Alien Metals Ltd
Annual Report
For the year ended 31 December 2020
Contents
Chair’s & Chief Executive statement ................................................................... 3
Business overview .......................................................................................... 5
Strategy and business model ................................................................... 5
Financial highlights .............................................................................. 5
Overview of operations .......................................................................... 5
Copper project ................................................................................... 5
Silver projects .................................................................................... 5
Iron Ore projects ................................................................................. 6
Future outlook .................................................................................... 6
Governance ................................................................................................. 7
Chair’s Corporate governance statement ..................................................... 7
Board leadership ................................................................................. 8
Nomination & Remuneration Committee Report ........................................... 12
Audit Committee Report ....................................................................... 16
Risk Management ................................................................................ 16
Financial statements ..................................................................................... 23
Directors’ responsibilities statement ......................................................... 23
Independent auditor’s report .................................................................. 24
Consolidated statement of comprehensive income ........................................ 28
Consolidated statement of financial position ............................................... 29
Consolidated statement of cash flows ....................................................... 30
Consolidated statement of changes in equity ............................................... 31
Notes to the financial statements ............................................................ 32
Other information ........................................................................................ 55
Forward looking statements
Certain information in this annual report may constitute a forward-looking statement. Forward-looking statements are frequently
characterised by words such as “plan”, “expect”, “forecast”, “project”, “intend”, “believe”, “anticipate”, “expect”, “budget”,
“scheduled”, “outlook” and other similar words or statements that certain events or conditions “may” or “will” occur.
Forward-looking statements are not guarantees of future performance. Rather, they are based on current opinions and estimates
of management and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ from
any future results or developments expressed or implied from each forward-looking statement. Each forward-looking statement is
expressed only as at the date on which it is made and the Company undertakes no obligation to update forward-looking statements
if circumstances or management’s estimates or opinions should change, other than as required by securities laws. The reader is
cautioned not to place undue reliance on forward-looking statements.
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2
Chair & Chief Executive’s statement
2020 marked a year of growth as the Company, headed by a high-quality geological team, focused on its strategy to advance its
assets up the value curve; with new prospects in Western Australia added to our diversified portfolio, they lay the groundwork for
a busy and productive year.
The impact of the Covid-19 pandemic influenced all aspects of the company and the personnel for the whole year but the whole
team pulled together to mitigate wherever possible any risk of infection to all employed and contracted personnel and ensure all
worked within their relative government guidelines to keep everyone safe while progressing where possible and safely exploration
work in the field and research and business dealings in the office.
Even with the global pandemic impacting all aspects of normal life the company was able to still achieve some significant milestones
during the year notably further acquisition of a significant exploration licence around the Elizabeth Hill Mining licence in the Pilbara
region of Western Australia and signing a mid tier Canadian Exploration and Mining company for a significant earn in agreement on
the Donovan 2 Copper Gold project in Mexico while also having a significant uplift in the markets awareness of the company.
The Company’s Technical Director, Bill Brodie Good, with over 25 years of experience in mineral exploration, was appointed CEO
in September 2020 and continued on an acquisition-led strategy as well as looking for partners to work with moving forward. We
focused on strengthening our portfolio of diversified assets to encompass silver and precious metals projects in Mexico and newly
acquired silver and iron ore projects in Western Australia.
Reducing overheads is a practice from previous years that has stayed with us and was even more necessary in 2020 whereby all
aspects of cost cutting were maintained including the Directors taking a reduction in directors fees, streamlining corporate overhead
costs where possible to minimise overheads. In 2020, we continued to bring value by acquiring a significant new project within an
established mining community that has a stable political background and assures a strong operation control.
During 2020, we are delighted to have finalised the acquisition of the Elizabeth Hill Silver Project in the Pilbara region of Western
Australia and furthermore securing a significant new exploration licence ELA47/4422, Munni Munni North, covering some 117km2
that wraps around the Elizabeth Hill Mining Licence including a significant historical data package and some surface soil samples
collected in 2019 but never processed.
Furthermore, in October 2020 Alien signed an Earn-in Agreement with Capstone Mining Corp of Canada (TSX: CS) over the Donovan
2 Copper-Gold project in Mexico. Pursuant to the Agreement, Capstone has the ability to acquire up to an 80% interest in Donovan
2 by sole funding the Project up to completion of a Prefeasibility Study. Highlights of the agreement are that Capstone can earn
an initial 65% interest in Donovan 2 through a combination of cash payments and committed expenditure, consisting of US$290,000
in cash payments to Alien over three years and US$3,600,000 in valid exploration expenditure over three years (including
US$150,000 being incurred by 31 December 2020). Capstone can increase their interest from 65% to 75% by making a further cash
payment of US$200,000 and funding the costs associated with a Preliminary Economic Assessment (PEA). Following delivery of the
PEA, in the event Alien elects not to contribute pro-rata to its 25% interest, Capstone Mining has the ability to sole-fund the costs
of a Prefeasibility Study (PFS) to earn an additional 5% in Donovan 2 (bringing their holding to 80% and Alien 20%) . Thereafter,
each party will fund their pro-rata interest in the Project or dilute according to industry standard mechanisms. In the event Alien
dilutes to below 5%, its interest will convert to a 2% Royalty. This was a significant transaction with Capstone and delivered the
potential for immediate advancement of the Donovan 2 Copper-Gold project while allowing Alien to focus exploration activities
across its other project portfolio.
We are committed to continue delivering on the strategy of advancing our projects through the exploration phases with our high
quality geological team’s expertise while seeking to identify a suitable partner for an earned-in agreement or a joint venture at a
price which will not overly dilute existing Shareholders. We intend, as we have proved with the Capstone deal, in joining with
potential partners on other projects, to ensure the costs and capital commitments are minimised.
We believe that in order to successfully grow this vision, we need to focus on channelling the funds invested in it towards exploration
activity and business development, and this is at the heart of everything we do.
The Company’s work to identify suitable partners for a joint venture or earned-in agreement included our Mexican silver projects
and gold and copper project. Alien works based on a strict selection criteria centred on assessing risk, appropriate scale and likely
upside.
We look forward to sharing further results from our exploration work at our various sites following the completion of our 2 Placings
in Q3 and Q4 2020 that were extremely successful and have provided the company with an excellent funding for advancing all the
exploration projects as well as looking at further acquisitions in 2021.
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3
Dan Smith
Chairman
Bill Brodie Good
CEO & Technical Director
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Business overview
Strategy and business model
Alien Metals’ objective is to create a multi-commodity
portfolio of exploration and mining projects in
jurisdictions with established mining communities,
stable political backgrounds, and where strong
operational controls can be assured.
The group has operated in Mexico for over ten years
during which time it has established long-term
relationships with local government, communities,
and key stakeholders.
Alien Metals’ geological experts assess and identify
projects for potential mineralisation. Wherever
possible, the projects are acquired on a low-cost
option basis whilst preliminary exploration
is
undertaken to assess the merits of further work.
The Company routinely evaluates mining projects in
jurisdictions other than Mexico and Australia. During
2020, this included West Africa, Europa and Latin
America.
studies evidence
Where preliminary
sufficient
mineralisation, increasingly comprehensive studies
will be undertaken with a view to delineating a
compliant mineral resource estimate in readiness of
potential sale of the asset to a producing mining
company, at which time a significant premium over its
acquisition and development cost may be justified.
Financial highlights
All dollar amounts in this annual report and financial
statements are US dollars, unless stated otherwise.
As at 31 December 2020, the Group had total assets of
$9.4 million (2019: $0.7 million) of which $5.6 million
(2019: $0.2 million) was cash. The Group had total
liabilities of $0.3 million (2019: $0.1 million) of which
$0.3 million were current liabilities (2019: $0.1
million).
In the year ended 2020 the Group made an operating
loss of $1.2million (2019: $1 million) and a loss per
share of 0.052 cents (2019: 0.1 cents).
Overview of operations
During 2020, the Group completed its initial high-level
review and some exploration work over its portfolio of
mining concessions in Mexico covering an area of over
approximately 1,500 hectares, to advance the projects
in knowledge and potential. The Group was also active
across its highly prospective Australian projects of
Elizabeth Hill Silver and the Hamersley Iron Ore
projects.
As at 31 December 2020, the Company held 12 fully
owned mining concessions in Mexico, and was in the
process of obtaining an option to acquire an interest
in 1 additional project. It should be noted that the
company dropped 4 of these licences in Mexico in early
2021 by not paying the required annual rent as per
Mexican Mining Code due to the 4 projects being too
small, totally underexplored and the company felt of
no value to maintain.
Copper project
Donovan 2 project
The Company’s 750-hectare Donovan 2 project is
located to the southeast of Zacatecas city and in close
proximity to other wholly owned projects within
Alien’s portfolio within the Mexican precious and base
metals belt. The Teck Resources San Nicolás copper
zinc deposit and Minera Frisco El Coronel gold mine are
both located within 25km.
Alien Metals' preliminary exploration programme on
this project, has identified several areas that exhibit
pathfinder indicators of volcanogenic massive sulphide
(VMS)-style mineralisation, and ground magnetic
geophysics and induced polarisation have confirmed
indications of sub-surface VMS-style mineralisation.
Further to the earn in agreement with Capstone Mining
a more detailed ground IP survey was carried out by
Capstone in November/December 2020 to further
delineate drill targets. Results and targets were
defined in early 2021 to coincide with planned drilling
program by Capstone.
Silver & Precious Metals projects
Elizabeth Hill project
The Elizabeth Hill project is situated approximately 45
km south of Karratha in the 61,000 km2 Achaean
Pilbara Block of the Pilbara Craton. The Project is well
located, lying 40 km from the deep-water port at
Dampier and 8 km from rail infrastructure.
The Elizabeth Hill Silver Project was mined between
1998 and 2000 via underground mining, primarily
between the 62 m and 102 m levels. Silver production
totalled approximately 16,800 tonnes of ore grading
2,195 g/t Ag (70.24 oz/t Ag) generating 1,170,000
ounces Ag, including some very large specimens of
native silver.
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Munni Munni North project
ELA 47/4422 is a 117km2 tenement which wraps
around the Elizabeth Hill Silver Mining Lease on all
sides and includes a portion of the Munni Munni
intrusive complex to the south and southwest. The
highly prospective Munni Munni fault strikes north-
south through the tenement and into the Elizabeth Hill
ML on which the Elizabeth Hill Silver deposit is
associated with. There is also some strike length of the
Hunters Reef, a Platinum Group Element target
geological feature related to the Munni Munni Deposit
defined just to the south of this ELA.
Los Campos project
The Los Campos project comprises four concessions
covering an area of approximately 500 hectares and is
located on the south side of the city of Zacatecas and
only 3 km from the Endeavour Silver El Compas silver
mine. The property contains at least two known veins:
the Los Campos vein and the San Rafael vein, which
were both partially mined historically.
The Los Campos vein system has been developed along
a strike distance of 3.3km and to depths exceeding
100m. Geological mapping and sampling discovered
additional veins running either parallel or nearly
parallel to the Los Campos vein.
San Celso project
The 88-hectare San Celso project is located in the
historic mining district of Pánfilo Natera-Ojocaliente.
It contains two highly mineralised veins: the San Celso
and Las Cristinitas veins which were also partially
mined historically. Work carried out during 2019 and
2020 confirmed the high grade of these veins.
Iron Ore projects
Hancock Ranges Project – 51%
The Hancock Ranges Iron Ore Project. E47/3954, is
within 20kms of the Newman township and borders
licences held by Fortescue Metals Group, Hancock
Prospecting, BHP Billiton (Mount Whaleback), Hope
Downs and Brockman Mining.
The Licence has been subject to historical exploration
by Rio Tinto plc, BHP Group plc, and more recently
Volta Mining Limited, where drilling intercepted
mineralisation within the Brockman Iron Formation
including 126m @ 60.28% Fe from surface (Hole
14SERC004).
Brockman Iron Project – 51%
This tenement hosts part of the historic BHP Deposit
20 iron ore target and the historic BHP Deposit 19 Fe
target sits on the south-eastern boundary.
This tenement is dominated by the Brockman Iron
Formation which underlies the majority of the
tenement area. Recent alluvial cover is prevalent and
covers the indicated Brockman Iron Formation.
In late 2020 the Company undertook further field
exploration at Hancock Range and Brockman Iron,
which culminated in the maiden drilling program at
Brockman commencing in early 2021.
Future outlook
The Company entered 2021 with a strong balance
sheet and a solid portfolio of advanced exploration
assets in Western Australia and Mexico. Despite global
challenges attributed to the COVID-19 pandemic, Alien
has been able to advance its key projects, Hamersley
Iron Ore, Elizabeth Hill and Donovan 2.
(cid:3)
So far
in 2021, the Company has successfully
completed a maiden drilling program at the Hancock
Ranges Project, undertaken an airborne magnetic
survey at Elizabeth Hill and Munni Munni North, and
progressed a number of desktop studies to guide high-
impact exploration work in the second half of the year.
Alien is well financed, with quality assets and a strong
technical team, and looks forward to a busy 2021 and
beyond.
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Governance
Chair’s corporate governance statement
Alien Metals recognises the value and importance of maintaining the highest standards of corporate governance
and is committed to the principles of corporate governance founded on accountability, leadership and
stakeholder management. (cid:3)
Although compliance with the 2018 UK Corporate Governance Code (“the Code”) is not compulsory for AIM
companies, the directors aim to apply its provisions where practical and in relation to the size and stage of
development of the Company. The Board is conscious that the corporate governance environment is constantly
evolving and the charters and policies under which it operates are regularly reviewed and amended as
required.
The Code is widely recognised as setting the highest standard for corporate governance and is written to
accommodate very large companies as well as much smaller ones. The directors have therefore satisfied
themselves that appropriate governance structures, policies and procedures are in place, and have made training
available to all directors.
All directors have access to the services of the Company Secretary, who is responsible for advising the Board on
all governance matters. Both the appointment and removal of the Company Secretary are matters for the whole
Board.
The provisions of the Code that the Company does not apply are summarised below and described in further
detail within this annual report:
Employee engagement
Due to the Company only having a small number of employees, the Board has not appointed a director from the
workforce, created a formal workforce advisory panel or designated a non-executive director to engage with
the workforce. This is contrary to Code provision 5 and is explained in the section headed “Culture and
employees” on page 10.
Senior independent director
The Board has not appointed a senior independent director. This is contrary to Code provision 12 and is explained
in the section headed “Senior Independent Director” on page 9.
Annual evaluation of the performance of the Board
The Board does not carry out a formal annual evaluation of its the performance, its committees, the Chair and
individual directors. This is contrary to Code provision 21 and is explained in the section headed “Board
assessments” on page 15.
Board Committees
Currently, the Company has insufficient independent non-executive directors to enable it to meet the criteria
for the composition of its committees, contrary to Code provision 24 and Code provision 32 and is explained in
more detail on pages 11 and 12.
Performance related pay
Non-executive directors participate in the Company’s share option plan. This is contrary to Code provision 34
and is explained in the section headed “Share Option Plan and Option-Based Awards” on page 13 and 14.
(cid:3)
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Board leadership
The Board of Directors is responsible for overseeing the long term success and strategic direction of the Company
in accordance with the schedule of matters reserved for board decision and it responsible for monitoring the
activities of the executive management.
Non-executive Chair
Dan Smith
(appointed 26 February
2019)
Skills and experience
Dan Smith has over 13 years’ capital markets experience working in various roles
including as an Executive and Non-Executive Director and Company Secretary of
companies with shares quoted on AIM, ASX and NSX. He is the founder of Minerva
Corporate Pty Ltd, a boutique corporate services firm focused on providing
corporate advisory, company secretarial, and accounting services to listed and
unlisted entities, as well as compliance manager services for IPOs and RTOs across
sectors including natural resources. Dan is currently a Non-Executive Director and
Company Secretary of AIM traded Europa Metals Ltd, a European focused zinc-lead
exploration company, and is director and company secretary for a range of
companies listed on the ASX.
Roles on Board committees
Member:
Member:
Audit Committee
Nomination & Remuneration Committee
Chief Executive Officer
and Technical Director
Bill Brodie Good
(appointed 4 July 2019)
Skills and experience
Douglas William (“Bill”) Brodie Good, BSc and BA (Hons) has worked in minerals
exploration in over 40 countries, across Africa, the Middle East, Central Asia and
SE Asia, since his geological studies and early years in the mining industry in
Australia.
Bill has over 25 years in mineral exploration, working for start-ups, juniors, mid-
tier and major (Rio Tinto Mining and other Rio Tinto group companies in a variety
of roles) resource companies, as well as 5 years as a principal with SRK Exploration
Services Ltd, a leading global mining consultancy group.
Roles on Board committees
None
Non-executive Director
Mark Culbert
(appointed 23 July 2020)
Skills and experience
Mark is an experienced litigation lawyer and is the Managing Director of iLaw
Solicitors Limited, a City Legal 500 law firm, which he co-founded in 2006. His
speciality areas are intellectual property, technology and media disputes.
Mark is the Chairman of the IT Disputes Group of the Society for Computers & Law,
an Associate Member of the Chartered Institute of Trade Mark Attorneys and an
Associate Member of the Australian Risk Policy Institute.
Roles on Board committees
Member: Audit Committee
Member: Nomination & Remuneration Committee
Non-executive director
Christopher Gordon
(resigned 23 July 2020)
Skills and experience
Chris Gordon has a Bachelor of Economics degree awarded by the University of
London and over 10 years’ experience in the financial services sector in London,
working in dealing and trading roles with a focus on raising capital for listed
companies. Chris Gordon previously acted as a non-executive director for Gunsynd
plc which is listed on AIM.
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Non-executive director
James Cable
(resigned 24 November
2020)
Skills and experience
James Cable has been a chartered accountant for over 40 years and has extensive
experience at board level in various companies. He has significant international
and commercial experience gained in the Middle East, Africa, Far East and Europe
in several business sectors including natural resources and construction. He is a
former Finance Director of Kopane Diamond Developments Plc and Mantle
Diamonds Ltd and he advises natural resources companies on corporate strategy
and project finance and is a director of GemRock Company Ltd.
Company Secretary
St James’s Corporate
Services Limited
(“SJCS”) (appointed 10
January 2020)
Skills and experience
SJCS is co-owned by Phil Dexter and Jane Kirton.
Phil has in excess of 40 year’s experience in the company secretarial environment
and has worked in the natural resources sector since 1977.
During that time he has worked with most of the leading South African mining
companies and assisted on numerous corporate transactions involving acquisitions,
reorganisations and restructurings, rights offers and fund raisings.
Jane has over 20 year’s experience in the company secretarial environment and
qualified as a Chartered Secretary in 2007.
Roles on Board committees
Secretary:
Secretary:
Audit Committee
Nomination & Remuneration Committee
The following documents are available on the Company’s website, www.alienmetals.uk:
schedule setting out the division of responsibilities between the Chair and CEO;
(cid:120)(cid:3)
(cid:120)(cid:3) matters reserved for board decision
(cid:120)(cid:3)
(cid:120)(cid:3)
Terms of Reference of the Nomination & Remuneration Committee
Terms of Reference of the Corporate Governance
Independent directors
At least half the Board, including the Chair, comprises independent non-executive directors who provide a
balance of skills and experience, and who are responsible for providing constructive challenge to and assistance
in, developing proposals on strategy.
All the non-executive directors participate in the Company’s share option plan; the extent of their participation
is not considered to impact their independence.
Dan Smith and Mark Culbert are both deemed independent.
Senior Independent Director
The role of a Senior Independent Director is to provide a sounding board for the Chair and serve as an
intermediary for the other directors and shareholders. In addition, a senior independent director would be
expected to meet the other non-executive directors without the Chair present, to appraise his performance.
The Company Secretary, as well as each of the non-executive directors, is available as a sounding board to the
Chair and to serve as an intermediary for shareholders. The Company Secretary is also available to serve as an
intermediary for any of the directors when required. Due to the size of the Board, the nomination of any one
particular director to act as a Senior Independent Director is not currently considered to be appropriate and
would not improve its effective operation. However, the matter is kept under review.
The process through which board assessments are undertaken is more fully described in the section headed
“Board assessments”, on page 15.
Operation of the board
All directors are required to allocate sufficient time to the Company to discharge their responsibilities
effectively. In any decision-making, the directors are required to exercise their judgement in determining the
likely impact of each decision as to the likelihood of promoting the success of the company for the benefit of its
members as a whole. In doing so, the directors consider whether the decision is likely to promote the success of
the company for the benefit of its members as a whole, having regard for (amongst other matters):
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(a)(cid:3) the likely consequences of any decision in the long term,
(b)(cid:3) the interests of the company's employees,
(c)(cid:3) the need to foster the company's business relationships with suppliers, customers and others,
(d)(cid:3) the impact of the company's operations on the community and the environment,
(e)(cid:3) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f)(cid:3) the need to act fairly as between members of the company.
The Chair is ultimately responsible for ensuring that each board decision is taken having sufficient information
on and with all due discussion of, each of the aforementioned items as is relevant to such decision.
The Company has a schedule of matters reserved for its own decision and two committees comprised entirely of
non-executive directors: the Audit Committee and the Nomination & Remuneration Committee. Although an
Executive Committee was established in the past, from May 2019, the Company had only 1 Executive Director
and therefore it has not met since that date and is not expected to meet until such time as additional members
are appointed.
Each committee has formally delegated responsibilities by way of Terms of Reference.
The performance of the Board, committees and individual directors are reviewed but no formal evaluation has
taken place.
Board meeting attendance
The small size of the Board and frequent telephonic or other remote contact between the directors enables
decisions to be taken quickly and effectively using written resolution procedures rather than physical board
meetings. Only 1 board meeting took place during the year in October 2020, at which all directors at that time
were present i.e. Dan Smith, Bill Brodie Good, James Cable and Mark Culbert. All other resolutions of the
directors were effected by written resolution.
Value generation and preservation
The Company’s business model and opportunities immediately available are more fully described in the “Business
overview” section of this annual report. Over the long-term, the Company seeks to create value by acquiring
mining rights, demonstrating the presence of mineralisation and thereby significantly increasing the value of
those mining rights.
As the Company does not expect to generate operating revenues in the immediate future, it is dependent upon
the financial support of new or existing investors and it is believed that companies that are well-governed enjoy
a lower cost of capital which, all things being equal, should translate to greater business success.
The risks to the business are set out in the Risk Management section commencing on page 16.
Culture and employees
At the Company’s present stage of development, it has two employees and its culture therefore exists principally
in the boardroom and amongst any contractors. In the UK, all contractors report directly to the CEO. Overseas,
all contractors report directly to the country manager. The country manager reports to the CEO. It is considered
that the board is well positioned to ensure that policy, practices and behaviour throughout the business is aligned
with the Company’s purpose, values and strategy. In the event that the Board had any concerns, it would require
the CEO or country manager to take remedial action.
The Board recognises the importance of the remuneration structure supporting its strategy and reinforcing the
culture of the organisation. This is further described in the Nomination and remuneration committee report on
page 12.
Relations with shareholders
The Chair welcomes major shareholders to discuss the Company’s strategy and governance, including, as
explained in the Nomination & Remuneration Committee Report, on the appointment of key board appointments.
The Chair reports to the Board as a whole, on the views of major shareholders.
All investors are encouraged and welcomed at the Company’s annual general meeting, at which there is
opportunity to pose questions to the directors. However, as shareholders were not able to attend the 2020 AGM
due to COVID-19 restrictions, a dial-in facility was made available to enable shareholders to participate in the
meeting. Following the conclusion of the formal business of the meeting, the CEO gave an update on the
Company’s activities and answered questions from shareholders.
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Annual general meeting
At the Company’s annual general meeting held during 2020, all resolutions were passed by a poll and proxy
voting figures were published immediately following the AGM.
Major shareholders
As at 5 May 2021 being the latest practicable date, the Company had been notified of the following companies
or individuals interested 3% or more of the Company’s shares:
Shareholder
Windfield Metals Pty
Gravner Ltd
No. shares
220,000,000
202,247,000
%
6.43
5.91
Conflicts of interest
All Directors have duties under the BVI Business Companies Act to act with care, diligence and skill, in the best
interests of the Company.
Certain directors and officers of the Company may also serve as directors and/or officers of, or have investments
in other companies involved in mineral exploration and development and consequently there is the potential for
conflicts of interest.
Conflicts of interest can arise amongst shareholders, especially where one shareholder, or a small group of
shareholders, has a significant stake in the Company. The directors must not to allow this to compromise or
override their independent judgement, especially in the context of acting fairly as between members of the
Company.
In the event a conflict of interest should arise, each individual so conflicted is required to disclose the conflict
in accordance with the Company’s Articles of Association in order that it can be considered and approved if
appropriate. No director may vote on any matter in which he or she may be deemed to be interested.
On an ongoing basis, each director is responsible for informing the Company Secretary of any new actual or
potential conflicts that may arise or if there are any changes in circumstances that may affect an authorisation
previously given. Even when provided with authorisation, a director is not absolved from his or her statutory
duties.
Board Committees
The Board of Directors has two standing committees:
Audit Committee
(cid:120)(cid:3)
(cid:120)(cid:3) Nomination & Remuneration Committee
The Company Secretary is Secretary to each Committee and attends all meetings.
The Board considers that each of the Committees has an appropriate balance of skills, experience, independence
and knowledge of the Company to enable them to discharge their respective duties and responsibilities
effectively.
The Corporate Governance Committee and a Health & Safety Committee were dissolved in July 2018 as the size
of the Board and the extent of operations did not warrant their continuance.
Audit Committee
The Audit Committee meets at appropriate times in the reporting and audit cycle, and otherwise as required. It
is responsible for nominating the external auditor recommending to the Board the auditor’s compensation,
overseeing the work of the auditor, and approving any proposals for non-audit services. The Audit Committee is
also responsible for reviewing public announcements relating to the Company’s profit or loss or cash flow,
satisfying itself of the adequacy of procedures for the release of financial information, and ensuring the
maintenance of appropriate and proportionate procedures for addressing matters relating to accounting,
internal financial controls and auditing matters.
It is the Board of Directors’ conclusion that each of the members of the Audit Committee has an understanding
of the accounting principles used by the Company to prepare its financial statements, the ability to assess the
general application of such accounting principles in connection with the accounting for estimates, accruals and
reserves, and experience in evaluating financial statements that present a breadth and level of complexity of
accounting issues generally comparable to the breadth and complexity of issues that can reasonably be expected
to be raised by the Company's financial statements.
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During the year Dan Smith, James Cable (until 24 November 2020), Chris Gordon (until 23 July 2020) and Mark
Culbert (from 23 July 2020) served as members of the Audit Committee.
The Audit Committee Terms of Reference (”TORs”), in accordance with the provisions of the Code, require it to
comprise of not less than 3 independent non-executive directors and also provide that the Chair of the Board
should not be member. However, as a result of the resignation of James Cable earlier in the year, the Audit
Committee comprises of only 2 non-executive directors, one of which is Dan Smith and is therefore non-
compliant with its TORs. However, the Code does allow audit committees of smaller companies to comprise of
only 2 independent non-executive directors. Accordingly, the Terms of Reference were amended subsequent to
the year-end to reflect this. Until such time as an additional independent non-executive director is appointed,
the Board has agreed that Dan Smith may remain a member.
Nomination & Remuneration Committee
The Nomination & Remuneration Committee (“the N&R Committee”) meets at least once each year, and
otherwise as required. It is responsible for identifying and nominating for the approval of the Board, candidates
to fill Board vacancies as and when they arise, having due regard for the structure, size and composition of the
Board together with the skills, knowledge, experience and diversity of both the Board and the individual.
Additionally, the N&R Committee is responsible for reviewing the results of any board effectiveness review that
relates to the composition of the board.
The scale and structure of the remuneration and compensation packages for the directors is set taking into
account time commitment, comparatives, and risks and responsibilities, to ensure that the amount of
individual’s previous performance, achievements, experience,
compensation adequately reflects the
responsibilities and the risks of the office or position held, and in the context of the Company’s risk profile, to
ensure they do not encourage excessive risk taking.
During the year Dan Smith, James Cable (until 24 November 2020), Chris Gordon (until 23 July 2020) and Mark
Culbert (from 23 July 2020) served as members of the N&R Committee.
Subsequent to the year-end, the Board agreed that a separate Nomination Committee and a separate
Remuneration Committee be constituted to replace the current N&R Committee. However, the Code requires
the chair of the Remuneration Committee to have served on a remuneration committee for at least 12 months
prior to appointment and for it to comprise of a minimum of 2 independent non-executive directors and for the
Nomination Committee to comprise of a majority of non-executive directors. Currently, it would not be possible
to meet any of these criteria and therefore the constitution of the separate committees has been deferred until
such time as an additional independent non-executive director is appointed.
Nomination and remuneration committee report
Overview
The N&R Committee makes recommendations to the Board as to the appropriate structure, size and composition
(including the skills, knowledge, experience and diversity) of the Board and is responsible for identifying and
nominating suitable candidates to fill Board vacancies.
The N&R Committee is also responsible for recommending the remuneration policy to the Board, determining
the remuneration of the directors and senior executives, ensuring that remuneration is reported correctly, and
reviewing the results of any assessment of the effectiveness of the Board.
The N&R Committee meets as required each year to review the performance of the executive directors and to
determine their respective compensation.
The N&R Committee is governed by terms of reference, which are available on the Company’s website at
www.alienmetals.uk. The N&R Committee’s terms of reference require it to review its own terms of reference
once a year; they were last amended on 28 September 2019.
During the year, Mark Culbert joined the Board as an independent non-executive director and Bill Brodie Good
was appointed as CEO and Technical Director. Chris Gordon and James Cable resigned as non-executive directors
on 23 July 2020 and 24 November 2020 respectively.
The directors received a significant award of share options to ensure there was a strong link between their
contribution to the Company and their reward.
The Board is not aware that the workforce has any particular desire to engage in the discussion of remuneration
policy and how executive remuneration aligns with wider company pay policy. The Board will make appropriate
provision should it appear that this is not the case or the situation changes.
12
Although the Chairman of the N&R committee has not served on a remuneration committee for at least 12
months prior to appointment, as required by the Code, the members of the N&R Committee have the necessary
experience of executive compensation matters relevant to their responsibilities as members of such a committee
by virtue of their respective professions, contacts within the minerals industry as well as experience in the
broader business community. In addition, each member of the N&R Committee keeps abreast on a regular basis
of trends and developments affecting executive compensation. Nonetheless, it is the intention that an additional
non-executive director who meets the requirements of the Code will be appointed to the Board and will assume
the role of Chairman of the Committee in due course. Neither the Company nor the N&R Committee engaged
independent consultants to evaluate the levels of compensation during the year ended 31 December 2020.
The recommendations of the N&R Committee are submitted to the independent members of the Board of
Directors for consideration and approval.
Remuneration policy
The Company’s remuneration policy is intended to support the Company’s long-term strategy and sustainable
success in a manner consistent with the Company’s purpose and values, attracting and retaining the highest
quality of directors and senior executives. The pay policy is to:
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
align the interests of the Board and senior executives with shareholders’
align the interests of the workforce (including the Board and senior executives) with the Company’s
purpose and values,
avoid incentivising excessive risk taking by the Board and senior executives,
be proportionate to the contribution of the individuals concerned, and to
be sensitive to pay and employment conditions elsewhere in the group.
The remuneration policy does not require post-employment shareholding requirements. Share options ordinarily
lapse upon the resignation of the option holder.
The scale and structure of the remuneration and compensation packages of directors is set taking into account
time commitment, comparatives, risks and responsibilities, to ensure that the amount of compensation
adequately reflects the individual’s previous performance, achievements, experience, responsibilities and risks
of the office or position held, and in the context of the Company’s risk profile, to ensure they do not encourage
excessive risk taking on the part of the recipient of such compensation.
As the Company is at an early stage of development, the use of traditional performance standards, such as
corporate profitability, is not considered by the N&R Committee to be appropriate in the evaluation of corporate
or directors’ performance. Discretionary bonuses may be paid to aid staff retention and reward performance.
The Board considers that the remuneration policy has operated as intended in terms of company performance
and quantum.
The Company provides executive directors with base salaries which represent their minimum compensation for
services rendered during the financial year. The base salaries of directors and senior executives depend on the
scope of their experience, responsibilities, and performance. A description of the material terms of each
director’s contract is provided under “Terms of Directors’ Employment, Termination and Change of Control
Benefits” below.
The N&R Committee has considered the risk implications of the Company’s compensation policies and practices
and has concluded that there is no appreciable risk associated with such policies and practices since such policies
and practices do not have the potential of encouraging an executive officer or other applicable individual to
take on any undue risk or to otherwise expose the Company to inappropriate or excessive risks. Furthermore,
although the Company does not have in place any specific prohibitions preventing executives from purchasing
financial instruments, including prepaid variable forward contracts, equity swaps, collars, or units of exchange
funds that are designed to hedge or offset a decrease in market value of options or other equity securities of
the Company granted in compensation or held directly or indirectly, by the director, the Company is unaware
of the purchase of any such financial instruments by any director.
The Company does not anticipate making any significant changes to its compensation policies and practices
during 2021.
Share Option Plan and Option-Based Awards
All share options granted under the Company’s Unapproved option plan as amended and restated effective as of
1 December 2006 have now lapsed and no further share options will be awarded under this plan.
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The Company currently has EMI share option plan (“Approved Plan”) which was adopted by the Board on 3
February 2018, and which provides for the award of share options under HMRC’s approved Enterprise
Management Incentive scheme, the Company Share Option Plan, as well as Unapproved share options.
In February 2018, the Board resolved that no further options would be granted under the Unapproved Plan and
succeeded it with the Approved Plan.
Share options are approved by the Board of Directors on the recommendation of the Nomination & Remuneration
Committee. Option awards are reviewed periodically, take into account previous option grants, changes in
executive positions and overall contribution to the Company.
The Approved Plan provides that the maximum number of shares which may be reserved and set aside for issue
under it, is 10% of the Company’s issued share capital at the date of grant. The aggregate number of shares
which may be reserved for issuance to any one person under the Share Option Plan and which are subject to
outstanding options granted under a prior plan, must not exceed 5% of the issued shares (determined at the date
the option was granted), in a 12-month period.
The Company’s non-executive directors participate in the Unapproved Plan because the Board considers that
the holding of options helps align the interests of the non-executive directors with shareholders by incentivising
their decision making with a view to providing growth in the Company’s share price. The Company’s long-term
success will be dependent upon raising additional finance in future; aligning the interests of all directors and
senior executives with shareholders incentivises all concerned to achieve the best possible price for such placings
and to minimise undue dilution of interests.
Summary Compensation Table
The following table sets forth the compensation awarded, paid to or earned by each director during 2020,
rounded to the nearest US$1,000.
All figures in US$
Director and
position
D. J. Smith
Non-Executive
Chairman
B. Brodie Good
CEO & Technical
Director
M. C. Culbert
Non-Executive
Director
J. S. Cable
Non-Executive
Director
C. C. Gordon
Non-Executive
Director
D. V. Edmonds
Executive Chair
P. Taylor
Chief Executive
Officer
Appointed /
Resigned
Appointed
26 February
2019
Appointed
5 July 2019
Appointed 23
July 2020
Resigned 24
November
2020
Resigned 23
July 2020
Resigned
30 April 2019
Resigned
8 July 2019
Base
Salary /
Fees /
Pensions
63,000
2020
Option
based
awards
-
2019
Base
Salary /
Fees
42,000
Option
based
awards
19,000
Total
63,000
Total
61,000
166,000
18,000
184,000
51,000
10,000
61,000
6,000
3,000
9,000
-
-
-
21,000
3,000
24,000
32,000
2,000
34,000
13,000
-
1,000
-
-
-
13,000
32,000
-
14,000
-
-
32,000
14,000
1,000
119,000
32,000
151,000
Salaries are paid in pounds sterling and translated to US dollars based on the average £:$ foreign
exchange rate for each respective year (2020: 1.2833; 2019: 1.2760).
The fair value of options granted is calculated using the Black-Scholes model as this model is widely
accepted as an industry standard and is considered to provide the best estimation of value. Further
details are set out in note 16.
Notes:
(1)(cid:3)
(2)(cid:3)
14
Appointment of new directors and succession planning
The N&R Committee recognises that an effective board comprises a range and balance of skills, experience,
knowledge, gender and independence, with individuals that are prepared to challenge each other whilst working
as a team, which requires a range of personal attributes, including character, intellect, sound judgement,
honesty and courage.
The Board and its advisers have significant experience in the mining sector and from that, a strong network of
individuals working in the sector.
In the first instance, the N&R Committee in consultation with the Chair identify the Board’s needs, and potential
candidates believed to have the right blend of attributes to complement the Board, are identified and shortlisted
from this broad network.
Given this experience and network, the Board does not consider it necessary to openly advertise positions or,
generally, to use executive search consultants, however, in the event the N&R Committee is unsatisfied with
the suitability of candidates which have been presented from the identification process, an executive search
agency would be appointed. The Company usually has very limited need for the service of executive search
agencies and therefore does not maintain a relationship with any one particular firm.
For key appointments, such as the appointment of the Chair, a representative from the Board may discuss the
proposed appointment with significant investors.
Once a suitable candidate has been identified, the Company’s Nominated Advisor carries out searches to provide
assurance of their suitability.
Diversity and inclusion
There are many forms of diversity in the workplace: age, gender, race, national or ethnic origin, religion,
language, political beliefs, sexual orientation and physical ability, as well as diversity of perspective arising from
individuals’ skills, experience and working styles providing different perspectives and approaches to finding
solutions.
The present gender balance of senior management is exclusively male; the Board recognises this would benefit
from improved balance, and the N&R Committee is cognisant of this when seeking candidates.
Appointment and removal of directors
The powers of the directors of the Company are determined by its Articles of Association and British Virgin
Islands (“BVI”) legislation, each of which contain rules about the appointment and replacement of directors.
They provide that subject to certain conditions, directors may be appointed by an ordinary resolution of the
members or by a resolution of the directors, provided that, in the latter instance, a director appointed in this
way retires at the first AGM following his or her appointment.
The Company’s Articles of Association also provide that directors should normally be subject to re-election at
the AGM at intervals of three years although directors may volunteer to stand for re-election annually.
A director may cease to be a director:
•(cid:3) By special resolution of the members approved by 75% of the shareholders entitled to vote
•(cid:3) By resolution of the directors
•(cid:3)
•(cid:3)
If he resigns
If he ceases to meet the eligibility requirements under the BVI Companies Act.
Where any director resigns and has concerns about the operation of the board or the management of the
company, they are asked to provide a written statement to the Chair to circulate to the Board.
Board assessments
The Chair continuously considers the performance of the Board, its committees and of individual directors, and
provides feedback when appropriate. Similarly, the Chair invites feedback in the same manner from the Non-
Executive Directors and the Company Secretary. The N&R Committee considers the time and cost involved in
carrying out a formal process, especially one that is externally facilitated, cannot be justified for the Company
at this stage in its development.
The N&R Committee acknowledges the merits in carrying out formal board evaluations and will monitor the
continuing suitability of this stance as the Company grows in size.
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Audit committee report
Overview
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors.
The Company’s management has the primary responsibility for the financial statements, for maintaining
effective internal control over financial reporting, and for assessing the effectiveness of internal control over
financial reporting. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the audited
consolidated financial statements and the notes to them, as set out on pages 28 to 54 of this annual report, with
Company management, including a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Committee is governed by terms of reference, which are available on the Company’s website at
www.alienmetals.uk. The Audit Committee’s terms of reference require were reviewed and amended post the
year-end, in February 2021.
Independence of the external auditor
The independence of the auditor is considered by the Audit Committee each year. In assessing the auditor’s
independence, the Audit Committee consider:
Ratio of audit fees to non-audit fees
Length of tenure
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3) Whether there are any known material relationships between the Company, its directors and senior
executives, and the audit firm, its partners, and the audit team
Application of constructive challenge and professional scepticism
(cid:120)(cid:3)
Audit and non-audit fees are disclosed in note 4 to the financial statements, on page 39.
The Audit Committee considers the nature and value (in the context of the audit fee) of any non-audit services
on the auditor’s independence, and is required to give its prior approval of any such non-audit services.
Effectiveness of the external audit process
In considering the effectiveness of the external audit process, the Audit Committee consider:
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
Effectiveness of the audit plan, its delivery and execution
Knowledge and experience of the audit team
Robustness of the audit
Internal audit function
The Audit Committee considers annually whether there is a need for an internal audit function and makes a
recommendation to the Board if a change is considered to be appropriate. The Company’s operations are small
in scale, the organisational structure is flat, and the cost of an internal audit function is not justified at present.
Risk management
The financing, exploration, development and mining of any of the Company’s properties is subject to a number
of factors including the price of copper, silver, gold, lead and zinc, laws and regulations, political conditions,
currency fluctuations, environmental regulations, hiring and retaining qualified people and obtaining necessary
services in jurisdictions where the Company operates.
The Board periodically carries out robust assessments of the emerging and principal risks facing the Company
including those that would threaten its business model, future performance, solvency or liquidity. The
assessment includes a review of all material controls including those which are related to finance, operations
and compliance.
The Audit Committee is responsible for monitoring the effectiveness of the Company’s risk management and
internal control systems, and reports to the Board as required.
Alien Metals operates with a small team of key personnel and with open lines of internal communication. Where
new risks are identified, these are reported to the Company Secretary or the Executive Director. Where
practicable, a method of mitigation is determined, and the risk together with any form of mitigation is presented
to the Board for discussion.
The following is a brief discussion of those distinctive or special characteristics of the Company’s operations and
industry which may have a material impact, or constitute risk factors in respect of the Company’s future financial
performance.
16
Principal risks and uncertainties
Key risks
Description of risk
Mitigating factors
Strategic risks
Exploration and
development
and
acquisitions
future
No reserves or
resources
and
risks
incidental
The Company's operations are subject to all of the
hazards
exploration,
development, and the production of minerals, including
damage to life or property, environmental damage and
legal liability for damage, which could have a material
adverse impact on the business and its financial
performance.
to
The Company intends to acquire additional mining
concessions in Mexico, Australia or elsewhere in the
world.
The Company may be unable to obtain suitable mining
concessions at competitive prices.
Any exploration programme entails risks relating to the
location of economic ore bodies, the development of
appropriate metallurgical processes, the receipt of
necessary governmental permits and the construction of
mining and processing facilities.
In the event that the Company’s portfolio of mining
concessions are deemed by management not to warrant
further exploration and the Company is unsuccessful in
acquiring suitable new projects, the Company will have
no exploration or development projects to pursue.
The Company does not hold any concessions in respect of
which reserves or resource estimates have been
established that comply with Canadian Institute of
Mining, Metallurgy and Petroleum (“CIM”) Standards and
industry
similar
Guidelines or other
standards.
recognised
No assurance can be given that any exploration
programme will result in any new commercial mining
operation or in the discovery of new resources.
concessions
Our mineral
are
evaluated carefully by qualified
independent
and
geologists,
advisors are engaged as and when
appropriate.
The management
has
significant experience operating in
Mexico and Australia.
team
The Company has had significant
success in the past at delineating
mineral resources in accordance
with NI 43-101.
Key risks
Description of risk
Mitigating factors
Strategic risks
Mineral
concessions and
titles risks
In relation to exploration and mining concessions over
which the Company holds legal rights, if the Company
fails to fulfil the specific terms of any of its concessions
or operates in the concession areas in a manner that
violates Mexican or Australian mining law, regulators
may impose fines, suspend or revoke the concessions,
any of which could have a material adverse effect on the
Company's operations and proposed operations.
Ownership of the mineral concessions in Mexico has been
transferred from the Company’s former operating
subsidiary Alien Metals de Mexico SA de CV (“ASM”) to its
new operating subsidiary, Compañía Minera Estrella de
Plata SA de CV (“CMEP”). Whilst the Company has
previously received legal opinions in respect of title of
ASM to its properties there is no guarantee that title to
such properties will not be challenged or impugned by
third parties. The Company’s concessions could be
subject to prior unregistered agreements, transfers or
The Company’s mineral concessions
have been registered in the name of
CMEP and no contest or objection
was received.
The Company is aware of necessary
minimum expenditure and annual
rental obligations
its
exploration and mining permits and
maintains the necessary payments
and expenditure obligations to
negate any risk from this aspect.
for all
Prior to entering into agreements
relating to mineral concessions,
formal searches and reviews of
legal documentation are conducted
to provide evidence of the legal
owner, including outsourcing of
17
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Key risks
Description of risk
Mitigating factors
Strategic risks
other claims and title could be affected by unidentified
or unknown defects or government actions. A formal
legal opinion has not been obtained as to the legal title
of CMEP to the mineral concessions.
legal
diligence to legal practitioners.
tenement
and/or
due
Key risks
Description of risk
Mitigating factors
Failure to obtain sufficient financing for any projects
would result in a delay or indefinite postponement of
exploration, development or production on properties
covered by the Company's concessions or even the loss of
a concession.
Additional financing might not be available when
needed, or if available, the terms of such financing might
not be favourable to the Company and could involve
substantial dilution to shareholders. In the absence of
adequate funding or cost reductions, the Company may
not be able to continue as a going concern.
The Company’s approach to managing liquidity risk is to
ensure that it will have sufficient liquidity to meet
liabilities when due. As at 31 December 2020, the
Company had cash of $5.6m to settle accounts payable
of $296k. The Company’s accounts payable have
contractual maturities of less than 30 days and are
subject to normal trade terms. In the short-term,
liabilities will be funded by cash.
The Group’s objective when managing capital is to
safeguard the Group’s ability to continue as a going
concern and have access to adequate funding for its
exploration and development projects, so that it can
provide returns for shareholders and benefits for other
stakeholders. The Group manages the capital structure
and makes adjustments in the light of changes in
economic conditions and risk characteristics of the
underlying assets.
The price risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of
changes in market prices, whether those changes are
caused by factors specific to the individual financial
instrument or its issuer, or factors affecting all similar
financial instruments in the market.
The Company’s exploration expenditure is made in
Mexican pesos, Australian dollars or US dollars and head
office expenses are predominantly made in the UK in
pounds sterling. The Company is therefore exposed to
the movement in exchange rates for these currencies.
At the year end the majority of the Company’s cash
resources were held in GBP. The Company therefore also
has downside exposure to any weakening of pound
sterling against the US dollar as this would increase
Financial risks
Requirement of
additional
financing
Liquidity risk
Capital
management
risk
Price risk
Foreign
currency risk
18
The Company has an experienced
board and management team with
significant experience in financing
mining activities.
The Company has been successful in
raising funds in the past and it is our
intention to raise additional funds
in future to support the ongoing
development of the business.
that
satisfied
The Company ensures sufficient
funds will be available to allow it to
meet its liabilities as they fall due.
To achieve this cash balances and
cash flow projections are reviewed
by the Board on a regular basis.
The Board will not commit to
material expenditures prior to
sufficient
being
funding is available.
In order to maintain or adjust the
capital structure the Group may
issue new shares, acquire debt, or
sell assets. Management regularly
reviews cash flow forecasts to
determine whether the Group has
sufficient cash reserves to meet
capital
working
future
take
and
requirements
advantage
business
of
opportunities.
The Company does not currently
have any financial instruments in
issue other than share options and
warrants.
to
The Company does not hedge its
exposure to price risk.
The Company does not currently
hedge foreign exchange risk.
There is not considered to be any
material exposure in respect of
other monetary
and
liabilities of the Group.
assets
Key risks
Description of risk
Mitigating factors
Financial risks
expenses in US dollar terms and accelerate the depletion
of the Company’s cash resources. Any strengthening of
pound sterling, Australian dollars or the Mexican peso
against the US dollar would, however, result in a
reduction in expenses in US dollar terms and preserve the
Company’s cash resources.
In addition, any movements
in pounds sterling,
Australian dollars or Mexican peso would affect the
presentation of the consolidated statement of financial
position when the net assets of the Mexican subsidiary
and parent company in the UK are translated from their
functional currencies into US dollars.
The Company’s credit risk is primarily attributable to
cash and the financial stability of the institutions holding
it.
The Group’s maximum exposure to credit risk is
attributable to cash. The credit risk on cash is limited
because the Group invests its cash in deposits with well
capitalised financial institutions with strong credit
ratings.
The Company may from time to time hold shares in other
mining companies, such as SGL UK. There is not always a
liquid market for the shares in companies such as SGL UK
companies and so it may not always be possible to sell
such shares at the optimum time or price.
Credit risk
Investment risk
The Company invests its cash in
deposits with well-capitalised
financial institutions with strong
credit ratings.
The Company has previously been
successful in realising value from
investments.
Key risks
Description of risk
Mitigating factors
External risks
Metals prices
The Company’s ability to obtain further financing will
depend in part on the price of commodity prices,
including copper, silver, lead and zinc, and the industry’s
perception of its future price. The Company's resources
and financial results of operations will also be affected
by fluctuations in metal prices over which the Company
has no control. A reduction in the metal prices could
from being
prevent
economically mined or result in curtailment of existing
production activities or result in the impairment and
write-off of assets.
the Company’s properties
It is an accepted risk that the
Company’s performance will be
impacted by the price of metals.
The Board and management believe
the price of precious metals in
particular, will increase in the long
term.
The Company does not hedge its
exposure to metals prices.
The price of commodities, which is affected by numerous
factors including inflation levels, fluctuations in the US
dollar and other currencies, supply and demand and
political and economic conditions, could have a
significant influence on the market price of the
Company’s common shares.
Key risks
Description of risk
Mitigating factors
Operational risks
Reliance on
contractors
The Company relies on contractors to implement
exploration and development programmes. The failure of
in
The Company has operated
Zacatecas in Mexico, for several
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Key risks
Description of risk
Mitigating factors
Operational risks
a contractor or key service provider to perform properly
its services to the Company could delay or inconvenience
the Company’s operations, and have a materially adverse
effect on the Company.
years and has well-established and
trusted relationships with various
contractors. The Company also has
considerable experience operating
in Australia.
and
significant
Certain of the Company’s directors
have
recent
in other
experience operating
global jurisdictions, which may help
identify reliable contractors.
The Board has established a
Nomination
Remuneration
Committee which is responsible for
considering succession planning and
ensuring remuneration is sufficient
to attract and retain staff of the
necessary calibre.
&
The Company has an experienced
board and management team with
an awareness and knowledge of
these types of risk.
to
their acquisition
Concessions are evaluated carefully
prior
for
environmental risks and consultants
are engaged to advise on specific
risks when appropriate.
The Company has an excellent track
record on environmental matters.
directors
believe
of Mexico
the
The
governments
and
Australia support the development
of natural resources by foreign
operators.
Key personnel
Environmental
factors
The Company's business is dependent on retaining the
services of a small number of key personnel of the
appropriate calibre as the business develops. The
Company has entered into employment agreements with
certain key managers. The success of the Company is,
and will continue to be to a significant extent,
dependent on the expertise and experience of the
directors and senior management. The loss of one or
more of these individuals could have a materially adverse
effect on the Company. The Company does not currently
have any insurance in place with respect to key
personnel.
The Company's operations are subject to environmental
regulation in the jurisdictions in which it operates. Such
regulation covers a wide variety of matters including,
without limitation, prevention of waste, pollution and
protection of the environment, labour regulations and
health and safety. The Company might also be subject
under such regulations to clean-up costs and liability for
toxic or hazardous substances, which might exist on or
under any of the properties covered by its concessions,
or which might be produced as a result of its operations.
If the Company does not comply with environmental
regulations or does not file environmental impact
statements in relation to each of its concessions, it might
be subject to penalties, its operations might be
suspended, closed and/or its concessions may be
revoked.
Environmental legislation and permit requirements are
likely to evolve in a manner which will require stricter
fines and
standards and enforcement,
penalties
stringent
environmental assessments of proposed projects and a
heightened degree of responsibility for companies and
their directors and employees.
increased
non-compliance, more
for
The Company's activities could be subject to prolonged
disruptions due to weather conditions depending on the
location of operations in which the Company has
interests.
The Company is conducting its exploration activities in
the Zacatecas region Mexico, and in Western Australia.
The Company may be adversely affected by changes in
economic, political, judicial, administrative or other
regulatory factors such as taxation these jurisdictions,
where the Company operates and holds its major assets.
Mexico may have a more volatile political environment
and/or more challenging trading conditions than in some
other parts of the world. There is no assurance that
Political risk
20
Key risks
Description of risk
Mitigating factors
Operational risks
future political and economic conditions in Mexico will
not result in the government of Mexico adopting
different policies in respect of foreign development and
ownership of mineral resources. Any such changes in
policy may result in changes in laws affecting ownership
of assets, taxation, rates of exchange, environmental
protection, labour relations, and repatriation of income
and return of capital. These changes may affect both the
to undertake exploration and
Company's ability
development activities in respect of future properties in
the manner currently contemplated, as well as its ability
to continue to explore and develop those properties, in
respect of which it has obtained exploration and
development rights to date.
Under the mineral property concessions and certain
other contractual agreements to which a member of the
Group is, or may in the future become, a party, any such
company is, or may become, subject to payment and
other obligations. If such obligations are not complied
with when due, in addition to any other remedies which
may be available to other parties, this could result in
dilution or forfeiture of
interests held by such
companies.
The operations of the Company require approvals,
licenses and permits from various regulatory authorities,
governmental and otherwise. There can be no guarantee
that the Company will be able to obtain or maintain all
necessary approvals, licenses and permits that may be
required to explore and develop its various projects
and/or commence construction or operation of mining
facilities that economically justify the cost.
The Company competes with numerous other companies
and individuals in the search for and acquisition of
mineral claims, leases and other mineral interests, as
well as for the recruitment and retention of qualified
employees. There is significant competition for the silver
and other precious metals opportunities available and,
as a result, the Company may be unable to acquire
further mineral concessions on terms it considers
acceptable.
Certain directors and officers of the Company also serve
as directors and/or officers of other companies involved
in mineral exploration
and
consequently there is the potential for conflicts of
interest. The Company expects that any such director or
officer shall disclose such interest in accordance with its
articles of association or his contractual obligations to
the Company and any decision made by any of such
directors and officers involving the Company will be
made in accordance with their duties and obligations to
deal fairly and in good faith with a view to the best
interests of the Company and its shareholders.
and development
Payment
obligations
Regulatory
approvals
Competition
Conflicts of
interest
The directors have in place a
system of
internal controls to
ensure any payment obligations are
complied with.
The Company has
significant
experience in operating in Mexico
and Australia, and believes that the
Company holds or will obtain all
necessary approvals, licenses and
permits under applicable laws and
regulations in respect of its current
projects.
The Company and its management
team have significant experience in
in Mexico.
mining operations
and
Through
relationships
Mexico,
counterparties may consider the
Company to have lower transaction
risk than its competitors.
experience
its
in
Articles
Company’s
The
of
Association have been adopted by
shareholders and any conflicts of
interest
in
accordance with the rules set out
therein.
dealt with
are
In the event of a conflict of
interests, the conflicted director
shall not vote on the relevant
matter.
Viability statement and going concern
The Board has assessed the prospects of the Group over a period of 12 months from the date of approval of these
financial statements, involving a review of the Group’s forecast prepared for the year ending 31 December 2021
and taking account of the Board’s intentions for future activities after that date. As explained further in note
2(C), taking account of the Group’s current position and principal risks, over a 12 month period, the Board has
a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall
due over that period albeit additional funding will be required to enable the Group to meet all of its objectives.
The raising of additional funding is fundamental to the future success of the business and therefore gives rise to
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a material uncertainty, although the Board notes the Group’s successful track record in having raised finance in
the past as necessary to meet the Group’s ongoing cash requirements.
The Board considers these periods of assessment to be appropriate because they contextualise the Company’s
financial position, business model and strategy.
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Financial statements
Directors’ responsibilities statement
The directors are responsible for preparing the annual report and financial statements and have prepared the
Group financial statements in accordance with International Financial Reporting Standards in order to give a
true and fair view of the state of affairs of the Group and of its profit or loss for that period, in accordance with
the rules of the London Stock Exchange for companies trading securities on AIM.
In preparing these financial statements the directors are required to:
select suitable accounting policies and then apply them consistently;
(cid:120)(cid:3)
(cid:120)(cid:3) make judgements and accounting estimates that are reasonable and prudent;
(cid:120)(cid:3)
state whether they have been prepared in accordance with IFRSs, 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 and the Group will continue in business.
(cid:120)(cid:3)
The directors are responsible for keeping records that are sufficient to show and explain the Group and
Company’s transactions and will, at any time, enable the financial position of the Group and Company to be
determined with reasonable accuracy. They are also responsible for safeguarding the assets of the Company and
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 British Virgin Islands governing the preparation and
dissemination of the Company’s financial statements and other information included in the annual reports may
differ from legislation in other jurisdictions.
The directors consider this Annual report and accounts, taken as a whole, is fair, balanced, understandable, and
provides the information necessary for shareholders to assess the company’s position, performance, business
model and strategy.
Statement as to disclosure of information to auditor
Each of the persons who is a Director at the date of approval of this annual report confirms that:
(cid:120)(cid:3)
(cid:120)(cid:3)
so far as the Director is aware, there is no relevant audit information of which the Group’s auditor is
unaware; and
the Director has taken all the steps that he ought to have taken as a Director in order to make himself
aware of any relevant audit information and to establish that the Group’s auditor is aware of that
information.
Jeffreys Henry LLP continued as auditor to the Group, a resolution proposing that they be re-appointed will be
put at a General Meeting.
On behalf of the board,
D Smith
Director
19 May 2021
(cid:3)
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALIEN METALS LTD
Opinion
We have audited the consolidated financial statements of Alien Metals Ltd (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2020 which comprise the consolidated statement of
income and other comprehensive income, the consolidated statement of financial position, the consolidated
statement of cash flows, the consolidated statement of changes in equity and the notes to the consolidated
financial statements, including a summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial statements is applicable law and United Kingdom
International Financial Reporting Standards (IFRSs).
In our opinion:
(cid:120)(cid:3)
(cid:120)(cid:3)
the group financial statements give a true and fair view of the state of the Group’s affairs as at 31
December 2020 and of the Group’s loss for the year then ended; and
the group financial statements have been properly prepared in accordance with UK IFRSs;
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 company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 entity’s ability to continue to adopt the going concern basis of accounting included a detailed
review of the Group’s forecasts in comparison to available management accounts at the date of these financials
to assess the reasonability of the estimates made. We have further performed a sensitivity analysis to conclude
on the degree to which current cash reserves will be able to sustain the Group for at least a further twelve
months from the date of these financials.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our audit approach
Audit scope
The Group is made up of Alien Metals Limited and its four significant subsidiaries. The main trading entities of
the group are Alien Metals Limited, Compañía Minera Estrella de Plata S.A. de C.V. and A.C.N. 643 478 371 Pty
Ltd.
Our full audit scope covered 100% of losses before tax and 100% of net assets across the group.
Significant changes in our approach
No significant changes have been made to our audit approach.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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. This is not a complete list of
all risks identified by our audit.
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(cid:120)(cid:3)
Carrying value of intangible assets
These are explained in more detail below.
Key audit matters
24
Key audit matters
Key audit matter
Carrying value of intangible assets
Intangible assets comprise exploration assets, being
accumulated licence acquisition costs and subsequent
capitalised expenditure on those concessions. The Group
had intangibles of US$3,641k at the year-end (2019:
US$492k).
Included within intangibles assets were additions relating
to capitalised exploration costs, capitalised licence
acquisition costs and consideration payable in respect of
licences acquired during the period.
The Directors have a duty to confirm that all intangibles
are correctly recognised.
As these are the group’s primary assets, the continued
existence and ownership of these assets is a key audit
matter.
Additionally, management is required by IFRS 6 to
consider whether there are any impairment indicators
which may suggest that the exploration costs will not be
recoverable. Such indicators include the expiry or
potential non-renewal of licences, absence of planned or
budgeted expenditure on further exploration, the
discontinuance of exploration activities in a specific area
consequent on the non-discovery of commercially viable
minerals, or data which indicates that the carrying
amount of the asset is unlikely to be recovered in full
through development or sale of the asset.
How our audit addressed the key audit matter
We have performed the following audit procedures:
(cid:120)(cid:3) We have confirmed the existence and ownership
of key licenses to confirm that the group holds a
valid right to explore the projects.
(cid:120)(cid:3) We have vouched additions of exploration costs
and ensured compliance with IFRS 6.
(cid:120)(cid:3) We have reviewed expert reports in relation to
the concessions and their future viability.
(cid:120)(cid:3) We have reviewed disclosures made in the
financial statements.
(cid:120)(cid:3) We have reviewed the estimates in relation to
the contingent consideration payable and
whether this has been recognised in accordance
with IFRS.
(cid:120)(cid:3) We have reviewed the directors’ consideration of
impairment indicators and comparing this to
other information available to us, including RNS
announcements,
expenditure,
management’s future plans and budgets.
past
Based on the audit work performed we are satisfied that
the management have appropriately considered the
carrying value in accordance with accounting standards.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Overall materiality
How we determined it
Rationale for
benchmark applied
Group financial statements
US$94,000 (2019: US$18,500).
Based on 1% of gross assets (2019: 2.5% of gross assets)
We believe that the gross assets are a primary measure
used by shareholders in assessing the performance of the
Group, as the group is at a pre-revenue stage and is
asset heavy.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall
Group materiality. The range of materiality allocated across components was between US$54,000 and US$85,000.
Performance materiality
We set performance materiality at a level lower than overall materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a
whole. Group performance materiality was set at 75% of Group materiality for the 2020 audit (2019: 75%).
We determined performance materiality with reference to factors such as our understanding of the Group and
its complexity, the quality of the control environment and ability to rely on controls and the low level of
uncorrected misstatements in the prior year audit.
25
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Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during
our audit above US$4,700 (Group audit) (2019: US$1,000) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industry in which they operate.
The group financial statements are a consolidation of 3 reporting units, comprising the Group’s operating
businesses. The Group comprises the parent undertaking, incorporated in the British Virgin Islands, its principal
operating subsidiaries, Compania Minera Estrella de Plata S.A de C.V and A.C.N. 643 478 371 Pty Ltd and five
non-trading or intermediate holding companies, all registered in England. A full scope audit to group materiality
levels was performed on the parent undertaking and its main subsidiaries Compania Minera Estrella de Plata S.A
de C.V and A.C.N. 643 478 371 Pty Ltd. This resulted in 100% coverage of consolidated expenditures and 100%
of the group’s gross and net assets.
We performed audits of the complete financial information of the Group reporting units which we regarded as
being individually financially significant to the Group, namely Alien Metals Limited and A.C.N. 643 478 371 Pty
Ltd. We also performed specified audit procedures over other intangible assets, as well as certain account
balances and transaction classes that we regarded as material to the Group at the 3 reporting units.
The Group engagement team performed all audit procedures.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 23, the directors are
responsible for the preparation of the group 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 financial statements, the directors are responsible for assessing the group’s and 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:
26
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, was as follows:
(cid:120)(cid:3)
the senior statutory auditor ensured the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
(cid:120)(cid:3) we identified the laws and regulations applicable to the company through discussions with directors
and other management.
(cid:120)(cid:3) we focused on specific laws and regulations which we considered may have a direct material effect on
the financial statements or the operations of the company, including taxation legislation, data
protection, anti-bribery, employment, environmental, health and safety legislation and anti-money
laundering regulations.
(cid:120)(cid:3) we assessed the extent of compliance with the laws and regulations identified above through making
(cid:120)(cid:3)
enquiries of management and inspecting legal correspondence.
identified laws and regulations were communicated within the audit team regularly and the team
remained alert to instances of non-compliance throughout the audit; and
(cid:120)(cid:3) we assessed the susceptibility of the company’s financial statements to material misstatement,
including obtaining an understanding of how fraud might occur, by:
o(cid:3) making enquiries of management as to where they considered there was susceptibility to fraud,
o(cid:3)
their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with
laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out
in note 2 of the Group financial statements were indicative of potential bias;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed
procedures which included, but were not limited to:
o(cid:3)
o(cid:3)
o(cid:3)
o(cid:3)
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with HMRC and the group’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and
regulations are from financial transactions, the less likely it is that we would become aware of noncompliance.
Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations
to enquiry of the directors and other management and the inspection of regulatory and legal correspondence,
if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they
may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of this report
This report is made solely to the Company's members, as a body, in accordance with our engagement letter. Our
audit work has been undertaken so that we might state to the Company's members those matters that 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, or the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of
Jeffreys Henry LLP (Statutory Auditors)
Finsgate
5-7 Cranwood Street
London EC1V 9EE
19 May 2021
(cid:3)
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Consolidated statement of comprehensive income
For the year ended 31 December 2020
(Tabulated amounts expressed in thousands of US dollars unless otherwise stated)
Note
2020
2019
Continuing operations
Administrative expenses
Operating loss
Net finance charges
Loss for the year before taxation
Tax
Loss for the year attributable to equity shareholders of the parent
Other comprehensive income that may be reclassified to profit or
loss:
Foreign exchange translation differences recognised directly in equity
Movement in equity instrument
Other comprehensive income for the year
Total comprehensive loss for the year attributable to equity
shareholders of the parent
Basic and diluted loss per share (US cents/share)
All activities relate to continuing operations.
4
7
8
19
(1,223)
(1,223)
(3)
(1,226)
-
(1,226)
362
40
402
(824)
(1,042)
(1,042)
(4)
(1,046)
-
(1,046)
10
(81)
(71)
(1,117)
9
(0.052)
(0.1)
The accompanying notes are an integral part of these consolidated financial statements.
(cid:3)
28
Consolidated statement of financial position
As at 31 December 2020
(Tabulated amounts expressed in thousands of US dollars unless otherwise stated)
Assets
Financial asset investments
Intangible assets
Property, plant and equipment
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity attributable to equity shareholders of the parent
Share capital
Warrant reserve
Share-based payment reserve
Equity investment reserve
Foreign exchange translation reserve
Accumulated losses
Total equity
Liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2020
2019
19
10
11
12
13
14
14
14
14
17
40
3,641
-
3,681
135
5,627
5,762
9,443
65,181
872
1,033
(232)
2,249
(59,957)
9,146
297
297
297
9,443
-
492
1
493
63
166
229
722
56,814
261
1,121
(272)
1,887
(59,212)
599
123
123
123
722
The financial statements were approved and authorised for issue by the Board of Directors on 19 May 2021 and
were signed on its behalf by:
(cid:39)(cid:68)(cid:81)(cid:3)(cid:54)(cid:80)(cid:76)(cid:87)(cid:75)(cid:3)(cid:3)
(cid:49)(cid:82)(cid:81)(cid:16)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)
The accompanying notes are an integral part of these consolidated financial statements.
(cid:3)
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Consolidated statement of cash flows
For the year ended 31 December 2020
(Tabulated amounts expressed in thousands of US dollars unless otherwise stated)
Cash flows from operating activities
Loss before tax from continuing operations
Adjustments for non-cash items:
Depreciation
Exchange difference
Issue of share options
Finance charges
Equity-settled share-based payment transactions
(Increase)/Decrease in trade and other receivables
Increase in trade and other payables
Cash used in operating activities
Cash flows from investing activities
Net interest expense
Purchase of intangible assets
Cash used in investing activities
Cash flows from financing activities
Proceeds from convertible loan
Proceeds from issue of share capital
Issue costs
Exercise of options and warrants
Cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rate fluctuations on translation
Cash and cash equivalents at 31 December
Note
2020
2019
(1,226)
(1,046)
11
7
12
17
7
10
14
14
1
5
24
3
-
(70)
176
(1,087)
(3)
(590)
(593)
-
6,185
(371)
971
6,785
5,105
166
356
5,627
2
(6)
5
64
34
46
(901)
(1)
(261)
(262)
264
834
(76)
-
1,022
(141)
298
9
166
The accompanying notes are an integral part of these consolidated financial statements.(cid:3)
30
Consolidated statement of changes in equity
For the year ended 31 December 2020
(Tabulated amounts expressed in thousands of US dollars unless otherwise stated)
Balance: 31 December 2019
Loss for the year
Foreign exchange translation
differences recognised
directly in equity
Movement on equity
investment fair value
Total comprehensive income
Total comprehensive income
Shares issued for cash
Share issue costs
Issue of share options
Cancellation of warrants
Fair value of warrants issued
Balance: 1 January 2020
Loss for the year
Foreign exchange translation
differences recognised
directly in equity
Movement in equity
investment
Total comprehensive income
Shares issued
Share issue costs
Shares issued to settle
creditors
Issue of share options
Exercise of share options
Share options lapsed
Project acquisitions
Fair value of warrants issued
Exercise of warrants
Balance: 31 December 2020
Share
capital
Warrant
reserve
Share
based
payment
reserve
Equity
investment
reserve
Foreign
exchange
translation
reserve
Accumulated
losses
Total
53,870
-
2,183
-
1,057
-
(185)
-
1,871
-
(58,166)
(1,046)
630
(1,046)
-
-
-
-
-
-
-
-
1,098
(76)
-
2,166
(244)
-
-
-
(2,166)
244
-
-
-
-
-
-
64
-
-
(6)
(81)
(87)
16
-
-
-
10
(81)
16
(1,046)
(1,117)
(56)
(70)
(1,533)
(1,659)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,098
(76)
64
-
-
599
56,814
261
1,121
(272)
1,887
(59,212)
-
-
-
6,185
(371)
6
-
46
-
2,230
(653)
924
65,181
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
981
(369)
872
24
(55)
(57)
-
-
-
1,033
-
-
40
40
-
-
-
-
-
-
-
-
-
(232)
-
(1,226)
(1,226)
362
-
362
362
-
-
-
-
-
-
-
-
-
2,249
(1,226)
-
-
-
-
55
57
-
-
369
(59,957)
40
(824)
6,185
(371)
6
24
46
-
2,230
328
924
9,146
The accompanying notes are an integral part of these consolidated financial statements.
31
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Reporting entity
1.(cid:3)
Alien Metals Ltd (the “Company”) is a public company limited by shares and was incorporated in the British
Virgin Islands. The consolidated financial statements for the year ended 31 December 2020 comprise the
Company and its subsidiaries (together referred to as the “Group”).
The Group is primarily involved in the acquisition and development of mineral resource assets.
2.(cid:3)
Basis of preparation
a)(cid:3) Statement of compliance
The consolidated financial statements for the year ended 31 December 2020 have been prepared in accordance
with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards
Board, IFRIC interpretations and the British Virgin Island Business Companies Act 2004.
The Group has adopted all of the new and revised Standards and Interpretations that are relevant to its
operations and effective for accounting periods beginning 1 January 2020. The adoption of these new and revised
Standards and Interpretations had no material effect on the profit or loss or financial position of the Group. The
Group has not adopted any standards or interpretations in advance of the required implementation dates.
Amendments to Existing Standards
Amendments to References to the conceptual framework in IFRSs
Amendment to IFRS 3 Business Combinations: Definition of Business
Amendments to IAS 1 and IAS 8: Definition of Material
Amendments to IRFS 9, IAS 39 and IFRS 17: Interest Rate Benchmark
Reform
Issued Date
IASB mandatory
effective date1
29-Mar-18
22-Oct-18
31-Oct-18
01-Jan-20
01-Jan-20
01-Jan-20
01-Jan-20
The accounts were approved by the board and authorised for issue on 19 May 2021.
b)(cid:3) Future standards and possible effects
At the date of authorisation of these financial statements, a number of amendments to existing standards and
interpretations, which have not been applied in these financial statements, were in issue but not yet effective
for the year presented. The Directors do not expect that the adoption of these standards will have a material
impact on the financial information of the Group in future periods.
c)(cid:3) Going concern
The directors regularly review cash flow forecasts to determine whether the Group has sufficient cash reserves
to meet future working capital requirements and discretionary business development opportunities including
exploration activities.
The Group’s assets are at an early stage and in order to meet financing requirements for their development the
Company has raised funds by way of several discrete share placements, which is a common practice for junior
mineral exploration companies.
The directors believe the funds raised during the period are sufficient to complete existing work programs,
therefore consider it appropriate to prepare the Group’s financial statements on a going concern basis.
d)(cid:3) Use of estimates and judgement
The preparation of financial statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
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2.(cid:3)
Basis of preparation (continued)
d) Use of estimates and judgement (continued)
Information about such judgements and estimates are contained in the accounting policies and/or the notes to
the consolidated financial statements. Areas of judgement that have the most significant effect on the amounts
recognised in the consolidated financial statements:
(cid:120)(cid:3)
Impairment of exploration and evaluation costs – Notes 3(E), 10
Determination as to whether, and by how much, an asset or cash generating unit is impaired involves
management estimates. Management uses the following triggers to assess whether impairment has
occurred (the list is not exhaustive):
(cid:190)(cid:3)
(cid:190)(cid:3)
the period for which the entity has the right to explore in the specific area has expired during
the period or will expire in the near future and is not expected to be renewed.
substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned.
(cid:190)(cid:3) exploration for and evaluation of mineral resources in the specific area have not led to the
discovery of commercially viable quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area.
sufficient data exist to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset is unlikely to be
recovered in full on successful development or by sale.
(cid:190)(cid:3)
(cid:120)(cid:3)
As at 31 December 2020, it was considered that none of the impairment triggers had arisen and the
assets were being evaluated for future potential exploration.
In any such case, or similar cases, the Group will measure, present, and disclose any resulting
impairment loss in accordance with IAS 36. For further information please refer to notes 3(E) and 10.
(cid:120)(cid:3)
Estimation of share-based payment costs
Where appropriate, the Group estimates the fair value of share-based payments using the Black-Scholes
model taking into account the terms and conditions upon which the share-based payment was granted.
For further information please refer to notes 3(K) and 16.
(cid:120)(cid:3) Valuation of financial asset investments
The Group measures financial assets investments with fair value through other comprehensive income
(FVTOCI) at fair value. Management determine the appropriate valuation techniques and inputs for fair
value measurement. In estimating the fair value, the Group uses market-observable data to the extent
it is available. For further information please refer to notes 3(H) and 19.
e)(cid:3) Functional and presentation currency
These consolidated financial statements are presented in United States dollars, rounded to the nearest
thousand dollars, as the Company believes it to be the most appropriate and meaningful currency for
investors. The functional currencies of the Company and its subsidiaries, Compañía Minera Estrella de Plata
SA de CV (“CMEP”) and A.C.N 643 478 371 Pty Ltd, are pounds sterling, Mexican pesos and Australian dollars
respectively.
For the reporting purposes the following exchange rates have been used:
GBP: USD Closing rate 1: 1.35772 (2019: 1.312)
Average rate 1: 1.28329 (2019: 1.276)
MXN: USD Closing rate 1: 0.05027 (2019: 0.053)
Average rate 1: 0.0469 (2019: 0.052)
AUD: USD Closing rate 1: 0.76619
Average rate 1: 0.69012
(cid:3)
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3.(cid:3)
Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by Group entities.
(A)
Basis of consolidation
(i)
Subsidiaries
An investor controls an investee when the investor is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its
power over the investee. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control is obtained up to the date that
control ceases.
(ii)
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains, losses, income or expenses arising from intra-
group transactions are eliminated in preparing the consolidated financial statements.
(B)
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities relating to the
arrangement.
(cid:3)
At 31 December 2020 the Group held a 51% interest in a joint operation with Windfield Metals
Pty Ltd, to develop the Hancock Ranges and Brockman Iron Ore Projects in Australia. There is
considered to be joint control due to the contractual arrangement which stipulates that there
is an agreed sharing of control of the arrangement. The Group recognises its direct right to the
assets, liabilities, revenues and expenses of joint operations and its share of any jointly held
or incurred assets, liabilities, revenues and expenses. These have been incorporated in the
financial statements under the appropriate headings.
(C)
Foreign Currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies at
the date of the consolidated statement of financial position are translated at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are stated at fair value are
translated at foreign exchange rates ruling at the dates the fair value was determined.
(ii)
Financial statements of operations
The assets and liabilities of operations, including goodwill and fair value adjustments arising
on consolidation, are translated to United States dollars at exchange rates ruling at the date
of the consolidated statement of financial position. The revenues and expenses of operations
are translated to United States dollars at rates approximating to the exchange rates ruling at
the dates of the transactions. Foreign exchange differences arising on retranslation are
recognised in other comprehensive income. They are reclassified to profit or loss upon
disposal.
On disposal of a foreign operation, the cumulative exchange differences recognised in the
foreign exchange reserve relating to that operation up to the date of disposal are reclassified
to the profit or loss as part of the profit or loss on disposal.
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34
3.
Significant accounting policies (continued)
(D)
Income tax expense comprises current and deferred tax.
Income tax expense
Income tax expense is recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation
purposes. Deferred tax is not recognised for the initial recognition of goodwill, the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable
profit, and differences relating to investments in subsidiaries that will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Loss per share
(E)
The Group presents basic and diluted loss per share (“LPS”) data for its common shares. Basic LPS is calculated
by dividing the profit or loss attributable to common shareholders of the Company by the weighted average
number of common shares outstanding during the period. Diluted LPS is determined by adjusting the profit or
loss attributable to common shareholders and the weighted average number of common shares outstanding for
the effects of all potentially dilutive common shares, which comprise warrants, share options and conversion of
the loan note into shares.
(F)
Intangible assets
(i)
Deferred exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation as well as the cost of
mineral licences. Costs which are capitalised include costs of licence acquisition, technical
services and studies, exploration drilling and testing and appropriate technical and
administrative expenses but do not include general administrative expenses or costs incurred
prior to having obtained the legal rights to explore an area, which are expensed directly to
the income statement account as they occur. They are capitalised as intangible assets pending
the determination of the feasibility of the project. When the decision is taken to develop a
mine the related intangible assets are transferred to property, plant and equipment and the
exploration and evaluation costs are amortised over the estimated life of the project. Where
a project is abandoned or is determined not economically viable, the related costs are written
off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number
of factors common to the natural resource sector. These include the extent to which the
Company can establish mineral reserves on its properties, the ability of the Company to obtain
necessary financing to complete the development of such reserves and future profitable
production or proceeds from the disposition thereof.
Option fees received in respect of Earn-in agreements are offset against the relevant
exploration asset. If the amount exceeds the value of the asset, the balance will be
recognised via the income statement.
(cid:3)
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3.
Significant accounting policies (continued)
(G)
Property, plant and equipment
(i)
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment. The estimated useful lives for the
current and comparative periods are as follows:
•(cid:3) plant and equipment: 5 to 10 years
•(cid:3) motor vehicles:
4 years
The residual value, if not insignificant, is reassessed annually.
Impairment of non-financial assets
(H)
The carrying amounts of the Group’s assets are reviewed at the date of each consolidated statement of financial
position to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated. Impairment is measured by comparing the carrying values of the asset with
its recoverable amount. The recoverable amount of the asset is the higher of the assets' fair value less costs to
sell and its value-in-use, which is measured by reference to discounted future cash flow.
An impairment loss is recognised in the income statement immediately.
When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in
the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to
the extent of the carrying amount of the asset that would have been determined (net of amortisation and
depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement
immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
(I)
Financial instruments
Financial instruments are recognised in the statements of financial position when the Group has become a party
to the contractual provisions of the instruments.
Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards of
ownership. On de-recognition of a financial asset in its entirety, the difference between the carrying amount
and the sum of the consideration received and any cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.
(i)
Financial assets carried at amortised cost
These assets incorporate such types of financial assets where the objective is to hold these
assets in order to collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair value plus transaction
costs that are directly attributable to their acquisition or issue, and are subsequently carried
at amortised cost using the effective interest rate method, less provision for impairment.
Impairment of provisions for receivables are recognised based on the simplified approach
within IFRS 9 using a provision matrix in the determination of the lifetime expected credit
losses. During this process the probability of the non-payment of the receivables is assessed.
This probability is then multiplied by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the receivables. On confirmation that the
receivable will not be collectable, the gross carrying value of the asset is written off against
the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are
recognised based on a forward-looking expected credit loss model. The methodology used to
determine the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For those where the credit
risk has not increased significantly since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be credit impaired, lifetime
expected credit losses along with interest income on a net basis are recognised.
The Group's financial assets measured at amortised cost comprise other receivables and cash
and cash equivalents in the consolidated statement of financial position.
36
3.
Significant accounting policies (continued)
(I)
Financial instruments (continued)
(ii)
(iii)
(iv)
Financial assets with fair value through other comprehensive income (FVTOCI)
The Group has a strategic investment in an unlisted entity (SGL, note 19), which is not
accounted for as subsidiary, associate or jointly controlled entity. For that investment, the
Group has made an irrevocable election to classify the investment at fair value through other
comprehensive income rather than through profit or loss as the Group considers this
measurement to be the most representative of the business model for this asset. It is carried
at fair value with changes in fair value recognised in other comprehensive income and
accumulated in the equity instrument reserve through other comprehensive income reserve.
Upon disposal any balance within the equity instrument reserve is reclassified directly to
retained earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of
part of the cost of the investment, in which case the full or partial amount of the dividend is
recorded against the associated investments carrying amount.
Purchases and sales of financial assets measured at fair value through other comprehensive
income are recognised on settlement date with any change in fair value between trade date
and settlement date being recognised in the equity instrument reserve.
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include current borrowings and trade and other
payables that are short term in nature. Financial liabilities are derecognised if the Group’s
obligations specified in the contract expire or are discharged or cancelled.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
(cid:120)(cid:3)
(cid:120)(cid:3)
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset
or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's
ability to generate economic benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy, described as follows, based on the
lowest level input that is significant to the fair value measurement as a whole:
(cid:120)(cid:3)
(cid:120)(cid:3)
(cid:120)(cid:3)
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or
liabilities;
Level 2 — Valuation techniques for which the lowest level input that is significant to
the fair value measurement is directly or indirectly observable; and
Level 3 — Valuation techniques for which the lowest level input that is significant to
the fair value measurement is unobservable.
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3.
Significant accounting policies (continued)
(I)
Financial instruments (continued)
(v)
Fair value measurement (continued)
For assets and liabilities that are recognised in the financial statements on a recurring basis,
the Group determines whether transfers have occurred between levels in the hierarchy by re-
assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period. For the purpose of fair value
disclosures, the Group has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy
as explained above.
(J)
Warrants
The Company estimates the fair value of the future liability relating to issued warrants using
(cid:120)(cid:3)
(cid:120)(cid:3)
residual method, where a warrant was issued and included as a part of a package placement of “1 share
+ 1 warrant”;
the Black-Scholes pricing model taking into account the terms and conditions upon which the warrants
were issued, if the warrant was granted on its own.
Warrants relating to equity finance are recorded as a reduction of capital stock based on the fair value of the
warrants.
(K)
Share capital – common shares
Incremental costs directly attributable to the issue of common shares and share options are recognised as a
deduction from equity.
(L)
Share-based payment transactions
The share option programme allows Group directors, officers, employees and consultants to acquire shares of
the Company. Equity-settled share-based payments to employees and others providing similar services are
measured at the fair value of the equity instruments at the grant date and are recognised as an expense with a
corresponding increase in equity. The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on the Directors’ estimate of equity
instruments that will eventually vest, with a corresponding increase in equity. Where the conditions are non-
vesting, the expense and equity reserve arising from share-based payment transactions is recognised in full
immediately on grant.
The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms
and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest, except if the change is due to market-based conditions not being
satisfied.
(M)
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of
changes in value. The carrying amount of these assets approximates their fair value.
(N)
Segmental reporting
Operating segments are reported in a manner consistent with the 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 and making strategic decisions, has been identified as the
Board of Directors.
The Board of Directors considers there to be only one operating segment during the year, the exploration,
development and exploitation of mineral resources, and three geographical segments, being Mexico, Australia
and United Kingdom.(cid:3)
38
4.(cid:3)
Operating loss
Operating loss is stated after charging:
Depreciation
Fees payable to the Group’s auditor for the audit of the annual financial
statements
Exchange loss
2020
1
2019
2
31
56
29
14
5.(cid:3)
Segmental analysis
Statement of comprehensive income
Year ended 31 December 2020
Administration expenses
Operating loss
Net finance charges
Tax
Loss for the year attributable to equity
shareholders of the parent
Statement of financial position
Year ended 31 December 2020
Segment assets
Segment liabilities
Segment net assets
Statement of comprehensive income
Year ended 31 December 2019
Administration expenses
Operating loss
Net finance charges
Tax
Loss for the year attributable to equity
shareholders of the parent
Statement of financial position
Year ended 31 December 2019
Segment assets
Segment liabilities
Segment net assets
(cid:3)
Mexico
Australia
(108)
(108)
(1)
-
(109)
16
16
-
-
16
Mexico
Australia
311
(1)
310
3,312
-
3,312
Mexico
Australia
76
76
-
-
76
-
-
-
-
-
Mexico
Australia
244
(1)
243
-
-
-
United
Kingdom/
other
(1,131)
(1,131)
(2)
-
(1,133)
United
Kingdom/
other
5,820
(296)
5,524
United
Kingdom/
other
(1,118)
(1,118)
(4)
-
(1,122)
United
Kingdom/
other
478
(122)
356
Total
(1,223)
(1,223)
(3)
-
(1,226)
Total
9,443
(297)
9,146
Total
(1,042)
(1,042)
(4)
-
(1,046)
Total
722
(123)
599
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6.(cid:3)
Staff numbers and costs
The average number of persons employed by the Group (including directors) during the year, analysed by
category, was as follows:
Finance and administration
Technical
Total staff numbers
The aggregate staff costs of these persons as follows:
Wages and salaries
Social security costs
Pension
Share based payments
Total staff costs
Remuneration of key management personnel
Key management personnel remuneration is detailed below:
Executive directors
B Brodie Good
P Taylor (resigned 5 July 2019)
D V Edmonds (resigned 11 April 2019)
Non-executive directors
D J Smith
J S Cable (resigned 24 Nov 2020)
M C Culbert (appointed 23 Jul 2020)
C C Gordon (resigned 23 Jul 2020)
Other key management
Company Secretary (resigned 10 Jan 2020)
Total remuneration
2020
3
1
4
2020
335
24
9
23
391
2019
5
-
5
2019
362
36
10
64
472
2020
Salary/Fees
2019
Salary/Fees
184
1
-
63
21
7
13
53
342
51
119
14
42
32
-
32
81
371
The above remuneration excludes social security costs incurred by the Group. Including these social security
costs, the total short-term employee benefits for the year in respect of key management personnel amounted
to $344,000 (2019: $471,000).
Wages and salaries
Paid directly
Paid via related party consultancy companies
Share based payment charge
Total
2020
2019
255
63
24
342
320
42
63
425
Share based payment charges relate to the fair value charge attributed to share options granted, further details
are disclosed in note 16.
7.(cid:3)
Net finance charges
Finance charges
Interest income
Total net investment income
(cid:3)
40
2020
2019
(3)
-
(3)
(5)(cid:3)
1
(4)
8.(cid:3)
Income tax recognised in the income statement
Current tax
Reconciliation of effective tax rate
Loss before tax
Income tax using the domestic corporation tax rate of 19%
(2019: 19%)
Non-deductible expenses
Effect of timing differences
Depreciation in excess of capital allowances
Adjustments relating to different tax rates of subsidiary
Tax losses carried forward not recognised
Total tax expense
2020
-
2019
-
2020
(1,226)
(233)
34
-
-
-
199
-
2019
(1,046)
(199)
18
-
-
-
181
-
At the year end the Group had tax losses to carry forward of approximately $26,772,000 (2019: $25,577,000).
Under IFRS a net deferred tax asset of approximately $5,099,050 (2019: $4,872,000) has not been recognised
due to the uncertainty as to the amount that can be utilised.
No adjustments are required in respect of the subsidiaries.
9.(cid:3)
Loss per share
Basic loss per share
The calculation of basic loss per share at 31 December 2020 was based on the loss attributable to common
shareholders of $1,226,000 (2019: $1,046,000) and a weighted average number of common shares outstanding
during the year ended 31 December 2020 of 2,337,874,313 (2019: 1,103,098,525).
Loss from continuing operations
Loss attributable to common shareholders
Basic and diluted loss per share in US cents
2020
1,226
1,105
0.052
2019
1,046
1,046
0.1
Diluted Loss per share
The potential increase in common shares from the exercise of any outstanding share purchase warrants and
share options would be anti-dilutive as the Group has a net loss. These potential common shares are therefore
excluded from the calculation and the diluted loss per share figure reported is the same as the basic loss per
share.
(cid:3)
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10.(cid:3)
Intangible assets
Cost
At 1 January 2019
Additions
Foreign exchange
At 31 December 2019
Additions
Licences relinquished
Initial option fee (Donovan 2)
Foreign exchange
At 31 December 2020
Deferred
exploration costs
231
251
10
492
3,313
(99)
(52)
(13)
3,641
Deferred exploration costs relate to the initial acquisition of the licences and subsequent exploration
expenditure incurred in evaluating the projects.
During the year new licence acquisition costs were capitalised as follows:
Hammersley – Brockman & Hancock Ranges Iron Ore Project
On 19 March 2020, $240,291 was capitalised from the issue of 200,000,000 ordinary shares and 66,666,667
warrants, and a further $135,772 deferred cash consideration was also capitalised.
Elizabeth Hill Mine Project
On 25 September 2020, $1,966,577 was capitalised from the issue of 200,000,000 ordinary shares and 49,536,471
warrants. A loan made to the vendor to complete the sale was also capitalised to the value of $84,394.
Munni Munni North Project
On 1 October 2020, $350,991 was capitalised from the issue 37,357,190 ordinary shares, and further cash
consideration of $36,738 was also capitalised.
Exploration in Mexico is undertaken by Compañía Minera Estrella de Plata S.A. de C.V., a wholly owned subsidiary,
that owns 12 exploration licences.
Donovan 2 – Earn-in Agreement
On 22 October 2020, CMEP executed an Earn-in Agreement with Capstone Mining Corp over its Donovan 2 licence.
Pursuant to the agreement, Capstone has the ability to acquire up to an 80% interest in Donovan 2 by sole funding the
project up to completion of a Prefeasibility Study. Further details are reported in note 22.
11.(cid:3)
Property, plant and equipment
Plant and
equipment
Vehicles
Total
2
2
(2)
-
(1)
-
(1)
(1)
2
-
1
1
-
7
7
-
7
(5)
(2)
(7)
-
-
(7)
2
-
-
9
9
(2)
7
(6)
(2)
(8)
(1)
2
(7)
3
1
-
Cost
At 31 December 2018
At 31 December 2019
Disposals
At 31 December 2020
Depreciation and impairment losses
At 31 December 2018
Depreciation
At 31 December 2019
Depreciation
Disposals
At 31 December 2020
Carrying amounts
At 31 December 2018
At 31 December 2019
At 31 December 2020
(cid:3)
42
12.(cid:3)
Trade and other receivables
Other receivables
Prepayments
Total trade and receivables
13.(cid:3)
Cash and cash equivalents
Bank balances
Cash and cash equivalents in the statement of cash flows
14.(cid:3)
Share capital and reserves
Share Capital
2020
73
62
135
2020
5,627
5,627
2019
17
46
63
2019
166
166
Authorised
The Company is authorised to issue an unlimited number of common shares of no par value.
Issued and outstanding common shares
Changes for the years ended 31 December 2020 and 2019 are detailed in the following table:
2020
2019
Opening balance 1 January
Shares issued for cash
Shares issued – exercise of warrants
and options
Issue costs of share issuance
Fair value of share warrants issued
Shares issued - project acquisitions
Expiry of warrants
Shares
invoice
Closing balance 31 December
issued – settle supplier
Number of
shares (000s)
1,351,723
1,264,962
363,416
-
-
437,357
-
3,333
Amount
56,814
6,185
970
(371)
(653)
2,230
-
6
Number of
shares (000s)
716,143
635,580
-
-
-
-
-
-
Amount
53,870
1,098
-
(76)
(244)
-
2,166
-
3,420,791
65,181
1,351,723
56,814
During the years ended 31 December 2020 and 2019, the Company made share issuances as set out below.
2020
(cid:120)(cid:3) On 10 March 2020, 466,666,666 common shares were issued at £0.0015 each, raising £700,000
($917,189), before costs.
(cid:120)(cid:3) On 19 March 2020, 200,000,000 common shares were issued at £0.00078, £156,000 ($185,253) as part
consideration shares for the Hancock Ranges and Brockman Iron Ore Projects.
(cid:120)(cid:3) On 18 May 2020, 343,750,000 common shares were issued at £0.0008, raising £275,000 ($332,626),
before costs, and a further 3,333,333 common shares were issued at £0.0015 each to settle a supplier
invoice of £5,000 ($6,047).
(cid:120)(cid:3) On 8 September 2020, 40,972,222 common shares were issued in respect of 22,222,222 warrants
exercised at £0.003 each, for total of £66,667 ($87,933), and 18,750,000 warrants exercised at £0.0015
each, for a total of £28,125 ($37,097).
(cid:120)(cid:3) On 11 September 2020, 227,272,727 common shares were issued at £0.0055 each, raising £1,250,000
($1,615,500) before costs.
(cid:120)(cid:3) On 18 September 2020, 92,812,500 common shares were issued in respect of 63,333,333 warrants
exercised at £0.003 each, £190,000 ($245,888), and 29,479,167 warrants exercised at £0.0015 each,
£44,219 ($57,226).
(cid:120)(cid:3) On 24 September 2020, 72,291,667 common shares were issued in respect of 56,250,000 warrants
exercised at £0.0015 each, £84,375 ($107,374), and 16,041,667 warrants exercised at £0.0012 each,
£19,250 ($24,497).
(cid:120)(cid:3) On 1 October 2020, 17,500,000 common shares were issued in respect of warrants exercised at £0.0015
each, £26,250 ($33,785).
(cid:120)(cid:3) On 1 October 2020, 4,800,000 common shares were issued in respect of options exercised at £0.0025
each, £12,000 ($15,445).
43
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14.(cid:3)
Share capital and reserves (continued)
(cid:120)(cid:3) On 25 September 2020, 200,000,000 common shares were issued at £0.00665 each, £1,330,000
($1,693,675) as part consideration for the Elizabeth Hill Mine Project acquisition.
(cid:120)(cid:3) On 1 October 2020, 37,357,190 common shares were issued at £0.0073 each, £272,707 ($350,991) as
part consideration for the Munni Munni Project acquisition.
(cid:120)(cid:3) On 9 October 16,805,556 common shares were issued in respect of 10,555,556 warrants exercised at
£0.003 each, £31,667 ($40,946), and 6,250,000 warrants exercised at £0.0015 each, £9,375 ($12,122).
(cid:120)(cid:3) On 19 October 2020, 1,875,000 common shares were issued in respect of warrants exercised at £0.0015
each, £2,813, ($3,631).
(cid:120)(cid:3) On 28 October 2020, 81,262,709 common shares were issued in respect of 13,333,334 warrants
exercised at £0.003 each, £40,000 ($52,151), 67,229,375 warrants exercised at £0.0015 each, £100,844
($131,477), and 700,000 warrants exercised at £0.0025 each, £1,750 ($2,282).
(cid:120)(cid:3) On 28 October 2020, 2,000,000 common shares were issued in respect of options exercised at £0.0025
each, £5,000 ($6,519).
(cid:120)(cid:3) On 5 November 2020, 7,342,373 commons shares were issued in respect of options exercised at £0.0025
each, £18,356 ($23,847).
(cid:120)(cid:3) On 12 November 2020, 17,055,223 commons shares were issued in respect of 14,833,000 warrants
exercised at £0.0025 each, £37,083 ($49,105), and 2,222,223 warrants exercised at £0.003 each, £6,667
($8,828).
(cid:120)(cid:3) On 24 November 2020, 3,904,408 commons shares were issued in respect of 1,682,186 warrants
exercised at £0.0025 each, £4,205 ($5,607), and 2,222,222 warrants exercised at £0.003 each, £6,667
($8,888).
(cid:120)(cid:3) On 30 November 2020, 227,272,727 common shares were issued at £0.011 each, raising £2,500,000
($3,319,775) before costs.
(cid:120)(cid:3) On 7 December 2020, 1,050,000 common shares were issued in respect of warrants exercised at £0.0025
each, £2,625 ($3,525).
(cid:120)(cid:3) On 14 December 2020, 3,435,445 commons shares were issued in respect of warrants exercised at
£0.0025 each, £8,589 ($11,358).
(cid:120)(cid:3) On 21 December 2020, 308,028 commons shares were issued in respect of warrants exercised at £0.0025
each, £770 ($1,040).
Warrants
Warrant reserve
The warrants reserve arises on the issue of warrants. Refer note 15 for further information.
Opening balance 1 January
Fair value of warrants issued
Exercise of warrants
Expiry of warrants
Closing balance 31 December
2020
261
980
(369)
-
872
2019
2,183
244
-
(2,166)
261
(cid:3)
44
14.(cid:3)
Share capital and reserves (continued)
Share-based payment reserve
The share-based payment reserve arises on the grant of share options to directors, employees and other eligible
persons under the share option plan. Refer note 16 for more information.
Opening balance 1 January
Fair value of share options issued
Share options exercised
Share options lapsed
Closing balance 31 December
2020
1,121
24
(55)
(57)
1,033
2019
1,057
64
-
-
1,121
Foreign exchange translation reserve
The translation reserve comprises foreign exchange differences arising from the translation of the financial
statements of operations that do not have a US dollar functional currency. Exchange differences arising are
classified as equity and transferred to the Group’s translation reserve.
Accumulated losses
Accumulated losses contain losses incurred in the current and prior years.
15.(cid:3)
Warrants issued
The number and weighted average exercise price of warrants in issue for the year ended 31 December 2020 and
2019:
2020
2019
Outstanding
(000s)
216,695
527,900
(349,273)
-
395,322
Weighted
average
exercise price
(£)
0.01
0.0022
0.0020
-
0.0024
Outstanding
(000s)
393,235
202,247
-
(378,787)
216,695
Weighted average
exercise price (£)
0.01
0.01
-
0.01
0.01
Opening balance 1 January
Issued
Exercised
Cancelled
Closing balance 31 December
2020
(cid:120)(cid:3) On 10 March 2020, 155,555,555 common share purchase warrants were issued in conjunction with a
cash placing, exercisable at £0.003 each, the fair value being £147,183 ($192,850). In addition, a
further 40,000,000 common share purchase warrants were issued as broker warrants, exercisable at
£0.0015 each, the fair value being £58,523 ($76,682).
(cid:120)(cid:3) On 19 March 2020, 66,666,667 commons share purchase warrants were issued, as part consideration for
the Hancock Ranges and Brockman Iron Ore Projects, exercisable at £0.0019 each, the fair value being
£46,347 ($55,037).
(cid:120)(cid:3) On 18 May 2020, 171,875,000 common share purchase warrants were issued in conjunction with a cash
placing, exercisable at £0.0015 each, the fair value being £79,094 ($95,668). In addition, a further
18,666,667 common share purchase warrants were issued as broker warrants, exercisable at £0.0012
each, the fair value being £9,549 ($11,550).
(cid:120)(cid:3) On 4 September 2020, 12,000,000 common share purchase warrants were issued as broker warrants,
exercisable at £0.006, the fair value being £74,363 ($98,815).
(cid:120)(cid:3) On 25 September 2020, 49,536,471 common share purchase warrants were issued as part consideration
of the Elizabeth Hill Mine Project, exercisable at £0.0025 each, the fair value being £214,302
($272,901).
(cid:120)(cid:3) On 23 November 2020, 13,600,000 common share purchase warrants were issued as broker warrants,
(cid:120)(cid:3)
exercisable at £0.0013 each, the fair value being £133,544 ($177,335).
During 2020, 349,272,758 common share purchase warrants were exercised, as detailed within share
capital.
(cid:3)
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2019
Warrants issued (continued)
(cid:120)(cid:3) On 10 April 2019 202,247,000 common share purchase warrants were issued, exercisable at £0.0015 per
common share, until 31 January 2022. These warrants were issued as a part of the full settlement of
subsisting convertible loan.
Fair value of Warrants and assumptions
The estimate of the fair value of the Warrants is measured based on the Black-Scholes model. The following
inputs were used in the calculation of the fair value of the warrants granted.
Fair value ($000s)
10 Mar
193
10 Mar
77
2020
19 Mar 18 May 18 May 4 Sep
67
12
96
99
25 Sep
285
23 Nov
177
2019
17 Apr
244
Share price (£)
0.00215 0.00215 0.0015 0.0009 0.0009 0.009 0.00625 0.01525
0.0010
Expected volatility
Expected warrants
life (years)
Expected dividend
yield
Risk-free interest
rate
100%
100%
100%
100%
100%
100%
100%
100%
103.38%
2
Nil
0%
3
Nil
0%
2
Nil
0%
3
Nil
0%
3
Nil
0%
3
Nil
0%
1.5
Nil
0%
3
Nil
0%
2.8
Nil
0.823%
The expected volatility is based on the historical share prices of a group of companies deemed to be comparable.
Share-based payment transactions
16.(cid:3)
The number and weighted average exercise prices of share options for the years ended 31 December 2020 and
2019 are set out below.
2020
2019
Outstanding (000s)
81,327
Weighted average
exercise price (£)
0.0025
Outstanding
(000s)
36,785
Weighted
average
exercise price
(£)
0.025
60,000
(14,142)
(22,350)
104,835
0.0050
0.0025
0.0025
0.0041
44,542
-
-
81,327
0.0025
-
-
0.0025
Opening balance 1
January
Issued
Exercised
Lapsed
Closing balance 31
December
Share options in issue at 31 December 2020:
Issued
2017
2018
2019
2019
2019
2019
2019
2019
2020
2020
2020
Outstanding
shares
1,250,000
15,142,373
1,100,000
12,342,509
5,000,000
3,000,000
3,000,000
4,000,000
18,750,000
18,750,000
22,500,000
Exercisable
shares
1,250,000
20,142,373
1,100,000
12,342,509
17,142,373
3,000,000
3,000,000
4,000,000
18,750,000
18,750,000
22,500,000
Exercise price
£0.0100
£0.0025
£0.0025
£0.0025
£0.0025
£0.0022
£0.0030
£0.0045
£0.0045
£0.0050
£0.0055
Expiry
09-Feb-22
14-May-23
28-Mar-24
28-Mar-24
14-May-23
28-Mar-24
28-Mar-24
28-Mar-24
30-Aug-23
30-Aug-23
30-Aug-23
The share options outstanding at 31 December 2020 if exercised, will be settled by issue of equity.
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46
Share-based payment transactions (continued)
The weighted average remaining contractual life of share options as at 31 December 2020 was 991 days.
Fair value of share options and assumptions
The estimate of the fair value of the share options is measured based on the Black-Scholes model. The following
inputs were used in the calculation of the fair value of the options granted during the year.
Share price (£)
Exercise price (£)
Expected volatility
Vesting date
Expected option life (years)
Expected dividend yield
Risk-free interest rate
1 September
2020
0.0045
0.0045
100%
1 September 2020
1 September 2020
0.0045
0.0050
100%
0.0045
0.0055
100%
1 March 2021
1 September 2021
1 September 2021
3
Nil
0%
3
Nil
0%
3
Nil
0%
As at 31 December 2020, a fair value charge of $24,000 in respect of the 60,000,000 share options issued on 1
September 2020 was posted to the income statement.
The expected volatility is based on the historical share prices of a group of companies deemed to be
comparable.
Share options held by directors and senior management at 31 December 2020:
Holder
D J Smith
B Brodie Good
M C Culbert
Shares
Options
3,085,627
3,085,627
6,171,255
3,000,000
3,000,000
4,000,000
15,000,000
15,000,000
15,000,000
1,875,000
1,875,000
3,750,000
Exercise price
Grant Date
Vesting Date
Expiry1
£0.0025
£0.0025
£0.0025
£0.0022
£0.0030
£0.0045
£0.0045
£0.0050
£0.0055
£0.0045
£0.0050
£0.0055
29 Mar 2019
29 Mar 2019
29 Mar 2019
29 Jun 2019
29 Sep 2019
29 Mar 2020
28 Mar 2024
28 Mar 2024
28 Mar 2024
30 Sep 2019
30 Sep 2019
30 Sep 2019
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2020
01 Sep 2020
1 Oct 2019
1 Oct 2019
1 Oct 2019
01 Mar 2021
01 Sep 2021
01 Sep 2021
01 Mar 2021
01 Sep 2021
01 Sep 2021
28 Mar 2024
28 Mar 2024
28 Mar 2024
30 Aug 2023
30 Aug 2023
30 Aug 2023
30 Aug 2023
30 Aug 2023
30 Aug 2023
1 The expiry date is subject to the terms and conditions contained in the share option plan.
17.(cid:3)
Trade and other payables
Trade payables
Other payables
Total trade and other payables
(cid:3)
2020
87
209
297
2019
86
37
123
47
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18.(cid:3)
Group entities
Significant Subsidiaries
Compañía Minera Estrella de Plata S.A. de C.V. Mexico
Arian Silver Corporation (UK) Ltd
Arian Silver (Holdings) Limited
A.C.N. 643 478 371 Pty Ltd
England and Wales
England and Wales
Australia
Country of
incorporation and
operation
Principal activity
Mining exploration
Holding
Holding
Mining exploration
Alien Metals
Ltd effective
interest
2020
100%
100%
100%
100%
2019
100%
100%
100%
-
19.(cid:3)
Financial instruments and financial risk management
The principal financial instruments used by the Group from which financial risk arises are as follows:
Categories of financial instruments
Cash and cash equivalents (note 13)
Trade and other receivables (note 12)
Total financial assets measured at amortised cost
Financial assets at fair value through other
comprehensive income
Total financial assets
Trade and other payables measured at amortised cost (note 17)
Total financial liabilities
2020
5,627
73
5,700
40
5,740
297
297
2019
166
17
183
81
264
123
123
Exposure to interest rate and foreign currency risks arises in the normal course of the Group’s business.
Derivative financial instruments are not used to hedge exposure to fluctuations in foreign exchange rates and
interest rates.
The Group’s policy is to retain its surplus funds on short term deposits. Credit risk is managed by ensuring that
surplus funds are only deposited with well-established financial institutions of high quality credit standing.
Market risk
Market risk is the risk that the Group’s future earnings will be adversely impacted by changes in market prices.
Market risk for Alien Metals comprises two types of risk: price risk and foreign currency risk.
Price risk
The price risk is the risk that the Group’s future earnings will be adversely impacted by changes in the market
prices of commodities.
Foreign currency risk
The Group’s operational expenditure is made in Mexico in Mexican pesos, in Australia in Australian dollars, and
head office expenses are predominantly made in the UK in pounds sterling, and United States dollars. The Group
is therefore exposed to the movement in exchange rates for these currencies. The Group does not currently
hedge foreign exchange risk.
At the year end the majority of the Group’s cash resources were held in pounds sterling. The Group therefore
also has downside exposure to any strengthening of United States dollar, Australian dollar, or the Mexican peso
against pounds sterling as this would increase expenses in pounds sterling terms and accelerate the depletion of
the Group’s cash resources. Any weakening of United States dollar, Australian dollar or the Mexican peso against
pounds sterling would, however, result in a reduction in expenses in pounds sterling terms and preserve the
Group’s cash resources.
The carrying amounts of the Group’s foreign currency denominated financial assets and monetary liabilities at
the reporting date are as follows:
Liabilities
Assets
2020
296
-
-
-
1
2019
122
-
-
-
1
2020
5,668
30
39
1
2
2019
175
7
-
-
1
Pounds sterling
United States dollars
Australian dollars
Canadian dollars
Mexican pesos
48
19.(cid:3)
Financial instruments and financial risk management (continued)
Sensitivity Analysis
The Group holds cash in pounds sterling to settle accounts payable balances derived in that currency. The main
risk is through foreign exchange fluctuations in companies where the cash balances are held in a currency that
is different to the functional currency.
Exposure to foreign currency risk sensitivity analysis:
15% strengthening in the United States dollar
15% weakening in the United States dollar
Against Sterling
US$
(800)
800
A 15% variation is considered an appropriate level of sensitivity given recent levels of foreign exchange volatility.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument
will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial
assets and liabilities that the Group uses. Treasury activities take place under procedures and policies approved
and monitored by the Board to minimise the financial risk faced by the Group. Interest bearing assets comprise
cash and cash equivalents which are considered to be short-term liquid assets. No sensitivity analysis has been
disclosed as management does not consider any reasonable fluctuation in interest rates to be sufficiently
material to disclose.
Liquidity risk
The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet
liabilities when due. The directors regularly review cash flow forecasts to determine whether the Group has
sufficient cash reserves to meet future working capital requirements and discretionary business development
opportunities including exploration activities.
As at 31 December 2020, the Company had cash and other receivables of $5.7m to settle accounts payable of
$297k. The Company’s accounts payable have contractual maturities of less than 30 days and are subject to
normal trade terms. In the short-term, liabilities will be funded by cash.
The Group’s assets are at an early stage and in order to meet financing requirements for their development the
Company has raised funds by way of several share placements, which is a common practice for junior mineral
exploration companies.
Although the Company has been successful in the past in raising equity finance, there can be no assurance that
the funding required by the Group will be made available to it when needed or, if such funding were to be
available, that it would be offered on reasonable terms. The terms of such financing might not be favourable to
the Group and might involve substantial dilution to existing shareholders.
Credit risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfil its payment obligations. The
Group’s maximum exposure to credit risk is attributable to cash. The credit risk on cash is limited because the
Group invests its cash in deposits with well capitalised financial institutions with strong credit ratings.
Fair values
Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables,
trade and other payables. It is the Board’s opinion that the carrying values of the cash and cash equivalents, the
other receivables, all trade and other payables in the consolidated statement of financial position approximate
their fair values due to their short-term nature.
Fair value disclosures for financial asset investment in SGL are shown below in this note.
Capital management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern
and have access to adequate funding for its exploration and development projects, so that it can provide returns
for shareholders and benefits for other stakeholders. The Group manages the capital structure and makes
adjustments in the light of changes in economic conditions and risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure the Group may issue new shares, acquire debt, or sell assets.
Management regularly reviews cash flow forecasts to determine whether the Group has sufficient cash reserves
to meet future working capital requirements and to take advantage of business opportunities.
(cid:3)
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19.(cid:3)
Financial instruments and financial risk management (continued)
Financial asset investment
The Company has only one investment, which is an equity investment into the shares of Siberian Goldfields
Limited “SGL”, an unlisted company with interests in gold and iron ore deposits in Siberia, Russia. The
classification of the equity investments into SGL share is disclosed as fair value through other comprehensive
income under IFRS 9.
The Directors are in discussion with various parties who are interested in acquiring the Company’s shares in SGL.
The amount reflected below is considered the minimum amount that will be received if an SPA is entered into.
The following table shows the changes to the fair value of the Company’s Level 2 financial assets:
Opening balance
Change in fair value recognised in OCI
Foreign exchange
Closing balance
20.(cid:3)
Operating lease arrangements
2020
-
40
-
40
2019
78
(81)
3
-
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:
Within one year
21.(cid:3)
Ultimate controlling party
There is no ultimate controlling party of the Company.
2020
11
2019
34
Significant agreements and transactions
22.(cid:3)
The following are significant agreements and transactions recently undertaken having an impact in the year
under review.
Financing
(cid:120)(cid:3) On 25 February 2020, the Company announced it had raised £700,000 by way of a placing of 466,666,666
new ordinary shares at a price of £0.0015 per share. The Company also granted participating investors
155,555,555 two-year warrants with an exercise price of £0.003 per share. A further 40,000,000 three-
year broker warrants were issued at an exercise price of £0.0015 per share.
(cid:120)(cid:3) On 11 May 2020, the Company announced it had raised £275,000 by way of placing 343,750,000 new
ordinary shares at a price of £0.0008 per share. The Company also granted participating investors with
171,875,000 two-year warrants with an exercise price of £0.015 per share. A further 18,666,667 three-
year broker warrants were issued at an exercise price of £0.0012 per share.
(cid:120)(cid:3) On 7 September 2020, the Company announced the receipt of exercise notices and the respective
subscription payments and issued 22,222,222 new ordinary shares of no par value at an issue price of
£0.003 per share, and 18,750,000 new ordinary shares of no par value at an issue price of £0.0015 per
share.
(cid:120)(cid:3) On 4 September 2020, the Company announced it had raised £1.25m by way of a placing of 227,272,727
new ordinary shares at a price of £0.0055 per share. In addition, 12,000,000 three-year broker warrants
were issued at an exercise price of £0.006 per share.
(cid:120)(cid:3) On 14 September 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 63,333,333 new ordinary shares of no par value at an issue price of
£0.003 per share, and 29,479,167 new ordinary shares of no par value at an issue price of £0.0015 per
share.
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(cid:3)
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22.(cid:3)
Significant agreements and transactions (continued)
(cid:120)(cid:3) On 18 September 2020, the Company announced the receipt and exercise notices and respective
subscription payments and issued 56,250,000 new ordinary shares of no par value at an exercise price
of £0.0015 per share and 16,041,667 new ordinary share of no par value at an issue price of £0.0012
per share.
(cid:120)(cid:3) On 25 September 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 17,500,000 new ordinary shares of no par value at an issue price of
£0.0015 per share and 4,800,000 new ordinary shares of no par value at an issue price of £0.0025 per
share.
(cid:120)(cid:3) On 6 October 2020, the Company announced the receipt of exercise notices and respective subscription
payments and issued 6,250,000 new ordinary shares of no par value at an issue price of £0.0015 per
share and 10,555,556 new ordinary shares of no par value at an issue price of £0.003 each.
(cid:120)(cid:3) On 13 October 2020, the Company announced the receipt of exercise notices and respective subscription
payments and issued 1,875,000 new ordinary shares of no par value at an issue price of £0.0015 each.
(cid:120)(cid:3) On 22 October 2020, the Company announced the receipt of exercise notices and respective subscription
payments and issued 13,333,334 new ordinary shares of no par value at an issue price of £0.003 each,
67,229,375 new ordinary shares of no par value at an issue price of £0.0015 each, and 2,700,000 new
ordinary shares of no par value at an issue price of £0.0025 each.
(cid:120)(cid:3) On 2 November 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 7,342,373 new ordinary shares of no par value at an issue price of
£0.0025 per share.
(cid:120)(cid:3) On 9 November 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 14,833,000 new ordinary shares of no par value at an issue price of
£0.0025 per share, and 2,222,223 new ordinary shares of no par value at an issue price of £0.003 per
share.
(cid:120)(cid:3) On 18 November 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 1,682,186 new ordinary shares of no par value at an issue price of
£0.0025 each, and 2,222,222 new ordinary shares of no par value at an issue price of £0.003 per share.
(cid:120)(cid:3) On 23 November 2020, the Company announced it had raised £2.5m by way of a placing of 227,272,727
new ordinary shares at a price of £0.011 per share. The Company also issued 13,600,000 three-year
broker warrants with an exercise price of £0.013 per share.
(cid:120)(cid:3) On 1 December 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 1,050,000 new ordinary shares of no par value at an issue price of
£0.0025 per share.
(cid:120)(cid:3) On 8 December 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 3,435,445 new ordinary shares of no par value at an issue price of
£0.0025 per share.
(cid:120)(cid:3) On 15 December 2020, the Company announced the receipt of exercise notices and respective
subscription payments and issued 308,028 new ordinary shares of no par value at an issue price of
£0.0025 per share.
Issue of options
(cid:120)(cid:3) On 1 September 2020, the Company announced the recommendation to issue 60,000,000 unapproved
share options to Directors. Bill Brodie Good was issued 45,000,000 three-year share options with
exercise prices of £0.0045, £0.0050 and £0.0055. James Cable and Mark Culbert were each issued
7,500,000 three-year share options with exercise prices of £0.0045, £0.0050 and £0.0055.
(cid:3)
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22.(cid:3)
Significant agreements and transactions (continued)
Hammersley Iron Ore Project – Hancock Ranges & Brockman
(cid:120)(cid:3) On 19 March 2020, the Company announced it had entered a joint venture agreement with Windfield
Metals Pty Ltd, following its previously notified decision to exercise its option to acquire a 51% interest
in the Hancock Ranges & Brockman Iron Ore Projects. As consideration the Company issued 200,000,000
new ordinary shares at a price of £0.00078 each. The Company also issued 66,666,666 three-year
warrants with an exercise price of £0.0019 each. A further £100,000 is payable 12 months from 18
March 2020, and 100,000,000 performance shares, to be issued upon achieving the following
performance hurdles:
1.(cid:3)
2.(cid:3)
10,000,000 tonne JORC inferred resource at greater than 54% Fe (Hurdle 1); and
20,000,000 tonne JORC inferred resource at greater than 54% Fe (Hurdle 2).
Elizabeth Hill Mine Project
(cid:120)(cid:3) On 25 September 2020, the Company announced the completion of the Elizabeth Hill Mine project
acquisition. In accordance with the SPA dated 4 December 2019, the Company issued 200,000,000 new
ordinary shares at an issue price of £0.00665 per share, and 49,536,471 two-year warrants with an
exercise price of £0.0025 per share.
Munni Munni North Projecta
(cid:120)(cid:3) On 1 October 2020, the Company announced the acquisition of the Munni Munni North project. The
consideration paid was ~AU$36,000 cash and the issue of 37,357,190 new ordinary shares at a price of
£0.0073 each.
Donovan 2 – Earn-in agreement
(cid:120)(cid:3) On 22 October, CMEP executed an Earn-in Agreement with Capstone Mining Corp over its Donovan 2 licence.
Pursuant to the agreement, Capstone has the ability to acquire up to an 80% interest in Donovan 2 by sole
funding the project up to completion of a Prefeasibility Study.
Initial option
Stage Period
a)
b)
c)
d)
Date of execution
By 31 December 2021
By 31 December 2022
By 31 December 2023
Second option
Cash payment
$50,000
$50,000
$100,000
$100,000
Work or other expenditure
$150,000 by 31 December 2020
$450,000 by 31 December 2021
$1,000,000 by 31 December 2022
$2,000,000 by 31 December 2023
% Earned
-
-
-
+65%
Period
By 30 March 2024
Cash payment
$200,000
TOTAL
Notes:
$500,000
Work or other expenditure
Delivery
of
Assessment
Delivery of Prefeasibility Study
Preliminary
Economic
% Earned
+10%
+5%
80%
1.(cid:3) Capstone can accelerate work expenditure at their election
2.(cid:3)
If the Company chooses not to fund its pro-rata costs of the prefeasibility study, Capstone is entitled to a
further 5% interest post-delivery of prefeasibility study
If the Company dilutes to a 2% Royalty, Capstone has the ability to buy back 1% of the Royalty for $1,000,000
Under the terms of the Earn-in agreement, Capstone has given CMEP a right of first refusal to acquire
the project should Capstone choose to dispose of its interest. Alien will remain the operator of the
project up until the end of initial option stage a).
3.(cid:3)
(cid:3)
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23.(cid:3)
Related parties
Control of the Company
In the opinion of the Board, at 31 December 2020 there was no ultimate controlling party of the Company.
Identity of related parties
The Company and its subsidiaries have related party relationships with their respective directors.
Directors’ interests in shares of the Company
At 31 December 2020, none of the Directors of the Company or their immediate relatives had an interest in the
Common shares of the Company (2019: nil). Refer note 24 for details on dealings after the period end.
Transactions with key management personnel
During the year ended 31 December 2020 the Company entered into the following transactions involving key
management personnel:
During the period KBG Consultants a company in which Bill Brodie Good is a director, charged the Company a
total of $47,803 (2019: $29,584) for geological consultancy services. There was no outstanding balance at 31
December 2020 (2019: nil).
During the period Sorrento Resources International, a company in which Dan Smith and Mark Culbert are
directors, charged the Company a total of $128,101 (2019: $46,277) for corporate advisory fees. There was a
balance of $6,631 outstanding at 31 December 2019 (2019: nil).
During the period Minerva Corporate Pty Ltd, a company in which Dan Smith is a director, charged the Company
a total of $25,041 (2019: $6,498) for consultancy services and expenses. There was a balance of $4,888
outstanding at 31 December 2020 (2019: nil).
During the period Orwellian Investments, a company in which Dan Smith is a director, charged the Company a
total of $36,253 (2019: nil) for directors’ fees. There was no outstanding balance at 31 December 2020 (2019:
nil).
During the period iLaw, a company in which Mark Culbert is a partner, charged the Company a total of $21,683
(2019: nil) for legal fees. There was a balance of $7,158 outstanding at 31 December 2020 (2019: nil).
Key management personnel participate in the Group’s share option programme as disclosed in note 16.
Key management personnel compensation is disclosed in note 6.
24.(cid:3)
Significant events after the reporting period
On 15 January 2021, the Company announced the receipt of exercise notices and respective subscription
payments and issued 2,000,000 new ordinary shares of no par value at an issue price of £0.003 each.
On 3 February 2021, the Company received notification that Mark Culbert, a non-executive director of the
Company, purchased 5,000,000 ordinary shares at a price of £0.0125 each, representing 0.15% of the Company’s
issued share capital.
On 10 February 2021, and further to announcements on 16 September 2020 and 2 February 2021, the Company
announced the issue of 100,000 new ordinary shares of no par value, at an issue price of £0.00975 per share, in
consideration for the option to acquire the Nueva Andromeda permit. Under the terms of the option, the
Company has agreed to pay $100,000 if it should exercise the option to acquire the permit.
On 10 March 2021, the Company announced the signing of a 60 day exclusivity agreement with Wombat Resources
Pty Ltd, the owner of the historic tailings on site within the Elizabeth Hill Mining licence area. Using this period
to carry out further assessment of the tailings in situ and potentially negotiate an acquisition of the rights and
title to the Elizabeth Hill tailings project.
On 17 March 2021, the Company announced the receipt of exercise notices and respective subscription
payments and issued 2,222,222 new ordinary shares of no par value at an exercise price of £0.003 each.
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Contingent liabilities
25.(cid:3)
The Group has been informed that a former employee has started legal proceedings against the Group for
unfair dismissal. The Group vigorously denies that it was at fault and is intending to defend itself against any
such action. Legal advice received supports the director’s belief that the claim is without merit. It is
anticipated the case will be concluded by the end of 2021.
In the event that the Group is found to be liable, and whilst a considerably larger figure has been claimed,
the directors have been advised that the compensation payable is highly unlikely to exceed US$81,000. The
directors note that in the event of an unfavourable judgement the Group would not be able to recoup the loss
from another party.
(cid:3)
54
Other information
Directors
The following individuals served as directors to the Company during the year ended 31 December 2020:
Dan John Smith
Bill Brodie Good
Mark Culbert
Christopher Charles Gordon
James Seymour Cable
(appointed 26 February 2019)
(appointed 4 July 2019)
(appointed 23 July 2020)
(appointed 15 May 2018; resigned 23 July 2020)
(appointed 17 October 2006; resigned 24 November 2020)
Company contacts and advisers
Auditors
Jeffreys Henry LLP
Finsgate 5-7 Cranwood Street
London
EC1V 9EE
United Kingdom
Registrar (BVI)
Computershare Investor Services (BVI) Limited
c/o Queensway House
Hilgrove Street
St Helier
JE1 1ES
Jersey
Registered office
Craigmuir Chambers
P.O. Box 71
Road Town
Tortola
British Virgin Islands
UK head office
UK head office
Green Park House
16 Berkeley Street
15 Stratton Street
London W1J 8DZ
London W1J 8LQ
United Kingdom
Nominated Advisor
Beaumont Cornish Ltd
10th Floor
30 Crown Place
London EC2A 4EB
United Kingdom
Registrar (UK depository interests)
Computershare Investor Services plc
The Pavilions
Bridgewater Road
Bristol
BS99 7NH
United Kingdom
Company registration number
UK FC027089
BVI 1029783
Website
www.alienmetals.uk
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(cid:36)(cid:89)(cid:82)(cid:70)(cid:72)(cid:87)(cid:87)(cid:72)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:47)(cid:82)(cid:81)(cid:71)(cid:82)(cid:81)