
make judgements as to the future events and circumstances of a project, especially in relation to whether an
economically viable extraction operation can be established. In making such judgements, the Directors take
comfort from the findings from exploration activities undertaken, the fact the Group intends to continue these
activities and that the Company expects to be able to raise additional funding to enable it to continue the
exploration activities.
Impairment assessment of exploration and evaluation costs – £3,050,430
Impairment charge for the year - (£165,627)
At each reporting date, management make a judgment as to whether circumstances have changed following the
initial capitalisation and whether there are indicators of impairment. If there are such indicators, an impairment
review will be performed which could result in the relevant capitalised amount being written off to the income
statement. The impairment in the reporting period relates to the Limerick Base Metals Project.
Impairment assessment of development and production assets – £nil
Impairment charge for the year (£373,927)
At each reporting date, management make a judgment as to whether circumstances have changed following the
initial capitalisation and whether there are indicators of impairment. If there are such indicators, an impairment
review will be performed which could result in the relevant capitalised amount being written off to the income
statement. In the current period the failure of the well test programme at the Brockham Oil Project is regarded
as an indicator of impairment, and the asset has been fully impaired.
Accounting for investment in Horse Hill Developments Limited - £5,430,000
The Group and Company’s investment in Horse Hill Developments Limited (“HHDL”) is in the form of equity and
a shareholder loan. However, the Directors judge that the loan is in substance part of the equity investment as
governed by the HHDL investment agreement. As such the loan element of the investment is accounted for at fair
value with movements in fair value being taken to the profit and loss (FVTPL).
The Group and Company’s shareholding in HHDL is less than 20%. A director of the Company is also a director of
HHDL, but does not act in an executive capacity. At the balance sheet date HHDL had a majority shareholder with
a 77.9% shareholding. The Directors judge that the Company does not have significant influence over HHDL and
that it should not be accounted for as an associate.
Control over Mauritania Ventures Limited
The Directors have to use judgement to assess whether they have control over Mauritania Ventures Limited, in
which the Group owns a 50% economic interest. The Directors have assessed that they have control over that
company through control of the board and therefore it is accounted for as a subsidiary.
34
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Company only - Impairment assessment of investment in and loans to subsidiaries – £2,446,230
Impairment charges for the year (£232,484) and (£914,772)
In preparing the parent company financial statements, the Directors apply judgement to decide if any, or all of
the company’s investments in and loans to each of Aurum Mineral Resources Limited, Obsidian Mining Limited,
White Eagle Resources Limited, White Fox Resources Limited and Dragonfire Mining Limited are impaired or not.
These companies have no source of funds other than their shareholders and the ability of the companies to repay
their inter-company debt and for the Company to gain value from its investments in the companies is dependent
on the future success of the companies’ exploration activities. In undertaking their review, the Directors consider
the outcome of their impairment assessment of the relevant licences as detailed above. During the period the
investment in Aurum Mineral Resources has been fully impaired and the related merger reserve released to
reserves. The loan to that company was also fully impaired.
Additionally, in the current period, IFRS 9 has been applied for the first time and accordingly the Directors have
used the Expected Credit Loss model to make a general provision against intercompany loans receivable based
on historic credit losses and current data. In applying the expected credit loss model, the directors have judged
that the loans to the subsidiaries were credit impaired on inception. See Note 11 for further details.
ii)
ESTIMATES
Carrying value of investment in Horse Hill Developments Limited - £5,430,000
The Company’s investment in Horse Hill Developments Limited is carried at fair value, as, in the judgement of the
Directors, it has been possible to estimate a reliable fair value for the investment by reference to recent share
transactions and transfers of licence interests, where there has been no substantial variation in the range of
values.
New standards and interpretations
The accounting policies adopted are consistent with those of the previous financial year with the exception of
IFRS 9 which has been adopted and applied for the first time in these accounts. This standard has had no impact
on the financial position, financial results, disclosures or stated accounting policies of the Group. Disclosures of
the impact of this standard on the parent company accounts are included in Note 11. The Directors have used the
transition provisions not to adjust the comparative figures.
At the date of authorisation of these financial statements the following amendments which have not been applied
in these financial statements were in issue and endorsed by the EU but not yet effective:
o
o Amendments to IAS 28: Investments in Associates and Joint Ventures (effective 1 January 2019);
o Amendments to IFRS 3 and IFRS 11 as part of Annual Improvement Cycle amendments 2015 – 2017 (effective
IFRS 16: Leases (effective 1 January 2019);
1 January 2019); and
o Amendments to IFRS 3: Business Combinations (effective 1 January 2020).
In addition, there are further amendments and standards which have been issued but not yet endorsed by the
EU, including:
o Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS
10 and IAS 28).
The Directors do not anticipate that the adoption of these amendments will have a material impact on the
financial statements in the period of initial application.
35
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Other amendments, standards and interpretations are in issue, both endorsed and not yet endorsed, but they
are not relevant to the Group and as such they are not commented on. The Directors note that IFRS 15 became
effective during the financial year but that this has had no impact on the preparation of the accounts as the Group
has no revenues at this stage.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and companies
controlled by the Company, the Subsidiary Companies, drawn up to 30 November each year.
Control is recognised where the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, where appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses
are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group’s equity therein.
Non-controlling interests consist of the amounts of those interests at the date of the original business
combination and the minority’s share of changes in equity since the date of the combination.
Foreign currency
For the purposes of the consolidated financial statements, the results and financial position of each Group entity
are expressed in pounds sterling, which is the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the
rates prevailing at the reporting date. Exchange differences arising are included in the profit or loss for the period.
For the purposes of preparing consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period. Gains and losses from exchange differences so arising
are shown through the Consolidated Statement of Changes in Equity.
36
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Share based payments
Share-based compensation benefits are made on an ad-hoc basis on the recommendations of the Remuneration
Committee or via the Enterprise Management Incentive Scheme where the employee meets the qualifying
conditions. The fair value of warrants or options granted is recognised as an employee benefits expense, with a
corresponding increase in the warrant reserve. The total amount to be expensed is determined by reference to
the fair value of the options granted:
including any market performance conditions (eg the entity’s share price)
o
o excluding the impact of any service and non-market performance vesting conditions (eg profitability, sales
o
growth targets and remaining an employee of the entity over a specified time period), and
including the impact of any non-vesting conditions (eg the requirement for employees to save or hold shares
for a specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to the warrant reserve.
Intangible assets: Deferred exploration and evaluation costs
Pre-licence costs are expensed in the period in which they are incurred. Expenditure on licence renewals and new
licence applications covering an area previously under licence are capitalised in accordance with the policy set
out below.
Once the legal right to explore has been acquired, exploration costs and evaluation costs arising are capitalised
on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the
project. Costs include appropriate technical and administrative expenses. If a project is successful, the related
expenditures will be reclassified as development and production assets and amortised over the estimated life of
the commercial reserves. Prior to this, no amortisation is recognised in respect of such costs. When all licences
comprising a project are relinquished, a project abandoned, or is considered to be of no further commercial value
to the Company, the related costs will be written off to administrative expense within profit or loss. Deferred
exploration costs are carried at historical cost less any impairment losses recognised.
Where the Group has entered into a farm out agreement, the Group does not record any expenditure made by
the farmee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out
arrangements, but redesignates any costs previously capitalised in relation to the whole interest as relating to
the partial interest retained. Any cash consideration received directly from the farmee is credited against costs
previously capitalised in relation to the whole interest with any excess accounted for as a gain on disposal.
Where the Group enters into a farm in agreement, the Group recognises all expenditure which it incurs under
that agreement, with the expenditure being either capitalised or expensed in accordance with the policy detailed
above.
37
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Intangible assets: Development and production assets
Development and production assets are accumulated into cost centres and represent the cost of developing the
commercial reserves and bringing them into production together with any previously deferred exploration and
evaluation.
On acquisition of development and production assets from a third party, the asset will be recognised in the
financial statements on signature of the sale and purchase agreement, subject to satisfaction of any substantive
conditions within the agreement.
Costs relating to each cost centre are depreciated on a unit of production method based on the commercial
proven reserves for that cost centre. Changes in reserve quantities and cost estimates are recognised
prospectively. On disposal of any part of a development and production asset, proceeds are credited to the
Statement of Comprehensive Income, less the percentage cost relating to the disposal.
A review is performed for any indication that the value of the development and production assets may be
impaired. Where there are such indications, an impairment test is carried out on the relevant cost centre.
Additional depletion is included within cost of sales within the Statement of Comprehensive Income if the
capitalised costs of the cost centre exceed the associated estimated future discounted cash flows of the related
commercial oil and gas reserves.
Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets are classified as either:
o
o
those to be measured subsequently at fair value (either through other comprehensive income or through
profit or loss), and
those to be measured at amortised cost.
The classification is dependent on the business model adopted for managing the financial assets and the
contractual terms of the cash flows expected to be derived from the assets.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in equity instruments that are not held for trading, this will depend on whether the
group has made an irrevocable election at the time of initial recognition to account for the equity investment at
fair value through other comprehensive income.
The Group’s financial assets comprise equity instruments and debt instruments as described below.
Investment in subsidiaries: Investment in subsidiaries, comprising equity instruments and capital contributions,
are recognised initially at cost less any provision for impairment.
Investments: Investments in unlisted equity instruments whose fair value cannot be reliably measured are
recognised initially at fair value and subsequently measured at cost. Investments in unlisted equity instruments
where a value can be reliably measured are recognised at fair value. Investments in listed equity instruments are
recognised initially and subsequently at fair value. The Group has not designated any equity instruments as being
at fair value through other comprehensive income, and thus all equity instruments are held at fair value through
profit and loss.
38
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Loans to subsidiaries: Loans to subsidiaries, other than capital contributions, are held for the collection of
contractual cash flows and are classified as being measured at amortised cost, net of provision for impairment.
Impairment is initially based on the expected life time credit loss as applied to the portfolio of loans. The loans
are interest free and have no fixed repayment terms. As such the loans are assessed as being credit impaired on
inception and lifetime expected credit losses are recognised with the amount of provision being recognised in the
profit or loss.
A loan is fully impaired when the relevant subsidiary recognises an impairment of its deferred exploration
expenditure, such that the subsidiary is not expected to be able to repay the loan from its existing assets.
Trade and other receivables: Trade and other receivables are held for the collection of contractual cash flows
and are classified as being measured at amortised cost. They are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method less provision for impairment.
Cash and cash equivalents: Cash and cash equivalents include cash on hand and deposits held at call with banks.
Trade and other payables: Trade and other payables are not interest bearing and are recognised initially at fair
value and subsequently measured at amortised cost.
Financial liabilities: Most financial liabilities are recognised initially at fair value and are subsequently measured
at amortised cost. There are no financial liabilities classified as being at fair value through profit or loss. The
liability recognised for the 10% call option over the remaining shares in the Clogau gold project not owned by the
Company is reassessed at each reporting date and any change in the liability will be recognised against the
intangible asset value on the balance sheet.
Share capital: The Company’s ordinary and deferred shares are classified as equity.
Warrants: Warrants are stated at their value, which is estimated using a Black Scholes model where they are not
issued as part of a cash transaction.
Taxation
The charge for taxation is based on the profit or loss for the year and takes into account deferred tax. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit or loss, and is accounted for using the liability method.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available
in the foreseeable future against which the temporary differences can be utilised.
39
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
2.
ANALYSIS OF SEGMENTAL INFORMATION
The Group currently only has one primary reporting business segment, exploration and development. The Board
of the Company evaluates the business on a sector basis, the two sectors being mining and oil and gas. The group
exploration assets and investments along with capital expenditures are presented on this basis below:
Total assets
Mining
Oil and gas
Investments – other
Current assets
Capital expenditure
Mining
Oil and gas
2019
£
3,135,430
5,430,000
11,125
292,793
8,869,348
492,752
27,023
519,775
2018
£
2,814,878
5,776,904
7,161
647,689
9,246,632
763,738
1,123,876
1,887,614
The Group’s primary business activities operate in three different geographical areas (and the Group has an
investment in a fourth area) and the group exploration assets and investments along with capital expenditures
are presented on the basis of geographical segments below:
Total assets
Republic of Ireland
Greenland
Australia
England & Wales
Capital expenditure
Republic of Ireland
Greenland
England & Wales
2019
£
-
1,634,994
11,125
7,223,229
8,869,348
2019
£
67,928
113,840
338,007
519,775
2018
£
104,273
1,521,154
7,161
7,614,044
9,246,632
2018
£
7,692
678,831
1,201,091
1,887,615
The administrative expenditure in the income statement primarily relates to central costs. Impairment charges
in the current period related to the mining project in the Republic of Ireland (£165,627) and oil and gas assets in
the United Kingdom (£373,927).
40
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
3.
OPERATING LOSS
This is stated after charging/(crediting):
Impairment of intangible assets
Share-based payments charge (see note 16)
Auditor’s remuneration
- audit services
- other services
4.
DIRECTORS’ EMOLUMENTS
2019
£
2018
£
539,554
-
82,405
243,156
33,330
40,335
-
-
During the period there were 3 (2018: 3) permanent employees, being the Directors who are the key management
personnel. In addition there were 2 (2018: none) temporary employees who were employed for 2-3 months each.
The Directors accrue benefits under the government’s money purchase auto-enrolment scheme, NEST.
Group and Company
Directors’ Remuneration
Fees
Salaries
Share based payment charge
Social security costs
Defined contribution pension scheme
Key management personnel remuneration
Average number of employees
2019
£
2018
£
9,339
130,000
139,339
71,526
13,901
1,463
42,140
130,000
172,140
177,522
13,959
868
226,229
364,489
3.4
3
Fees
2019
Salaries
2019
£
£
Pension
2019
£
Total
2019
£
Fees
2018
£
Salaries Pension
2018
£
2018
£
Total
2018
£
Directors
George Frangeskides
Michael Nott
Manuel Lamboley
Total
9,339 100,000
18,000
12,000
-
-
9,339 130,000
1,146
317
-
1,463
110,485 17,890
18,317 24,250
-
12,000
100,000
18,000
12,000
140,802 42,140
130,000
668
200
-
868
118,558
42,450
12,000
173,008
Note 23 gives details of other transactions with the Directors.
41
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
4.
DIRECTORS’ EMOLUMENTS (continued)
During the year the Company did not grant any warrants or options to the Directors. Warrants were granted in
the prior year:
George Frangeskides
Michael Nott
Manuel Lamboley
2019
No
-
-
-
2018
No
60,000,000
12,000,000
-
The warrants issued to Mr Nott during the prior year have an exercise price of 0.42 pence per share. The warrants
vested on 31 December 2018 and can be exercised until 27 March 2021.
The options awarded to Mr Frangeskides during the prior year were under the Company’s Enterprise
Management Incentive plan (“EMI scheme”) comprising 15 million share options vesting on 31 December 2018,
with a further 15 million share options vesting on each of the dates falling 6, 12 and 18 months following that
initial vesting date. These options have an exercise price of 0.42p and expire on the tenth anniversary of grant,
being 2
May 2028, if not exercised. They are subject to accelerated vesting in certain circumstances, including pursuant
to a change of control of the Company following a completed takeover offer.
The estimated value of the share-based remuneration provided to Directors was £71,526 (2018: £177,522). These
values were derived from a Black Scholes model as described in Note 16. The warrants were granted when the
share price was 0.37 pence per share and the warrants were valued at between 0.18 pence and 0.27 pence per
share depending on their vesting date. The warrant value was high as a proportion of the market price due to
the historic share price volatility.
5.
INCOME TAXES
a) Analysis of charge in the period
United Kingdom corporation tax at 19% (2018: 19%)
Deferred taxation
2019
£
-
-
-
2018
£
-
-
-
42
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
5.
INCOME TAXES (continued)
b) Factors affecting tax charge for the period
The tax assessed on the loss for the year before tax differs from the standard rate of corporation tax in the UK
which is 19% (2018: 19%). The differences are explained below:
Loss before tax
Loss multiplied by standard rate of tax
Effects of:
Credits to income not taxable
Deferred tax assets not recognised
2019
£
2018
£
(1,312,403)
(75,106)
(249,357)
(14,525)
-
(156,851)
249,357
171,376
-
-
A deferred tax asset has not been recognised in respect of timing differences relating to tax losses and accelerated
capital allowances, as there is insufficient evidence that the potential asset will be recovered. Given the lack of
funds available to the Group and the non-recognition of any asset, no full analysis of deferred tax asset has been
prepared. However, the aggregated losses in each of the Group companies, Alba Mineral Resources plc, Aurum
Mineral Resources Ltd, Mauritania Ventures Limited, Obsidian Mining Limited, White Eagle Resources Limited,
White Fox Resources Limited, Dragonfire Mining Limited, Gold Mines of Wales Limited, GMOW (Holdings) Limited
and GMOW (Operations) Limited amounted to £4,273,795 before adjustments required by local tax rules and
excluding losses on intra-group transactions (2018: £3,170,226).
6.
COMPANY LOSS FOR THE YEAR
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and
has not included its own income statement and statement of comprehensive income in these financial
statements. The Company’s loss for the year amounted to £2,206,194 (2018: £15,258 loss). While the prior year
results were improved by a revaluation gain, in the current year a number of one-off charges have been
incurred. The adoption of new accounting standard IFRS 9 during the year has required the Company to establish
an expected credit loss provision against intercompany loans. Further, the provision for impairment of the
Limerick zinc project has required provisions to be made against the Company’s investment in Aurum Mineral
Resources Limited, the subsidiary company which holds the Limerick exploration licence, and against the balance
of its intercompany loan to that entity. These provisions are eliminated for the purposes of the group accounts.
7.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of £1,311,172 (2018:
£72,823 loss) by the weighted average number of shares of 3,403,506,056 (2018: 2,717,353,000) in issue during
the year. The diluted loss per share calculation is identical to that used for basic loss per share as warrants are
not dilutive due to the losses incurred.
43
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
8.
PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 December 2017
Acquisitions
At 30 November 2018
At 30 November 2019
Land
£
-
85,000
85,000
85,000
The land was acquired during the prior year as part of the Clogau gold project. At the year end the land is held at
cost. No depreciation is charged as it is not a wasting asset.
9.
INTANGIBLE FIXED ASSETS
Group
Cost
At 1 December 2017
Exchange differences
Acquisitions
Additions
At 30 November 2018
Exchange differences
Additions
As 30 November 2019
Amortisation
As at 1 December 2017 and 30 November 2018
Impairment charge for the year
As 30 November 2019
Net book value
At 30 November 2019
Exploration and
evaluation
£
1,506,524
1,598
1,027,236
Development and
production
£
208,030
-
-
Total
£
1,714,554
1,598
1,027,236
902,613
3,646,001
(6,574)
519,775
4,159,202
138,874
346,904
-
27,023
373,927
-
(373,927)
(373,927)
(569,218)
(539,554)
(1,108,772)
763,739
3,299,097
(6,574)
492,752
3,785,275
(569,218)
(165,627)
(734,845)
3,050,430
-
3,050,430
At 30 November 2018
2,729,879
346,904
3,076,783
The Group’s intangible fixed assets relate to Amitsoq, the Greenland graphite project (£769,618), Thule, the
Greenland mineral sands project (£584,710), Inglefield Land, the Greenland polymetallic project (£198,588),
Melville Bay, the Greenland iron ore project (£82,078) and the Clogau gold project (£1,415,435).
The impairment charges during the period relate to the Brockham Oil Project and the Limerick Base Metals Project
asset, both of which have been fully impaired.
44
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
9.
INTANGIBLE FIXED ASSETS (continued)
The Group holds a 5% interest in the Brockham oil field production licence which was producing at low volumes
historically from the Portland layer. Works undertaken in June 2019 to test flow the Kimmeridge layer were
unsuccessful, and it is considered by the Operator “unlikely that commercial hydrocarbon flow can be established
from the Kimmeridge layer” although other options for the field are being actively pursued by the Operator.
The Group was not successful in intersecting significant mineralisation in its 2019 drill campaign on the Limerick
zinc project. Although other potential drill targets have been identified, the Group plans to target its spending
elsewhere in the current period and therefore under IFRS 6 criteria the project should be impaired in value.
Further, if the Group wishes to renew the Limerick exploration licence (PL 3824) for a further two-year period,
the renewal application must be submitted by 26 March 2020. However, the Group has recently requested that
the Irish authorities consider granting an extension of time for the Group to confirm whether or not it wishes to
renew the licence, given the extenuating circumstances of COVID-19. In the event that a significant extension of
time is not confirmed by that date, not least given that a renewal will require a further exploration expenditure
commitment on the part of the Group, the Board has decided that it will give notice that it does not intend to
renew the licence. At the time of writing, the Board is awaiting guidance from the Irish authorities on this matter.
The Company intangible fixed assets, comprising development and production assets, relate solely to the
Brockham oil field, which was fully impaired in value during the period due to unsuccessful flow testing of the
Kimmeridge layer.
10.
INVESTMENTS
Group and company
At 30 November 2017
Additions
Revaluation
At 30 November 2018 and at 30 November 2019
£
3,619,465
985,002
825,533
5,430,000
The above investment represents an investment in 18.1% (2018: 18.1%) of the issued share capital of Horse Hill
Developments Limited (“HHDL”) and an associated loan to that company. That loan is treated as part of the overall
investment and as such is classified as fair value through the profit and loss. During the year the Company elected
not to contribute its share of a cash call. As a result the Company’s shareholding could be diluted but the impact
would be minimal, the reduction being less than 0.1% of the total issued share capital of HHDL.
HHDL is an early stage private company with no stock quote. In prior periods share transactions have been without
substantial variation in the range of prices which allowed the Directors to reliably estimate the fair value of the
investment, being a level 2 valuation under IFRS 13 with observable inputs being the share prices. During the
reporting period, the Directors’ valuation of the investment moved from a level 2 valuation to a level 3 valuation.
The Directors’ policy is to use the latest available data for valuation purposes. The sale of a licence interest for
£12 million in September 2019 has given an additional level 2 observable input as a reference point for the
Directors to use to value of the Group’s investment. The valuation was made by imputing a value of shares in
HHDL using this observable input plus an estimate of the additional value attributable due to free-carry
arrangements. Because an element of the valuation calculation is an unobservable input, the valuation moves
from level 2 to level 3 under IFRS 13’s valuation hierarchy. A 10% change in the estimated value of that
unobservable input would result in a change in the overall value of the investment of 2.4% or £130,000.
The registered office of HHDL is: The Broadgate Tower, 8th Floor, 20 Primrose Street, London, EC2A 2EW.
45
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
11.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Company
At 30 November 2017
Additions
Foreign exchange movements
At 30 November 2018
Presentation change under IFRS 9
Provision for expected credit losses under
IFRS 9
At 1 December 2018 (restated)
Additions
Foreign exchange movements
Provision for expected credit losses
Impairment of intercompany loan
Impairment of investment
At 30 November 2019
Investments
£
530,729
99
-
530,828
-
-
Capital
Contributions
£
Loans
£
1,746,989
1,892,075
14,827
Total
£
2,277,718
1,892,174
14,827
3,653,891
4,184,719
-
-
-
-
1,115,831
(1,115,831)
-
-
(1,171,068)
(1,171,068)
530,828
1,115,831
1,366,992
3,013,651
99
-
-
-
(232,484)
298,443
-
-
-
-
-
625,018
(45,282)
(274,688)
(640,084)
-
625,117
(45,282)
(274,688)
(640,084)
(232,484)
1,115,831
1,031,956
2,446,230
IFRS 9 has been adopted during the period. The Company has used the standard’s transitional provisions not to
adjust the comparatives, but to simply restate the opening position.
For clarity, further detail has been provided on the split of loans and capital contribution in the prior and current
periods.
Upon adoption of IFRS 9 the company has recognised a provision for expected credit loss against the loans due
from subsidiaries. These loans are interest-free and have no agreed terms. For the purposes of IFRS 9 the loans
are assumed to be repayable on demand. Historically no provisions were made unless the specific balance was
found to be impaired. The loans are assessed as being credit impaired on inception and as such lifetime expected
credit losses have been recognised. Historic and current data has been used to derive a probability of default and
this has been applied across the portfolio of loans. This has resulted in a provision of £1,171,068 at the date of
adoption being 1 December 2018 and a charge of £274,688 for the current year, which arises solely from new
credit impaired loans made in the year. Also in the current year a specific provision of £640,084 (20918: £nil) has
been made.
The loans are assessed as being credit impaired on inception as the subsidiaries have no income other than the
receipt of inter-company funding and as the loans are primarily used to fund the subsidiaries deferred exploration
expenditure. The subsidiaries would only be able to repay the loans if they can either sell their exploration assets
or develop them to the point at which the assets generate cash flows, both of which would take time to achieve.
Therefore, at inception, it is known that the loans will not be able to be repaid in accordance with the loan terms
(that is, on demand) and therefore they are assessed as being credit impaired.
The impairment relates to the investment in Aurum Mineral Resources, a wholly-owned subsidiary registered in
the Republic of Ireland and the holder of the exploration licence for the Limerick zinc project. The project asset
was impaired in the year and so it was considered appropriate to impair the historic investment value. A merger
reserve of £200,000 relating to this investment has been released to the P&L reserve at the same time (see the
parent company Statement of Changes in Equity).
46
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
11.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
At 30 November 2019 the Company held the following interests in subsidiary undertakings, which are included in
the consolidated financial statements and are unlisted.
Name of company
Aurum Mineral Resources Ltd
Mauritania Ventures Limited
Obsidian Mining Limited
White Eagle Resources Limited
White Fox Resources Limited
Dragonfire Mining Limited
Gold Mines of Wales Limited
GMOW (Holdings) Limited
GMOW (Operations) Limited
White Deer Resources Limited
Country of
incorporation
Ireland
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Jersey
England & Wales
England & Wales
England & Wales
Proportion
held
100%
50%
90%
100%
51%
100%
90%
90%
90%
100%
Nature of
holding
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Direct
Business
Exploration
Non-trading
Exploration
Exploration
Exploration
Exploration
Holding Co.
Holding Co.
Exploration
Non-trading
The address of the registered office of Aurum Mineral Resources Ltd is c/o Hugh Lennon Associates, Unit 8&10
Church View, Cavan, Ireland.
The address of the registered office of Gold Mines of Wales Limited is 2 Mark Clos, La Rue de la Croix, St Clement,
Jersey.
All the other companies have their registered office at 6th Floor, 60 Gracechurch Street, London EC3V 0HR.
Mauritania Ventures Limited has been treated as a subsidiary undertaking because the Company exercises
dominant influence over the investment by virtue of having the casting vote at Board meetings.
Dragonfire Mining Limited owns a 90% holding in Gold Mines of Wales Limited, which company wholly owns
GMOW (Holdings) Limited and its wholly owned subsidiary GMOW (Operations) Limited. Dragonfire Mining
Limited holds a put and call option over the 10% of shares in Gold Mines of Wales Limited that it does not own
and therefore consolidates these entities as though they are 100% owned.
12.
TRADE AND OTHER RECEIVABLES
Current
Other debtors
Prepayments and accrued income
Group
2019
£
60,616
20,844
81,460
Group
2018
£
38,172
23,722
61,894
Company
2019
£
7,758
20,845
28,603
Company
2018
£
38,172
23,722
61,894
The fair value of trade and other receivables approximates to their book value.
47
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
13.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
211,333 585,795
211,240
574,185
Group
2019
Group
2018
Company
2019
Company
2018
£
£
£
£
The fair value of cash at bank is the same as its carrying value.
14.
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors
Accruals and deferred income
Group
2019
£
Group
2018
£
12,329
157,401 140,428
12,278
186,502 340,489
356,232 493,195
Company
2019
Company
2018
£
156,444
12,329
184,929
353,702
£
139,435
12,277
328,477
480,189
The fair value of trade and other payables approximates to their book value.
15.
FINANCIAL LIABILITIES
Financial Liabilities
Borrowings
Other borrowings
Contingent consideration
Group
2019
£
Group
2018
£
96,178
-
6,958 253,074
34,176
34,176
137,312 287,250
Company
2019
Company
2018
£
96,178
-
-
96,178
£
-
-
-
-
The other borrowings in prior year was a joint venture partner loan to a subsidiary. The assets of the subsidiary
were impaired in a prior period and the joint venture partner has now waived the loan. See Note 17 Non-
controlling Interests.
The borrowings are a short term loan, repayable within 12 months from the date of these financial statements.
The loan accrues interest at 3% above UK base rate and a 5% arrangement fee is due on repayment, both included
in the amount presented above.
The contingent consideration is recognition of a liability in respect of the put and call option over the remaining
10% shareholding in the Clogau gold project which the Company does not own.
48
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
16.
CALLED UP SHARE CAPITAL
Allotted, called up and fully paid
Ordinary shares of 0.1 pence
Deferred shares of 0.9 pence
Total
2019
Number
of shares
2019
£
2018
Number
of shares
2018
£
3,745,351,946
93,070,100
3,838,422,046
3,745,352 3,261,601,946
93,070,100
4,582,983 3,354,672,046
837,631
3,261,602
837,631
4,099,233
On 27 May 2016 the Company adopted new Articles which do not specify authorised share capital. All issued
ordinary shares carry equal rights. The deferred shares do not carry any rights to vote or dividend rights. In
addition, holders of deferred shares will only be entitled to a payment on a return of capital or on a winding up
of the Company after each of the holders of the ordinary shares have received a payment of £1,000,000 on each
such share.
During the year the Company issued ordinary shares as follows:
22 March 2019 – Directors subscription for shares
12 June 2019 – placing for cash
6 November 2019 – placing for cash
Total
Number of
shares
15,000,000
250,000,000
218,750,000
483,750,000
Proceeds of
issue
£
45,000
500,000
350,000
895,000
Given the current share price of the Company trades below its par value of £0.001, the Company intends to put
forward a resolution to reduce the par value of its ordinary shares to £0.0001 at its forthcoming Annual General
Meeting to be held in April 2020. Assuming that resolution is passed, the Company will thereafter be able to issue
ordinary shares at or above that new par value.
As at 30 November 2019 Alba had 555,654,761 warrants and options outstanding.
Exercise price (pence)
Final exercise date
Vested
No. of warrants
15,000,0001
20,000,0001
2,000,000
51,000,0002
15,000,0003
60,000,0003
0.3 pence
0.3 pence
0.3 pence
0.3 pence
0.4 pence
0.4 pence
18 September 2020
27 March 2021
28 May 2021
27 March 2021
27 March 2021
13 January 2027
Vested
Vested
Vested
Vested
Vested
Awarded under the EMI scheme.
Vested.
Partially vested.
24,500,000 vesting in 2019 and 2020
Awarded under the EMI scheme.
Vested except 15,000,000 vesting 31
Dec 2019
Vested
Vested
113,904,7614
0.42 pence
27 March 2021
60,000,0004
0.42 pence
2 May 2028
146,562,500
72,187,500
555,654,761
0.32 pence
0.32 pence
13 November 2021
21 November 2021
49
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
16.
CALLED UP SHARE CAPITAL (continued)
As at 30 November 2018 Alba had 341,904,761 warrants and options outstanding.
No. of warrants
15,000,0001
20,000,0001
2,000,000
51,000,0002
15,000,0003
60,000,0003
5,000,0003
113,904,7614
Exercise price (pence)
Final exercise date
Vested
0.3 pence
0.3 pence
0.3 pence
0.3 pence
0.4 pence
0.4 pence
18 September 2020
27 March 2021
28 May 2021
27 March 2021
27 March 2021
13 January 2027
0.7 pence
0.42 pence
1 Nov 2019
27 March 2021
Vested
Vested
Vested
Vested
Vested
Awarded under the EMI scheme.
Vested.
Vested
Partially vested.
24,500,000 vesting in 2019 and 2020
Awarded under the EMI scheme.
Not yet vested. 30,000,000 vesting
2019, 30,000,000 vesting 2020
60,000,0004
0.42 pence
2 May 2028
341,904,761
1,2,3,4 These warrants fall within the scope of IFRS 2 “Share-based Payments” and were issued in 2015, 2016, 2017
and 2018 respectively. The fair value of the warrants issued in 2018 calculated using a Black Scholes model was
£392,070. Within the meaning of the IFRS 13 fair value hierarchies, this is a Level 2 valuation. It is based on the
Company’s share price volatility over the period to the date of issue of the warrants, a risk free rate of 1.25% per
annum, a dividend yield of nil, the life of the options, the share price at the date of issue of the warrants and the
strike prices of the warrants. The volatility was derived from the quoted prices for the Company’s shares in the
12-month period prior to the issue of the respective warrants.
17.
NON-CONTROLLING INTERESTS
At 30 November 2017
Loss after taxation
At 30 November 2018
Loss after taxation
Contribution from joint venture partner
At 30 November 2019
£
(264,218)
(2,283)
(266,501)
(1,231)
253,074
(14,658)
In 2017 the Group fully impaired the value of the exploration asset held by Mauritania Ventures Limited (“MVL”),
a fully consolidated 50% joint venture company. The parent company wrote down the full value of its loan to that
company. The joint venture partner has waived its loan during the current period which is accounted for as a
contribution from an owner and as such is a movement on reserves.
50
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
18.
RESERVES
The following describes the nature and purpose of certain reserves within owners’ equity:
Share premium: Amounts subscribed for share capital in excess of nominal value less costs of issue.
Merger reserve: Amount in excess of nominal value on issue of shares in relation to business combinations. The
merger reserve arose on the acquisition of Aurum Mineral Resources Limited. As detailed in note 11, the
investment in that company has been impaired in the year and accordingly the merger reserve has been released.
Foreign currency reserve: Gains/losses arising on retranslating the net assets of the Group into pounds sterling.
Warrant reserve: Proceeds from the issue of extant warrants.
19.
CAPITAL COMMITMENTS
As at 30 November 2019, the Group / Company had commitments to spend at least approximately £935,000 in
calendar year 2020 on its Greenland licences (2018: £675,000), being in approximate terms the aggregate
minimum expenditure commitments required under the licences. Subsequent to the year end, reductions in the
areas under licence reduced the aggregate minimum commitment for calendar year 2020 to approximately
£248,000.
20.
CONTINGENT LIABILITIES
A royalty agreement was agreed as part of the acquisition of the Clogau gold project in 2018. The Group has no
obligations under this agreement until such time as gold is produced and sold.
The Company / Group will be liable for 5% of the abandonment and reinstatement costs relating to the Brockham
Production licence. The expected liability is in the region of £22,000 and accordingly this amount has been accrued
during the period.
21.
FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise investments, cash at bank and various items such as investments,
other debtors, loans and creditors. The Group has not entered into derivative transactions nor does it trade
financial instruments as a matter of policy.
Credit Risk
The Group’s credit risk arises primarily from cash at bank, other debtors and the risk the counterparty fails to
discharge its obligations. As at 30 November 2019, other debtors included £8,100 that was past due but not
impaired (2018: £14,400).
The Company’s credit risk primarily arises from intercompany debtors and this has been reviewed in the course
of applying IFRS 9 for the first time. See Note 11 for more details.
Liquidity Risk
Liquidity risk arises from the management of cash funds and working capital. The risk is that the Group will fail to
meet its financial obligations as they fall due. The Group operates within the constraints of available funds and
cash flow projections are produced and regularly reviewed by management.
51
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
21.
FINANCIAL INSTRUMENTS (continued)
Interest rate risk profile of financial assets
Excluding the investment in HHDL, the only financial assets (other than short term debtors) are cash at bank and
in hand, which comprises money at call. The interest earned in the year was negligible. The Directors believe the
fair value of the financial instruments is not materially different to the book value.
The investment in HHDL includes a loan element. Under an investment agreement those loans attract interest
which becomes payable once HHDL has surplus cash. As the Group / Company treats the loan as held at fair value
through profit and loss, any interest credit is subsumed within the fair value movement.
Foreign currency risk
The Group has an Irish subsidiary, which can affect the Group’s sterling denominated reported results as a
consequence of movements in the sterling/euro exchange rates. The Group also incurs costs denominated in
foreign currencies (primarily Danish Krone) which gives rise to short term exchange risk. The Group does not
currently hedge against these exposures as they are deemed immaterial and there is no material exposure as at
the year-end (2018: £nil).
Market risk
Following the acquisition of the investment in Horse Hill Developments Limited (“HHDL”), the Group is exposed
to market risk in that the value of the investment would be expected to vary depending on the price of oil and
the future cash calls will, to an extent, depend on the revenue generated from oil produced from well testing
activities.
Since January 2020 the price of Brent crude oil has dropped from a high of $70 per barrel to the low $30s per
barrel at the time of writing. The price fall was triggered by the failure of talks between the Organization of the
Petroleum Exporting Countries (“OPEC”) and producers outside of OPEC, notably Russia, to curtail oil production
in reaction to a slowdown in global demand caused by the Coronavirus (COVID-19) pandemic, with Saudi Arabia
subsequently announcing price discounts to customers in Europe, Asia, and the United States, and earlier this
month announcing that it would increase its production from 9.7 million to 12.3 million barrels per day. Russia
has also announced plans to increase oil production by 300,000 barrels per day.
A sustained downturn in the price of oil may have a materially adverse effect on the revenues generated from
the Horse Hill Oil Field. A material reduction in the market value of HHDL shares can be expected to result in a
proportionate reduction in the carrying value of the Group’s investment in HHDL.
52
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
21.
FINANCIAL INSTRUMENTS (continued)
Categories of financial instrument
Financial assets
Investments at fair value through the profit and loss account
- Horse Hill Developments Limited
Investments at fair value through the profit and loss account
- other
Held at amortised cost:
Trade and other receivables
Intercompany receivables net of expected credit losses
Financial liabilities
Financial liabilities held at amortised cost
Group
Group
Company Company
2019
£
2018
£
2019
£
2018
£
5,430,000 5,430,000 5,430,000 5,430,000
11,125
7,161
11,125
7,161
60,616
38,172
7,758
38,172
-
- 1,031,956 1,366,991
5,501,741 5,475,333
6,480,839 6,842,324
486,585
780,445
449,880
480,190
486,585
780,445
449,880
480,190
Contractual liabilities of £nil (2018: £253,073; Company 2019: £nil, 2018: £nil) have no fixed terms for repayment.
Liabilities not yet due relate to a valuation of a call option over 10% of the Clogau gold project (£34,176; 2018:
£34,176; Company – £nil both years) and borrowings (Group and Company - £96,178; 2018: £nil). Other
contractual liabilities are either contractually overdue or due within one month.
Included in the investments held at fair value through profit and loss are loans of £2,097,768 (2018 - £2,097,768).
These were designated as fair value through the profit and loss on recognition as they form part of the Company’s
investment in Horse Hill Developments Limited. The maximum exposure to credit risk of this financial asset at the
end of the reporting period is the carrying amounts of the loans. The loans are not valued separately from the
investment and changes in the fair value of the investment are based on observable prices paid for HHDL shares
(traded with such shareholder loans attached). No change in fair value to date has been attributable to a change
in credit risk.
22.
CAPITAL MANAGEMENT
The Group’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern
and develop its mining and exploration activities to provide returns for shareholders. The Group’s funding
comprises equity and debt. The Directors consider the Company’s capital and reserves to be capital. When
considering the future capital requirements of the Group and the potential to fund specific project development
via debt, the Directors consider the risk characteristics of all the underlying assets in assessing the optimal capital
structure.
53
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
23.
RELATED PARTY TRANSACTIONS
Company
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation. The loan balances and transactions in the year with the subsidiaries are disclosed in
Note 11. Details of transactions between the Company and other related parties are disclosed below.
Group
Stirling Corporate Limited, a company which George Frangeskides, a director of the Company, controls, charged
the Group £39,191 (2018: £30,319) for the provision of financial and administrative services. As at the year end
£17,185 (2018: £21,395) was owed to Stirling Corporate Limited and £8,702 was accrued for invoices expected.
The independent Directors, having consulted with the Company's Nomad, consider that the terms of this
transaction are fair and reasonable insofar as the Company's shareholders are concerned.
Aetos Consulting Limited, a company which George Frangeskides, a director of the Company, jointly controls,
charged the Group fees for consultancy services of £37,853 (2018: £36,225). Of these fees, £28,514 are not
reported as director’s fees in note 4 as they represent work carried out specifically on the advancement of the
Group’s project portfolio and have therefore been capitalised. As at the year end £18,710 (2018: £36,225) was
owed to Aetos Consulting Limited and £37,853 was accrued for invoices expected.
Woodridge Associates, a business which Michael Nott, a director of the Company, controls, charged the Group
fees for consultancy services of £nil (2018: £58,750). As at the year end, £50,500 (2018: £58,750) was due to
Woodridge Associates.
24.
EVENTS AFTER THE REPORTING PERIOD
Corporate
After the financial year end, in February 2020 we announced that we had entered into an unsecured financing for
£767,000 (which can be increased by mutual consent to up to £1,054,500) with US-based institutional fund,
Bergen Global Opportunity Fund, LP (the “Financing”). In March 2020 we announced that we had closed the first
tranche of funding under the Financing, with Alba issuing the first convertible security and receiving payment of
£192,000 from the Investor. 48 million ordinary shares were issued in accordance with the terms of the
agreement. Subject to the fulfilment of the specified conditions and warranties, the second funding tranche will
be issued four months after the Company’s 2020 AGM (which will be held in April) with each of the third, fourth
and fifth funding tranches being issued in further four monthly intervals thereafter.
Horse Hill Developments Limited
Since January 2020 we have seen the price of Brent crude oil drop from a high of $70 per barrel to a low of $27
per barrel earlier this month. See further Note 21, at pages 51-53, in this regard.
Post year end, we reported in relation to Horse Hill that a well intervention to shut-off a water ingress at HH-2z
had been successful and that dry oil had flowed to surface. It was also announced by the Operator, HHDL, that
further clean-up activities would be carried out prior to a shut-in.
Shortly before the publication of this report, HHDL confirmed that the Oil and Gas Authority (“OGA”) had
approved the Horse Hill Field Development Plan (“FDP”) and consented to the start of long-term production
(“Production”) from the field which should allow net recoverable reserves to be allocated to the field. The
Operator further stated that Portland oil pool Production will commence via HH-1, with Kimmeridge Production
planned to be added in late spring 2020 by converting the well to a dual completion. Production from HH-2z is
planned to follow upon completion of the current EWT campaign.
54
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
24.
EVENTS AFTER THE REPORTING PERIOD (continued)
Exploration licences
In March 2020 the Group confirmed the reduction of certain of its Greenlandic licence areas with effect from 31
December 2019, as follows:
- Amitsoq Graphite Project (Mineral Exploration Licence (“MEL”) 2013-06): licence area reduced from 146 km²
-
to ~48 km².
Inglefield Multi-Element Project (MEL 2017-40 and MEL 2018-25): MEL 2018-25 reduced from 466 km² to ~88
km². Application has been made for MEL 2017-40 to be relinquished in full. The Company is in discussions
with the Mineral Licence and Safety Authority of Greenland to formalise this.
- Melville Bay Iron Ore Project (MEL 2017-41): licence area reduced from 53 km² to ~17km².
These reductions have not affected the key deposits and targets held within the Group’s Greenlandic licence
portfolio, which have all been retained.
In respect of the Group’s Limerick Base Metals Project, held by subsidiary Aurum Mineral Resources Limited
(“AMR”) under exploration licence PL3824, this licence was due for renewal by 26 March 2020. Given that
renewal would have involved a commitment by AMR to expend further sums on exploration, and given the
current COVID-19 global pandemic makes it uncertain when the Group will be able to resume field operations, in
March 2020 AMR wrote to the Exploration and Mining Division (“EMD”) of the Department of Communications,
Climate Action and Environment of The Republic of Ireland, to request an extension of time for AMR to make a
decision on whether to apply for renewal. At the time of writing, the EMD’s advice is awaited.
Amitsoq (the Greenland graphite project)
In February 2020 we announced the appointment of leading graphite experts ProGraphite GmbH for the next
testwork phase in respect of our high-grade Amitsoq graphite project. The testwork programme will be focused
on developing an optimised method for the production of graphite suitable for lithium-ion batteries.
COVID-19
The potential impact of the COVID-19 pandemic is discussed in the Chairman’s statement on pages 8 and 9 and
in the Risks section of the Strategic Report on page 11.
The ability of the Company to raise funds through equity capital raisings, joint ventures or divestments can be
expected to remain constrained for so long as current market conditions prevail. However the Company does
have the benefit of the financing package arranged with Bergen Global Opportunity Fund, LP, as described above.
Aside from these funding constraints, the COVID-19 pandemic may adversely affect the Group’s ability to
implement its planned exploration programmes for the coming year, whether due to logistical challenges, such
as the curtailment of international flights, because of the unavailability of exploration personnel, equipment or
materials or because of Governmental restrictions which are imposed from time to time in any of the jurisdictions
in which the Group or its personnel or contractors operate.
On 23 March 2020, the UK Prime Minister announced that UK residents will only be allowed to leave their home
for certain very limited purposes. In respect of workers, this includes travelling to and from work, but only where
this is absolutely necessary and cannot be done from home. The Prime Minister also announced the immediate
closure of all shops selling non-essential goods and a prohibition on all gatherings of more than two people in
public. The Company will need to consider the precise effect of these, and other, announced measures upon its
business and affairs for so long as these measures remain in place, including by reviewing in detail the final
provisions of the COVID-19 emergency response legislation which is currently passing through the Houses of
Parliament.
55
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
24.
EVENTS AFTER THE REPORTING PERIOD (continued)
In his announcement of 23 March 2020, the Prime Minister committed to keep the announced restrictions under
constant review, to look at them again after a period of three weeks and to relax them if the evidence shows this
to be possible.
In terms of the Company’s forward planning, the Company has adopted a working assumption that these
restrictions will remain in place for a period of at least three months and that work on site at the Group’s UK
operations, namely at the Clogau Gold Project, will not be possible during that time. As the Group does not
operate the oil and gas projects in which the Group has investments, namely the Horse Hill and Brockham Projects
in the Weald Basin in England, the Company is not able to comment upon what impact the Government’s
restrictions will have on ongoing operations at those sites. The Company awaits the advice of the Operators of
those projects in that regard.
The Directors’ view is that being unable to undertake field work in the next three months should not have a
material impact on the valuation of the Group’s assets. In this regard, the following considerations apply:
In respect of the Clogau Gold Project in Wales, there is a significant amount of technical and geological work and
studies that can be undertaken which does not involve field work, building on the significant technical database
that has been generated by the Group. Also, given the weather conditions in north Wales allow for field activities
all year round, if the Government restrictions are lifted within three months, the Group would then expect to be
able to resume its field activities for the remainder of the year.
In respect of the Group’s Greenlandic exploration licences, restrictions on travel and field activities for a period
of three months would, in the Company’s opinion, likely mean that work on site will not be possible this calendar
year, not least due to the amount of time needed to prepare for a significant field programme in Greenland, which
typically requires months of forward-planning. It is possible, however, that the Greenlandic authorities will grant
a waiver to all licensees in respect of the requirement to fulfil expenditure commitments in the current calendar
year, as it has done in previous years when global financial markets were impacted by serious adverse
conditions. But even if this is not the case and the Group is unable to undertake field work during the 2020 field
season, there is a significant amount of other technical, geological and economic work and studies which can be
undertaken and which would constitute qualifying expenditure on those licences. Further, if there remains any
shortfall on expenditure commitments at the end of this calendar year, the Group may elect (on certain
conditions) to carry forward any under-expenditure to 2021, to reduce the size of the licence area such that the
expenditure commitment is met or to pay a fine of 50% of any underspend.
Should the COVID-19 pandemic result in the Group’s field work activities being suspended for a considerably
longer period than the Group’s current working assumption of up to three months, the Group will revisit its
assessment of whether this is likely to have a material impact on the valuation of the Group’s assets. If an
impairment is recognised in respect of any of the Groups’ assets, it is probable that impairments may be required
in respect of the Company’s investments in and loans to subsidiaries.
Both the Covid-19 pandemic and significant reduction in the oil price are considered to be non-adjusting post
balance sheet events and therefore have not been taken into account in preparing the statement of financial
position as at 30 November 2019.
56