Company No. 5285814
Alba Mineral Resources plc
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2020
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
Page
1
2
11
14
15
16
22
28
29
30
31
32
33
34
35
36
Alba Mineral Resources plc
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
George Frangeskides (Chairman)
Michael Nott
Manuel Lamboley (resigned 8 December 2020)
Elizabeth Henson (appointed 8 December 2020)
Lars Brünner (appointed 8 December 2020)
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
ETX Capital
One Broadgate
London EC2M 2QS
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
1
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
2020.
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
1.1
INTRODUCTION
The annual Chairman’s Statement always provides a good opportunity both to review the past 12 months
of progress and also to set our course for the next 12 months. This year, however, it is also an opportunity
to make a significant announcement. After assessing all the alternatives, the Alba Board has determined
that the optimal way to unlock real and sustained value in our asset portfolio is to effect a divestment of
our Greenland assets into a new Greenland-focused, AIM quoted company.
In Section 4 below, I set out the rationale for the proposed restructuring of the Alba Group. First of all,
however, I would like to present my review of the past year.
This time last year I wrote in my Chairman’s Statement about the impact COVID-19 was beginning to have
on our 2020 field exploration plans. I think it is quite illuminating to look at some of those statements
again through the lens of the past 12 months.
I said at the time that “the rapidly developing situation in relation to the COVID-19 pandemic has placed
some considerable doubt upon our ability to execute [our field] programmes in full this year”.
I also referred to the impact the COVID-19 pandemic had had on global stock markets, and how Alba’s
share price had been caught up in the “cross-winds of [a] sudden slump in investor confidence across the
board”. I also expressed the view that while these market conditions continued to hold, “our ability to
raise capital through the equity markets must now be considered severely constrained”.
As to whether the pandemic put paid to some of our field plans in 2020, it is undoubtedly the case that
they did, in Greenland at least. We put our plans to drill the Amitsoq Graphite Project on hold and focused
our efforts instead on those sites which we could more readily access, most notably of course the Clogau-
St David’s Gold Mine in Wales.
As to whether our ability to raise capital remained constrained through 2020 and our share price in the
doldrums, I am pleased to say that neither proved to be the case by the time the year was out. The
second half of 2020 saw us raising money at ever increasing prices, testament to the great results we
were getting at Clogau. And our share price recovered from a low of 0.05p in March 2020 to a high for
the financial year of 0.54p in September 2020, a rally of more than 10 times. While our share price has
recently come off those highs, it still represents a dramatic improvement on the position which prevailed
this time last year.
As for COVID-19, things seem to be improving finally, after what has been a particularly bleak time for us
all here in the UK. As for Greenland, we are hopeful that the travel restrictions there will start to be lifted
sufficiently in the next few months to enable us to get our drill teams and rigs into the country this
summer so that we can drill both the Amitsoq Graphite and the Thule Black Sands Ilmenite Projects. Mark
Austin, our Senior Geologist & COO, and his team are busy putting the final touches on those drill
programmes as I write.
2
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
1.2 DETAILED REVIEW OF THE 2020-21 FINANCIAL YEAR AND SUBSQUENT ACTIVITIES
(a) CLOGAU-ST DAVID’S GOLD MINE, WALES
We have made great progress at Clogau-St David’s in the past 12 months towards our goal of getting
the Mine back into commercial production. A number of milestones have been reached in that time:
Underground Drilling
A phase 1 underground drilling programme was successfully completed, with seven drill holes
completed for a total of 560 metres. All seven drillholes intersected quartz veining, the known
geological setting of all historic gold production at the Clogau-St David’s Gold Mine, validating Alba’s
geological model, with gold assays returning grades up to 1.79 g/t. Alba believes the drilling to have
intersected a 550-metre westerly extension to the Main Lode, the source of most historic production
at the Clogau-St David’s Gold Mine.
Surface Drilling
A phase 1 surface drilling programme was successfully completed, targeting a zone below the
Llechfraith mine area. While it had originally been planned to drill only three holes from the first
collar location, the success of the first holes in hitting significant quartz veins within about a 15-metre
zone of one another has led the Company to the belief that this indicates the presence of a significant
vein system below the deepest previously worked zone at the Llechfraith mine area. As a result, we
ended up drilling a total of ten holes from this same location, which has enabled us to more clearly
define the significant dimensions of this lode system.
Alba now projects the newly identified vein system as having a strike extent of up to 52 metres, as
well as extending 122 metres below the deepest previously worked zone at the Llechfraith mine area.
In April 2021 we announced the assay results from this phase 1 surface drilling campaign. Gold
mineralisation was confirmed across several individual zones up to one metre thick, with individual
values up to 4.25 g/t. The intersection of values strongly reinforces our view that the newly modelled
zone, which we are calling the Llechfraith Lode, is a key target for future development and production
at Clogau-St David's. The results add weight to our objective to dewater the Llechfraith Shaft as soon
as possible to allow direct access to the on-reef development.
Also in April 2021, we announced that we had started the second phase of the Company's surface
drilling programme at Clogau-St David's. This phase of drilling is targeting what we believe to be the
westerly, 550-metre extension to the Clogau Main Lode, which was identified during the underground
drilling last year (see above). This programme is currently ongoing.
Bulk Sampling
A phase 1 underground bulk sampling programme was successfully completed, with seven bulk
samples collected for a total of 36 tonnes of material. The processing of a small quantity of that bulk
sample at a third-party processing facility validated the Company’s process flowsheet and confirmed
the production of a 20.7 grams per tonne gold concentrate.
The Company purchased and installed new items of plant at the mine site, notably an impact crusher
and gold concentrator. The Company’s dedicated pilot gold processing plant became fully
operational in January 2021.
3
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
Pitting of Waste Rock Dump
In April 2021 we carried out evaluation pitting of the historic waste rock dump at Clogau-St David's.
The waste rock dump contains material derived from the internal development of the Mine during
past periods of production. The dump is estimated to cover about 30,000 square feet and to contain
20,000 tonnes of rock. Several pits were dug, with around 15 tonnes of material extracted per pit.
The material was then screened and a sample of the finer material from each pit sent for gold assaying
offsite. Results are awaited.
Llechfraith Dewatering
After the year end we submitted an application for a bespoke water discharge permit to allow the
lower workings in the Llechfraith Shaft to be dewatered so that we can then undertake underground
drilling and bulk sampling directly from that key zone.
Regional Exploration
The completed first phase of surface trenching validated our regional geological model, by uncovering
multiple quartz veins in the target area identified during Alba’s extensive soil sampling programme,
including a 2.1 metre width quartz vein, comparable with the widths of the worked veins in the
Clogau-St David’s Gold Mine. While the assays only returned low-grade anomalism, this is not
unexpected given the irregular distribution of gold through the Clogau vein system.
Permitting
The Crown Estate agreed to extend the duration of our exclusive exploration licence over the Clogau-
St David’s Gold Mine. We had originally been awarded a six-year exclusive exploration licence,
termed an Option Agreement, with effect from 10 February 2015. The licence has now been
extended for a further four years (until 9 February 2025), being the maximum extension possible
under the terms of the original licence. As and when we are ready to proceed to commercial
production, we will apply to convert the exploration licence into a formal, long-term lease.
(b) GWYNFYNYDD GOLD MINE, WALES
Towards the end of the year, we were awarded the exclusive exploration rights to the Gwynfynydd
Gold Mine in north Wales for a period of six years. The Gwynfynydd Gold Mine is the second largest
producer of gold in the UK’s history, after the Clogau-St David’s Gold Mine. With this award, Alba
now has the exclusive exploration rights over the entire length of the Dolgellau Gold Belt.
The Gwynfynydd Gold Mine has historically produced around 45,000 ounces of gold at a mining grade
of 15 grams/tonne. Commercial operations at Gwynfynydd ceased in 1999 when the gold price was
only around US$300 per ounce. Gwynfynydd shares many of the same geological and mineralogical
characteristics of Clogau, enabling Alba to roll out the same modern exploration and development
methods which have been successfully deployed at Clogau-St David’s.
(c) GREENLAND MINING PROJECTS
Work at our mining sites in Greenland was severely constrained during the year due to travel
restrictions imposed by Greenland in the face of the Coronavirus pandemic.
Thule Black Sands Ilmenite Project (TBS)
TBS benefits from an existing defined JORC-compliant Inferred Mineral Resource of 19 million tonnes
at 43.6% Total Heavy Minerals, with an in-situ ilmenite grade of 8.9%, one of the highest in-situ grades
of any ilmenite project in the world.
4
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
Mineral sands specialists IHC Robbins were appointed to carry out a comprehensive metallurgical
process development and test work programme on a bulk sample which we collected from TBS during
the last field programme there. The test work programme is designed to confirm the ilmenite
products to be produced from TBS ilmenite and to provide product samples to enable potential
customers and offtake partners to carry out their own confirmatory analyses.
Amitsoq Graphite Project
In relation to Amitsoq, during the year graphite specialists ProGraphite of Germany undertook a test
work programme in relation to Amitsoq graphite. This reaffirmed that the graphite content of
Amitsoq ore is very high, indeed amongst the highest found in flake graphite deposits globally. It also
demonstrated that a >96% graphite concentrate can be produced and that purification test work
confirms the suitability of Amitsoq graphite for Lithium-Ion Batteries ("LIBs"), with standard alkaline
purification, in particular, achieving a carbon level of above 99.95%, the grade needed for the
production of spherical graphite for LIBs. LIBs are already the fastest growing market for flake
graphite, with massive growth rates forecast for the next decade.
Alba also commissioned Dr John Arthur CGeol, FGS, to prepare an Exploration Target for the Amitsoq
Project. Dr Arthur has determined that the volume and grade ranges for:
(a) the Amitsoq Deposit Exploration Target are between 1.7 and 4.5 million tonnes (assuming a
density of 2.63t/m3) with a grade range of between 24-36% Graphitic Carbon; and
(b) the Kalaaq Deposit Exploration Target are between 4.0 and 7.0 million tonnes (assuming a density
of 2.63t/m3) with a grade range of between 23-29% Graphitic Carbon.
This translates into a tonnage estimate of between 408,000 and 1,620,000 tonnes for the Amitsoq
deposit and between 920,000 and 2,030,000 tonnes for Kalaaq and gives us great confidence as we
move into the drilling phase at the Project.
Legal & Regulatory
In response to the COVID-19 pandemic, the Government of Greenland decided to reduce to zero the
exploration expenditure obligations for all mineral exploration licences for both 2020 and 2021 and
to extend the duration of all existing licences by two years to reflect the difficulty of progressing
exploration projects in Greenland since last year. All of Alba’s Greenland exploration licences have
therefore benefited from these measures in full.
During the year, we decided to reduce some of our exploration landholdings in Greenland, reducing
our Amitsoq, Inglefield and Melville Bay licence areas. These reductions did not affect any of the key
areas of interest across our licences. Expenditure commitments in Greenland are largely a function
of the size of licences held, so this process of regular review and refinement allows us to keep our
expenditure commitments under control. No changes were made to the licence area for Alba’s 100%
owned TBS.
(d) LIMERICK BASE METALS PROJECT
After the year end, the mineral exploration licence for our 100% owned Limerick Base Metals Project,
PL 3824, was renewed until 26 May 2022. A prospectivity review of the licence area has identified
the Coonagh Castle Fault as one of main faults transecting the Limerick Basin and concluded that
5
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
being able to determine the trace of the fault to within tens of metres on surface is crucial to the
success of future drilling.
Subsequent interpretation of Tellus and satellite (Sentinel) imagery for the Alba licence area has
identified three principal exploration target areas within PL 3824, each exhibiting a number of the
structural and geological features found in Zinc-Lead deposits in the Irish Zinc Ore Field.
These results support Alba's decision to renew PL 3824 and to recommence exploration activities at
the Project.
(e) HORSE HILL OIL FIELD, ENGLAND
During the year, various interventions were made to the Horse Hill-2z (“HH-2z”) horizontal well by
the Operator, Horse Hill Developments Limited (“HHDL”), under the management of its major
shareholder, UK Oil & Gas Plc (“UKOG”), to stop the ingress of formation water which was inhibiting
oil production. However, ultimately UKOG was not able to resolve these issues sufficiently well.
While UKOG initially reported that it was reviewing a number of options for the future use of HH-2z,
after the end of the year it confirmed that it planned to reconfigure HH-2z into a water re-injection
well as soon as practicable, subject to regulatory consent. The reasons given for this were that it
would remove the need for costly off-site water disposal and also help maximise oil recovery from
HH-1 by supporting reservoir pressure.
While it is disappointing that HH-2z was not successful as an oil producer, Alba’s technical team had
flagged concerns from the outset as to the significant challenges that lay ahead in UKOG attempting
to drill a horizontal well into this reservoir. While we would have much preferred not to be proven
correct in this particular instance, it should also be said that in our view the failure of HH-2z has no
bearing on the merits of drilling successive vertical wells into both the Portland and Kimmeridge oil
pools, and I return to this subject below.
As for the original Horse Hill-1 well (“HH-1”), an intervention was completed to reperforate the full
Portland oil-producing section, and this was followed by an ongoing series of production optimisation
trials. UKOG reported after the year end that these trials are expected to continue for several months
but that the early results were encouraging, with stable water influx levels achieved by the end of
2020.
During the year, the Oil and Gas Authority (“OGA”) approved the Horse Hill Field Development Plan
(“FDP”) and consented to the start of long-term production from the field. This key consent should
enable net recoverable reserves to be allocated to the field, which is important for future potential
debt-based funding for the field.
In January 2021, UKOG reported that the Horse Hill Oil Field had to date produced and exported over
132,000 barrels of Brent quality crude from its Kimmeridge and Portland oil pools. It also reported
that it had completed the interpretation of data from the November 2020 pressure build-up ("PBU")
test sequence, confirming the HH-1 connected oil in place volumes of 7-11 million barrels previously
reported in October 2018. The PBU data also helped to identify a potentially significant contribution
to Portland fluid flow from a natural fracture system. UKOG reported that the integration of the PBU
data, HH-2z rock data and a revised seismic interpretation has provided a far better understanding of
the Portland reservoir. As a result, it reported that several significant infill drilling opportunities have
been identified in the Portland oil pool, all up-dip of HH-1 (i.e., at a shallower depth within the oil
pool) and significantly above the oil-water contact.
6
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
UKOG also reported that further development of the Kimmeridge oil pool remains a significant
objective. It announced plans to drill an infill well to determine the lateral extent of the Kimmeridge
oil pool, proven by HH-1 to lie within a natural fracture system of significant vertical extent. It said
that the Kimmeridge HH-4 well, also situated up-dip of both HH-1 and HH-2z, is likely to be a highly
inclined or "slant" well, so as to maximise the number of open fractures penetrated. UKOG reported
that it expected to drill these Portland (HH-3) and Kimmeridge (HH-4) infill wells following its
completion of an appraisal drilling campaign on another project (unrelated to Horse Hill).
We are encouraged by UKOG’s revised strategy for the exploitation of the Horse Hill Oil Field. Their
confirmation of the connected oil in place volumes of 7-11 million barrels from the Portland oil pool
alone highlights the untapped production that remains in the Portland, production that cannot hope
to be fully realised from HH-1 alone. The plans, therefore, to drill another two vertical wells up-dip of
HH-1 are welcome, not least in the light of the sustained rally in the oil price over the past year or so.
Also encouraging is the Operator's reaffirmation of the potential of the Kimmeridge oil pool. HH-1
has already proven the Kimmeridge's ability to contribute substantial production to the overall field,
so there is certainly merit in testing the Kimmeridge's producibility from a new vertical well. We look
forward to UKOG delivering on this revised and reaffirmed strategy for enhancing production and
delivering on the inherent value of the Horse Hill Oil Field.
Following a review carried out by the Company in connection with the preparation of these accounts,
the Directors have determined that the fair value of the Company’s investment in HHDL should be
revised down to a figure of £4,000,000 (2019: £5,430,000). The Directors commissioned a third-party
market-based valuation of Alba’s investment. For further details see Note 10.
2. CORPORATE AND FINANCIAL
During the year, we announced that we had entered into an unsecured financing of up to £767,000 (which
could 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 was structured by way
of the issue by Alba to the Investor of up to five unsecured convertible securities, the first issued at a discount
with the subsequent four at zero-coupon. The Financing was structured in such a way as to provide Alba with
access to capital at regular intervals over a period of 18 months, allowing us to fund key value-enhancing
work activities across our mining portfolio.
In 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.
However, in October 2020 we announced that we had terminated the Financing and would not be issuing any
further convertible securities or receiving any further funding under it. While the Financing had provided the
Company with access to a significant capital runway and timely access to funding, given that the onset of the
Coronavirus pandemic in early 2020 had resulted in the capital markets becoming severely constrained for
secondary placings. Once the markets had stabilised, however, we found ourselves able to raise money more
competitively by undertaking straight share placings through our new brokers, ETX Capital, rather than via
the funding line available under the Financing.
Through ETX Capital, we raised £450,000 in early August 2020 (at a placing price of 0.065p), £1.3 million in
September 2020 (placing price: 0.275p) and £1.2 million in November 2020 (placing price: 0.375p). Each
placing included attaching warrants on the basis of 1 warrant for every two shares issued, with the warrant
exercise price set in each case at a 100 per cent premium to the placing price. To date, a further £742,100
has been raised through the exercise of share warrants.
7
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
During the year, Mark Austin joined us as Alba’s Senior Geologist. Mark has significant management and
operational experience in a career spanning four decades across a range of commodities, but with a particular
focus on gold. Mark’s experience includes being a Non-Executive Director at Central Rand Gold Limited (2015-
2017), Group Geologist for Goldplat plc and CEO of its subsidiary Kilimapesa Gold (Kenya) (2007-2013), Vice
President-Exploration for Mano River Resources Plc (2006-2007) and Senior Exploration Geologist for Placer
Dome Exploration (Africa-Eurasia) Ltd (2005-2006). Towards the end of the year, we announced that Mark
had been appointed as Alba’s Chief Operating Officer.
In December 2020, we strengthened our Board through the appointment of Elizabeth Henson and Lars
Brünner as Non-Executive Directors. Elizabeth was, from 2007-2019, a senior international tax partner for
PricewaterhouseCoopers LLP (PwC), based in London. As for Lars, from 2014-2020 he was the Arctic Mining
and Environment, Business Development Leader for Golder Associates A/S, a leading international mining
and environmental consultancy firm. These high-calibre appointments are indicative of Alba management’s
determination to keep pushing the Company in the right direction and striving for excellence on all levels,
both in the quality of our projects, in our technical work and in the depth of our management team.
At the same time, Manuel Lamboley stepped down from the Alba Board and took up a consultancy role for
the Company, advising Alba on access to European markets and joint venture partners.
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 outlook for Alba is strong. We intend to spend the next six months or so continuing our push to prove
up sufficient new mineralised zones at Clogau-St David’s to make a compelling case for bringing the Mine
back into commercial production.
As I write, we are putting the finishing touches on summer drilling programmes for both the Thule Black Sands
Ilmenite and Amitsoq Graphite Projects in Greenland. While we are not yet certain that Greenland’s current
Coronavirus measures, notably the restrictions on travel into the country, will allow these programmes to
proceed, and we also recognise that a spike in cases may lead to additional restrictions being imposed, as
things stand we are confident that these drilling programmes will go ahead. The drilling at TBS will be aimed
at significantly increasing our JORC Resources there, as well as moving some of our existing Inferred Resources
into the Indicated category, meaning that they can be stated with a higher level of confidence. With this
achieved, we will be able to start planning in earnest to move the TBS project into the development phase,
including commencing discussions with potential offtake partners.
At Amitsoq, drilling will be aimed at defining a maiden JORC Resource for the project. This, together with the
excellent results we obtained in a test work programme which was conducted in Germany, will position
Amitsoq for fast-track development and to capitalise on the surge in demand for battery-grade graphite
emanating from the electric vehicle sector.
Our focus at Alba has always been about building sustained value and growth for our shareholders. With that
in mind, we have been exploring how best to unlock value in those of our assets in our portfolio which we
consider to be undervalued. Most pertinently, this applies to our Greenland mining project portfolio
(“Greenland Projects”). This includes two assets with particularly strong potential, Amitsoq (graphite) and
Thule Black Sands (ilmenite), plus one other, Melville Bay (iron ore), which deserves renewed attention given
the significant rally in the iron ore price over the past 12 months.
8
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
One way to unlock greater value in our Greenland assets would be to enter into a joint venture with third
parties. This would set a market price for the Greenland Projects and provide a validation of their potential
by virtue of a third party committing to spend money on them. There are, however, many uncertainties in
going down this route, prime among them of course being that there is no guarantee that we would be able
to conclude joint ventures on acceptable terms.
After assessing all the alternatives, the Alba Board has determined that the best way to unlock real value in
our Greenland assets is to divest the Greenland Projects into a separate vehicle which, subject to regulatory
approval, will be admitted to trading on AIM (“Greenland Listco”). It is intended that Greenland Listco will
acquire the Greenland Projects (see Table 1 below) for shares and simultaneously undertake an IPO (Initial
Public Offering) fundraising to secure the necessary working capital to fast-track the development of the
Greenland Projects.
Table 1: The Greenland Projects
Project
Amitsoq Graphite Project
Thule Black Sands Ilmenite Project
Inglefield Land Multi-Element Project
Melville Bay Iron Project
Exploration Licence
MEL 2013-06
MEL 2017-29
MEL 2018-25
MEL 2017-41
Historic cost at 30 November 2020
£788,360
£587,766
£199,412
£112,061
The rationale for a stand-alone listing for our Greenland assets is:
(1) That the Board consider the Greenland Projects to be materially undervalued within the current Alba
asset portfolio.
(2) Moving the Greenland Projects into a new listed vehicle will allow the market to set a clear value for those
assets in isolation rather than as part of a larger pool of diverse mining, oil and gas and exploration assets,
as is currently the case. The potential for obtaining a significant stand-alone valuation is evident, when
one has regard to the market capitalisations of other listed mineral exploration and development
companies whose principal mining assets are in Greenland (see Table 2 below).
Table 2: Greenland-Focused Listed Mining Companies (information as at 14 May 2021)
Market
AIM
ASX
AIM and
TSX-V
TSX-V
Company
Bluejay Mining Plc
Greenland Minerals
& Energy Limited
AEX Gold Inc
Hudson Resources
Inc.
Ironbark Zinc
Limited
North American
Nickel Inc
Market Cap
GBP £90m
AUD$127m
GBP Equivalent Main Project
£90m
£70m
Dundas Titanium
Kvanefjeld REE-Uranium
Status
Development
Development
GBP £51m
£51m
Nanulaq Gold
Development
CAD$29m
£17m
ASX
AUD$26m
£15m
White Mountain
Anothorsite
Citronen Lead-Zinc
Exploitation
Exploration
TSX-V
CAD$29m
£17m
Maniitsoq Nickel
Exploration
As can be seen from Table 2, the only other Greenland-focused vehicle quoted solely on AIM is Bluejay Mining
Plc (market capitalisation of £90m at 14 May 2021), whose ilmenite project, Dundas, is on the same coastline
as the Thule Black Sands ilmenite deposit. The Board of Alba is of the view that, given the plan to drill a more
sizeable JORC-compliant Resource at Thule Black Sands this year, there is great potential for Greenland
Listco’s market capitalisation to increase significantly following the completion of the drilling programme.
9
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
(3) Alba will retain substantial upside in the Greenland assets post disposal because, in consideration for the sale
of the assets to Greenland Listco, Alba will receive a significant shareholding in Greenland Listco. Further, as
Greenland Listco’s management team will be focusing all its efforts on growing the value of its Greenland
asset portfolio, we would hope to see Alba’s stake in Greenland Listco also grow ever more valuable.
(4) At the same time as retaining that upside through its stake in Greenland Listco, Alba would no longer have to
meet any of the funding obligations for the Greenland Projects. These are likely to be significant in the
medium to long-term, as Greenland Listco seeks the development capital to progress at least one, if not more,
of its projects into the development stage and ultimately into production.
(5) Not having to fund the Greenland Projects will inevitably mean less dilution for Alba shareholders, as it would
significantly reduce our need to seek further capital from the public markets.
(6) With the Greenland Projects divested, Alba will be able to focus on its UK and Irish portfolio of precious and
base metal projects which, in our view, are what have fired the Company’s growth over the past 12 months.
(7) Greenland Listco will, in turn, be able to focus solely on the development of its Greenlandic assets, including
raising money from investors and institutions who are specifically interested in those assets and/or in
Greenland and therefore much more likely to be long-term investors. Greenland is expected to play an
increasingly important strategic and geopolitical role on the world stage and in the global mining sector in
the coming years. With its pure Greenland focus, Greenland Listco will be able to benefit from this increased
exposure and interest in the country from foreign investors and sovereign states.
(8) Looking to the future, Alba may choose to sell down some of its stake in Greenland Listco, once the post-IPO
lock-in period has expired, or it may decide to retain its shares in Greenland Listco for the long-term or, at
least, until its stake in Greenland Listco has increased significantly in value. The point is that, as a result of
the disposal, Alba’s stake in the Greenland Projects would become a liquid, tradeable asset, which in itself
could add significant value to the Alba Group’s balance sheet. This is not the case at present, with those
assets being held within the Alba Group and being valued purely on a historical cost basis.
For all these reasons, the Alba Board has concluded that the case for divesting of the Greenland Projects into a
Greenland-dedicated listed vehicle is an overwhelmingly strong one. We will, therefore, be seeking the admission
of a new English public company to the AIM market, subject to the necessary regulatory approvals. That company
will own 100% of the Amitsoq Graphite, Thule Black Sands Ilmenite, Melville Bay Iron and Inglefield Multi-Element
Projects. The name chosen for Greenland Listco will be disclosed in due course.
Further announcements will be made as the transaction progresses towards completion.
Finally, I would like to take this opportunity to thank our shareholders for all their support and encouragement
over the past 12 months, during which we have all had to face unprecedented challenges. Rest assured, however,
that the Alba Board has emerged stronger and more determined than ever to make Alba a great success story.
George Frangeskides
Executive Chairman
19 May 2021
10
Alba Mineral Resources plc
STRATEGIC REPORT
The Directors present the strategic report for Alba Mineral Resources plc for the year ended 30 November 2020.
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 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 continuing global Coronavirus (COVID-19) pandemic may
adversely affect the Company’s ability to implement its planned overseas exploration programmes for the coming
year, whether due to the resulting logistical challenges, such as the curtailment of international flights or other
restrictions imposed by individual countries, or because of the unavailability of exploration personnel, equipment
or materials.
FINANCIAL REVIEW
Income Statement
The reporting period saw a reduction in Administration expenses from £772,849 during the period ending 30
November 2019 to £543,942 during the period ending 30 November 2020. There is no single reason for this
reduction, rather various costs being reduced during the uncertainties of the COVID-19 pandemic. Additionally
the recovery of a previously impaired debt and the award of associated costs, plus a local council small business
grant, reduced the overall admin expenses.
There were no impairment charges to intangible assets during the period. However, the value of the Group and
Company’s 18.1% investment in Horse Hill Developments Limited was written down by £1,430,000 from
£5,430,000 to £4,000,000. The basis of this valuation is discussed further in Note 10 to the Accounts.
Financing costs arose from the convertible loan note arrangement with Bergen Asset Management. These costs
include values attributable to warrants and fee shares issued as part of the arrangement plus the termination fee
11
Alba Mineral Resources plc
STRATEGIC REPORT
to exit the arrangement, when COVID-19 market uncertainty settled and funding became available to the Group
from other sources.
Balance sheet
Successful placings during the period, as per the Chairman’s Statement, led to a substantial cash balance of
£1,512,031 at 30 November 2020 compared to £211,333 at prior year end. Trade receivables included a significant
debtor of £1,128,000 relating to the placing announced on 25 November 2020. These placing funds were received
on 1 December 2020. Combined, these have driven the change in the balance sheet from a net current liability
position at 30 November 2019 to a net current asset position this year end.
Intangible assets increased by £475,887 year on year. COVID-19 restrictions prevented activities in Greenland
during the year, but we were able to continue activities in Wales and the majority of these additions related to
the Clogau Gold Project.
Group net assets increased to £10,047,211 at 30 November 2020 from £8,375,804 at 30 November 2019. This
was despite an impairment of £1,430,000 of the Group’s investment in Horse Hill Developments Limited, which
is valued at a fair value of £4,000,000 at year end. For further details of this valuation see Note 10 to the Accounts.
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.
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)
either that a maiden mineral resource estimate is announced in respect of at least one of Alba’s projects
or that the declared level of Resources on any project is increased; 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.
(ii)
In relation to the Company’s other assets, the KPI of declaring a mineral resource estimate is not an appropriate
measure of progress at the Clogau-St David’s Gold Mine. Regarding the second KPI, the Board has commenced a
process to divest the Greenland part of the portfolio into a new, Greenland-focused listed vehicle, as detailed in
the Chairman’s Statement on page 8.
For the coming year, the Board will apply the following KPIs:
(i)
(ii)
(iii)
either that a maiden Mineral Resource estimate is announced in respect of at least one of Alba’s
projects or that the declared level of Resources on any project is increased; or
that an exploration target is declared for Clogau or Gwynfynydd or one or more new mineralised
zones is discovered at Clogau or Gwynfynydd; or
that the Company submits a formal planning application for the opening of the Clogau-St David’s Gold
Mine for commercial production.
12
Alba Mineral Resources plc
STRATEGIC REPORT
Section 172(1) Statement
The Directors believe they have acted in the way most likely to promote the success of the Company for the
benefit of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
- Consider the likely consequences of any decision in the long term,
- Act fairly between the members of the Company,
- Maintain a reputation for high standards of business conduct,
- Consider the interests of the Company’s employees,
-
- Consider the impact of the Company’s operations on the community and the environment.
Foster the Company’s relationships with suppliers, customers and others, and
At Alba, our focus is always on building sustained value and growth for our shareholders. The application of the
s172 requirements can be demonstrated in relation to the some of the key decisions made during 2020, as
follows, some of which are already covered in the Chairman’s statement:
-
-
-
-
extending the Group’s reach in the Dolgellau gold belt by successfully applying for an option to explore
the Gwynfynydd gold mine and the wider gold belt, giving the Group exclusive rights over that area;
investing in plant to part-process sampling on site, with a view to long term activities and reducing
processing time and costs;
capitalising on interest in the Clogau gold project to obtain funding to progress development across the
portfolio;
continued assessment of corporate overheads and expenditure levels to best direct the Group’s spend to
investing in its projects;
- using Twitter as a channel to more widely engage with shareholders (within the AIM disclosure
-
guidelines), for example canvassing opinions on Group projects;
engaging with the community – for example Alba’s Executive Chairman attended a virtual meeting of a
local Community Council in north Wales to update the councillors about Alba’s work at the Clogau-St
David’s Gold Mine and take questions. Our site team also keeps local residents updated on activities and
addresses their legitimate concerns;
- using local suppliers and staffing where possible;
-
-
liaising closely with local regulatory and environmental bodies and professional advisers to ensure that
the Group’s activities are properly permitted and approved. Our operations in Wales are all undertaken
in accordance with all applicable planning, environmental and ecological regulations, and we work closely
with Snowdonia National Park Authority (“SNPA”) and Natural Resources Wales (“NRW”) on those
matters;
commencing the process to transfer some of Alba’s assets into a new vehicle in order to unlock value in
Alba’s project portfolio and enable to projects to be developed faster, streamlining the portfolio but at
the same time retaining a significant investment in the new vehicle in order to obtain the best value for
Alba shareholders; and
in response to COVID-19, implementing new working practices on site to best protect employees.
In respect of acting fairly between members, the Directors note that equity financings are typically managed by
the Company’s appointed corporate brokers who are responsible for book-building on each private placement
undertaken for the Company. As a junior resource company, it is prohibitively expensive to undertake rights
issues whereby all existing shareholders are given the opportunity to participate in an equity financing, which is
why the Company expects to undertake future equity financings by way of private placements. However the
Company will keep this under regular review.
-
Approved by the Board of Directors and signed on behalf of the Board
George Frangeskides
Executive Chairman, 19 May 2021
13
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 2020.
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
£2,078,897 (2019: £1,311,172 loss).
The Directors do not recommend the payment of a dividend (2019: £nil).
DIRECTORS
George Frangeskides, Michael Nott and Manuel Lamboley served as Directors throughout the year.
Manuel Lamboley resigned from the Board on 8 December 2020 and two new non-executive directors, Elizabeth
Henson and Lars Brünner, were appointed on the same date.
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
19 May 2021
14
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.
15
Alba Mineral Resources plc
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.
The Board has adopted the Quoted Companies Alliance Corporate Governance Code (the “Code”) in line with the
AIM Rules for Companies (“AIM Rules”) which require 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 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. As discussed
in the Chairman’s Statement on pages 2-10 of these Report and Accounts Alba intends to divest of its Greenland
assets into a new, Greenland-focused AIM-quoted entity, with Alba thereby acquiring a major shareholding in the
new entity.
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 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. The Board also believes
that the strategy of divesting of the Group’s Greenland asset portfolio and becoming a major shareholder in a
new, Greenland-focused AIM-quoted entity has the potential to add significant long-term value for Alba
shareholders, for the reasons given in on pages 9-10 of the Chairman’s Statement.
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. The Group is also active on social media via Twitter, and the
Executive Chairman regularly participates in interviews on investment channels such as Vox. The Group has also
held two investor webinars in the last 12 months. These have been well attended and have been an invaluable
alternative to in-person events during the restrictions in place this year.
16
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
Shareholders can contact the Company via info@albamineralresources.com or @AlbaMinerals on Twitter. The
Board welcomes feedback from shareholders as this helps Alba to better communicate our activities and, where
possible, to deal with any 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, non-public information.
The Board maintains regular contact with the Company’s advisers, notably our Nominated Adviser (or “Nomad”),
Cairn Financial Advisers, and our retained broker, 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.
Our operations in Wales are all in accordance with all applicable planning, environmental and ecological
regulations, and we work closely with SNPA and NRW on those matters. We have also attended a local community
council meeting near our activities in north Wales, and management engages with local residents about any
concerns.
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, with the recent addition of COVID-19
related infection risk to overall health and safety risk management. 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 Note 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.
Covid-related risks are a new part of the health and safety environment and again are addressed on a project-by-
project basis and at a head office level.
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. 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.
17
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
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
During the year ended 30 November 2020, the Board comprised the Executive Chairman and two Non-Executive
Directors. One of these Non-Executive Directors, Manuel Lamboley, was considered to be independent. In
December 2020 Manuel Lamboley stood down and two new independent Non-Executive Directors were
appointed. The Board is now compliant with the Code in respect of having two independent Non-Executive
Directors.
The Board is aware that the Code advises that save in exceptional circumstances the Chairman should not also
fulfil the role of Chief Executive. At this stage of the Company’s development the Board believes the combined
role (with the Chairman acting in an executive capacity) is merited. This is kept under regular review with a view
to moving to full compliance once the Company has achieved a significant, sustained increase in its market
capitalisation.
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 regular Board meetings also held periodically.
During the year, six scheduled Board meetings were held and all Directors were in attendance. Various ad-hoc
meetings took place to approve specific actions, such as exercises of share warrants.
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 four 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 the majority have experience in the public markets. The Board also engages 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. During the year a new role of Chief
Operating Officer (COO) was created and filled to support the Group’s development of its mining assets.
Further information about the Directors’ experience, skills, capabilities and personal qualities is published on our
website and on page 22 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 COO and oil and gas Technical Director (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.
18
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
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. A further evaluation, in the form of a Board effective questionnaire, is circulated to
Board members each 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
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 UK 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 Non-Executive Directors do not have specific individual responsibilities or remits
although they are all specialists in different fields and provide support to the Company in those areas.
All 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 or herself from the discussion
and not vote on any proposed terms which relate to him or her. 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
19
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
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.
Audit Committee
The Audit Committee comprises Michael Nott, Lars Brünner and the Group’s Head of Finance. Prior to 8 December
2020, Audit Committee matters were generally dealt with as part of Board Meetings. During the year one Audit
Committee meeting was held and all members attended.
The new enlarged 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.
The principal duties and responsibilities of the Audit Committee include:
- Overseeing the Company’s financial reporting disclosure process; this includes the choice of appropriate
accounting policies
- Monitoring the Company’s internal financial controls and assess their adequacy
- Reviewing key estimates, judgements and assumptions applied by management in preparing published
financial statements
- Annually assessing the auditor’s independence and objectivity
- Making recommendations in relation to the appointment, re-appointment and removal of the company’s
external auditor
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).
Historical annual reports and interim results, corporate factsheets and presentations can be accessed via the
Company’s website and are released via RNS and therefore reported in the “Latest News” section of the website.
20
Alba Mineral Resources plc
CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
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. Prior to working in the mining sector, 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 draws on his extensive experience of both the mining industry and the corporate world to offer pragmatic
advice to the Company.
Elizabeth Henson, Non-Executive Director
A recent appointment to the Board, Ms Henson was previously a senior international tax partner for
PricewaterhouseCoopers LLP (PwC), based in London. She was the Founder and Leader of PwC UK’s International
Wealth business and is considered a leader in her field and has an established and substantial contact base
consisting of some of the wealthiest entrepreneurs and high net worth individuals from the UK and across the
globe.
Ms Henson was the 2018 Spears Private Client Accountant of the Year and won the Citywealth Powerwomen
Awards Silver award for Woman of the Year - Leadership (Large, Institutional) in 2016, 2018 and 2019, among
other awards. She has a huge amount of professional experience across a wide range of sectors and countries
and her advice and input will benefit the Group as it looks to grow. Her financial background adds to the strength
and depth of the Board.
Lars Brünner, Non-Executive Director
Another recent appointment to the Board, Mr Brünner was previously the Arctic Mining and Environment,
Business Development Leader for Golder Associates A/S, the leading international mining and environmental
consultancy firm.
He has been an Environmental Consultant for more than 25 years, during which time he has conducted numerous
Environmental and Social Impact Assessments for a broad range of projects and developed a wide-ranging
expertise in environmental legislation, natural resource management, monitoring and surveillance programmes.
Mr Brünner has an M.Sc. in Biology from the University of Copenhagen, Denmark. The Group will benefit greatly
from his expertise in environmental compliance.
21
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 2020 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 2020 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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report
to you where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
22
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Key audit matters
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.
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
- £4,000,000”, 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 10, the
valuation is based on a very limited number of transactions of interests in comparable UK onshore oilfields. The
adoption of such a valuation technique
requires judgement and is inherently subjective; the resultant valuation has a high degree of estimation uncertainty
associated with it. The investment forms approximately 40% of the group’s net assets and 44% of the parent
company’s net assets.
Our response to the risk
At the planning stage of the audit, we identified that there were no recent transactions relating to either the
underlying license interests nor the shares of the Horse Hill Developments Limited, and accordingly the valuation
approach used by the directors in prior years was unlikely to be appropriate for the current year.
The directors then prepared an internal valuation, based on comparable market data. Whilst we considered that the
valuation methodology was an appropriate one to use, we challenged the appropriateness of the comparable data
used, on the grounds that the underlying transactions took place some two years prior to the valuation date and
therefore may not reflect current market conditions. In response the directors commissioned the external valuation,
which the directors have adopted in preparing these financial statements.
In respect of that valuation we:
• reviewed information relating to the experience, expertise and independence of the valuer
• agreed factual information within the formal valuation to supporting documentation
• considered whether the comparable data was appropriate to use
• compared the valuation outcome to other relevant market information
• confirmed that the results of the valuation were appropriately reflected in the financial statements
• considered whether the accompanying disclosures were appropriate and sufficiently explained the inherent
uncertainties relating to the valuation.
23
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Key audit matters (continued)
Valuation of investment in Horse Hill Developments Limited (continued)
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 -
£3,526,317” 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.
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
• 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 headings “Impairment assessment of investment in and loans to subsidiaries
(company only) – £2,754,752” and “Impairment charges for the year (£290,555)” 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.
24
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
Key audit matters (continued)
Carrying values and impairment of the parent company’s investment in its subsidiaries and loans due to the parent
company from its subsidiaries (continued)
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 £500,000. 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 5% 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 £406,000. 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 4.4% of total assets as
presented on the face of the parent company’s statement of financial position.
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 99.6% of the consolidated
assets, 86.0% of the consolidated liabilities, 98.2%% of the consolidated administrative expenses and 100% of the
revaluation of investments. 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.
25
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC
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.
26
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
19 May 2021
27
Alba Mineral Resources plc
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2020
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment of intangible assets
Operating loss
Revaluation of investment
Finance costs
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 and diluted
Note
9
3
10
5
2020
£
-
-
-
(543,942)
-
(543,942)
(1,430,000)
(105,595)
(2,079,537)
-
2019
£
-
-
-
(772,849)
(539,554)
(1,312,403)
-
-
(1,312,403)
-
(2,079,537)
(1,312,403)
(2,078,897)
(640)
(2,079,537)
(1,311,172)
(1,231)
(1,312,403)
7
(0.047) pence
(0.039) pence
28
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2020
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
2020
£
(2,079,537)
2019
£
(1,312,403)
(61,406)
(2,140,943)
39,040
(1,273,363)
(2,140,303)
(640)
(2,140,943)
(1,272,132)
(1,231)
(1,273,363)
29
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2020
Note
2020
£
2019
£
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 assets / (liabilities)
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Reserve for warrants to be issued
Retained losses
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
111,038
3,526,317
4,000,000
-
7,637,355
85,000
3,050,430
5,430,000
11,125
8,576,555
1,196,006
1,512,031
2,708,037
81,460
211,333
292,793
(257,047)
(41,134)
(298,181)
(356,232)
(137,312)
(493,544)
2,409,856
(200,751)
10,047,211
8,375,804
4,983,956
9,360,248
1,286,785
416,044
(6,153,136)
168,612
10,062,509
(15,298)
4,582,983
7,128,257
722,998
-
(4,273,794)
230,018
8,390,462
(14,658)
10,047,211
8,375,804
These financial statements were approved and authorised for issue by the Board of Directors on 19 May 2021.
Signed on behalf of the Board of Directors
George Frangeskides, Director, Company No. 5285814
30
Alba Mineral Resources plc
COMPANY STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2020
Note
2020
£
2019
£
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 assets / (liabilities)
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Reserve for warrants to be issued
Retained losses
Equity shareholders’ funds
9
10
11
12
13
14
16
-
4,000,000
-
2,754,742
6,754,742
-
5,430,000
11,125
2,446,230
7,887,355
1,160,153
1,498,291
2,658,444
28,603
211,240
239,843
(256,429)
-
(256,428)
(353,702)
(96,178)
(449,880)
2,402,015
(210,037)
9,156,757
7,677,318
4,983,956
9,360,248
1,286,785
416,044
4,582,983
7,128,257
722,998
-
(6,890,276) (4,756,920)
7,677,318
9,156,757
The loss of the parent company for the year was £2,332,911
(2019: a loss of £2,206,194). For more details see Note 6 to the accounts.
These financial statements were approved and authorised for issue by the Board of Directors on 19 May 2021.
Signed on behalf of the Board of Directors
George Frangeskides, Director
Company No. 5285814
31
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2020
Share
capital
£
Share Warrant Warrants to be
issued reserve
£
reserve
£
premium
£
At 30 November 2018
Loss for the period
Translation differences
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
Owner’s contribution
At 30 November 2019
Loss for the period
Translation differences
Comprehensive loss for the period
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Shares and warrants issued
Shares issued on conversion
Share issue costs
Equity settled share-based payments
Transfer on exercise or expiry of warrants
At 30 November 2020
239,681
161,292
-
-
-
4,983,956
744,786
2,301,273
-
136,708
-
(205,990)
93,556
-
(274,555)
-
9,360,248 1,286,785
416,044
-
-
-
-
416,044
32
Profit and
loss
£
Merger Foreign currency Attributable to Non-controlling
interest
reserve equity holders
reserve
£
£
£
£
Total
£
(3,167,943)
(1,311,172)
-
(1,311,172)
-
-
200,000
-
5,321
-
(4,273,794)
(2,078,897)
-
(2,078,897)
-
(75,000)
-
-
274,555
(6,153,136)
200,000
-
-
-
-
-
(200,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
190,978
-
39,040
39,040
-
-
-
-
-
-
230,018
-
(61,406)
(61,406)
-
-
-
-
-
168,612
8,732,689
(1,311,172)
39,040
(1,272,132)
895,000
(47,500)
-
82,405
-
-
8,390,462
(2,078,897)
(61,406)
(2,140,303)
3,701,784
223,000
(205,990)
93,556
-
10,062,509
(266,501)
(1,231)
-
(1,231)
8,466,188
(1,312,403)
39,040
(1,273,363)
-
-
-
-
-
253,074
(14,658)
895,000
(47,500)
-
82,405
-
253,074
8,375,804
(640)
-
(640)
(2,079,537)
(61,406)
(2,140,943)
-
-
-
-
-
(15,298)
3,701,784
223,000
(205,990)
93,556
-
10,047,211
Alba Mineral Resources plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2020
Notes
Share
capital
Share
premium
Warrant Warrants to be
issued reserve
reserve
Profit and
loss
Merger
reserve
£
£
£
£
£
£
Attributable to
equity holders
of parent
£
At 1 December 2018 as restated
4,099,233
6,786,382
624,039
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
Loss for the period
Comprehensive loss for the period
Shares and warrants issued
Shares issued on conversion
Share issue costs
Equity settled share-based payments
Transfer on exercise or expiry of warrants
At 30 November 2020
-
-
-
-
483,750
-
-
-
-
4,582,983
389,375
(47,500)
-
-
-
7,128,257
-
-
-
-
239,681
161,292
-
-
-
4,983,956
2,301,273
136,708
(205,990)
-
-
9,360,248
-
-
21,875
-
-
82,405
(5,321)
722,998
-
-
744,786
-
-
93,556
(274,555)
1,286,785
33
-
-
-
-
-
-
-
-
-
-
-
416,044
-
-
-
-
416,044
(2,756,048)
200,000
8,953,606
(2,206,193)
(2,206,193)
-
-
200,000
-
5,321
(4,756,920)
(2,332,911)
(2,332,911)
-
(75,000)
-
-
274,555
(6,890,276)
-
-
(2,206,193)
(2,206,193)
-
-
(200,000)
-
-
-
-
-
-
-
-
-
-
-
895,000
(47,500)
-
82,405
-
7,677,318
(2,332,911)
(2,332,911)
3,701,784
223,000
(205,990)
93,556
-
9,156,757
Alba Mineral Resources plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2020
Note
Cash flows from operating activities
Operating loss
Consulting fees settled in shares
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
Payments for tangible fixed assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares and warrants
Costs of issue
Proceeds from short term borrowings
Proceeds from issue of convertible loan notes
Financing costs
Repayment of short term borrowings plus financing costs
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
13
2020
£
(543,942)
12,500
93,556
-
11,125
(61,406)
(89,394)
13,453
2019
£
(1,312,403)
-
82,405
539,554
(3,964)
45,614
44,474
(19,566)
(564,108)
(623,886)
(482,777)
-
(26,038)
(508,815)
2,422,899
(105,000)
-
192,000
(37,200)
(99,078)
2,373,621
1,300,698
211,333
1,512,031
(522,179)
(165,897)
-
(688,076)
895,000
(47,500)
90,000
-
-
-
937,500
(374,462)
585,795
211,333
Non-cash transactions
The significant non-cash transaction in the period was the revaluation of the Group’s investment in Horse Hill
Developments Limited, impairing the value by £1,430,000. This is not included in operating costs so is not
reflected in the cash flow statement above.
Significant non-cash transactions in the prior period were impairment charge against intangible assets.
Accruals includes capital items of £52,135 (2019: £59,025).
34
Alba Mineral Resources plc
COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2020
Cash flows from operating activities
Operating loss
Consulting fees settled in shares
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
Costs of issue
Proceeds from borrowings
Proceeds from issue of convertible loan notes
Financing costs
Repayment of short term borrowings plus financing costs
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Note
2020
£
2019
£
(797,316)
(2,206,194)
12,500
93,556
-
11,125
-
221,926
68,628
(61,426)
(94,374)
(3,550)
-
82,405
373,927
(3,964)
232,484
274,688
640,084
45,281
18,566
33,292
(548,931)
(509,431)
11
11
(537,539)
-
(100)
(625,018)
(165,897)
(99)
(537,639)
(791,014)
2,422,899
(105,000)
-
192,000
(37,200)
(99,078)
895,000
(47,500)
90,000
-
-
-
2,373,621
937,500
1,287,051
211,240
1,498,291
(362,945)
574,185
211,240
Cash and cash equivalents at end of year
13
Significant non-cash transactions in the period were the revaluation of the Group’s and Company’s investment in
Horse Hill Developments Limited, impairing the value by £1,430,000 and an increase in the general expected
credit loss provision as noted above. The impairment of investment is not included in operating costs so is not
reflected in the cash flow statement above. In the prior period, 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.
35
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.
Going concern
Based on financial projections prepared by the Directors, the Group’s current cash resources are sufficient to
enable the Group to meet its recurring outgoings and projected exploration expenditure for the entirety of the
next twelve months.
The Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
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 - £3,526,317
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 – £3,526,317
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.
Accounting for investment in Horse Hill Developments Limited - £4,000,000
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).
36
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
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.
Company only - Impairment assessment of investment in and loans to subsidiaries – £2,754,742
Impairment charges for the year (£290,555)
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, Dragonfire Mining Limited group and GMOW
Gwynfynydd 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.
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 - £4,000,000
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. For further details of the
valuation see Note 10.
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards in conformity with the requirements of the Companies Act 2006 ("IFRSs") as they apply to the Group
for the year ended 30 September 2020 and with the Companies Act 2006.
New standards, amendments and interpretations Effective for the Periods from 1 Dec 2019
The accounting policies adopted are consistent with those of the previous financial year.
IFRS 16 came into effect for the accounting period. Adoption of IFRS 16 has not resulted in the Group recognising
right of use of assets and lease liabilities for all contracts that are, or contain, a lease. IFRS 16 has not had a
material impact on the results or balance sheet of the Group. All the exploration agreements that the Group has
for its areas of interest are outside the scope of IFRS 16.
New standards, amendments and interpretations not yet adopted
At the date of approval of these Financial Statements, the following standards and interpretations, which have
not been applied in these Financial Statements were in issue but not yet effective (and in some cases had not
been adopted by the EU):
o Amendments to References to Conceptual Framework in IFRS Standards – effective from 1 January 2020;
o Definition of Material (Amendments to IAS 1 and IAS 8) – effective from 1 January 2020;
o Amendment to IFRS 3 Business Combinations – effective 1 January 2020;
o Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current – effective 1 January 2023*.
*subject to EU endorsement
37
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
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. 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.
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.
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:
o
o excluding the impact of any service and non-market performance vesting conditions (eg profitability, sales
including any market performance conditions (eg the entity’s share price)
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).
38
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
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.
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.
39
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Property, plant and equipment
Land is shown at cost and is not depreciated as it is not a wasting asset. The land owned by the Group is an integral
part of access to one of the Group’s projects and as such its value is reviewed annually as part of the impairment
review of that project value as a whole.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
o Plant and equipment 10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no
future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the
disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is
transferred directly to retained profits.
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
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.
o
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 investment cost. Any shareholder loans made are included in the investment cost. Where
a value can be reliably measured the investment is subsequently 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.
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 lifetime 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.
40
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
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:
-
-
-
Trade payables and other short-term monetary liabilities are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest method.
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.
- Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the
issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost
using the effective interest rate method. Interest expense includes initial transaction costs and any
premium payable on redemption, as well as any interest or coupon payable while the liability is
outstanding.
Liability components of convertible loan notes are measured as described further below.
-
Convertible Debt: The proceeds received on issue of the Group’s convertible debt are allocated into their liability
and equity components. The amount initially attributed to the liability component equals the discounted cash
flows using a market rate of interest that would be payable on a similar instrument that does not include an
option to convert. Subsequently, the liability component is measured at amortised cost until extinguished on
conversion or maturity of the bond. The balance of the proceeds is allocated to the conversion option and is
recognised within shareholders’ equity.
The Company issued a convertible loan note during the period that that was fully converted prior to year end.
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.
41
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
2020
£
3,637,355
4,000,000
-
2,708,037
10,345,392
501,925
-
501,925
2019
£
3,135,430
5,430,000
11,125
292,793
8,869,348
492,752
27,023
519,775
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:
2020
2019
Total assets
Republic of Ireland
Greenland
Australia
England & Wales
Capital expenditure
Republic of Ireland
Greenland
England & Wales
£
-
1,687,600
-
8,657,792
10,345,392
2020
£
-
52,606
449,319
501,925
£
-
1,634,994
11,125
7,223,229
8,869,348
2019
£
67,928
113,840
338,007
519,775
The administrative expenditure in the income statement primarily relates to central costs. During the period oil
and gas investments were revalued downwards by £1,430,000. Impairment charges in the prior period related to
the mining project in the Republic of Ireland (£165,627) and oil and gas assets in the United Kingdom (£373,927).
42
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)
Recovery of bad debt and award of associated costs
COVID-19 recovery grant for small businesses
Auditor’s remuneration
- Group audit services
2020
£
-
93,556
(59,104)
(10,000)
2019
£
539,554
82,405
-
-
33,330
33,330
4.
DIRECTORS’ EMOLUMENTS AND STAFF COSTS
During the period there were 4.25 (2019: 3.4) permanent employees, being the Directors (who are the key
management personnel) plus finance and geological staff. There were no temporary employees (2019: 2). 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
Staff costs
Salaries, wages
Share based payment charge (options issued under the EMI
scheme, see below)
Social security costs
Defined contribution pension scheme
2020
£
16,915
134,000
150,915
50,564
14,204
1,668
217,351
33,667
17,445
3,540
819
55,471
2019
£
9,339
130,000
139,339
71,526
13,901
1,463
226,229
4,655
-
190
-
4,845
Average number of employees
4.25
3.4
£19,425 of staff costs comprising salaries, social security costs and pension contributions were incurred during
the period and recharged to relevant projects to be capitalised in intangible assets.
43
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
4.
DIRECTORS’ EMOLUMENTS AND STAFF COSTS (continued)
Fees
Salaries
Pension
2020
2020
£
£
2020
£
Total
2020
£
Fees
Salaries
Pension
2019
2019
£
£
2019
£
Total
2019
£
Directors
George Frangeskides
Michael Nott
Manuel Lamboley
Total
10,915
102,500
1,314
114,729
9,339
100,000
1,146
110,485
1,000
5,000
18,000
13,500
354
-
19,354
18,500
-
-
18,000
12,000
317
-
18,317
12,000
16,915
134,000
1,668
152,583
9,339
130,000
1,463
140,802
Note 23 gives details of other transactions with the Directors.
During the year the Company granted warrants or options to the Directors as follows (no warrants were granted
in the prior year):
George Frangeskides
Michael Nott
Manuel Lamboley
2020
No
140,000,000
15,000,000
-
2019
No
-
-
-
The warrants issued to Mr Nott have an exercise price of 0.16 pence per share. The warrants vest(ed) as follows:
5,000,000 on each of 30 September 2020, 31 March 2021 and 30 September 2021 and can be exercised until 31
December 2023.
The options awarded to Mr Frangeskides and other employees during the period were under the Company’s
Enterprise Management Incentive plan (“EMI scheme”). Mr Frangeskides award comprised 20 million share
options vesting on 28 August 2020, with a further 12 million share options vesting on 30 September 2020 and on
each of the dates falling quarterly from that date for nine vesting periods until 31 December 2022. These options
have an exercise price of 0.16 pence and expire on the tenth anniversary of grant, being 28 August 2030, 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 total estimated value of the share-based remuneration provided to Directors was £174,379 (2019: £71,526).
These values were derived from a Black Scholes model as described in Note 16. The warrants were granted when
the share price was 0.13 pence per share and the warrants were valued at between 0.069 pence and 0.116 pence
per share depending on their term and 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% (2019: 19%)
Deferred taxation
44
2020
2019
£
-
-
-
£
-
-
-
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% (2019: 19%). The differences are explained below:
Loss before tax
Loss multiplied by standard rate of tax
Effects of:
Downwards revaluation of investment not deductible
Deferred tax assets not recognised
2020
£
2019
£
(2,079,537)
(1,312,403)
(395,112)
(249,357)
271,700
123,412
-
-
249,357
-
A deferred tax asset has not been recognised in respect of timing differences relating to tax losses and accelerated
capital allowances, due to uncertainty that the potential asset will be recovered. The aggregated losses in each
of the Group companies, Alba Mineral Resources plc and its subsidiaries as listed in Note 11 amounted to
£6,153,156 before adjustments required by local tax rules and excluding losses on intra-group transactions (2019:
£4,273,795).
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 £2,332,911 (2019: £2,206,194 loss).
7.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of £2,078,897 (2019:
£1,311,172 loss) by the weighted average number of shares of 4,421,614,727 (2019: 3,403,506,056) 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.
45
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
8.
PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 December 2018 and 1 December 2019
Additions
At 30 November 2020
Land
£
85,000
-
85,000
Plant and
equipment
£
Total
£
-
26,038
85,000
26,038
26,038
111,038
The land is 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.
Plant is part of the Clogau gold project. No depreciation has been charged for the year as at year end it was newly
commissioned.
9.
INTANGIBLE FIXED ASSETS
Group
Cost
At 1 December 2018
Exchange differences
Additions
At 30 November 2019
Exchange differences
Additions
As 30 November 2020
Amortisation and impairment
As at 30 November 2018
Impairment charge for 2019
As 30 November 2019 and 30 November 2020
Net book value
At 30 November 2020
At 30 November 2019
Exploration and
evaluation
£
Development and
production
£
Total
£
3,299,097
(6,574)
492,752
3,785,275
-
475,887
4,261,162
(569,218)
(165,627)
(734,845)
3,526,317
3,050,430
346,904
3,646,001
-
(6,574)
27,023
519,775
373,927
4,159,202
-
-
-
475,887
373,927
4,635,089
-
(569,218)
(373,927)
(539,554)
(373,927)
(1,108,772)
-
-
3,526,317
3,050,430
The Group’s intangible fixed assets relate to Amitsoq, the Greenland graphite project (£788,360), Thule, the
Greenland mineral sands project (£587,766), Inglefield, the Greenland multi-element project (£199,412), Melville
Bay, the Greenland iron ore project (£112,061), the Clogau gold project (£1,838,716) and the Limerick base metals
project that was fully impaired in the prior year.
The impairment charges in the prior period related to the Brockham Oil Project and the Limerick Base Metals
Project asset.
46
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
10.
INVESTMENTS
Group and Company
At 30 November 2019
Revaluation of investment
At 30 November 2020
£
5,430,000
(1,430,000)
4,000,000
The above investment represents an investment in 18.1%* (2019: 18.1%) of the issued share capital of Horse Hill
Developments Limited (“HHDL”) and associated loans to that company accruing interest at variable rates linked
to the Bank of England base rate. Those loans and interest are treated as part of the overall investment and as
such are classified as fair value through the profit and loss. Any interest due is subsumed within the overall
investment valuation.
HHDL is a private company with no stock quote. In prior periods share transactions in the stock have provided
bases for valuing the investment. In 2019 the sale of 35% of the Horse Hill licences was a reference transaction.
During the period under review there have been no share transactions in HHDL stock nor transactions in licence
interests. The Directors commissioned a third-party market-based valuation of Alba’s investment. This reviewed
M&A transactions in the UK Onshore oil field sector to select the most comparable transactions in order to
provide price points for valuation. There are a limited number of transactions in the sector and they may not be
directly comparable, for example in scale or in terms of field geology. However the most recent should factor in
post-COVID changes in oil market sentiment and reflect the impact of fluctuating oil prices on field values. If there
had been a greater number of comparable transactions, then the range of values would be expected to be wider
which may have influenced the valuation.
This is a Level 3 valuation under IFRS 13’s valuation hierarchy as inputs are unobservable. Primary inputs are: the
market prices of proven and contingent reserves in recent comparable UK Onshore oil field transactions; oil in
place (“OIP”) from the Field Development Plan; and an estimated Recovery Factor, the two combined giving net
recoverable oil for HDL which can then be compared to market values. The Recovery Factor is the overall
proportion of oil expected to be extracted from the field and is calculated using a number of inputs derived from
the test production and published in the FDP.
The valuation is of the underlying oil field and there has been no adjustment to reflect that the interest is held
through a corporate vehicle. No discount is required in respect of Alba’s minority interest as the HHDL
shareholders’ agreement provides minority protection.
A 10% change in oil expected to be recovered would result in a change in the valuation of 10%, or £400,000.
A 10% change in the market price of proven and contingent reserves used in the model would result in a change
in the valuation of 10% or £400,000.
There is inherent uncertainty in any oil field valuation due to the uncertainty of future oil price movements.
The registered office of HHDL is: The Broadgate Tower, 8th Floor, 20 Primrose Street, London, EC2A 2EW.
*In the prior 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.
47
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
11.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Company
At 1 December 2018
Additions
Foreign exchange movements
Provision for expected credit losses
Impairment of intercompany loan
Impairment of investment
At 30 November 2019
Additions
Foreign exchange movements
Provision for expected credit losses
Impairment of intercompany loan
Investments
£
Capital
Contributions
£
Loans
Total
£
£
530,828
1,115,831
1,366,992
3,013,651
99
-
-
-
(232,484)
-
-
-
-
-
625,018
(45,282)
(274,688)
(640,084)
-
625,117
(45,282)
(274,688)
(640,084)
(232,484)
298,443
1,115,831
1,031,956
2,446,230
100
-
-
-
-
-
-
-
537,540
61,626
537,640
61,626
(221,926)
(221,926)
(68,628)
(68,628)
At 30 November 2020
298,543
1,115,831
1,340,368
2,754,742
Upon adoption of IFRS 9 in the year ended 30 November 2019 the company 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 were 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.
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.
48
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
11.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
At 30 November 2020 the Company held the following interests in subsidiary undertakings, which are included in
the consolidated financial statements and are unlisted.
Country of
Name of company
incorporation
Proportion
held
Nature of
holding
Business
Aurum Mineral Resources Ltd
Ireland
Mauritania Ventures Limited
Obsidian Mining Limited
White Eagle Resources Limited
White Fox Resources Limited
Dragonfire Mining Limited
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Gold Mines of Wales Limited
Jersey
GMOW (Holdings) Limited
GMOW (Operations) Limited
GMOW Gwynfynydd Limited (formerly
White Deer Resources Limited)
England & Wales
England & Wales
England & Wales
100%
50%
90%
100%
51%
100%
90%
90%
90%
100%
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Exploration
Non-trading
Exploration
Exploration
Exploration
Exploration
Holding Co.
Holding Co.
Exploration
Direct
Exploration
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
Called up share capital not paid
Group
2020
£
38,594
29,412
1,128,000
1,196,006
Group
2019
£
60,616
20,844
-
81,460
Company
2020
£
26,670
5,483
1,128,000
1,160,153
Company
2019
£
7,758
20,845
-
28,603
The fair value of trade and other receivables approximates to their book value. The called-up share capital not
paid relates to a placing on 25 November 2020 and settlement was made on 1 December 2020.
49
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
13.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Group
2020
£
Group
2019
£
Company
2020
Company
2019
£
£
1,512,031
211,333
1,498,291
211,240
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
2020
£
68,140
27,297
161,610
257,047
Group
2019
£
157,401
12,329
186,502
356,232
Company
2020
£
67,522
27,297
161,610
256,429
Company
2019
£
156,444
12,329
184,929
353,702
The fair value of trade and other payables approximates to their book value.
15.
FINANCIAL LIABILITIES
Financial Liabilities
Borrowings
Other borrowings
Contingent consideration
Group
2020
£
-
6,958
34,176
41,134
Group
2019
£
96,178
6,958
34,176
137,312
Company
2020
£
-
-
-
-
Company
2019
£
96,178
-
-
96,178
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.
50
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
Ordinary shares of 0.01 pence
Deferred shares of 0.9 pence
B deferred shares of 0.09 pence
2020
Number
of shares
2020
£
2019
Number
of shares
2019
£
-
- 3,745,351,946
3,745,352
6,198,078,989
93,070,100
619,808
837,631
3,918,351,946
3,526,517
-
-
93,070,100
837,631
Total
10,209,501,035
4,983,956 3,838,422,046
4,582,983
The Company’s Articles 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.
At the AGM on 28 April 2020 a resolution was passed to reduce the par value of its ordinary shares to £0.0001.
This resulted in the creation of a new class of deferred shares at 0.09 pence. These deferred shares have the same
rights as the original class of deferred shares (noted above).
In February 2020 the Company announced that it had entered into a convertible securities issuance deed with a
U.S.-based institutional investment fund managed by Bergen Asset Management, LLC to provide up to £1,054,500
of funding in the form of the issuance by the Company of unsecured zero-coupon convertible securities.
The initial Convertible Security issued on 3 March 2020 had the purchase price of £192,000 and a nominal value
of £223,000. That was converted in five tranches during the year. The Company terminated the agreement in
September prior to the issue of any further securities.
During the year the Company issued ordinary shares as follows:
At 1 December 2019
February 2020 – April 2020
Convertible Securities Agreement
(commencement fee, collateral shares,
conversion shares and fee shares)
Total capital prior to reduction in par value
28 April 2020 – reduction in par value
Total capital after reduction in par value
May 2020 – August 2020 issues under
convertible securities agreement
July 2020 – Placing for cash
September 2020 – Consultants fees paid in
shares
September 2020 – Placing for cash
November 2020 – Placing for cash
Various – issues of shares upon exercises of
warrants
At 30 November 2020
Ordinary shares
of 0.1 pence
Ordinary shares
of 0.01 pence
Deferred shares
of 0.9 pence
B deferred shares
of 0.09 pence
3,745,351,946
-
93,070,100
-
173,000,000
3,918,351,946
(3,918,351,946)
-
-
-
3,918,351,946
3,918,351,946
-
93,070,100
-
93,070,100
-
-
3,918,351,946
3,918,351,946
362,916,667
692,307,692
17,857,143
472,727,272
320,000,000
413,918,269
-
-
-
-
-
-
-
-
-
-
-
-
6,198,078,989
93,070,100
3,918,351,946
-
-
-
-
-
-
-
51
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
16.
CALLED UP SHARE CAPITAL (cont’d)
As at 30 November 2020 Alba had 997,253,974 warrants and options outstanding:
No. of warrants
20,000,0001
2,000,000
51,000,0002
15,000,0003
60,000,0003
113,904,7614
60,000,0004
119,687,500
42,375,000
16,923,077
236,363,636
60,000,0005
200,000,0005
997,253,974
Exercise price (pence)
0.3 pence
0.3 pence
0.3 pence
0.4 pence
0.4 pence
0.42 pence
0.42 pence
0.32 pence
0.32 pence
0.13 pence
0.55 pence
0.16 pence
0.16 pence
Final exercise date
27 March 2021
28 May 2021
27 March 2021
27 March 2021
13 January 2027
27 March 2021
2 May 2028
13 November 2021
21 November 2021
4 September 2022
20 September 2022
31 December 2023
28 August 2030
Vested
Vested
Vested
Vested
Vested
Awarded under the EMI scheme. Vested.
Vested
Awarded under the EMI scheme. Vested
Vested
Vested
Vested
Vested
Partially vested.
Awarded under the EMI scheme.
Partially vested.
As at 30 November 2019 Alba had 555,654,761 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
113,904,7614
60,000,0004
146,562,500
72,187,500
555,654,761
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
0.42 pence
0.42 pence
0.32 pence
0.32 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
2 May 2028 Awarded under the EMI scheme. Vested
except 15,000,000 vesting 31 Dec 2019
Vested
Vested
13 November 2021
21 November 2021
27 March 2021
1,2,3,4 These warrants fall within the scope of IFRS 2 “Share-based Payments” and were issued in 2015, 2016, 2017, 2018 and 2020
respectively. The fair value of the warrants issued in 2020 calculated using a Black Scholes model was £281,729. Within the meaning of the
IFRS 13 fair value hierarchies, this is a Level 2 valuation. It is based on a risk-free rate of 10 year gilts on the date of grant, 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.
52
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
17.
NON-CONTROLLING INTERESTS
At 30 November 2018
Loss after taxation
Contribution from joint venture partner
At 30 November 2019
Loss after taxation
£
(266,501)
(1,231)
253,074
(14,658)
(640)
(15,298)
The joint venture partner in Mauritania Ventures Limited waived its loan to that company during the prior period,
which is accounted for as a contribution from an owner and as such is a movement on reserves.
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.
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.
Warrants to be issued reserve: Proceeds from the issue of warrants announced on 25 November 2020 but issued
post-year end, on 1 December 2020.
19.
CAPITAL COMMITMENTS
As at 30 November 2020, the Group / Company had commitments to spend at least £200,000 in calendar year
2021 on its Greenland licences (2020: £nil due to COVID-19), being in approximate terms the aggregate minimum
expenditure commitments required under the licences. Subsequent to the year end, the Greenland authorities
announced that expenditure obligations for 2021 had been rescinded and obligations across all exploration
licences in Greenland were £nil for 2021.
On renewal of the exploration licence for the Limerick zinc project, the Group committed to spend of circa €16,000
in the period to May 2021 and a further €50,000 to May 2022.
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 has been accrued.
53
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
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 2020, other debtors included £8,100 that was past due but not
impaired (2019: £8,100).
The Company’s credit risk primarily arises from intercompany debtors and this is reviewed annually in the course
of reviewing the Expected Credit Loss provision required under IFRS 9. See Note 11 for more details.
Funding risk
Funding risk is the possibility that the Group might not have access to the financing it needs. The Group’s
continued future operations depend on the ability to raise sufficient working capital through the issue of equity
share capital. The Directors are confident that adequate funding will be forthcoming with which to finance
operations. The Board has a strong track record of raising funds as required. Controls over expenditure are
carefully managed and activities planned to ensure that the Group has sufficient funding.
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.
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.
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. For a review of the progress of the Horse Hill project, please see the Chairman’s Statement.
During the year under review the price of Brent crude oil has dropped from a high of $60 per barrel to a low of
$10 per barrel and back up to $60 at the time of writing. 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.
54
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
21.
FINANCIAL INSTRUMENTS cont’d
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
2020
£
Group
Company
Company
2019
£
2020
£
2019
£
4,000,000 5,430,000
4,000,000
5,430,000
-
11,125
-
11,125
1,166,594
60,616
1,154,670
7,758
-
-
1,340,368
1,031,956
5,166,594 5,501,741
6,495,038
6,480,839
291,223
486,585
256,428
449,880
Liabilities not yet due relate to a valuation of a call option over 10% of the Clogau gold project (£34,176; 2019:
£34,176; Company – £nil both years) and borrowings (Group and Company 2020 £nil, 2019 £96,178). 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 (2019 - £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. 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.
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.
55
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
23.
RELATED PARTY TRANSACTIONS (cont’d)
Group
Stirling Corporate Limited, a company which George Frangeskides, a director of the Company, controls, charged
the Group £3,209 (2019: £39,191) for the provision of financial and administrative services. As at the year-end
£nil (2019: £17,185) was owed to Stirling Corporate Limited.
Aetos Consulting Limited, a company which George Frangeskides, a director of the Company, jointly controls,
charged the Group fees for consultancy services of £42,604 (2019: £37,853). Of these fees, £31,689 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 £nil (2019: £18,710) was owed
to Aetos Consulting Limited and £42,604 was accrued for invoices expected.
24.
EVENTS AFTER THE REPORTING PERIOD
Corporate
On 8 December 2020 the Group announced changes to the membership of the Board, with Manuel Lamboley
stepping down as a Non-Executive Director and Elizabeth Henson and Lars Brünner being appointed as Non-
Executive Directors.
During the period since year end the Company has announced several exercises of share warrants.
As detailed in the Chairman’s Review on pages 2-10, the Directors have approved in principle the divestment of
the Group’s Greenland projects to a new Greenland-focused AIM-listed entity which will own and operate those
assets.
Exploration licences
Clogau Gold Project
On 2 December 2020 and 21 December 2020 the Group gave updates on the progress of a surface drilling
campaign at the Clogau-St David’s Gold Mine.
On 8 January 2021 the Group announced the results of processing of a small bulk sample and that the pilot
processing plant was expected to be operational within a week.
On 2 February 2021 the Group gave a further update on activities at the Project.
On 11 February 2021 the Group announced that The Crown Estate has agreed to extend the duration of the
Company’s exclusive exploration licence over the Clogau-St David’s Gold Mine in north Wales for a further four
years, being the maximum extension possible under the terms of the original licence. As such, the Exploration
Licence will now remain in full force and effect until 9 February 2025.
On 2 March 2021 the Group announced that the phase one surface drilling programme indicates that the newly
identified vein system at the Llechfraith mine area has a strike extent of 58 metres.
On 12 March 2021 the Group updated with further results from the surface drilling and said that the newly
identified vein system at the Llechfraith mine area has a down dip extent of 122 metres below the existing
workings.
On 12 April 2021 the Group announced the commencement of the second phase of surface drilling, the Clogau
Main Lode extension.
On 13 April 2021 the Group announced that an evaluation of the historic waste rock dump was being undertaken.
On 23 April 2021 the Group reported the full results of the phase 1 surface drilling.
Dolgellau Gold Exploration Project (encompassing licence areas in the Dolgellau Gold Belt excluding the
established mine sites)
On 17 December 2021 the Group announced the results of the trenching programme at the Project.
56
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
24.
EVENTS AFTER THE REPORTING PERIOD (cont’d)
On 24 February 2021 the Group announced the latest phase in its regional gold exploration activities, a stream
sediment sampling programme.
Limerick Base Metals Project
On 7 January 2021 the Group announced that the mineral exploration licence for the Limerick Base Metals Project,
PL 3824, has been renewed until 26 May 2022.
On 9 April 2021 the Group announced that a structural review of the Limerick licence had identified three principal
target exploration zones.
Greenland Projects
On 7 January 2021 the Group announced that the Government of Greenland had decided to roll over to 2021 the
initiatives which were first applied in 2020 in response to the COVID-19 pandemic, so that for all mineral
exploration licences in Greenland the exploration expenditure obligations for the year 2021 will be reduced to
zero and the existing licence period will be extended by one year.
Amitsoq Graphite Project
On 9 February 2021 and on 28 April 2021 the Group announced the results of metallurgical test work on samples
taken from the Amitsoq Graphite Project.
On 7 May 2021 the Group declared exploration targets for the Project.
57