Alba Mineral Resources plc
Annual Report 2022

Plain-text annual report

Company No. 05285814 Alba Mineral Resources plc REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 NOVEMBER 2022 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 7 11 13 14 19 26 27 28 29 30 31 32 33 34 Alba Mineral Resources plc OFFICERS AND PROFESSIONAL ADVISERS DIRECTORS George Frangeskides (Chairman) Michael Nott Elizabeth Henson SECRETARY Ben Harber REGISTERED IN ENGLAND & WALES Company Number 05285814 REGISTERED OFFICE 6th Floor, 60 Gracechurch St London EC3V 0HR NOMINATED ADVISERS SPARK Advisory Partners Limited 5 St. John’s Lane London EC1M 4BH BROKERS CMC Markets 133 Houndsditch London EC3A 7BX AUDITOR PKF Littlejohn LLP 15 Westferry Circus London E14 4HD SOLICITORS Memery Crystal 165 Fleet Street London EC4A 2DY PRINCIPAL BANKERS Metro Bank One Southampton Row London WC1B 5HA REGISTRARS Share Registrars Limited 3 Millennium Centre Crosby Way Farnham Surrey GU9 7XX 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 2022. 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 12). Chairman’s Statement Our overall objective is to unearth hidden value from previously drilled or mined projects and to this end we are advancing multiple projects in the UK including the Clogau-St David’s Gold Mine (“Clogau” or the "Clogau Project")), the Gwynfynydd Gold Mine and the Dolgellau Gold Exploration Project. Additionally, we hold significant stakes in two investee companies: GreenRoc Mining plc (“GreenRoc”), a Greenland-dedicated listed vehicle, spun out of Alba to fast-track the development of its advanced graphite and ilmenite projects; and Horse Hill Developments Ltd (‘Horse Hill’), a UK based oil producer. Our share price performance this year has certainly been hit by the ongoing delays in securing the environmental permits we need at Clogau so that we can proceed with our planned work activities at our primary exploration and development target in the Lower Llechfraith workings. We first applied for these permits in early 2021, and so it is inevitable that a delay of now more than two years would cause some disquiet in the market. After we took Clogau over in 2018, we had a very good run for two to three years of securing on a timely basis the ongoing permits required for our exploration work. This enabled us to undertake substantial drilling programmes both from surface and underground, to roll out extensive regional exploration programmes over several miles of the Dolgellau Gold Field and to carry out two successful pitting and sampling campaigns over the historic waste tip at Clogau. Unfortunately, since then our exploration activities, the objective of which has always been to discover sufficient resources of gold to justify making a decision to reopen Clogau for commercial production, have been on hold as the competent regulator has determined that a full Habitat Regulations Assessment (or “HRA”) of the entire mining project at Clogau would be required before any further permits could be considered. However, we hope that we are now entering the final straight of this process and that we will be able to get on with our work activities again in the near future. In January 2022, I purchased over 10 million ordinary shares in the Company on market at an average price of 0.1475p, paying consideration of around £15,000. Following these purchases, which were made into an ISA, I now hold over 48 million ordinary shares in Alba, representing around 0.68 per cent of its issued share capital. Although Alba management’s ability to invest in Alba shares is restricted for large parts of the year by the prevalence of “close periods” for share dealings, I hope to be able to make further investments in the coming year to demonstrate my steadfast belief in the inherent value of the Company’s assets and prospects. This year we have continued to focus on Clogau, where our objective remains to identify sufficient grades and quantities of gold to support the restart of commercial operations at the mine and take advantage of the strong gold price. Welsh gold occupies a unique place in the gold market, putting us in a good position to pursue commercialisation opportunities such as entering into a joint venture with a luxury international brand for the production of bespoke or high-end jewellery products or producing Welsh gold coins or bars for the investment 2 Alba Mineral Resources plc CHAIRMAN’S STATEMENT market. To that end, we have been working with a gold supply chain expert, Vivien Johnston Glass, as we seek to maximise the commercial opportunities presented by this exceptional project. Vivien has a strong commitment to ethics and sustainability and a great deal of experience in the establishment of a robust chain of custody. These elements will be key to our ability to prove the unique provenance of our gold and thereby justify the high prices we expect to be able to secure for our products. During the year we completed the acquisition of the remaining 10% of the Clogau Project not owned by Alba, taking our ownership to 100%. This is a measure of our confidence in the long-term prospects for Clogau. The 10% minority stake had been free carried to commercial production and the vendors also held a 4% net smelter return royalty over the Project, so acquiring both the free carried interest as well as buying back 75% of the royalty greatly improves the economic viability of the project for Alba. Since mid-2018, we have undertaken circa 3,500 metres drilling from surface and underground at Clogau resulting in the identification of several high-priority development targets. New discoveries include the Upper Lode in the Llechfraith Payshoot and the New Branch Lode in the Main Lode System. As shareholders will be aware, the competent regulator Natural Resources Wales (‘NRW’) turned down our permit applications in 2021 which sought permission to dewater the Llechfraith Shaft and associated workings. Considerable ecological work by our technical team and ecological advisers has continued during 2022 both to address ongoing issues raised by NRW during its review of our applications and to feed into the overarching HRA for Clogau, which NRW notified us in 2021 that it wished to undertake. With the kind assistance of our local member of the UK Parliament, Liz Savile Roberts MP, we held a site visit at the mine in September 2022. This was attended by Liz along with our Welsh Parliament (Senedd Cymru) representative, Mabon ap Gwynfor MS, a number of representatives from NRW as well as local Councillors and other interested parties. Following that very positive meeting, in October 2022 we submitted to NRW an updated version of our Report to Inform a Habitat Regulations Assessment, together with renewed applications for a water discharge permit and a European Protected Species licence (“EPSL”) in respect of the proposed dewatering exercise and subsequent safety and exploratory works at the Company's primary target within the Lower Llechfraith workings at Clogau. As reported in late March, the Company received comments from NRW covering a relatively narrow set of points relating to the EPSL including noise mitigation measures, biosecurity and the duration of the proposed exclusion measures for bats. Following the generation of some further baseline data in respect of noise, we have now submitted that data and a full set of responses to NRW’s comments. The Company is hopeful, therefore, that NRW will be able to proceed to a decision shortly on the grant of the permits so that our dewatering activities may proceed as soon as possible. At the same time, we are developing plans to excavate further from Clogau’s historic waste tip (the “Waste Tip”). The Phase 2 programme at the Waste Tip achieved strong concentrate grades of up to 1,000 g/t, with an average across the five pits of 503 g/t. What is more, independent assaying has confirmed that the overall head grade of the fine material taken from the Waste Tip averages 1.7 g/t, which is a significant upgrade on the average grade achieved from sampling the same material prior to the processing stage. This is unsurprising given what we know about the nuggety effect of the gold at Clogau, and it bodes well for the commercial viability of mining the Waste 3 Alba Mineral Resources plc CHAIRMAN’S STATEMENT Tip. Current estimations of the higher-grade portion of the Waste Tip indicate an in-situ tonnage of approximately 11,000 tonnes, of which up to 4,000 tonnes of fine material (<20mm) could be available for processing for gold. As reported in March, as soon as the Lower Llechfraith dewatering permitting has been secured and the HRA completed, we intend to push forward with our permitting and technical activities in relation to the Waste Tip. At our other exploration licences, which host the Gwynfynyndd Gold Mine located north of Clogau and the wider 188 km² Dolgellau Gold Exploration Project (“DGEP”), we are laying the groundwork to advance plans for more exploration work to define resources in previously unmined areas. These include the new high-grade regional gold target, Hafod Owen, which we identified in July 2021, with grab samples grading up to 24 g/t. We plan to fly a high-resolution UAV (unmanned aerial vehicle) aeromagnetic geophysical survey over key targets within the DGEP to pinpoint the bedrock sources of geochemical anomalies and refine targets for follow up groundwork, including drilling. The timing for the survey was delayed in 2022 due to a backlog of applications to the Civil Aviation Authority (“CAA”). At the time of writing, the latest estimated timetable from our contractor UAVE Ltd is that they are hopeful the CAA approvals will be through in time for the carrying out of the survey operations in July of this year. Just after the year end, we surrendered our Limerick Base Metals Project. Located in the Irish Ore Field, targets identified for exploration drilling could not be progressed during 2022 as planned, due to landowner access issues. Alternative drill collar locations proved not to be economically viable and, as the Group could not progress its exploration activities further, under the terms of the licence we were obliged to surrender the licence. In late 2021 we successfully spun out our portfolio of Greenlandic assets into GreenRoc Mining plc, a new AIM- quoted company which raised a gross amount of £5.1 million on its IPO and which now owns 100% of those Greenland assets. Our strategy of creating a Greenland-focused vehicle has been validated by the excellent progress made by GreenRoc throughout 2022. Highlights have included: - A highly successful follow-up drilling campaign in the summer of 2022, which culminated in the announcement of a near threefold increase in the Resource for the Amitsoq Island Deposit, with the total graphite content rising from 1.63Mt to 4.71Mt. - A revised average Resource grade of 20.41% C(g) that puts Amitsoq in a very select group of just two advanced graphite projects globally which have average grades of more than 20% C(g), the other one being the Vittangi deposit owned by Talga Group (ASX: TLG), which has a market cap of circa £360 million. - The completion of advanced test work by specialist consultants which confirmed that graphite concentrate from Amitsoq is “very suitable” for micronisation and spheronisation, those being the processes by which spherical graphite is produced for the electric vehicle (or “EV”) sector. - At the Thule Black Sands (“TBS”) Ilmenite Project, the completion of further ecological and other studies in the field which will feed into the development of an Environmental Impact Assessment (“EIA”) for the project, a key component for a future Mining Licence application. - The appointment of Stefan Bernstein as GreenRoc’s CEO. A Danish geologist with a comprehensive understanding of the Greenland's geological landscape and decades-long experience in Greenland's mining sector, Stefan is ideally equipped to drive GreenRoc forward and to achieve its goal of achieving 4 Alba Mineral Resources plc CHAIRMAN’S STATEMENT commercial production from one of more of its assets, with the focus very much being on GreenRoc’s flagship asset, Amitsoq. The substantially upgraded Resource for Amitsoq will underpin the feasibility studies GreenRoc will be carrying out this year as it moves towards a Mining Licence application and seeks to progress discussions with interested industry and offtake partners in the coming months. At the year end, Alba had a 54% stake in GreenRoc such that GreenRoc is fully consolidated in these results. Since year end, funding requirements to push the Amitsoq project forward have meant a dilution in Alba’s stake in GreenRoc to 44.67%, but we remain by some distance the largest shareholder and remain heavily involved in the strategic direction and development of the company. News from the Horse Hill oil field, in which we have an investment of 11.675% via our holding in Horse Hill Developments Limited ("HHDL"), included formal consent for the recompletion (i.e., conversion) of the Horse Hill- 2z well into a water reinjection well. More recently, plans have been announced for a 3D seismic survey, and possible drilling of a new well, at Horse Hill in a proposed new farm-in arrangement. The proposed transaction is stated to be subject to the satisfaction of a number of conditions, including the consent of all HHDL's shareholders, including Alba, and as such we intend to consider closely the merits of the proposed transaction for Alba and its shareholders. At the balance sheet date we reviewed the valuation of Alba’s investment in HHDL and judged that the asset value should be written down to £2.6 million, which aligns with the valuation attributed to its own interest by HHDL’s majority shareholder. Financial Review The results as reported for 2022 include both Alba Mineral Resources plc and GreenRoc Mining plc, as Alba’s 54% shareholding at the year end requires that company to be consolidated as part of the Alba Group. GreenRoc Mining plc reports separately on its own financial results, which can be found on its website www.greenrocmining.com. We achieved a successful placing in November 2022, raising £500,000 before issue costs. For a detailed financial review, see the Strategic Report which follows this statement. Outlook We continue to be very bullish about the prospects for our 100% owned Welsh gold assets. Although the ongoing hiatus in the planned in-mine work activities at Clogau has been frustrating, we believe that we are finally approaching a conclusion to the current ecological permitting process and that the HRA, once concluded, can provide a framework for a more streamlined and efficient process for future permitting applications. In terms of our non-operating assets, most importantly our investment in GreenRoc, substantial progress has been made at the flagship Amitsoq graphite project over the past 12 months which is shaping up to be a truly 5 Alba Mineral Resources plc CHAIRMAN’S STATEMENT world-class asset. I can personally testify to the immense interest in it from potential international strategic investors and industry partners with whom I have engaged in my capacity as GreenRoc Chairman over the past several months. In this way, our decision to spin out our Greenland assets into a new, Greenland-focused listed vehicle has already shown its worth, and all that is needed now is for the market to properly recognise what, to me, is a greatly undervalued asset. At the same time as developing our existing assets and supporting our investee companies, we are also focused on securing one or more additional complementary assets for Alba which will help drive serious value and growth for shareholders into the future. Finally, I would like to take this opportunity to thank the Board and our management team for their continued hard work and dedication over the course of the year and to thank our shareholders for their ongoing support. I look forward to continuing our work in the year ahead and delivering on our overriding objective, which is to generate significant value for all our shareholders. George Frangeskides, Executive Chairman, 4 May 2023 6 Alba Mineral Resources plc STRATEGIC REPORT The Directors present the strategic report for Alba Mineral Resources plc for the year ended 30 November 2022. 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 12). 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, and iron ore), Wales (gold), as well as having an investment in the onshore UK oil and gas sector. The Group’s stated focus is unearthing hidden value from previously drilled or mined projects. 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 across the portfolio is given in the Chairman’s Statement on pages 2-6. 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. 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. 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) (ii) (iii) (iv) Securing the necessary permissions and then undertaking development to access one or more key underground mine targets within the Clogau-St David’s Gold Mine. Submitting a planning application for the exploitation of the Waste Tip at the Clogau-St David’s Gold Mine and/or for the reopening of the Clogau-St David’s Gold Mine for commercial production. A maiden Mineral Resource estimate being announced in respect of at least one of Alba’s projects or investments or that the declared level of Resources on any project or investment is increased. The identification and securing of an interest in a mining project which is complementary to the Company’s existing portfolio and where the Company has determined there is significant potential for near-term production. 7 Alba Mineral Resources plc STRATEGIC REPORT In respect of (i), at the date of this report the achievement of this milestone is subject to a number of factors and outside the control of the Company. It remains a KPI for the Company. In respect of (ii), in order to allow the competent regulator and other relevant stakeholders to focus on existing permitting applications, the Company has deferred this objective until completion of (i) above. It remains a KPI of the company in 2023. In respect of (iii), GreenRoc Mining plc announced a maiden Mineral Resource estimate for the Amitsoq graphite project on 8 March 2022 and an upgraded Mineral Resource estimate for the project on 23 January 2023. In respect of (iv), the Company continues to actively seek and review projects that show significant potential for near-term production and this remains a KPI for the current year. PRINCIPAL RISKS AND UNCERTAINTIES Principal risks and uncertainties facing the Group are: (i) Funding risk – the risk that the group will not be able to raise sufficient funds to continue as a going concern or to progress exploration activities; Exploration risk – the risk that exploration programmes are not successful; and Global events – such as geopolitical uncertainty and public health incidents. (ii) (iii) Funding risk As reported in Note 1b) to these Accounts, there is a material uncertainty that the Group can obtain sufficient funding to continue as a going concern as it does not have cash to cover 12 months of planned spend. Given its strong track record in raising funds as needed, the Directors have prepared these accounts on the going concern basis but must highlight this to users of the Report and Accounts. For further information see Note 1b) on page 35. Exploration risk Every project has exploration risk attached, being the risk that the project is not successful in finding, developing and/or extracting sufficient quantities of minerals to be commercially viable. Specific risks are identified, evaluated and addressed on a project-by-project basis and can include finding insufficient reserves of minerals, difficulty in accessing minerals identified or complexity of extraction methods required, obtaining environmental or regulatory consents required for exploration and development, meeting commitments under a licence and licence expiry dates. The Company considers all such matters when evaluating and planning its activities. Global events Both funding risk and exploration risk can be materially increased by the impact of international geopolitical, financial and public health developments such as a pandemic, whether due to the resulting logistical challenges, because of the unavailability of exploration personnel, equipment or materials or because of any negative effect on capital markets and the availability of funding. FINANCIAL REVIEW Income Statement Group operating losses of £1,623,000 (before impairments) compared to £1,067,000 in 2021 reflects a full year of admin expenses for GreenRoc Mining plc, meaning that Alba Group results show the costs of two AIM-listed 8 Alba Mineral Resources plc STRATEGIC REPORT companies, with their necessary costs - fees, professional advisers and Boards. Alba company’s operating loss remained at a similar level of ~£800,000 year on year. GreenRoc Mining plc publishes its own Report and Accounts, available on their website and via RNS, with further detail. The impairment charge for the year relates to the Greenlandic project Inglefield Land (£199,000) plus the write down of the Company’s investment in Horse Hill Developments Limited by £785,000. Balance sheet Group net assets have decreased from £12.9 million to £11.3 million. The drop reflects the impairment of Inglefield Land by £0.2m, the investment in HHDL by £0.8m and the relative increase in costs in the income statement of £0.6 million. The increase in group intangible assets from £6.1 million to £8.5 million is direct cash spend on projects of £2.4 million. Cash flow Cash has decreased by £3.4 million from £3.9 million to £0.5 million, approximately split into spend on projects of £2.4 million, cash spend on operating costs of £1.5 million, and a cash inflow from Alba’s placing in November 2022. 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, Alba’s stated activities are exploration and development. The nature of such activities requires a long-term perspective as it may take several years’ work on a project to bring it to the point of crystallising value. In the evaluation of projects, both those in the portfolio and those identified as prospects for the Company, the Company always considers the long-term potential of the project. - Act fairly between the members of the Company, The Company does not differentiate between members in terms of access to information – all information is shared via the regulatory news service as required by AIM and any other communications are via public channels such as Twitter. 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. - Maintain a reputation for high standards of business conduct, The Directors are committed to high standards of business conduct and promotes these via policies and procedures such as its anti-bribery and whistle-blowing policy, and a share dealing policy for dealings in shares by Directors and senior employees and requiring adherence to the same by key suppliers. - Consider the interests of the Company’s employees, As a small Company, Alba does not have a large workforce other than the Board and management personnel and a geological team under the leadership of its COO. All employees have direct access to senior management. The 9 Alba Mineral Resources plc STRATEGIC REPORT Company demonstrates consideration of the interests of the team by enforcing safe working practices on sites, giving employees a range of opportunities for career development, offering competitive remuneration and flexibility in working arrangements. - Foster the Company’s relationships with suppliers, customers and others, The Company endeavours to use suppliers and services local to the projects where possible. It maintains a manned office in Wales near the licence areas and engages with the local community via open days, school visits, dual language communications and visits to local landowners. The Company has also sponsored signage at a local football club in North Wales and the local MP has visited the projects. The Company also works with other stakeholders such as regulatory and environmental bodies (see below) and The Crown Estate. - Consider the impact of the Company’s operations on the community and the environment. Mining in England and Wales is highly regulated. The Company liaises closely with local and national regulatory and environmental bodies and professional advisers to ensure that the Group’s activities are properly permitted and approved. Our operations in Wales are undertaken in accordance with all applicable planning, environmental and ecological regulations, and we work closely with the North Wales Minerals and Waste Planning Service (“NWMWPS”), Snowdonia National Park Authority (“SNPA”) and Natural Resources Wales (“NRW”) on those matters. Approved by the Board of Directors and signed on behalf of the Board George Frangeskides Executive Chairman, 4 May 2023 10 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 2022. 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. 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 12). RESULTS AND DIVIDENDS The loss of the Group for the year, after taxation, attributable to equity holders of the parent amounted to £2,039,000 (2021: £1,699,000 loss). The Directors do not recommend the payment of a dividend (2021: £nil). DIRECTORS George Frangeskides, Michael Nott and Elizabeth Henson served as Directors throughout the year. DIRECTORS’ INTERESTS The beneficial interests of the Directors who held office at 30 November 2022 in the share capital of the Company, and those of their connected parties, were as follows: G Frangeskides M Nott No. of Ordinary shares 2022 No. of Ordinary shares 2021 37,893,290 52,387,230 48,115,199 52,387,230 SUBSTANTIAL SHAREHOLDERS The Company has identified the following interests of 3% or more in its issued share capital at 1 May 2023: Hargreaves Lansdown (Nominees) Limited Barclays Direct Investing Nominees Limited Interactive Investor Services Nominees Limited Hargreaves Lansdown (Nominees) Limited HSDL Nominees Limited Interactive Investor Services Nominees Limited Hargreaves Lansdown (Nominees) Limited HSDL Nominees Limited Pershing Nominees Limited Vidacos Nominees Limited No. of Ordinary shares 866,428,493 563,907,558 518,695,429 495,849,302 465,402,565 463,121,369 378,538,844 370,286,329 271,520,352 216,723,538 Percentage holding 12.17% 7.92% 7.28% 6.96% 6.54% 6.50% 5.32% 5.20% 3.81% 3.04% 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. 11 Alba Mineral Resources plc DIRECTORS’ REPORT AUDITORS The auditors, PKF Littlejohn LLP, have indicted their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the annual general meeting. FINANCIAL INSTRUMENTS AND RISKS The disclosure relating to financial instruments and risks have been included in the Notes to the financial statements (Note 22). CORPORATE GOVERNANCE The Board follows the Quoted Companies Alliance Corporate Governance Code. For further details see page 14. EVENTS AFTER THE REPORTING PERIOD See Note 25 and the Chairman’s Statement from page 2. FUTURE DEVELOPMENTS See Chairman’s Statement “Outlook” on page 5. Approved by the Board of Directors and signed on behalf of the Board George Frangeskides Director, 4 May 2023 12 Alba Mineral Resources plc STATEMENT OF DIRECTORS’ RESPONSIBILTIES 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 UK- adopted international accounting standards. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company 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 UK-adopted international accounting standards 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 Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards to the Group Financial Statements, Article 4 of the IAS Regulation. 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. The Company is compliant with AIM Rule 26 regarding the Company’s website. 13 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 Chairman of the Board is responsible for ensuring the Board functions effectively, particularly with regards to Corporate Governance matters. The Board adopted the Quoted Companies Alliance Corporate Governance Code (the “Code”) in line with the changes to the AIM Rules for Companies (“AIM Rules”) requiring all AIM-quoted companies to adopt and comply with a recognised corporate governance code. The Code is available at www.theqca.com. The Code sets out 10 principles that should be applied. How Alba complies with those principles currently is set out below. As required by the Code, we will provide annual updates on our compliance with the Code. At this stage in the Company’s development, the Board does not fully 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 Wales (gold) as well as having investments in the onshore UK oil and gas sector and in GreenRoc Mining plc, a Greenland-focused exploration company established and listed on AIM (LON: GROC). The Board believes that the Group’s strong asset and investment portfolio provides access to a range of assets with potential to add significant value for the Company’s shareholders in the long-term. Our strategy, where possible, is to target assets that have a production history in stable jurisdictions, and which thereby offer real potential to be brought into commercial production. The key challenge for the Company is identifying the most effective, including the most cost-effective, methods for progressing mineral exploration activities at our projects. Our aim is to materially advance the level of knowledge and confidence in the potential of our projects in order to support committing 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 News Service (“RNS”) and on our website. Shareholders and other interested parties can subscribe to automatic RNS updates via our website. The Group is also active on social media via Twitter @AlbaMinerals, and the Executive Chairman regularly participates in interviews on investment channels such as Vox Markets including Q&A sessions. The Group also hold occasional investor webinars. Shareholders can contact the Company via info@albamineralresources.com or ir@albamineralresources.com, or directly via a contact form on our website . 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 information. The Board maintains regular contact with the Company’s advisers, notably our Nominated Adviser (or “Nomad”), SPARK Advisory Partners, and our retained broker, CMC Markets, which also assists the Company in understanding the views of shareholders and the wider investment market. 14 Alba Mineral Resources plc CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE 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 undertaken in accordance with all applicable planning, environmental and ecological regulations, and we work closely with the NWMWPS, SNPA and NRW on those matters. In Wales we engage with local residents via regular meetings, open days, school visits, dual-language communications, sponsorship of a local football club and we maintain a staffed local office. For more information relating to activities in Greenland, see the Report and Accounts of GreenRoc Mining plc, published on their website and via RNS. Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation The Board identifies, assesses and manages various risks in its decision-making and constantly evaluates the Company’s risk tolerance as part of its strategy as an exploration company. These range from financial and legal risks, to environmental, exploration, regulatory and management risks. The Board will also seek consultation with experts in any area where a particular risk is identified. The financial risks to the Company are addressed in the 2022 Report and Accounts in Notes 1 and 22 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 particular focus on funding risk. Environmental and exploration risks are considered at a 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. 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 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 issues with the Board and Chairman. The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their adequacy and effectiveness. These internal controls are designed to safeguard the assets of the Group and ensure the reliability of financial information for both internal and external use and publication. Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair The Board comprises the Executive Chairman and two Non-Executive Directors, Elizabeth Henson (independent) and Mike Nott, who is not considered to be independent. The Board is aware that it is not currently compliant with the Code in respect of not having two independent Non-Executive Directors, and in having an Executive Chairman fulfilling the role of Chief Executive. The Directors believe that this is appropriate at this stage of the Company’s development but both aspects are kept under regular review with a view to moving to full compliance once the Company has achieved a significant, 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 update Board meetings also held periodically. During the year, five scheduled Board meetings were held and all three Directors attended. Various additional ad-hoc meetings took place to approve specific actions. 15 Alba Mineral Resources plc CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE 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 or her responsibilities and duties as a director. Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities The Board currently consists of three Directors and, in addition, the Company employs Ben Harber of Shakespeare Martineau LLP to act as 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. The Group employs a COO and CFO. Further information about the Directors’ experience, skills, capabilities and personal qualities is published on our website and on page 18 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 mineral 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, CFO and technical advisers (about whom further details can be found on the “Board and Management” page of the Company’s website and in the latest corporate presentation, also found on the Company’s website), the Company retains the services of auditors in the UK, a Nomad, broker and solicitors (for details see page 1). GreenRoc Mining plc also retains auditors and solicitors in Greenland. 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 questionnaire-type assessment tool is undertaken annually. 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 regime (“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. 16 Alba Mineral Resources plc CHAIRMAN’S STATEMENT OF COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE 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 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. The Audit Committee comprises Mike Nott, Elizabeth Henson and the Group’s CFO Sarah Potter, a chartered accountant. The Executive Chairman attends the Audit Committee by invitation. The Committee meets a minimum of twice per year and has met twice in the reporting period in order to consider matters within its remit. 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. The results of voting on resolutions proposed at the Company’s AGM are reported via RNS and recorded in the “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 half-yearly results can be accessed via the Company’s website under “Reports and Accounts”. Final results and interim results are also released via RNS and therefore also reported in the “News” section of the website. 17 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 eight 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, Independent Non-Executive Director 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. 18 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 2022 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Cash Flow Statements and 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 UK-adopted International Accounting Standards 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 2022 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with UK-adopted International Accounting standards; the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to note 1b in the financial statements, which indicates that the Group’s current cash resources are insufficient to enable the Group to meet its recurring outgoings and projected exploration expenditure for the twelve months from the date of approval of the financial statements. The Group incurred a net loss of £2,605,000 during the year ended 30 November 2022 and has cash of £456,000 as at 30 November 2022. As stated in note 1b, these events or conditions, along with the other matters as set forth in note 1b, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. The Group is reliant on a successful fundraise by the Parent Company to fund its recurring outgoings and projected exploration expenditure for the twelve months from the date that the financial statements are approved. Our opinion is not modified in respect of this matter. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting included: • reviewing the cashflow forecast and budgets for the period to 30 November 2024 and the corresponding assumptions used. This includes future fundraising, exploration costs, salaries and ongoing regulatory costs; • discussions with management regarding the future plans and availability of funding; and • challenging management’s assumption of raising funds to support the operations of the Group and Parent Company. 19 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatement. At the planning stage, materiality is used to determine the financial statement areas that are included within the scope of our audit. Materiality applied to the group financial statements was £365,000 (2021: £400,000) with performance materiality set at £225,500 (2021: £280,000). The benchmark for determining materiality of the group was 3% of net assets, given that the most significant balances for the Group relate to the exploration and evaluation assets, investments, cash and cash equivalents. A benchmark of 70% for performance materiality during our audit of the group and parent company was applied as we believe that this would provide sufficient coverage of significant and residual risks. We agreed with the audit committee that we would report to them all audit differences identified during the course of our audit in excess of £18,250 (2021: £20,000) for the group. We also agreed to report any other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds. Materiality applied to the parent company’s financial statements was £328,500 (2021: £320,000) with performance materiality of £229,950 (2021: £224,000). The benchmark for determining materiality of the parent company was 3% of net assets, given that the most significant balances relate to investment in subsidiaries, investment in Horse Hill Developments Limited and cash and cash equivalents. The parent company is the funding vehicle for the exploration work carried out by the subsidiaries. For the parent company, we agreed with the audit committee that we would report all individual audit differences identified during the course of our audit in excess of £16,425 (2021:£16,000) together with any other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds. Component materiality ranged from £60,000 to £328,500 (2021: £84,000 to £350,000), based on their individual net assets. An overview of the scope of our audit In designing our audit approach, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we assessed the areas requiring the directors to make subjective judgements, for example in respect of significant accounting estimates and judgements including the carrying value of evaluation and exploration assets, intra-group balances and investments in subsidiaries and the consideration of future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. An audit was performed on the financial information of the group’s material operating components which, for the year ended 30 November 2022, were located in the United Kingdom, Wales and Greenland. GreenRoc Mining Plc, Obsidian Mining Limited, White Eagle Resources Limited, GMOW (Operations) Limited and Alba Mineral Resources plc have been assessed as significant components of the group and therefore we designed procedures focused on exploration cost capitalisation and valuation of the exploration assets in accordance with IFRS 6. This work was significant in addressing our key audit matter in respect of capitalised exploration costs and valuation of explorations assets in which the group’s exploration costs are recorded. 20 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How the scope of our audit responded to the key audit matter Carrying value of capitalised exploration costs (group) As at 30 November 2022, the group held £8,450k of intangible assets, comprising capitalised exploration costs. This is a material amount in its Consolidated Statement of Financial Position. There is a risk that these assets have been incorrectly capitalised in accordance with IFRS 6 -Exploration for and Evaluation of Mineral Resources (“IFRS 6”), and that there are indications of impairment as at 30 November 2022 which have not been identified by Management. Management's assessment of impairment under IFRS 6 requires significant estimation and judgement particularly in relation to early-stage exploration projects. There is a risk that the carrying value of these intangible assets could be overstated (refer to notes 2 and 10). We performed the following procedures: • Confirmed that the subsidiaries hold good title to the licence area; This subsidiaries. • Performed tests of detail in respect of the capitalised costs relating to the licences of the Greenland included considerations of the recognition criteria within IFRS 6; • Reviewed challenged management’s in respect of the assessment of subsidiaries. This included challenging the key assumptions, data, and method to determine whether any in accordance with IFRS 6; indicators existed impairment impairment and • Discussed and challenged management as to the status of the licence areas, results site work and testing performed, and confirmed their future plans for the licences; • Reviewed management’s forecasts and budgets for the licence areas and compared it to the required minimum expenditure for the succeeding year; and • Assessed progress of the individual projects during the period and post year-end. the reasonable and Based on the procedures performed, we consider management’s judgements and estimates in respect of the carrying value of their capitalised exploration costs related disclosures to be appropriate. We do note that the Group is still awaiting permission from Natural Resources Wales with regards to its application for water transfer and discharge permits and a European Protected Species licence, as announced to the market by the Group via RNS on 27 March 2023. Management believes the applications will be successful and therefore no impairment has been recognised with respect to the that 21 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC Carrying value of investments in subsidiaries and intra- group receivables (parent company) The parent company holds material investments of £6,955k in its Statement of Financial Position related to its subsidiary undertakings. There are also material intragroup balances of £1,550k as the parent company funds operations in the subsidiaries. Given the losses in the subsidiaries, there is a risk that the investments in subsidiaries (where capitalised exploration costs are the main asset) may not be fully recoverable and therefore overstated (refer to notes 2 and 12). To a significant degree the carrying value of the investments in subsidiaries is intrinsically linked to the value of the capitalised exploration assets held within them. capitalised costs on the Clogau licence. Should the applications be rejected, there is risk that the intangible assets will be subsequently impaired. We performed the following procedures: • Confirmed ownership of the investments in subsidiaries; • Reviewed and challenged management’s impairment assessments of the underlying assets of the IFRS 6 indicators on the licences held; in accordance with investments • Assessed the intragroup balance receivables in respect of the requirements set in IFRS 9 – Financial Instruments (“IFRS 9”), through reviewing the underlying terms and conditions; • Obtained contracts and agreements, reviewing terms and conditions to ensure the accounting treatment in accordance with UK-adopted international accounting standards; is • Considered and assessed whether there were any indicators of impairment; • Reviewed management’s assessment of expected in receivables intragroup losses on credit accordance with IFRS 9 criteria; and • Considered the appropriateness of the accounting policies and disclosures included in the financial statements. Based on the procedures performed, we consider management’s judgements on the recoverability of investments and intragroup balances to be reasonable and the related disclosures appropriate. We performed the following procedures: • Confirmed ownership of the investments; • Reviewed the latest filed accounts of the parent company of Horse Hill Developments Limited, being UK Oil & Gas plc, and assessed whether there are any indications of impairment; 22 in Horse Hill Carrying value of Developments Ltd and accounting treatment in accordance with IFRS 13 (group and parent company) Investment The group and parent company holds a material investment of £2,600k in their Statements of Financial Position relating to Horse Hill Developments Ltd. This is classified as a level 3 hierarchy investment as the fair value is not based on observable market data. There is a risk that there are indications of impairment as at 30 November 2022 which have not been identified by Management. Management's assessment of fair value under IFRS 13 - Fair Value INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC Measurement (“IFRS 13”), requires significant estimation and judgement particularly as it is classified as level 3. There is a risk that the carrying value of the investment in Horse Hill Developments Ltd is overstated (refer to note 11). • Reviewed the accounting treatment to ensure classification and valuation is in accordance with IFRS 9 and IFRS 13; • Reviewed and challenged management’s basis of fair value and accordingly obtained relevant supporting documentation; and • Considered the appropriateness of the accounting policies and disclosures included in the financial statements. During our audit work the directors recorded an impairment on the carrying value to reflect the value of Horse Hill Developments recognised by its majority owner, UK Oil and Gas plc. Details of this are disclosed within note 11. We consider management’s judgements in Horse Hill on Developments Ltd to be reasonable and the related disclosures appropriate. the valuation of investment Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the group and parent company 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. Opinions 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 in relation to which 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 23 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC • we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent company 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 group and parent company 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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of our cumulative audit knowledge and experience of the sector. • We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from Companies Act 2006, AIM rules, mining regulation in the relevant jurisdictions, Employment Law, Anti-Bribery and Money Laundering Regulations and QCA Corporate Governance Code. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to: o Enquiries of management regarding potential non-compliance; o Review of legal and professional fees to understand the nature of the costs and the existence of any non-compliance with laws and regulations; o Review of minutes of meetings of those charged with governance and RNS announcements; and o Review of accounting ledgers for any unusual journal entries which may indicate non-compliance • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation to the carrying value of the capitalised exploration costs and investments as described in the Key Audit Matters section above. • As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business and review of bank statements during the period to identify any large and unusual transactions where the business rationale is not clear. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the 24 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL RESOURCES PLC financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Alistair Roberts (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 4 May 2023 15 Westferry Circus Canary Wharf London E14 4HD 25 Alba Mineral Resources plc CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2022 Other income Administrative expenses Impairment expense Operating loss Revaluation of financial liability 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 Earnings per ordinary share Basic and diluted (pence) Note 4 16 11 7 2022 £’000 - (1,623) (984) (2,607) 2 - - (2,605) - (2,605) 2021 £’000 23 (1,067) - (1,044) (180) (615) (1) (1,840) - (1,840) (2,039) (566) (2,605) (1,699) (141) (1,840) 8 (0.031) (0.027) The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 26 Alba Mineral Resources plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2022 Loss after tax Items that may subsequently be reclassified to profit or loss: - Foreign exchange movements Total comprehensive income Total comprehensive income attributable to: Equity holders of the parent Non-controlling interests 2022 £’000 (2,605) 2021 £’000 (1,840) - (2,605) (1) (1,841) (2,039) (566) (2,605) (1,700) (141) (1,841) The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 27 Alba Mineral Resources plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 NOVEMBER 2022 Note Non-current assets Property, plant and equipment Intangible fixed assets Investments – Horse Hill Developments Limited 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 Net assets Capital and reserves Share capital Share premium Warrant reserve Dilution of ownership reserve Other reserves Retained losses Foreign currency reserve Equity attributable to equity holders of the parent Non-controlling interests 9 10 11 13 14 15 16 17 5 18 2022 £’000 150 8,450 2,600 11,200 129 456 585 (464) - (464) 2021 £’000 137 6,110 3,385 9,632 178 3,948 4,126 (671) (221) (892) 121 3,234 11,321 12,866 5,076 10,461 1,187 991 136 (8,929) 168 9,090 2,231 5,005 9,877 1,425 991 89 (7,421) 168 10,134 2,732 Total equity 11,321 12,866 The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. These financial statements were approved and authorised for issue by the Board of Directors on 4 May 2023. Signed on behalf of the Board of Directors George Frangeskides, Director, Company No. 05285814 28 Alba Mineral Resources plc COMPANY STATEMENT OF FINANCIAL POSITION 30 NOVEMBER 2022 Note 2022 £’000 2021 £’000 Non-current assets Investments – Horse Hill Developments Limited Investments in subsidiaries 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 Total current liabilities Net current assets Net assets Capital and reserves Share capital Share premium Warrant reserve Retained losses Equity shareholders’ funds 11 12 12 13 14 15 17 2,600 6,955 1,550 11,105 3,385 6,616 1,195 11,196 111 322 433 104 663 767 (165) (165) (167) (167) 268 600 11,373 11,796 5,076 10,461 1,187 (5,351) 11,373 5,005 9,877 1,425 (4,511) 11,796 The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 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 was £1,341,000 (2021: a profit of £1,948,000). These financial statements were approved and authorised for issue by the Board of Directors on 4 May 2023. Signed on behalf of the Board of Directors George Frangeskides, Director Company No. 05285814 29 Alba Mineral Resources plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2022 Warrant Warrants to be reserve £’000 Dilution of issued reserve ownership reserve £’000 - £’000 416 Other reserves £’000 - Retained Foreign currency reserve £’000 169 losses £’000 (6,153) Attributable to Non-controlling interests equity holders £’000 £’000 (16) 10,063 At 30 November 2020 Loss for the year Other comprehensive income Total comprehensive income for the year Shares and warrants issued Shares issued in exchange for ownership interests (not resulting in change in control) Equity settled share-based payments Transfer on exercise or expiry of warrants Dilution of ownership (not resulting in change in control) Subsidiary equity settled share-based payments Total transactions with owners Share capital £’000 4,984 Share premium £’000 9,360 - - - 7 14 - - - - - - - 162 355 - - - - 1,287 - - - 416 - 153 (431) - - - - - (416) - - - - - 21 517 138 (416) At 30 November 2021 5,005 9,877 1,425 Loss for the year Other comprehensive income Total comprehensive income for the year Shares and warrants issued Equity settled share-based payments Transfer on exercise or expiry of warrants Subsidiary equity settled share-based payments Total transactions with owners - - - 71 - - - 71 - - - 584 - - - 584 - - - 176 87 (501) - (238) At 30 November 2022 5,076 10,461 1,187 - - - - - - - - - - The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 30 - - - - - - - 991 - 991 991 - - - - - - - - - - - - - - - - 89 89 89 - - - - - - 47 47 (1,699) - (1,699) - - - 431 - - 431 (7,421) (2,039) - (2,039) - - 501 30 531 - (1) (1) - - - - - - - 168 - - - - - - - - (1,699) (1) (1,700) 169 369 153 - 991 89 1,771 10,134 (2,039) - (2,039) 831 87 - 77 995 Total £’000 10,047 (1,840) (1) (1,841) 169 376 153 - (141) - (141) - 7 - - 2,806 3,797 76 2,889 165 4,660 2,732 12,866 (566) - (566) - - - 65 65 (2,605) - (2,605) 831 87 - 142 1,060 991 136 (8,929) 168 9,090 2,231 11,321 Alba Mineral Resources plc COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2022 Notes Share capital £’000 Share premium £’000 Warrant reserve £’000 Warrants to be issued reserve £’000 Retained losses £’000 Attributable to equity holders of parent £’000 At 30 November 2020 4,984 9,360 1,287 416 (6,890) Profit for the year Total comprehensive income for the year Shares and warrants issued Equity settled share-based payments Transfer on exercise or expiry of warrants Total transactions with owners - - 21 - - 21 - - 517 - - 517 At 30 November 2021 5,005 9,877 Loss for the year Total comprehensive income for the year Shares and warrants issued Equity settled share-based payments Transfer on exercise or expiry of warrants Total transactions with owners - - 71 - - 71 - - 584 - - 584 At 30 November 2022 5,076 10,461 The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. - - 416 153 (431) 138 1,425 - - 176 87 (501) (238) 1,187 - - (416) - - (416) - - - - - - - - 31 1,948 1,948 - - 431 431 (4,511) (1,341) (1,341) - - 501 501 9,157 1,948 1,948 538 153 - 691 11,796 (1,341) (1,341) 831 87 - 918 (5,351) 11,373 Alba Mineral Resources plc CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2022 Note 2022 £’000 2021 £’000 (2,607) (1,044) Cash flows from operating activities Operating loss Depreciation Fees settled in shares Impairment Loss on disposal of oil & gas asset Share based payment charges Foreign exchange revaluation adjustment (Decrease)/increase in creditors Decrease/(increase) in debtors Net cash used in operating activities Cash flows from investing activities Payments for exploration expenditure Payments for tangible fixed assets Net cash used in investing activities 9 13 Cash flows from financing activities Proceeds from the issue of shares and exercise of warrants Costs of issue Proceeds from the issue of shares and warrants - GreenRoc IPO transaction costs Finance expense 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 14 7 - 984 - 228 - (208) 49 (1,547) (2,417) (20) (2,437) 522 (30) - - - 492 (3,492) 3,948 456 5 32 - 9 237 (1) 386 (110) (486) (2,544) (31) (2,575) 1,295 (72) 5,075 (800) (1) 5,497 2,436 1,512 3,948 Significant non-cash transactions in the period not reflected above are: Consideration of £339,000 in shares and warrants for the exercise of a put-and-call option over the 10% of Clogau Gold Project not owned by the Group (a financial instrument valued at £214,000) plus the purchase of part of a royalty attached to the project and settlement of some historic debts. See Note 5 for details. The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 32 Alba Mineral Resources plc COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2022 Note Cash flows from operating activities Operating loss Fees settled in shares Impairment expense Loss on disposal of oil & gas asset 5 Share based payment charge Movement in the expected credit loss provision for loans to subsidiaries Foreign exchange revaluation adjustment (Decrease)/increase in creditors Decrease/(increase) in debtors Net cash used in operating activities Cash flows from investing activities Loans granted to subsidiaries Loan repayments received from subsidiaries Net cash used in investing activities 12 Cash flows from financing activities Proceeds from the issue of shares and exercise of warrants Costs of issue 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 14 2022 £’000 (1,341) - 785 - 87 15 - (2) (7) (463) (370) - (370) 522 (30) 492 (341) 663 322 2021 £’000 (265) 32 9 153 (454) 62 (98) (72) (633) (1,925) 500 (1,425) 1,295 (72) 1,223 (835) 1,498 663 Significant non-cash transactions in the period not reflected above are: Consideration of £339,000 in shares and warrants for the exercise of a put-and-call option over the 10% of Clogau Gold Project not owned by the Group (see Note 5 for more details). The Accounting Policies and Notes on pages 34 to 58 form part of these financial statements. 33 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 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 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. a. Basis of preparation These consolidated financial statements of Alba Mineral Resources plc have been prepared in accordance with UK-adopted international accounting standards (“IFRSs”) as they apply to the Group for the year ended 30 November 2022 and with the Companies Act 2006. Numbers have been rounded to £’000. The consolidated financial statements have been prepared on the historical cost basis, save for the revaluation of certain financial assets and liabilities at fair value. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 2. New or amended Standards and interpretations that became effective during the year ended 30 November 2022 had no impact on the Group accounts. New standards, amendments, and interpretations not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for 30 November 2022 reporting periods and have not been early adopted by the Group. These standards include: • Amendments to IAS 1 Presentation of Financial Statements (effective 1 Jan 2023) – Disclosure of Accounting Policies • Amendments to IAS 1 Presentation of Financial Statements (effective 1 Jan 2024) – Classification of Liabilities as Current or Noncurrent • Amendments to IAS 8 Accounting Policies (effective 1 Jan 2023) – Definition of Accounting Estimates • Amendments to IAS 12 Income Taxes (effective 1 Jan 2023) - Deferred Tax related to Assets and Liabilities arising from a Single Transaction • Amendments to IAS 16 Property, Plant and Equipment (effective 1 Jan 2022) - Proceeds before intended use • Amendments to IFRS 16 Leases (effective 1 Jan 2024) – Lease liability in a sale and leaseback • • Amendments to IAS 37 Onerous Contracts (effective 1 Jan 2022) – Cost of Fulfilling a Contract IFRS 17 and Amendments Insurance contracts (effective 1 Jan 2023) The Directors do not anticipate that the adoption of these standards or amendments will have a material impact on the financial statements of the Company and the Group in the period of initial application or in future reporting periods. 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. 34 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued) b. Going concern Based on financial projections prepared by the Directors, the Group’s current cash resources are insufficient to enable the Group to meet its recurring outgoings and projected exploration expenditure for the entirety of the next twelve months. The Directors have prepared cash flow forecasts to 30 November 2024 which take into account planned exploration spend, costs and external funding. The need for external funding is a material uncertainty that may cast doubt on the Group’s ability to continue as a going concern. At this stage as an explorer the Group does not have a steady income stream and is reliant on external funding sources such as capital raisings or asset transactions to fund activities. The nature of these is ad-hoc and as such the Group does not carry a cash balance sufficient for 12 months of expenditure. However, the Board has a reasonable expectation that the Group will continue to be able to meet its commitments for the foreseeable future by raising funds when required from the equity capital markets and based on the following: • • • The Group has a strong track record in sourcing external funding. Forecasts contain a level of discretionary spend such that in the event that cash flow becomes constrained action can be taken to enable the Group to operate within available funding. The Group demonstrated this during the Covid-19 pandemic when sourcing capital was uncertain. The Group and Company may also consider future joint venture funding arrangements in order to share the costs of the development of its exploration assets, or to consider divesting of certain of its assets and realising cash proceeds in that way in order to support the balance of its exploration and investment portfolio. For these reasons the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. c. 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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. 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. Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity within the dilution of ownership reserve. 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. d. 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 profit or loss for the period. 35 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued) 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. e. 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 growth including any market performance conditions (eg the entity’s share price) o targets and remaining an employee of the entity over a specified time period), and including the impact of any non-vesting conditions (eg the requirement for employees to save or hold shares for a specific period of time). The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to the warrant reserve. f. Non-current assets 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. 36 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 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 vehicles - 10 years o Computer equipment - 3 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. Investment in subsidiaries: Investment in subsidiaries, comprising equity instruments and capital contributions, are recognised initially at cost less any provision for impairment. g. 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. 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. The Group classifies its financial instruments as follows: Financial assets Trade and other receivables Loans to subsidiaries (Company only) Investments Financial liabilities Trade and other payables Borrowings Other borrowings Derivative financial instrument Amortised cost Amortised cost At fair value through profit or loss (FVPL) Amortised cost Amortised cost Amortised cost At fair value through profit or loss (FVPL) 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. Loans to subsidiaries: Long-term 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. A loan will be subject to impairment review if there is an indicator of impairment, such as the impairment of the value of the deferred exploration intangible asset within the relevant subsidiary. 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. 37 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued) 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 through profit and loss. Information about the methods and assumptions used in determining fair value is provided in Note 11. 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. Derivative financial instrument A derivative financial instrument is recognised for the 10% call option over the remaining shares in the Clogau gold project not owned by the Group. This has been valued based on management’s best estimate and classified as fair value through profit and loss so that any future change in the valuation of the liability will be recognised through the profit and loss account. See Note 16 to the Accounts. A 4% net smelter return royalty was also agreed as part of the consideration. The Company has a buy-back right in respect of any proposed sale of the royalty. No value has been attributed to this right in these accounts as it cannot be quantified due to uncertainty in reaching commercial production and what the resulting royalty quantum would be likely to be Borrowings: Initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are then 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. Other borrowings: recognised initially at fair value and subsequently measured at amortised cost. Leases: The Group does not have any leases within the scope of IFRS16. h. Equity Share capital represents the nominal value of equity shares, both ordinary and preference. Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. Warrant reserve represents proceeds from the issue of extant warrants. Warrants to be issued reserve held proceeds from the issue of warrants announced on 25 November 2020 but issued post- year end, on 1 December 2020. Dilution of ownership reserve represents the difference between the fair value of any consideration paid and the relevant share of the fair value of net assets acquired in a dilutive transaction where control is retained. Other reserves represents the proceeds from the issue of warrants by GreenRoc Mining plc attributable to the equity holders of the group. Foreign currency reserve holds gains/losses arising on retranslating the net assets of the Group into pounds sterling. 38 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued) Taxation i. The charge for taxation is based on the profit or loss for the year and takes into account deferred tax. The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 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. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Segmental information j. An operating segment is a distinguishable component of the Group which is subject to risks and rewards that are different from those of other segments. In the Group’s current portfolio, the geographical location of exploration projects provides the basis for grouping into segments. Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision- maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of the Company. 2. 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 - £2,417,000 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. 39 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) Impairment assessment of exploration and evaluation costs – £8,450,000 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. For further details see Note 10 “Intangible Assets”. This balance includes £3,084,000 relating to the Clogau Gold Project. Despite the delays in obtaining permissions for planned exploration on the Clogau Gold Project, management do not judge the Exploration and Evaluation costs associated with that project to be impaired at 30 November 2022. Exploration is planned and budgeted for in 2023, the option is valid until February 2025 and the Group has no data at this point that suggests that the asset value is unlikely to be recovered from successful development. Accounting for investment in Horse Hill Developments Limited – £2,600,000 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 profit or loss (FVTPL). The Group and Company’s shareholding in HHDL is less than 20%. A director of the Company is also a director of HHDL but does not act in an executive capacity. At the balance sheet date HHDL had a majority shareholder with a 77.9% shareholding. The Directors judge that the Company does not have significant influence over HHDL and that it should not be equity accounted for as an associate. Company only - Impairment assessment of investment in and loans to subsidiaries – £8,505,000 In preparing the parent company financial statements, the Directors apply judgement to decide if any, or all of the company’s investments in (and where applicable loans to) each of GreenRoc Mining plc, Aurum Mineral 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 12 for further details. ii) ESTIMATES Carrying value of investment in Horse Hill Developments Limited – £2,600,000 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 11. The Directors believe that the intrinsic value of the oil field has not been diminished during the year but recognise that the majority owner’s impairment of part of that asset during 2022 is an indicator of impairment of the Group’s investment in HHDL and has performed an impairment review. As the majority owner has access to more information for valuation purposes than the Group, management has revalued the fair value at 30 November 2022 to align with the fair value applied by the majority owner. 40 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 3. 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 Exploration and development Oil and gas Current assets Capital expenditure Exploration and plant 2022 £’000 8,600 2,600 585 11,785 2021 £’000 6,247 3,385 4,126 13,758 2,436 2,615 The Group’s primary business activities operate in three different geographical areas (and the Group has an investment in a fourth area) and the group exploration assets and investments along with capital expenditures are presented on the basis of geographical segments below: Total assets Republic of Ireland (fully impaired) Greenland England & Wales Capital expenditure Greenland England & Wales 2022 £’000 - 5,343 6,442 11,785 2022 £’000 2,091 345 2,436 2021 £’000 - 3,451 10,307 13,758 2021 £’000 1,763 852 2,615 The administrative expenditure in the income statement primarily relates to central costs or exploration costs that cannot be capitalised. 41 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 4. EXPENSES BY NATURE AND AUDITOR REMUNERATION Auditor’s remuneration: Current auditor (PKF Littlejohn LLP) - Group audit services - Subsidiary audit services - Taxation advice - Corporate finance services relating to IPO (costs in equity) - Taxation advise relating to IPO (costs in equity) Alba and subsidiaries £’000 GreenRoc £’000 2022 £’000 39 - 3 - - 42 35 - 9 - - 44 74 - 12 - - 86 2021 £’000 35 32 6 60 12 145 Tax and corporate finance services in the prior period relating to the IPO were shared with the minority shareholders of GreenRoc Mining plc and respective shares of these costs are included within the Company’s investment in GreenRoc Mining plc and the NCI share of assets. Expenses by nature: Staff costs (note 6) Professional fees and insurances Consultancy not capitalised Office, travel, PR, other Forex Depreciation Settlement of historic claims Administrative expenses Other income Government grants Services provided Alba and subsidiaries £’000 427 174 45 120 (17) 7 - 756 GreenRoc £’000 534 217 9 107 - - - 2022 £’000 961 391 54 227 (17) 7 - 867 1,623 2022 £’000 - - - 2021 £’000 628 260 108 90 7 5 (31) 1,067 2021 £’000 7 16 23 42 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 5. ACQUISITIONS Exercise of put-and-call option over 10% of Clogau Gold Project plus buyback of Royalty On 1 September 2022 Alba completed the acquisition of the remaining 10% of the Clogau Gold Project by exercising a put- and-call option over that 10%, taking its total ownership of the Project to 100%. At the same time, Alba bought back a 3% net smelter return royalty owned by the vendor, reducing the royalty to 1%, as well as settling a residual ~£72,000 of loans held by the vendor. Total consideration payable was the issue of 200 million Alba ordinary shares plus 81,930,830 two-year share warrants with an exercise price of 0.4p per share, valued at £39,000 via a Black Scholes formula. On the date of issue, the share price was 0.15 pence and therefore the effective consideration was £300,000. The carrying value of the 10% put-and-call option was £214,000. No carrying value had been attributed to the Royalty. 6. DIRECTORS’ EMOLUMENTS AND STAFF COSTS During the period the Group had on average 11.3 (2021: 10.1) employees each month, being the Directors (who are the key management personnel) plus finance, geological and local site staff. Where eligible, Directors and other staff accrue benefits under a money purchase auto-enrolment scheme held in NEST. Costs incurred by: 2022 Costs incurred by: 2021 Alba Mineral Resources plc GreenRoc Mining plc Total Group Alba Mineral Resources plc GreenRoc Mining plc Total Group £’000 £’000 £’000 £’000 £’000 £’000 Directors’ fees, salaries and pension (see table below) Directors’ share based payments Directors’ social security costs Staff costs Salaries and wages Share based payment charges Social security costs Defined contribution pension scheme Fees classified as consultancy Costs recharged to projects Staff costs reported in administrative expenses (Note 4) 185 56 16 221 31 25 5 (33) (79) 427 54 69 7 295 72 27 10 - - 534 239 125 23 516 103 52 15 (33) (79) 961 220 114 19 247 31 26 5 (39) (161) 462 54 16 4 71 23 7 1 - - 166 274 130 23 318 54 33 6 (39) (161) 628 Average number of employees 7.3 6 11.3* 10.1 6** 10.9* ** Average based on two months only. *Two employees of Alba are also employees of GreenRoc. 43 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 6. DIRECTORS’ EMOLUMENTS AND STAFF COSTS (continued) Directors’ remuneration: 2022 2021 Fees Salaries Pension FV of options vesting Total Fees Salaries Pension Bonus FV of options vesting Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 G.F. 36 115 Fees capitalised (15) M.C.N E.H. M.L. L.B. G.F. GreenRoc 6 6 - - - L.B. GreenRoc* n/a Total 33 - 18 18 - - 54 n/a 205 1 - - - - - - n/a 1 56 - - - - - 69 n/a 125 208 (15) 24 24 - - 241 123 n/a 364 43 (15) 6 - 5 - - - 115 - 18 23 2 19 9 5 39 191 1 - - 1 - - - 2 - 2 20 10 32 56 - 8 25 - 25 16 - 130 215 (15) 32 49 7 46 334 45 15 394 * LB resigned from the Board of Alba in 2021 so his 2022 remuneration from GreenRoc does not need separate disclosure here – see GreenRoc Report and Accounts for the year ended 30 November 2022. GF: George Frangeskides, MCN: Michael Nott, EH: Elizabeth Henson, ML: Manuel Lamboley, LB: Lars Brünner Note 24 gives further details of transactions with the Directors. Warrants and options During the year no warrants or options were granted to the Directors. Charges in the tables above relate to historic grants vesting. In 2021 warrants were issued to Mr Brünner (resigned) and Ms Henson with an exercise price of 0.5 pence per share. The warrants vested as follows: 4,000,000 each on 8 June 2021 and 8 December 2021 and can be exercised until 7 December 2023. Mr Brünner waived the rights to his warrants when he stepped down from the Board. The total estimated value of those warrants was £50,000. These values were derived from a Black Scholes model as described in Note 17. The warrants were granted when the share price was 0.41 pence per share and the warrants were valued at 0.031 pence. The warrant value was high as a proportion of market price due to the historic share price volatility. 44 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 7. INCOME TAXES The UK corporation tax rate has been applied throughout the workings below as substantially all of the losses during the year (and historic losses in retained earnings) have been incurred by the parent or other companies resident in the UK for tax purposes. Using a weighted average rate would not change the effective tax rate. a) Analysis of charge in the period United Kingdom corporation tax at 19% (2021: 19%) Deferred taxation b) Factors affecting tax charge for the period 2022 £’000 - - 2021 £’000 - - 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% (2021: 19%). The differences are explained below: Loss before tax 2022 £’000 2021 £’000 (2,605) (1,840) Loss multiplied by standard rate of tax (495) (350) Effects of: Expenses not deductible Deferred tax assets not recognised/capital allowances not claimed 235 260 - 201 149 - 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 being Alba Mineral Resources plc and its subsidiaries as listed in Note 12 amounted to £8,501,000 before adjustments required by local tax rules and excluding losses on intra-group transactions (2021: £6,436,000). 8. EARNINGS PER SHARE The calculation of the basic loss per share is calculated by dividing the consolidated loss attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the year. The diluted earnings per share is the same as the basic earnings per share, as warrants/options are not dilutive due to the loss for the year. Loss attributable to group shareholders 2022 2021 £’000 (2,039) £’000 (1,699) Weighted average number of ordinary shares for calculating basic loss per share 6,476,717,573 6,303,890,811 Loss per share (pence) (0.031) (0.027) 45 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 9. PROPERTY, PLANT AND EQUIPMENT Group Cost At 1 December 2020 Additions At 30 November 2021 Additions At 30 November 2022 Accumulated Depreciation At 30 November 2020 and at 1 December 2021 Charge for the year At 30 November 2021 Charge for the year At 30 November 2022 Net Book Value at 30 November 2022 Net Book Value at 30 November 2021 Land Plant, equipment and vehicles £’000 £’000 Total £’000 85 - 85 - 85 - - - - - 85 85 26 31 57 20 77 - (5) (5) (7) 111 31 142 20 162 - (5) (5) (7) (12) (12) 65 52 150 137 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. 46 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 10. INTANGIBLE FIXED ASSETS Group Cost As 30 November 2020 Additions Disposals As 30 November 2021 Additions At 30 November 2022 Amortisation and impairment At 30 November 2020 Disposals At 30 November 2021 Impairment charge 2022 At 30 November 2022 Net book value At 30 November 2022 At 30 November 2021 Exploration and evaluation £’000 Development and production £’000 4,261 2,584 - 6,845 2,539 9,384 (735) - (735) (199) (934) 8,450 6,110 374 - (374) - - - (374) 374 - - - - - Total £’000 4,635 2,584 (374) 6,845 2,539 9,384 (1,109) 374 (735) (199) (934) 8,450 6,110 The Group’s intangible fixed assets relate to the Welsh gold projects (Clogau, Dolgellau Gold and Gwynfynydd) (£3,107,000), and the Greenland projects held by GreenRoc Mining plc (£5,343,000). Although there are delays in obtaining permissions for planned exploration on the Clogau Gold Project, management do not judge the Exploration and Evaluation costs associated with that project to be impaired at 30 November 2022. Exploration is planned and budgeted for in 2023, the option is valid until February 2025 and the Group has no data at this point that suggests that the asset value is unlikely to be recovered from successful development. During the period GreenRoc Mining plc impaired all capitalised costs in respect of the Inglefield project on the basis of that Company’s decision to discontinue activity at that permit. The impairment charge arising £199,000. At the year end the amount of liabilities (being creditors and accruals) relating to the exploration and evaluation assets was £265,000. 47 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 11. INVESTMENTS Group and Company At 30 November 2020 Revaluation of investment At 30 November 2021 Revaluation of investment £’000 4,000 (615) 3,385 (785) 2,600 The above investment represents an investment in 18.1%* (2020: 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 (see Note 22). HHDL is a private company with no stock quote. There have been no share transactions in HHDL stock nor transactions in licence interests in the past two years to provide any basis for valuation. The majority owner and operator of HHDL, UK Oil & Gas plc (UKOG) recently announced its results for year ended 30 September 2022 including an impairment of the HH1 well based on net present value calculations (utilising an internally generated depletion curve that was independently reviewed). Costs were based on current costs less any anticipated savings. A long-term Brent oil price of US$81/bbl was used being the spot rate at the time of assessment, with a discount rate of 3.86% used being the weighted average costs of capital of Horse Hill Developments Ltd, the holding company of the producing well HH-1). There is inherent uncertainty in any oil field valuation due to the uncertainty of future oil price movements. The Directors believe that the intrinsic value of the oil field has not been diminished but recognise that UKOG’s impairment of the HH1 asset is an indicator of impairment of the Group’s investment in HHDL. That investment value has been reviewed for impairment. With reference to UKOG’s recent results, where that company has access to more information for valuation purposes than the Group, management has revalued the 18.1% investment in HHDL to align with the value of HHDL in UKOG’s balance sheet (comprising an investment in HHDL and shareholder loans to HHDL). This revised valuation is a Level 3 valuation under the IFRS 9 hierarchy, as was the valuation in prior year, as defined in Note 22. The registered office of HHDL is: The Broadgate Tower, 8th Floor, 20 Primrose Street, London, EC2A 2EW. *In a prior period 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. 48 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 12. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS Investments Notes Company At 30 November 2020 Additions – purchase of minorities 5 Additions – expenditure Repayments Disposals to another group company Additional holding in subsidiary as consideration, net of costs Foreign exchange movements Adjustment to Expected Credit Loss provision Impairment of intercompany loan At 30 November 2021 Additions – purchase of minority and royalty Additions – expenditure Impairment of intercompany loan £’000 298 370 - - (668) 5,500 - - - 5,500 - - - Capital Contributions £’000 Loans Total £’000 £’000 1,116 1,341 - 1,965 (500) 2,755 370 1,965 (500) (2,003) (2,671) - (49) 417 24 5,500 (49) 417 24 - - - - - - - - 1,116 339 - - 1,195 7,811 - 370 (15) 339 370 (15) At 30 November 2022 5,500 1,455 1,550 8,505 Upon adoption of IFRS 9 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. However management has agreed that these loans will not be recalled within 12 months from the balance sheet date so they are classified as long term. 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. Historic and current data has been used to derive a probability of default and this has been applied across the portfolio of loans. 49 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 12. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued) At 30 November 2022 the Company held the following interests in subsidiary undertakings, which are included in the consolidated financial statements: Name of company Country of incorporation Holding at 30 November 2022 Nature of holding Holding at 30 November 2021 Business Aurum Mineral Resources Ltd Ireland Mauritania Ventures Limited England & Wales Dragonfire Mining Limited England & Wales Gold Mines of Wales Limited Jersey GMOW (Holdings) Limited England & Wales GMOW (Operations) Limited England & Wales GMOW Gwynfynydd Limited England & Wales GreenRoc Mining plc Obsidian Mining Limited White Eagle Resources Limited England & Wales England & Wales England & Wales White Fox Resources Limited England & Wales 100% 50% 100% 100% 100% 100% 100% 54% 54% 54% 54% Direct Direct Direct Indirect Indirect Indirect Direct Direct Indirect Indirect Indirect 100% Exploration 50% Non-trading 100% Exploration 90% 90% 90% Holding Co. Holding Co. Exploration 100% Exploration 54% Parent 54% (indirect) 54% (indirect) 54% (indirect) Exploration Exploration 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 3rd Floor, IFC5, Castle Street, St Helier, Jersey JE2 3BY. 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. The Company was dissolved on 14 February 2023. During the period Dragonfire Mining Limited acquired 10% of Gold Mines of Wales Limited, taking its holding to 100%. See Note 5 to the Accounts for further details on this transaction. After the reporting date, GreenRoc Mining plc issued further share capital. Alba’s interest in GreenRoc was diluted to 44.67% at 9 March 2023. See Note 25 “Events after the Reporting Date” for more information. 50 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 13. TRADE AND OTHER RECEIVABLES Current Other debtors Prepayments and accrued income Group 2022 £’000 109 20 Group 2021 £’000 159 19 Company 2022 £’000 92 19 Company 2021 £’000 88 16 129 178 111 104 The fair value of trade and other receivables approximates to their book value. 14. CASH AND CASH EQUIVALENTS Cash at bank and in hand The fair value of cash at bank is the same as its carrying value. 15. TRADE AND OTHER PAYABLES Current Trade creditors Other creditors Accruals and deferred income Group 2022 £’000 456 Group 2021 £’000 3,948 Company 2022 Company 2021 £’000 £’000 322 663 Group 2022 £’000 222 15 227 464 Group 2021 £’000 481 13 177 671 Company 2022 £’000 81 15 69 165 Company 2021 £’000 80 13 74 167 The fair value of trade and other payables approximates to their book value. 16. FINANCIAL LIABILITIES The Company has no financial liabilities. Group Other borrowings Financial Liabilities At 30 November 2019 and 2020 Revaluation recognised in the profit and loss At 30 November 2021 Released as part of 10% minority purchase At 30 November 2022 £’000 7 - 7 (7) - Derivative financial instrument £’000 34 180 214 (214) - Total £’000 41 180 221 (221) - The derivative financial instrument related to the recognition of a liability in respect of the put and call option over the remaining 10% shareholding in the Clogau gold project at last year end, which the Company acquired during the period. See Note 5 for further information. 51 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 17. CALLED UP SHARE CAPITAL Issued, allotted and fully paid Ordinary shares of 0.1 pence Ordinary shares of 0.01 pence Deferred shares of 0.9 pence 2022 Number of shares 2022 £’000 2021 Number of shares - 7,121,568,996 93,070,100 712 6,404,645,919 838 93,070,100 B deferred shares of 0.09 pence 3,918,351,946 3,526 3,918,351,946 Total 11,132,991,042 5,076 10,416,067,965 2021 £’000 - 641 838 3,526 5,005 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. During the year the Company issued ordinary shares as follows: Ordinary shares Deferred shares Share premium Total Ordinary shares of 0.01 pence 6,404,645,919 £’000 641 £’000 4,364 At 1 December 2021 September issue of shares as consideration for 10% minority acquisition September exercise of warrants November placing net of fees November placing warrants valuation At 30 November 2022 200,000,000 16,923,077 500,000,000 20 1 50 - - - £’000 9,877 280 20 420 (136) £’000 14,882 300 21 470 (136) 712 4,364 10,461 15,537 Warrants 809,286,713 250,000,000 81,930,830 - (16,923,077) (244,363,636) 879,930,830 Warrants reserve £’000 1,425 136 39 87 (13) (487) 1,187 At 1 December 2021 Warrants granted with placings Warrants issued as consideration Warrants vesting (counted in brought forward balance) Warrants exercised Warrants expired/waived At 30 November 2022 Of the warrants outstanding at 30 November 2022, 857,930,830 are vested and able to be exercised. The weighted average exercise price of these vested warrants is 0.35 pence. Where warrants were exercised in the year, the weighted average share price at the date of exercise was 0.14 pence. 52 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 17. CALLED UP SHARE CAPITAL (continued) As at 30 November 2022 Alba had 879,930,830 warrants and options outstanding: No. of warrants 60,000,0001 60,000,0002 50,000,0003 200,000,0003 Exercise price (pence) 0.4 pence 0.42 pence 0.16 pence 0.16 pence 160,000,000 10,000,000 8,000,0004 91,930,830 250,000,000 879,930,830 0.75 pence 0.375 pence 0.5 pence 0.4 pence 0.2 pence At 30 November 2022 Final exercise date 13 January 2027 2 May 2028 31 December 2023 28 August 2030 23 November 2022 1 December 2022 7 December 2023 31 August 2024 16 November 2024 Vested Awarded under the EMI scheme. Vested. Awarded under the EMI scheme. Vested. Partially vested. Awarded under the EMI scheme. Partially vested. Vested. Vested. Vested. Vested. Vested. As at 30 November 2021 Alba had 809,286,713 warrants and options outstanding: No. of warrants 60,000,0001 60,000,0002 16,923,077 236,363,636 50,000,0003 200,000,0003 Exercise price (pence) 0.4 pence 0.42 pence 0.13 pence 0.55 pence 0.16 pence 0.16 pence 160,000,000 10,000,000 16,000,0004 809,286,713 0.75 pence 0.375 pence 0.5 pence At 30 November 2021 Final exercise date 13 January 2027 2 May 2028 4 September 2022 20 September 2022 31 December 2023 28 August 2030 23 November 2022 1 December 2022 7 December 2023 Vested Awarded under the EMI scheme. Vested. Awarded under the EMI scheme. Vested Vested Vested Partially vested. Awarded under the EMI scheme. Partially vested. Vested. Vested. Partially vested. 1,2,3,4 These warrants fall within the scope of IFRS 2 “Share-based Payments” and were issued in 2017, 2018, 2020 respectively. The fair value of the warrants issued in 2022 calculated using a Black Scholes model was £175,000. 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. 53 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 18. NON-CONTROLING INTERESTS Mauritania Ventures Ltd White Fox Resources Ltd GreenRoc Mining plc Total NCIs £’000 At 30 November 2020 Acquisition of NCI NCI arising from IPO Share of loss for the year Share of other reserves At 30 November 2021 Share of loss for the year Share of movement on other reserves At 30 November 2022 (9) - - - - (9) - - (9) (7) 7 - - - - - - - - - 2,806 (141) 76 2,741 (566) 65 2,240 (16) 7 2,806 (141) 76 2,732 (566) 65 2,231 The Group recognises the non-controlling interest in GreenRoc Mining plc at the non-controlling interest’s proportionate share of the entity’s net identifiable assets as included in the Group balance sheet. These differ from the assets presented in the standalone GreenRoc Mining plc Report and Accounts due to consolidation entries, including elimination of fair valuation uplift generated in the IPO in 2021. This fair value uplift was judged by management to be intragroup profit. At the balance sheet date Alba holds 53.96% of the share capital of GreenRoc Mining plc (see Note 12). Voting rights do not differ from ownership interests. After the year end Alba’s ownership was diluted to 44.67%. For more information see Note 25. The Report and Accounts of GreenRoc Mining plc for the period ended 30 November 2022 can be found on its website www.greenrocmining.com. 19. LEASES The Company has no lease or rental commitments within scope of IFRS 16. Expenditure short-term leases during the year was £19,000. 20. CAPITAL COMMITMENTS As at 30 November 2022, the Group / Company had commitments to spend at least £470,000 in the calendar year 2023 on its Greenland licences (2021: £105,000), After taking into account credit from historic expenditure, the real commitments for 2023 reduce to approximately £130,000 due to be spent on the Melville Bay project. 21. CONTINGENT LIABILITIES A 4% net smelter royalty agreement was agreed as part of the acquisition of the Clogau gold project in 2018. During the year the Group acquired 3% of that. A 1% net smelter royalty agreement remains in place. The Group has no obligations under this agreement until such time as gold is produced and sold. 54 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 22. FINANCIAL INSTRUMENTS The Group’s financial instruments comprise investments, cash at bank and various items such as 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, debtors and the risk the counterparty fails to discharge its obligations. As at 30 November 2022, debtors included £25,000 that was past due but not impaired (2021: £8,100). Given the low number and value of debtors management considers recoverability of any overdue amount individually on an annual basis. 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 12 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. At 30 November 2022 the management considers that the liquidity risk is not material as sufficient cash is held to meet financial liabilities to be settled in cash. Future liquidity risk is addressed in Note 1 under the heading “Going Concern”. 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 nil. 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. Loans plus interest become 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. No sensitivity analysis has been performed. 55 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 22. FINANCIAL INSTRUMENTS (continued) 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 trended upwards from $70 at the start of the year to over $100 then to $86 at the 30 November 2022, stabilising at around $85 for the last 6 month. However a sustained downturn in the price of oil would 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. Categories of financial instrument Financial assets Investments at fair value through profit or loss: Investment in HHDL (Note 11) Held at amortised cost: Trade and other receivables Cash and cash equivalents Intercompany receivables net of expected credit losses Financial liabilities Liabilities held at fair value through profit or loss: Derivative financial instrument (Note 16) Held at amortised cost: Trade and other payables Other financial liabilities Group Group Company Company 2022 £’000 2021 £’000 2022 £’000 2021 £’000 2,600 3,385 2,600 3,385 109 456 - 159 3,948 - 3,165 7,492 92 322 1,550 4,564 88 663 1,195 5,331 - 214 237 - 237 494 7 715 - 96 - 96 - 93 - 93 Valuation of financial instruments Under IFRS 9 the valuation of financial instruments is categorised based on the inputs used to generate the valuation as follows: Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1. Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. 56 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 22. FINANCIAL INSTRUMENTS (continued) The Group’s financial instruments by valuation method: Financial assets held at FVTPL Investment - FV at 30 November 2021 Impairment expense in 2022 Investment - FV at 30 November 2022 Financial liabilities held at FVTPL Derivative financial instrument (Note 16) – FV at 30 November 2021 Exercise of instrument in 2022 Derivative financial instrument (Note 16) – FV at 30 November 2022 Level 3 £’000 3,385 (785) 2,600 214 (214) - Total £’000 3,385 (785) 2,600 214 (214) - For more information on the valuation bases see the relevant Notes referred to above. Included in the value for HHDL are loans of £2,126,000 plus accrued interest. 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. 23. 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. 24. RELATED PARTY TRANSACTIONS All related party transactions have been conducted at arm’s length. Fees charged by Directors are detailed below and also shown in Note 6. “Directors’ emoluments and staff costs”. 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 12. Details of transactions between the Company and other related parties are disclosed below. Group Stirling Corporate Limited and Berwick Capital Limited, companies which George Frangeskides, a director of the Company, controls, billed the Group combined £2,000 (2021: £nil) for recharges of historic costs incurred in the course of work performed on behalf of the Group. These amounts were accrued in prior periods and were outstanding at year end. There are no terms and conditions associated with the outstanding balances. Aetos Consulting Limited, a company which George Frangeskides, a director of the Company, jointly controls, charged the Group fees for consultancy services of £36,000 (2021: £43,000). Of these fees, £15,000 represents work carried out specifically on the advancement of the Group’s project portfolio and has therefore been capitalised. During the period this company also recharged the Group amounts totalling £7,000 for historic expenses incurred on behalf of the Group. These costs were accrued in prior periods. 57 Alba Mineral Resources plc Notes to the Financial Statements for the year ended 30 November 2022 24. RELATED PARTY TRANSACTIONS (continued) As at the year-end £53,000 (2021: £44,000) was owed to Aetos Consulting Limited and £36,000 was accrued for invoices expected. There are no terms and conditions associated with the outstanding balance. Woodridge Associates, a trading name of Michael Nott, a director of the Company, charged the Group fees of £6,000 for consultancy services during the year including £1,500 accrued at 30 November 2022. Ixia Advisers, a company controlled by Elizabeth Henson, a director of the Company, charged the Group fees of £6,000 for consultancy services during the year. 25. EVENTS AFTER THE REPORTING PERIOD Corporate In December 2022 GreenRoc Mining plc announced a placing and a broker option. On 6 March 2023 GreenRoc Mining plc announced a further placing. The combined effect of these rounds of fundraising is to dilute Alba’s holding in GreenRoc Mining plc to 44.67% after the reporting date. On 2 May 2023 the Company announced a change in broker. Clogau Gold Project On 27 March 2023 the Company updated the market on the progress of the permit applications for activities at the Clogau Gold Project. GreenRoc Mining plc - Amitsoq Graphite Project Since the balance sheet date GreenRoc Mining plc has made a number of RNS announcements on the progress of the Amitsoq graphite project. Also announced was a share placing (see “Corporate” above). For further information see GreenRoc Mining plc full year results announced on 24 March 2023. Horse Hill Oil Project On 28 March 2023 terms of a proposed farm-in arrangement for a seismic survey and future drilling at the Horse Hill oil field were announced by UKOG. These are subject to shareholder consent. Limerick Base Metals The Group announced that it had surrendered its exploration licence in Limerick on 20 January 2023. Due to lack of permissions, viable exploration targets could not be progressed and under the terms of the licence from relevant authorities in Ireland, the licence must be surrendered where no further expenditure was planned. 26. ULTIMATE CONTROLLING PARTY The Directors consider there is no ultimate controlling party. . 58 

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