Registered number: FC027089
ALIEN METALS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2022
ALIEN METALS LIMITED
CONTENTS
Company Information
Chairman’s Report
Directors’ Report
Statement of Directors’ Responsibilities
Corporate Governance Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash flows
Notes to the Financial Statements
Page
2
3
5
13
14
21
26
27
28
29
30
ALIEN METALS LIMITED
COMPANY INFORMATION
Directors
Registered Office
Company Number
Bankers
Nominated Adviser
Independent Auditor
Guy Robertson (Executive Chairman) – appointed 26 April 2023
Daniel Smith (Non-Executive Director)
Roderick McIllree (Executive Director) – appointed 7 September 2022
Mark Culbert (Non-Executive Director)
Jonathan Battershill (Non-Executive Director) - resigned 26 April 2023
Bill Brodie Good (Executive Director) – resigned 28 July 2022
Craigmuir Chambers
PO Box 71
Road Town
Tortola
British Virgin Islands
VG1110
UK FC027089
BVI 1029783
HSBC Bank plc
70 Pall Mall
London
SW1Y 5EZ
Beaumont Cornish Ltd
Building 3
566 Chiswick High Road
London
W4 5YA
PKF Littlejohn LLP
Registered Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
2
ALIEN METALS LTD
CHAIRMAN’S REPORT
Dear Shareholders,
I am pleased to present the Chairman's statement for Alien Metals Ltd (the ‘Company’ or ‘Alien Metals’) for the year ended
31 December 2022. This year has been a pivotal one for the Company, marked by significant progress in our exploration and
development projects, and strategic acquisitions that have strengthened our portfolio.
Operational Highlights
During the year, we made significant progress in our exploration and development projects in Australia. Our flagship project,
the Hancock Iron Ore Project in Western Australia, has continued to demonstrate strong potential for high-grade direct ship
iron ore, and we remain well-positioned to capitalise on the growing demand for iron ore in China.
Acquisitions
We have been active in pursuing strategic acquisitions that complement our existing portfolio and strengthen our long-term
growth prospects.
In March 2022 the Company completed the acquisition of a 100% interest in the Munni Munni Platinum Group Metals and
Gold Project in the West Pilbara, Western Australia containing palladium and Platinum Group Elements (‘PGE’) plus
significant quantities of other strategic metals including rhodium, nickel and copper.
In June 2022, we completed the acquisition of the Elizabeth Hill Silver Project in Western Australia, which has a historical
production record of over 2.7 million ounces of silver and the Vivash Gorge Iron Ore Project. These acquisitions expand our
footprint in Western Australia and provides us with new high-grade silver and base metal projects.
In December 2022, we completed the acquisition of the potential high-grade iron ore project, Brockman West, in Western
Australia. This project is located in the heart of the Pilbara region, one of the world's premier iron ore producing regions, and
has the potential to deliver significant value for our shareholders.
Project updates
Hancock Iron Ore Project: Alien Metals continued to progress its Hancock Iron Ore Project in Western Australia, which
covers a large area prospective for iron ore. The Company conducted exploration activities, including drilling, detailed
mapping, sampling, and geophysical surveys. Initial findings have led to a maiden mineral reserve and mining inventory along
with improving the overall resource potential of continued high-grade iron ore ridges. The Company plans further drilling to
identify additional resources throughout the licence area. The Company is continuing work on multiple fronts towards putting
the Hancock Project into production and to this end there is a key Native Title meeting scheduled in July following which the
Company will have a clearer idea on the timing for production commencing. Furthermore, work continues to define an updated
MRE on the Sirius Extension and this is now expected to be published in Q3 this year.
Elizabeth Hill Silver Project: Alien Metals continued its exploration efforts at the Elizabeth Hill Silver Project in Western
Australia. The Company carried out detailed geological and structural studies, coupled with geophysical surveys, to delineate
high-priority drill targets. These targets were subsequently drilled with excellent results confirming the presence of broader
high grade silver mineralisation around the old mine. Further drilling programmes are planned to expand the resource base
and assess the project's overall potential. In addition, the Company completed the installation of equipment on site to facilitate
re-entry to the old mine workings, such as headframes, winders and an overall refurbishment of the shaft entrance and local
mining licence.
Munni Munni: Alien Metals continued to compile and assimilate all historical data for the Munni Munni intrusion. The project
area contains a historic JORC 2004 compliant resource of 24 million tonnes @ 2.9 grams per tonne (‘g/t’) PGM and gold
for 1.14 million ounces (‘moz’) palladium (‘Pd’), 0.83 moz Pt (‘platinum’), 152 thousand ounces (‘koz’) Au (‘gold') and 76 koz
Rh (‘rhodium’). The Company completed its long term strategy of consolidating the entire northern Munni Munni licences into
a single coherent tenement, under 100% ownership. Potential exists for a much larger, high value, multi-commodity resource,
many of which appear on critical mineral lists. Munni Munni represents one of the largest undeveloped primary PGM
Resources in Australia.
Donovan 2 Copper-Gold Project: Alien Metals continued exploration activities at Donovan 2 during the year, including
exploratory drilling. This programme yielded encouraging, anomalous, copper and gold results and improved Alien Metals’
understanding of the projects prospectively. However, substandard core recovery over key intervals has led to the evaluation
of strategic alternatives for this project, including continued exploration, or divestment.
Financial Results
As an exploration and development Group which has no revenue, Alien reported a loss for the twelve months ended 31
December 2022 of $2,375,000 (31 December 2021: loss of $2,258,000).
3
ALIEN METALS LTD
CHAIRMAN’S REPORT
Outlook
Looking ahead, we remain focused on delivering long-term value for our shareholders by continuing to advance our
exploration and development projects. The acquisitions we have made during the year strengthen our portfolio and provide
us with additional growth opportunities.
We will continue to prioritise safety, sustainability, and good governance in all our operations, as we work to create value for
all our stakeholders.
Conclusion
In conclusion, I would like to thank our employees, contractors, and shareholders for their continued support during the year.
We are pleased with the progress we have made, and we look forward to updating you on our achievements in the coming
year.
Yours sincerely,
Guy Robertson
Executive Chairman
30 June 2023
4
ALIEN METALS LIMITED
DIRECTORS’ REPORT
The Directors present their Report, together with the Consolidated Financial Statements and Independent Auditor’s Report,
for the year ended 31 December 2022.
Principal Activities
The principal activity of the Group is to create and develop 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.
In addition to the Group’s growing activities in the premier Pilbara region of Western Australia, Alien Metals also operates in
Zacatecas, Mexico, where long-term relationships with local government, communities, and key stakeholders have been built
up over the last ten years.
Business Review
Alien Metals geological team continue to assess and identify projects that fit with the Group’s strategic objectives. Wherever
possible, the projects are acquired on a low-cost option basis whilst preliminary exploration is undertaken to assess the merits
of further work and with clear value drivers for shareholders and stakeholders alike.
Where preliminary studies show evidence of sufficient mineralisation, increasingly comprehensive studies and development
will be undertaken with a view to delineating a compliant mineral resource estimate in readiness for mine development or of
the 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.
A detailed review of the business of the Group during the year and an indication of likely future developments may be found
in the Chairman’s Report on pages 3 and 4.
Principal risks and uncertainties are discussed on pages 6 to 11.
Results and Dividends
The loss of the Group for the year ended 31 December 2022 amounts to $2,375,000 (31 December 2021: loss of $2,258,000).
The Directors do not recommend the payment of a dividend for the year (31 December 2021: $nil).
Directors & Directors’ Interests
The Directors who served during the year ended 31 December 2022 had the following beneficial interests in the shares of the
Company at year end.
Director
D J Smith
31 December 2022
31 December 2021
Ordinary
Shares
Options
Ordinary
Shares
Options
4,517,715
57,342,509
-
12,342,509
B Brodie Good***
-
-
1,500,000
55,000,000
M C Culbert
6,666,666
7,500,000
5,000,000
7,500,000
J L Battershill****
-
50,000,000
R McIllree**
137,404,762
230,000,000
G Robertson*
-
-
-
-
-
35,000,000
-
-
* Appointed 26 April 2023
** Appointed 7 September 2022
*** Resigned 28 July 2022
**** Resigned 26 April 2023
Further details on options can be found in Note 17 to the Financial Statements. Directors’ remuneration is disclosed in Note
20.
5
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Substantial shareholders
The substantial shareholders with more than a 3% shareholding at 29 June 2023 are shown below
Windfield Metals Limited
Bennelong Limited
Gilmore Capital Limited
Key Performance Indicators (“KPIs”)
Percentage
7.07%
6.34%
4.85%
The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based
on budget versus actual to assess the performance of the Group. The indicators set out below will be used by the Board to
assess performance over the period.
The three main KPIs for the Group are as follows. These allow the Board to monitor costs and plan future exploration and
development activities:
Cash and cash equivalents
Administrative expenses as a percentage of total assets
Exploration costs capitalised
Principal Risks and Uncertainties
2022
2,177,000
13%
3,029,000
2021
6,431,000
17%
2,432,000
Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more
than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on
the Group.
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, iron ore 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.
Principal risks and uncertainties
Key risks
Strategic risks
Exploration
and
development
and
acquisitions
future
Description of risk
Mitigating factors
The Group's operations are subject to all of the hazards
and risks incidental to 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.
The Group may acquire additional mining concessions in
Australia or elsewhere in the world.
Our mineral
concessions are
evaluated carefully by qualified
geologists
independent
and
advisors are engaged as and when
appropriate.
The management
has
significant experience operating in
Australia.
team
6
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Key risks
Strategic risks
Description of risk
Mitigating factors
The Group 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.
that
the event
In
the Group’s portfolio of mining
concessions is deemed by management not to warrant
further exploration and the Group is unsuccessful in
acquiring suitable new projects, the Group will have no
exploration or development projects to pursue.
No reserves or
resources
The Group announced its maiden mining reserve and
associated mining inventory during the period.
No assurance can be given that any future exploration
programme will result in any new resources and or
discoveries.
The Group received an independent
assessment of the reserve resource
potential of the Hancock project and
believes that there is good potential
to delineate additional mineral
resources
in accordance with
JORC.
Key risks
Strategic risks
Mineral
concessions
and titles risks
Description of risk
Mitigating factors
In relation to exploration and mining concessions over
which the Group holds legal rights, if the Group 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 Group's operations
and proposed operations.
Ownership of the mineral concessions in Mexico has been
transferred from the Group’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 Group has previously
received legal opinions in respect of title of ASM to its
properties there is no guarantee that the title to such
properties will not be challenged or impugned by third
parties. The Group’s concessions could be subject to prior
unregistered agreements, transfers or 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.
The Group’s mineral concessions
have been registered in the name of
CMEP and no contest or objection
was received.
The Group is aware of necessary
minimum expenditure and annual
rental obligations
its
exploration and mining permits and
maintains the necessary payments
to
and expenditure obligations
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 legal and/or
tenement due diligence to legal
practitioners.
Key risks
Financial risks
Requirement of
additional
financing
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
Group's concessions or even the loss of a concession.
The Group has an experienced
board and management team with
significant experience in financing
mining activities.
Additional financing might not be available when needed,
or if available, the terms of such financing might not be
favourable to the Group and could involve substantial
dilution to shareholders. In the absence of adequate
funding or cost reductions, the Group may not be able to
continue as a going concern.
The Group has been successful in
raising funds in the past and it is our
intention to raise additional funds in
future
the ongoing
to support
development of the business.
7
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Key risks
Financial risks
Liquidity risk
Capital
management
risk
Price risk
Foreign
currency risk
Credit risk
Description of risk
Mitigating factors
The Group’s approach to managing liquidity risk is to
ensure that it will have sufficient liquidity to meet liabilities
when due. The Group’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 the 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 Group’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 Group is therefore exposed to the movement
in exchange rates for these currencies.
At the year end the majority of the Group’s cash resources
were held in GBP. The Group therefore also has downside
exposure to any weakening of pound sterling against the
US dollar as this would increase expenses in US dollar
terms and accelerate the depletion of the Group’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 Group’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 Group’s credit risk is primarily attributable to cash and
the financial stability of the institutions holding it.
The Group’s maximum exposure
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.
to credit risk
commit
The Group 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
to material
will not
expenditures prior to being satisfied
that sufficient 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
to
flow
determine whether the Group has
sufficient cash reserves to meet
future working capital requirements
and to take advantage of business
opportunities.
The Group does not currently have
any financial instruments in issue
than share options and
other
warrants.
forecasts
The Group does not hedge its
exposure to price risk.
The Group does not currently hedge
foreign exchange risk.
There is not considered to be any
material exposure in respect of other
monetary assets and liabilities of the
Group.
The Group
deposits
financial
credit ratings.
invests
its cash
in
well-capitalised
institutions with strong
with
Investment risk The Group may from time to time hold shares in other
mining companies. There is not always a liquid market for
the shares in companies and it may not always be
possible to sell such shares at the optimum time or price.
The Group has previously been
successful in realising value from
investments.
8
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Key risks
External risks
Metals prices
Description of risk
Mitigating factors
The Group’s ability to obtain further financing will depend
in part on the price of commodity prices, including copper,
silver, lead, iron ore and zinc, and the industry’s
perception of its future price. The Group's resources and
financial results of operations will also be affected by
fluctuations in metal prices over which the Group has no
control. A reduction in the metal prices could prevent the
Group’s properties from being economically mined or
result in curtailment of existing production activities or
result in the impairment and write-off of assets.
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.
It is an accepted risk that the
Group’s
be
impacted by the price of metals.
performance will
The Board and management believe
the price of precious metals in
particular will increase in the long
term.
The Group does not hedge its
exposure to metals prices.
Key risks
Operational risks
Reliance
contractors
on
Description of risk
Mitigating factors
The Group relies on contractors to implement exploration
and development programmes. The failure of a contractor
or key service provider to properly perform its services to
the Group could delay or inconvenience the Group’s
operations and have a materially adverse effect on the
Group.
The Group has operated
in
Zacatecas in Mexico, for several
years and has well-established and
trusted relationships with various
contractors. The Group also has
considerable experience operating
in Australia.
and
significant
Certain of the Group’s directors
have
recent
experience operating in other global
jurisdictions, which may help identify
reliable contractors.
The Board has established a
Nomination
Remuneration
Committee which is responsible for
considering succession planning
is
and ensuring
sufficient to attract and retain staff of
the necessary calibre.
remuneration
&
Key personnel
The Group’s business is dependent on retaining the
services of a small number of key personnel of the
appropriate calibre as the business develops. The Group
has entered into employment agreements with certain key
managers. The success of the Group 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 Group. The Group does
not currently have any insurance in place with respect to
key personnel.
9
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Key risks
Operational risks
Environmental
factors
Description of risk
Mitigating factors
The Group’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 Group 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 Group does not comply with environmental
regulations or does not
impact
statements in relation to each of its concessions, it might
be subject
its operations might be
suspended, closed and/or its concessions may be
revoked.
file environmental
to penalties,
Environmental legislation and permit requirements are
likely to evolve in a manner which will require stricter
standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental
assessments of proposed projects and a heightened
degree of responsibility for companies and their directors
and employees.
The Group’s activities could be subject to prolonged
disruptions due to weather conditions depending on the
location of operations in which the Group has interests.
The Group is conducting its exploration activities in the
Zacatecas region of Mexico, and in Western Australia.
The Group may be adversely affected by changes in
economic, political,
judicial, administrative or other
regulatory factors such as taxation in these jurisdictions,
where the Group 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 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 Group's ability to
undertake exploration and 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 Group require approvals, licenses
and permits
regulatory authorities,
governmental and otherwise. There can be no guarantee
that the Group 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
from various
10
Political risk
Payment
obligations
Regulatory
approvals
The Group has an experienced
board and management team with
an awareness and knowledge of
these types of risk.
to
their acquisition
Concessions are evaluated carefully
for
prior
environmental risks and consultants
are engaged to advise on specific
risks when appropriate.
The Group has an excellent track
record on environmental matters.
Directors
believe
of Mexico
the
The
and
governments
Australia support the development
of natural resources by
foreign
operators.
The Directors have
in place a
system of internal controls to ensure
any
are
complied with.
obligations
payment
has
significant
The Group
experience in operating in Mexico
and Australia and believes that the
Group holds or will obtain all
necessary approvals, licenses and
permits under applicable laws and
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Key risks
Operational risks
Description of risk
Competition
Conflicts
interest
of
Health
Safety
and
commence construction or operation of mining facilities
that economically justify the cost.
The Group 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 Group may be unable to acquire further mineral
concessions on terms it considers acceptable.
Certain directors and officers of the Group also serve as
directors and/or officers of other companies involved in
mineral exploration and development and consequently
there is the potential for conflicts of interest. The Group
expects that any such director or officer shall disclose
such interest in accordance with its articles of association
or his contractual obligations to the Group and any
decision made by any of such directors and officers
involving the Group 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 Group and its
shareholders.
Alien Metals operates in an environment with work related
hazards and
injuries and accidents. A
comprehensive health and safety programme is the
primary means for delivering best practices in health and
safety management. This programme is regularly required
to be updated to incorporate employee suggestions,
lessons learned from past incidents and new guidelines
related to new projects with the aim of identifying areas for
further improvement of health and safety management.
This requires continuous improvement of the health and
safety programme. Employee involvement is recognised
as fundamental in recognising and reporting unsafe
conditions and avoiding events that may result in injuries
and accidents.
risk of
Mitigating factors
its
experience
regulations in respect of its current
projects.
The Group and its management
team have significant experience in
in Mexico.
mining operations
Through
and
Mexico,
relationships
counterparties may consider the
Group to have lower transaction risk
than its competitors.
The Group’s Articles of Association
have been adopted by shareholders
and any conflicts of interest are dealt
with in accordance with the rules set
out therein.
in
In the event of a conflict of interests,
the conflicted director shall not vote
on the relevant matter.
environmental
The Group has established and
published robust corporate health,
safety,
and
community relations policies, and at
the operations level have put into
place
operating
procedures covering a variety of the
Group’s activities. The active
the
participation of all staff
development, implementation and
further development of
these
procedures is actively encouraged.
clear
safe
in
Internal Controls
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control
environment and any related shortfalls during the year. Since the Group was established, the Directors are satisfied that,
given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware
that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and
proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are
adequate and effective.
Going Concern
These financial statements have been prepared on a going concern basis, as set out in Note 2.4.
The Directors have prepared cash flow forecasts for the period ending 30 June 2024, which take into account the cost and
operational structure of the Group and Parent Company, planned exploration and evaluation expenditure, licence
commitments and working capital requirements. These forecasts indicate that the Group and parent Company’s cash
resources are not sufficient to cover the projected expenditure for the period of 12 months from the date of approval of these
financial statements. These forecasts indicate that the Group and Parent Company, in order to meet their operational
objectives, and expected liabilities as they fall due, will be required to raise additional funds within the next 12 months.
Whilst the Directors are confident that they will be able to secure the necessary funding, the current conditions do indicate
the existence of a material uncertainty that may cast doubt regarding the applicability of the going concern assumption and
the auditors have made reference to this in their audit report. The Directors are confident in the Company’s ability to raise
additional funds as required, from existing and/or new investors, within the next 12 months. Thus, they continue to adopt the
going concern basis of accounting in preparing these financial statements. The auditors make reference to going concern by
way of a material uncertainty over the ability of the Company and the Group to fund the forecasted expenditure.
11
ALIEN METALS LIMITED
DIRECTORS’ REPORT
Directors’ and Officers’ Indemnity Insurance
During the financial year, the Company maintained insurance cover for its Directors and Officers under a Directors’ and
Officers’ liability insurance policy. The Company has not provided any qualifying indemnity cover for the Directors.
Provision of Information to Auditor
So far as each of the Directors is aware at the time this report is approved:
•
•
there is no relevant audit information of which the Company's auditor is unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
PKF Littlejohn LLP was appointed in the current year and and signified its willingness to be reappointed in office as auditor.
This report was approved by the Board on 30 June 2023 and signed on its behalf.
Guy Robertson
Executive Chairman
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ALIEN METALS LTD
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with the applicable
law and regulations including the AIM Rules for Companies.
The Directors are required to prepare Financial Statements for each financial year. The Directors have elected to prepare the
Group’s Financial Statements in accordance with UK-adopted International Accounting Standards. The Directors must not
approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that period. In preparing these Financial Statements, the Directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable UK-adopted International Accounting Standards have been followed, subject to any
material departures disclosed and explained in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group. They are also responsible
for safeguarding the assets of the Group, and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Group’s website, https://www.alienmetals.uk. The Group is compliant with AIM Rule 26 regarding the Group’s website.
The Directors confirm that they have complied with the above requirements in preparing these Financial Statements.
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
The Board recognises the value and importance of maintaining the highest standards of corporate governance and is
committed to the principles and best practice of good corporate governance. In this regard the Directors have elected to
comply with the 2018 UK Corporate Governance Code (“the Code”) though there are a number of provisions which the Group
have not complied with due to it not being practical to do so, having regard to the size and stage of development of the Group.
The Directors remuneration is disclosed in Note 20.
Although the Code contains a set of five Principles that emphasise the value of good corporate governance to long term
sustainable success and focuses on the application of such Principles, it does not set out a rigid set of rules but instead offers
flexibility through the application of Principles and through “comply or explain” Provisions and supporting guidance.
The Company is small with a modest resource base. The Company has a clear mandate to optimise the allocation of limited
resources to support its development plans. As such, the Company strives to maintain a balance between conservation of
limited resources and maintaining robust corporate governance practices. As the Company evolves, the Board is committed
to enhancing the Company’s corporate governance policies and practices deemed appropriate for the size and maturity of
the organisation.
During the year the Board consisted of four Directors: an Non-Executive Chairman, an Executive Director and two Non-
Executive Directors (“NED”s). The Board considers that appropriate oversight of the Group’s provided by the currently
constituted Board. The sections below set out the way in which the Group applies the Principles.
Principle 1: Board Leadership and Company Purpose
Alien Metals’ objective is to create a multi-commodity portfolio of exploration and mining projects in established mining
jurisdictions, stable political backgrounds and where strong operational controls can be assured.
The Company routinely evaluates mining projects in a wide array of world-class mining jurisdictions including Mexico and
Australia.
Where preliminary studies evidence sufficient mineralisation, increasingly comprehensive studies will be undertaken with a
view to delineating a compliant mineral resource estimate in readiness for the 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.
The Executive Director 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 is responsible for monitoring the activities of the
executive management.
The Board usually meets a minimum of four times a year but may meet more frequently on ad-hoc basis as and when required.
The Chairman is ultimately responsible for ensuring that each board decision is taken having sufficient information on and
with all due discussion as is relevant to such decision.
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other
commitments and interests of its Directors and changes to these commitments and interests are reported to, and, where
appropriate, agreed with the rest of the Board.
The Company has also adopted an Anti-Corruption and Bribery Policy to ensure compliance with the relevant laws governing
anti-corruption and anti-bribery as well as a Share Dealing Code for Directors and applicable employees to ensure compliance
with AIM Rule 21 and the provisions of the Market Abuse Regulations relating to dealings in the Group’s securities.
Provision 5 of the Code recommends that the Board appoints a Director from the workforce, creates a formal workforce
advisory panel or appoints a designated Non-Executive Director to engage with the workforce. However, due to the Group
currently having a small number of employees, the Board does not consider this to be appropriate but at such time as the
size of the workforce increases, it will review the position and make any such appointments or take other actions it considers
appropriate.
Principle 2: Division of Responsibilities
The Group 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 and Remuneration Committee, each with formally delegated duties and
responsibilities set out in respective Terms of Reference.
The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined in writing. However,
they work closely together to ensure effective decision making and the successful delivery of the Group’s strategy.
Each Director has a Letter of Appointment or a Services Agreement in place to ensure that they clearly understand the
requirements of the role. All Directors are required to allocate sufficient time to the Company to discharge their responsibilities
effectively.
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
Due to the size of the Board, the nomination of any one particular director to act as a Senior Independent Director, as
recommended by Code Provision 12, is not currently considered to be appropriate or improve the effective operation of the
Board. However, the matter is kept under review.
Provision 11 of the Code requires at least half the Board, excluding the Chairman, to be Non-Executive Directors whom the
board considers to be independent. During the year the Alien Metals Board consisted of three Non-Executive Directors –
Daniel Smith, Mark Culbert and Jonathan Battershill – of which Mark Culbert is deemed to be independent by virtue of not
having been granted Options in the most recent award of Options to Directors and Executives. Daniel Smith and Jonathan
Battershill are not considered to be independent by virtue of each having been granted Options in the most recent award and
as each are recompensed for the provision of material consultancy services to the Company outside of their respective
standard remuneration as Directors.
The intention is that an additional Independent Non-Executive Director will be appointed in the foreseeable future.
Principle 3: Composition, Succession and Evaluation
During the year, the Board comprised of one Executive Directors and three Non-Executive Directors.
The Board has established a Nomination and Remuneration Committee (”the N&R Committee”) and an Audit and Risk
Committee (“the ARC”), each with formally delegated duties and responsibilities set out in respective Terms of Reference, to
assist with oversight and governance.
The Board and its advisers have significant experience in the mining sector and from that, a strong network of individuals
working in the sector. The N&R Committee leads the process for Board appointments and is responsible for review of the
Board size, structure and composition (both executive and non-executive) including any potential new applicants to ensure
the Board contains the right balance of skills, knowledge and experience to manage and grow the business. The N&R
Committee will make recommendations to the Board on any proposed or suggested changes to the Board with a view on the
leadership needs of the business including succession planning.
The Board does not carry out a formal annual evaluation of its performance, its committees, the Chairman and individual
Directors, which is contrary to the recommendation of Code Provision 21.
However, the Chairman continuously considers the performance of the Board, its committees and of individual directors and
provides feedback when appropriate. Similarly, the Chairman invites feedback in the same manner from the Non-Executive
Directors and the Company Secretary.
The Board 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. Nonetheless, the Board acknowledges the merits in
carrying out formal board evaluations and will monitor the continuing suitability of this stance as the Company grows in size.
Principle 4: Audit, Risk and Internal Control
The Audit and Risk Committee (“the ARC”) is comprised of Daniel Smith, who chairs the committee and Mark Culbert, both
of whom are Non-Executive Directors of the Company. However, other individuals such as the Company’s CEO may be
invited to attend all or any part of any meeting when deemed appropriate. The Company’s external auditors are invited to
attend meetings of the Committee on a regular basis
The ARC has responsibility for, among other things, the monitoring of the integrity of the financial statements of the Company
and its Group and the involvement of the Group's auditors in that process. It focuses in particular on compliance with
accounting policies and ensuring that an effective system of external audit and financial control is maintained, including
considering the scope of the annual audit and the extent of the non-audit work undertaken by external auditors and advising
on the appointment of external auditors. The ultimate responsibility for reviewing and approving the annual report and
accounts and the half-yearly reports remains with the Board. The Audit Committee will meet at least three times a year at the
appropriate times in the financial reporting and audit cycle. The committee also review the emerging and principal risks of the
business, refer to Principal Risks and Uncertainties on page 6.
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 considers:
• Ratio of audit fees to non-audit fees
•
• Whether there are any known material relationships between the Company, its directors and senior executives, and
Length of tenure
the audit firm, its partners, and the audit team
• Application of constructive challenge and professional scepticism
Audit and non-audit fees are disclosed in the financial statements.
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
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:
• Effectiveness of the audit plan, its delivery and execution
• Knowledge and experience of the audit team
• Robustness of the audit
The Group’s external auditor is PKF Littlejohn LLP for the audit of the 31 December 2022 accounts. Prior to this, the audit
was conducted by Jeffreys Henry LLP.
Having assessed the performance, objectivity and independence of the auditor, the Committee will be recommending the
reappointment of PKF Littlejohn LLP as auditor to the Company at the 2023 Annual General Meeting.
During the year to 31 December 2022, the Audit Committee considered the following key issues in relation to the Financial
Statements:
Issue
• Accounting policies
• Carrying value of intangibles
• Going concern review
• Review of audit and non-audit
services and fees
Action
The Committee reviewed and discussed the significant accounting
policies with management and the external auditor and reached the
conclusion that each policy was appropriate to the Group.
The Committee reviewed the impairment assessment report prepared by
management and agreed that given the reasonable expectation that the
Group will achieve its milestone targets in the near future that no
impairment to the value of the intangibles was required as at 31
December 2022.
The Committee considered the ability of the Group to operate as a Going
Concern considering cash flow forecasts for the next 12 months. It was
determined by the Committee that the forecasts indicate that the Group
and parent Company’s cash resources are not sufficient to cover the
projected expenditure for the period of 12 months. Notwithstanding, the
Directors are confident in the Company’s ability to raise additional funds
as required, from existing and/or new investors, within the next 12
months. Thus, they continue to adopt the going concern basis of
accounting preparing these financial statements. Refer to page 11 and
31 for further information on going concern.
The external auditor is not engaged by the Group to carry out any non-
audit work in respect of which it might, in the future, be required to
express an audit opinion.
The Committee reviewed the fees charged for the provision of audit and
non-audit services and determined that they were in line with fees
charged to companies of similar size and stage of development.
The Committee considered and was satisfied the external auditor’s
assessment of its own independence.
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 considered to be justified at present.
Principle 5: Remuneration
During the year, the Nomination and Remuneration Committee (“the N&R Committee”) Committee was comprised entirely of
Non-Executive Directors, with Daniel Smith as Chairman and Mark Culbert and Jonathan Battershill as additional members.
The N&R Committee recognises that an effective board comprises a range and balance of skills, experience, knowledge,
genders 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.
In addition, the N&R Committee is responsible for establishing a formal and transparent procedure for developing policy on
executive remuneration and to set the remuneration packages of individual Directors. This includes agreeing with the Board
the framework for remuneration of the CEO and such other members of the executive management of the Company as it is
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
designated to consider. It is furthermore responsible for determining the total individual remuneration packages of each
Director including, where appropriate, bonuses, incentive payments and share options.
Provision 34 of the Code specifies that the remuneration of non-executive directors should not include share options or other
performance-related elements. However, although all Non-Executive Directors have been granted Options, the Board
considers the quantum of Options granted to each Non-executive Director is such that it does not impair or compromise their
impartiality or objectivity in decision making. The independence of Non-Executive Directors is reviewed and will continue to
be reviewed by the Board on a regular basis.
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 compensation adequately reflects the
individual’s previous performance, achievements, experience, 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.
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 aligns with Provision 40 of the code and is as follows:
•
•
•
•
•
•
•
remuneration of Directors is disclosed in annual accounts for clarity and to ensure transparency.
remuneration structures are limited to salaries and options to avoid complexity and are clearly communicated by the
board to ensure predictability.
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;
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, unless the Board determines otherwise.
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 Chair and the CEO welcome major shareholders to discuss the Company’s strategy and governance, including, on the
appointment of key board appointments. The Chair reports to the Board as a whole, on the views of major shareholders.
The Company does not anticipate making any significant changes to its compensation policies and practices during 2023.
Culture and employees
At the Company’s present stage of development, it has less than 10 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
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
report directly to the country manager, who in turn 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.
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.
Relations with stakeholders
The Company is committed to a continuous dialogue with shareholders as it believes that this is essential to ensure a greater
understanding of and confidence amongst its shareholders in the medium and longer term strategy of the Group and in the
Board’s ability to oversee its implementation. It is the responsibility of the Board as a whole to ensure that a satisfactory
dialogue takes place.
Whilst the Company is a BVI registered company, the UK Corporate Governance code references Section 172 of the
Companies Act 2006 which requires Directors to take into consideration the interests of stakeholders in their decision making.
The Board is committed to understanding and engaging with all key stakeholder groups of the Company in order to maximise
value and promote long-term Company success in line with our strategic objectives. The Board recognises how the
Company’s activities and decisions will impact employees, those with which it has a business relationship, the community
and environment and its reputation for high standards of business conduct. In weighing all of the relevant factors, the Board,
acting in good faith and fairly between members, makes decisions and takes actions that it considers will best lead to the
long-term success of the Company.
During the year, the Board assessed its current activities between the Board and its stakeholders, which demonstrated that
the Board actively engages with its stakeholders and takes their various objectives into consideration when making decisions.
Specifically, actions the Board has taken to engage with its stakeholders in 2022 include:
•
•
•
•
Attended the 2022 AGM and prepared to answer any questions raised by shareholders;
Made presentations at conferences and published recordings and slide decks on the Company’s exploration activities;
Evaluated the relationships with the Company’s various collaborators through management and identified ways to
strengthen relationships and arrangements with key collaborations; and
Monitored company culture and engaged with employees on efforts to continuously improve company culture and
morale.
The Board believes that appropriate steps and considerations have been taken during the year so that each Director has an
understanding of the various key stakeholders of the Company. The Board recognises its responsibility to contemplate all
such stakeholder needs and concerns as part of its discussions, decision-making, and in the course of taking actions, and
will continue to make stakeholder engagement a top priority in the coming years.
The Chairman, the CEO and other Directors, as appropriate, make themselves available for contact with major shareholders
and other stakeholders in order to understand their issues and concerns.
The Company plans to use the AGM as an opportunity to communicate with its shareholders. To ensure compliance with the
Governance Code, the Board proposes separate resolutions for each issue, and proxy forms allow shareholders who are
unable to attend the AGM to vote for or against or to withhold their vote on each resolution. The results of all proxy voting will
be published on the Group’s website after the AGM. Shareholders who attend the AGM will have the opportunity to ask
questions.
The Group’s website is the primary source of information on the Group. The website includes an overview of the activities of
the Group and all recent Group announcements.
Going Concern
The Directors have prepared cash flow forecasts for the period ending 30 June 2024, which indicate that the Group and parent
Company’s cash resources are not sufficient to cover the projected expenditure for the period of 12 months from the date of
approval of these financial statements. The Directors are confident in the Company’s ability to raise additional funds as
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ALIEN METALS LTD
CORPORATE GOVERNANCE REPORT
required, from existing and/or new investors, within the next 12 months. Thus, they continue to adopt the going concern basis
of accounting preparing these financial statements
Provisions not applied
The Company is small with a modest resource base. The Company has a clear mandate to optimise the allocation of limited
resources to support its development plans. To ensure the appropriate corporate governance is applied to the size and
maturity of the Company, there are certain provisions the group specifically does not comply with, given the size of the Group,
as noted below:
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”. At such time as the size of the
workforce increases, the Board will review the position and make any such appointments or take other actions it considers
appropriate.
Senior Independent Director
The Board has not appointed a Senior Independent Director. This is contrary to Code provision 12. 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.
Open advertising
The Board does not always use open advertising and/or an external search consultancy for the appointment of the chair and
non-executive directors. This is Contrary to Code Provision 20. Given the size of the Company and skills required by the
board it is not always possible to run an open advertising process.
Annual evaluation of the performance of the Board
The Board does not carry out a formal annual evaluation of its performance, its committees, the Chair and individual directors.
This is contrary to Code provision 21 and is explained in the section headed “Board assessments”.
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. The Nomination and Remuneration
Committee, in conjunction with the Board, regularly reviews the composition of the Board and its committees and will look to
appoint new independent non-executive directors in due course.
Performance related pay
Non-executive directors participate in the Company’s share option plan. This is contrary to Code provision 34. 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
In accordance with the UK Corporate Governance Code published in July 2018, the Directors have assessed the prospects
of the Group and concluded that it is appropriate to adopt the going concern basis of accounting based on the amount of cash
on hand at the end of the year and alternative funding options available at the time of publication of this report. The assessment
of going concern is disclosed in Note 2.4.
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CORPORATE GOVERNANCE REPORT
The Board’s assessment of the Group’s current position and principal risks are disclosed in the Directors’ Report on page 5.
The Group has not produced a detailed viability statement given the size and resources of the Group. This is contrary to Code
provision 31.
The Directors consider that the Annual Report and the Financial Statements, taken as a whole, are fair, balanced, and
understandable and provide the information necessary for the shareholders to assess the Company’s position and
performance, business model and strategy. Refer to the Statement of Directors Resposibilities on page 13.
Daniel Smith
Non-Executive Director
30 June 2023
20
ALIEN METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report to the Members of Alien Metals Ltd
Opinion
We have audited the financial statements of Alien Metals Ltd (the ‘Group’) for the year ended 31 December 2022 which
comprise the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial
statements, including significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted International Accounting Standards.
In our opinion, the financial statements:
•
•
give a true and fair view of the state of the Group’s affairs as at 31 December 2022 and of its loss for the year then
ended; and
have been properly prepared in accordance with UK-adopted International Accounting Standards
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.4 in the financial statements, which indicates that the Group incurred a loss of $2,375,000 in the
year ended 31 December 2022 and that the Group will be required to raise further finance, equity and/or debt, in order to
fund its forecasted expenditure over the next twelve months. As stated in note 2.4, these events or conditions, along with
the other matters as set forth in note 2.4, indicate that a material uncertainty exists that may cast significant doubt on the
Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 Group’s ability
to continue to adopt the going concern basis of accounting included reviewing and challenging cashflow forecasts prepared
by management covering the 12 months from the approval of these financial statements and the related key assumptions,
ascertaining the Group’s current financial position and cash reserves and discussing their strategies regarding future fund
raises.
In relation to the Group’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to:
•
•
the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting; and
the directors' identification in the financial statements of the material uncertainty related to the entity’s ability to
continue as a going concern over a period of at least twelve months from the date of approval of the financial
statements
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing and extent of our audit procedures.
Materiality for the consolidated financial statements was set at $274,000 based upon 1.5% of gross assets. Materiality has
been based upon gross assets due to the significant asset balances in the Consolidated Statement of Financial Position
and the number of identified risks in relation to the Consolidated Statement of Financial Position balances relative to the
Consolidated Statement of Comprehensive Income balances.
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 $185,000 and $130,000.
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ALIEN METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
Performance materiality and the triviality threshold for the financial statements was set at $137,000 and $13,700
respectively due to the number of significant risks identified and this being our first year of engagement. We also agreed to
report to the Board of Directors any other differences below that threshold that we believe warranted reporting on qualitative
grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular we looked at areas involving significant accounting estimates and judgements by the directors and
considered future events that are inherently uncertain, such as the carrying value of Intangible Assets and the fair value
assigned to warrants/ options issued in the year. We also addressed the risk of management override of internal controls,
including among other matters consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
A full scope audit was performed on the complete financial information of four of the components of the Group and a limited
scope review was performed on the remaining three as they were assessed as insignificant.
Of the seven reporting components of the Group, one is located in the British Virgin Islands, one is located in Mexico, two
are located in the United Kingdom and three are located in Australia. PKF Littlejohn LLP audited the ultimate parent
company, situated in the British Virgin Islands, and all other reporting components. The Engagement Partner conducted
audit work in the United Kingdom but interacted regularly with the management team in the Australia during all stages of the
audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures
performed, gave us appropriate evidence for our opinion on the Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we
have determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
Carrying value of intangible assets (Note 9 & 10)
How our scope addressed this matter
Our work in this area included but was not limited to:
As at 31 December 2022, the carrying value of
intangible assets was $15,639,000.
This intangible asset arises from exploration and
evaluation expenditure capitalised under IFRS 6
and the acquisition of interests in exploration
and evaluation projects which do not meet the
definition of a business per IFRS 3.
Given the value of the balance as at 31 December
2022, the fact that the Group have yet to enter
into production and the judgements and
estimations required to be made by Management
when assessing for impairment, there is a risk
that this assets may be overstated in the balance
sheet.
•
For an appropriate sample of additions in the
year, vouching to supporting documentation
and ensuring it has been appropriately
capitalised in accordance with IFRS 6;
• Obtaining the directors’ impairment
assessment and supporting workings.
Reviewing and discussing with the directors;
challenging the key inputs and assumptions.
• Obtaining all exploration licences held and
ensuring they are valid and any conditions
within have been adhered to; and
• Obtaining proof of ownership of all
subsidiaries.
The directors’ assessments that none of the
impairment indicators per IFRS 6 were met in respect
of any of the projects and that the recoverable value
of the Hancock project exceeds its carrying value
22
ALIEN METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
Accounting for asset acquisitions (Note 8)
The Group acquired an interest in a number of
projects in the year, namely the Munni Munni,
Vivash Gorge and Hancock & Brockman projects,
that they deemed to be outside the scope of IFRS
3 and the assessed fair value of the assets
acquired were capitalised as intangible assets
accordingly. Such acquisitions in the year
totalled $7,688,000
Given the value of the amounts capitalised in the
year and the judgements and estimations
required to be made by Management when
determining how to classify the acquisition and
the fair value of the assets acquired, there is a
risk that intangible assets may be materially
misstated as a result of the asset acquisitions
being incorrectly classified and/or valued.
were found to be reasonable though note that this is
contingent on further fund raises being completed and
necessary mining licences being secured.
Our work in this area included but was not limited to:
•
For each acquisition, we obtained and
reviewed the underlying acquisition
agreements to ascertain the key terms;
• Obtaining management’s paper outlining the
justification for the classification of each
acquisition. We reviewed and discussed with
management in order to conclude if the
acquisitions are correctly classified in
accordance with IFRS 6 and IFRS 3;
• Obtaining management’s paper outlining the
justification for the fair values assigned to the
assets acquired. We reviewed in order to
conclude if the assets acquired and the
consideration have been correctly valued in
accordance with IFRS 6 and IFRS 13; and
•
For any consideration settled in the year,
vouching payments to bank and the issue of
shares to supporting documentation.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 this gives rise to a
material misstatement in the financial statements themselves. 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.
Corporate governance statement
We have reviewed the directors' statement in relation to going concern and that part of the Corporate Governance
Statement relating to the company's compliance with the provisions of the UK Corporate Governance Code specified for our
review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 18 and 19;
• Directors’ explanation as to their assessment of the group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 18 and 19;
• Directors’ statement on whether they have a reasonable expectation that the group will be able to continue in
operation and meets its liabilities set out on page 18 and 19;
• Directors' statement that they consider the annual report and the financial statements, taken as a whole, to be fair,
balanced and understandable set out on page 20;
23
ALIEN METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 15;
The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 15; and
The section describing the work of the audit committee set out on page 15.
•
•
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s 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 to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the Group and the sector in which it operates to identify laws and regulations that
could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding
in this regard through discussion with management and independent research.
• We determined the principal laws and regulations relevant to the Group in this regard to be those arising from the
BVI Business Companies Act, AIM Rules, local tax legislation and local environmental, employment and health
and safety laws.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-
compliance by the Group with those laws and regulations. These procedures included, but were not limited to:
o Discussions with management regarding compliance with laws and regulations by the Group;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that
there was potential for management bias in relation to the carrying value of intangible assets and the accounting
for asset acquisitions. We addressed these risks by challenging the assumptions and judgements made by
management when auditing these significant accounting estimates (see the Key audit matters section of our
report).
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for
evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside
the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
24
ALIEN METALS LIMITED
INDEPENDENT AUDITOR’S REPORT
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our engagement letter dated 28 March
2023. Our audit work has been undertaken so that we might state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Dominic Roberts (Engagement Partner)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
25
ALIEN METALS LTD
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2022
Continuing Operations
Administration expenses
Other losses
Operating loss
Finance costs
Finance income
Loss for the year before taxation
Income tax
Loss for the year
Loss attributable to:
-
owners of the Parent
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Exchange differences recognised directly in equity
Total Comprehensive Income
Attributable to:
- owners of the Parent
Total Comprehensive Income
-
Total comprehensive income attributable to continuing
operations
Total comprehensive loss for the year attributable to equity
shareholders of the parent
Note
6
18
18
7
Group
Year ended 31
December 2022
Year ended 31
December 2021
$
$
(2,352,000)
(2,255,000)
(30,000)
-
(2,382,000)
(2,255,000)
-
7,000
(3,000)
-
(2,375,000)
(2,258,000)
-
-
(2,375,000)
(2,258,000)
(2,375,000)
(2,258,000)
(2,375,000)
(2,258,000)
(1,531,000)
(1,531,000)
(1,531,000)
(1,531,000)
(24,000)
(24,000)
(24,000)
(24,000)
(3,906,000)
(2,282,000)
Earnings per share (pence) from continuing operations
attributable to owners of the Parent – Basic & Diluted
21
(0.050)
(0.065)
The Notes on pages 30 to 53 form part of these Financial Statements.
26
ALIEN METALS LIMITED
REGISTERED NUMBER: FC027089
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Note
Group
2022
$
Non-Current Assets
Intangible assets
Assets under construction
Right of use asset
Total Non-current assets
Current Assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total Assets
Current Liabilities
Trade and other payables
Lease liability
Total Current Liabilities
Non-Current Liabilities
Lease liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity attributable to owners of the Parent
Share capital
Warrant reserve
Share-based payment reserve
Foreign exchange translation reserve
Equity investment reserve
Accumulated losses
Total Equity
8, 9
10
11
12
13
14
11
11
15
16, 17
16, 17, 23
16
23
2021
$
5,939,000
291,000
131,000
6,361,000
265,000
6,431,000
6,696,000
15,639,000
455,000
17,000
16,111,000
318,000
2,177,000
2,495,000
18,606,000
13,057,000
446,000
17,000
463,000
-
-
655,000
112,000
767,000
19,000
19,000
463,000
786,000
18,143,000
12,271,000
79,586,000
70,422,000
739,000
771,000
694,000
-
865,000
1,179,000
2,225,000
-
(63,647,000)
(62,420,000)
18,143,000
12,271,000
The Financial Statements were approved and authorised for issue by the Board of Directors on 30 June 2023 and were signed
on its behalf by:
Guy Robertson
Director
The Notes on pages 30 to 53 form part of these Financial Statements.
27
ALIEN METALS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share
Capital
Warrant
reserve
Share
based
payment
reserve
Equity
investment
reserve
Foreign
exchange
translation
reserve
Retained
losses
Total equity
$
$
$
$
$
$
$
As at 1 January 2021
65,181,000
872,000
1,033,000
(232,000)
2,249,000
(59,957,000)
9,146,000
Loss for the year
Other comprehensive income
Exchange differences recognised
directly in equity
Total comprehensive income for
the year
Disposal of equity investment
FVTOCI-movement in reserves
Transactions with owners
Issue of ordinary shares
Share issue costs
Issue of share options
Exercise of share options
Project acquisitions
Exercise of warrants
-
-
-
-
5,503,000
(303,000)
-
17,000
1,000
23,000
-
-
-
-
-
-
-
-
-
(7,000)
-
-
-
-
-
-
166,000
(20,000)
-
-
Total transactions with owners
5,241,000
(7,000)
146,000
As at 31 December 2021
70,422,000
865,000
1,179,000
Loss for the year
Other comprehensive income
Exchange differences recognised
directly in equity
Total comprehensive income for
the year
Transactions with owners
Issue of ordinary shares
Cost of capital
-
-
-
-
9,365,000
(141,000)
-
-
-
-
-
-
Share based payment charge
(60,000)
422,000
Exercise of options & warrants
Expiry of warrants & options
Expiry of options in prior year
-
-
-
(437,000)
(111,000)
-
-
-
-
-
-
192,000
(17,000)
(8,000)
-
(575,000)
Total transactions with owners
9,164,000
(126,000)
(408,000)
-
-
-
(2,258,000)
(2,258,000)
(24,000)
-
(24,000)
-
(24,000)
(2,258,000)
(2,282,000)
232,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(232,000)
-
-
-
-
20,000
-
7,000
5,503,000
(303,000)
166,000
17,000
1,000
23,000
27,000
5,407,000
2,225,000
(62,420,000)
12,271,000
-
(2,375,000)
(2,375,000)
-
-
(1,531,000)
-
(1,531,000)
-
(1,531,000)
(2,375,000)
(3,906,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,365,000
(141,000)
554,000
454,000
119,000
575,000
-
-
-
1,148,000
9,778,000
As at 31 December 2022
79,586,000
739,000
771,000
-
694,000
(63,647,000)
18,143,000
The Notes on pages 30 to 53 form part of these Financial Statements
28
ALIEN METALS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2022
Cash flows from operating activities
Loss before taxation from continuing operations
Adjustments for:
Issue of share options
Exchange difference
Finance charges
Depreciation and amortisation
(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Net interest expense
Acquisition of intangibles
Additions of intangibles
Expenditure on assets under construction
Proceeds from sale of financial assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of share issue
Lease payments
Exercise of options and warrants
Note
17
6
9
8
10
15
15
11
Net cash generated from financing activities
Net Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on translation
Cash and cash equivalents at end of year
13
Major non-cash transactions
Group
2022
$
2021
$
(2,375,000)
(2,258,000)
192,000
(42,000)
(7,000)
102,000
(53,000)
(209,000)
166,000
174,000
3,000
-
(129,000)
351,000
(2,392,000)
(1,692,000)
-
(432,000)
(3,029,000)
(164,000)
-
(3,000)
-
(2,432,000)
(291,000)
40,000
(3,625,000)
(2,686,000)
2,452,000
(141,000)
(102,000)
-
2,209,000
(3,808,000)
6,431,000
(446,000)
2,177,000
5,503,000
(303,000)
-
40,000
5,240,000
862,000
5,627,000
(59,000)
6,431,000
On 23 February 2022, 50,000,000 Ordinary Shares of no par value were issued for 0.78 pence each as part of the
consideration due to Windfield Metals Pty Ltd for total consideration of $468,000
On 22 March 2022, 138,703,396 Ordinary Shares of no par value were issued at 0.7935 pence per share as part of the
consideration for the acquisition of Munni Munni for total consideration of $1,383,000
On 22 March 2022, 358,617,818 Ordinary Shares of no par value were issued for 0.699 pence per share as part of the
consideration for the acquisition of Munni Munni for total consideration of $3,576,000
On 20 June 2022, 7,827,883 Ordinary Shares of no par value were issued for for 0.73 pence per share as part of the
consideration for the acquisition of Vivash Gorge for total consideration of $68,000
On 20 December 2022, 260,000,000 Ordinary Shares of no par value were issued for 0.7935 pence per Ordinary Share as
part of the consideration for the acquisition of Hancock and Brockman for total consideration of $1,414,000
On 20 December 2022, 100,000,000 Warrants were issued exercisable at 1 pence on or before 31 December 2025 for the
acquisition of Hancock and Brockman valued at $347,000 USD
29
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
ACCOUNTING POLICIES
1. General Information
The principal activity of Alien Metals Limited (“the Company”) and its subsidiaries (together “the Group”) is the acquisition and
development of mineral resource assets.
The Company’s shares are traded on AIM, a market operated by the London Stock Exchange. The Company is incorporated
in the British Virgin Islands and domiciled in the United Kingdom.
The address of its registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, BVI.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these Financial Statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Basis of Preparation of Financial Statements
The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting
standards, IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the United Kingdom applicable to
companies under IFRS. The Group and Company Financial Statements have also been prepared under the historical cost
convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition.
The Financial Statements are presented in US dollars rounded to the nearest thousand.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and
Company Financial Statements are disclosed in Note 4.
2.2 Changes in Accounting Policy and Disclosures
(a) New and amended standards adopted by the Group and Company
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial
Reporting Standards and IFRIC interpretations. The amendments and revisions applicable for the period ended 31 December
2022 did not result in any material changes to the financial statements of the Group.
b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard
IFRS 17 (Amendments)
IAS 1 (Amendments) and
IFRS Practice Statement 2
IAS 8 (Amendments)
IAS 12 Income Taxes
(Amendments)
IAS 1 (Amendments)
IFRS 16 (Amendments)
Impact on initial application
Insurance contracts
Disclosure of Accounting Policies
Definition of Accounting Estimate
Deferred Tax Related to Assets and Liabilities
Arising from a Single Transaction
Classification of liabilities as current or non-current
Lease Liability in a Sale and Leaseback
Effective date
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2024
1 January 2024
None are expected to have a material effect on the Group Financial Statements.
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of Alien Metals Limited and the Financial Statements
of all of its subsidiary undertakings made up to 31 December 2022.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Where an entity does not have returns, the Group’s power over the investee is assessed as to whether control
is held. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
30
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Below is a summary of subsidiaries of the Group:
Name of subsidiary
Compañía Minera
Estrella de Plata S.A.
de C.V.
Place of
business
Parent company
Share capital
held
Principal activities
Mexico
Alien Metals Ltd
100%
Exploration
Arian Silver
Corporation (UK) Ltd
England and
Wales
Arian Silver (Holdings)
Limited
England and
Wales
Alien Metals Ltd
100%
Holding
Alien Metals Ltd
100%
Holding
A.C.N. 643 478 371
Pty Ltd
Iron Ore Company of
Australia Pty Ltd
Alien Metals Australia
Pty Ltd
Australia
Alien Metals Ltd
100%
Australia
Alien Metals Ltd
100%
Australia
Alien Metals Ltd
100%
Exploration
Exploration
Exploration
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated on
consolidation. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
2.4 Going Concern
These financial statements have been prepared on the going concern basis. The Group’s business activities, together with
the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement and the
Strategic Report.
As at 31 December 2022, the Group had cash and cash equivalents of $2,177,000. The Directors have prepared cash flow
forecasts to 30 June 2024 which take account of the cost and operational structure of the Group and Parent Company,
planned exploration and evaluation expenditure, licence commitments and working capital requirements. These forecasts
indicate that the Group and Parent Company’s cash resources are not sufficient to cover the projected expenditure for the
period for a period of 12 months from the date of approval of these financial statements.
In common with many exploration and evaluation entities, the Company will need to raise further funds within the next 12
months in order to meet its expected liabilities as they fall due and progress the Group into construction and eventual
production of revenues. The Directors are confident in the Company’s ability to raise additional funds as required, from existing
and/or new investors, within the next 12 months.
Given the Group and Parent Company’s current cash position and its demonstrated ability to raise capital, the Directors have
a reasonable expectation that the Group and Parent Company has adequate resources to continue in operational existence
for the foreseeable future.
Notwithstanding the above, these circumstances indicate that a material uncertainty exists that may cast significant doubt on
the Group and Parent Company’s ability to continue as a going concern and, therefore, that the Group and Parent Company
may be unable to realise their assets or settle their liabilities in the ordinary course of business. As a result of their review,
and despite the aforementioned material uncertainty, the Directors have confidence in the Group and Parent Company’s
forecasts and have a reasonable expectation that the Group and Parent Company will continue in operational existence for
the going concern assessment period and have therefore used the going concern basis in preparing these consolidated
financial statements. The auditors make reference to going concern by way of a material uncertainty in their report.
31
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
2.5 Segment 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, has been identified as the Board of Directors that makes strategic decisions.
Segment results, include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
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.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the ‘functional currency’). The functional currency of the Company is Pounds
Sterling, the functional currency of the Australian subsidiaries is Australian Dollars and Mexican subsidiary Mexican pesos.
The Financial Statements are presented in US dollar, rounded to the nearest thousand.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income.
(c) Group companies
The results and financial position of all the Group’s entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
•
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date
of that statement of financial position;
•
income and expenses for each statement of comprehensive income presented are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
•
all resulting exchange differences are recognised in other comprehensive income where material.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary
items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future,
are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the
income statement as part of the gain or loss on sale.
2.7 Intangible Assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be
successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation
assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological,
geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical
feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when
the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation but are assessed annually for impairment. The assessment
is carried out by allocating exploration and evaluation assets to cash generating units (“CGU’s”), which are based on specific
projects or geographical areas. The CGU’s are then assessed for impairment using a variety of methods including those
specified in IFRS 6.
Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Consolidated Statement of Comprehensive Income.
32
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Exploration and evaluation assets recorded at fair-value on acquisition
Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant
assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is
equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value
of the exploration asset.
During the year, the Company made several acquisitions of which the Directors have treated as asset acquisitions as
explained in Note 9 to these financial statements. Per IFRS 3, an entity shall determine whether a transaction or other event
is a business combination by applying the definition in this IFRS, which requires that the assets acquired and liabilities
assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction
or other event as an asset acquisition. As the acquisitions were not considered to meet the definition of a business combination
under IFRS 3, the Group Financial Statements are prepared as though the group has acquired an asset. The fair value of the
assets were determined by management and the assets were classified as intangible assets given that they represent
exploration and evaluation assets.
2.8 Investment in Subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment
provision.
2.9 Assets Under Construction
Assets under construction are stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Assets under construction are not depreciated until they are completed and brought into use.
All assets are subject to annual impairment reviews. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replacement part is derecognised. All other repairs and maintenance are
charged to the Consolidated Statement of Comprehensive Income during the financial period in which they are incurred.
The asset’s residual value and useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within
‘Other net gains / (losses)’ in the Consolidated Statement of Comprehensive Income.
2.10 Right of Use Assets and Leases
The Group leases certain property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally
include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the
lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The
lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options
and residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any
incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the
commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line
basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease
term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance
charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The
interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance
leases are depreciated over their useful lives. The lease liabilities are shown in Note 11.
Exemptions are applied for short life leases and low value assets, with payment made under operating leases charged to the
Consolidated Statement of Comprehensive Income on a straight-line basis of the period of the lease.
33
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
2.11 Impairment of Non-Financial Assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and
are tested annually for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
Non-financial assets that suffered impairment (except goodwill) are reviewed for possible reversal of the impairment at each
reporting date.
2.12 Financial Assets
(a) Classification
The Group classifies its financial assets in the following categories: at amortised cost including trade receivables and other
financial assets at amortised cost, at fair value through other comprehensive income and at fair value through profit or loss,
loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
(b) Recognition and measurement
Amortised cost
Trade and other receivables are recognised initially at the amount of consideration that is unconditional, unless they contain
significant financing components, in which case they are recognised at fair value. The group holds the trade and other
receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised
cost using the effective interest method.
The group classifies its financial assets as at amortised cost only if both of the following criteria are met:
•
•
the asset is held within a business model whose objective is to collect the contractual cash flows; and
the contractual terms give rise to cash flows that are solely payments of principle and interest.
(c) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to
the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies
the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit
risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases,
the Group may also consider a financial asset to be in default when internal or external information indicates that the Group
is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by
the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows
and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
(d)Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
34
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and
the sum of the consideration received and receivable is recognised in profit or loss. This is the same treatment for a financial
asset measured at fair value through profit and loss.
2.13 Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables. 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.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Trade and other payables
After initial recognition, trade and other payables are subsequently measured at amortised cost using the effective interest
rate (‘EIR method’). Gains and losses are recognised in the statement of profit or loss and other comprehensive income when
the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included as finance costs in the Consolidated Statement of Comprehensive Income.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit
or loss and other comprehensive income.
Fair value
All assets and liabilities for which fair value is measured or disclosed in the consolidated Financial Statements are categorised
within the fair value hierarchy. The fair value hierarchy prioritises the inputs to valuation techniques used to measure fair
value. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments and other
assets and liabilities for which the fair value was used:
-
-
-
level 1: quoted prices in active markets for identical assets or liabilities;
level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and
level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2.14 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.15 Taxation
Tax for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
35
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated Financial Statements. However, the deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that,
at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries,
associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary
difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.
Generally, the group is unable to control the reversal of the temporary difference for associates. Only where there is an
agreement in place that gives the group the ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries,
associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and
there is sufficient taxable profit available against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
There has been no tax credit or expense for the period relating to current or deferred tax.
2.16 Share Capital, and other reserves
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity, as a deduction, net of tax, from the proceeds provided
Other reserves consist of the share option reserve and the foreign exchange translation reserve. See Note 16 for further
detail.
2.17 Share Based Payments
The Group operates a number of equity-settled share-based schemes, under which the entity receives services from
employees or third-party suppliers as consideration for equity instruments (shares, options and warrants) of the Group. The
Group may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled share
based payments is recognised as an expense in the Consolidated Statement of Comprehensive Income or charged to equity
depending on the nature of the service provided or instrument issued. The total amount to be expensed or charged in the
case of options is determined by reference to the fair value of the options or warrants granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a specified time period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to save).
In the case of shares and warrants the amount charged is determined by reference to the fair value of the services received
if available. If the fair value of the services received is not determinable the shares are valued by reference to the market price
and the warrants are valued by reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are expected to vest.
The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the directors revise their estimates of the number of options
that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original
estimates, if any, in the Consolidated Statement of Comprehensive Income or equity as appropriate, with a corresponding
adjustment to the share based payment reserve or warrant reserve in equity.
When the warrants or options are exercised, the Company issues new shares. The proceeds received, net of any directly
attributable transaction costs, are credited to share capital (nominal value) when the warrants or options are exercised.
36
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
2.18 Finance Income and Cost
Finance income and finance costs are recognised using the effective interest rate method.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group’s activities expose it to a variety of financial risks being market risk (including, interest rate risk, currency risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
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: foreign currency risk and price risk.
(a) Foreign currency risks
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:
Pounds sterling
United States dollars
Australian dollars
Canadian dollars
Mexican pesos
Sensitivity Analysis
Liabilities
2022
148,000
37,000
246,000
-
15,000
2021
542,000
-
102,000
-
11,000
Assets
2022
2021
2,256,000
6,436,000
2,000
166,000
-
70,000
20,000
96,000
1,000
3,000
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$
(280,000)
280,000
A 15% variation is considered an appropriate level of sensitivity given recent levels of foreign exchange volatility.
(b) 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. Given the Group has yet to enter production it is not possible to quantify this impact at this stage.
37
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
(c) 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 as there are no interest bearing loans and interest income is
only from cash held with banks.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any
losses from non-performance of these receivables.
The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. No credit limits
were exceeded during the reporting period, and management does not expect any losses from non-performance by these
counterparties.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
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 2022, the Company had cash of $2.1m to settle accounts payable and lease liabilities of $500k. 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.
3.2 Capital Risk 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.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements in conformity with IFRSs requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the Financial Statements and the reported amount of expenses during the year. Actual results may vary from the
estimates used to produce these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are not limited to:
Recognition and Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2022 of $15,639,000 (2021: $5,939,000): refer to
Note 8 for more information. During the year asset acquisitions with a carrying value of $7,688,000 were recognised, refer to
38
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Note 9 for more information. The Group has a right to renew exploration permits and the asset is only depreciated once
extraction of the resource commences. Management tests annually whether exploration projects have future economic value
in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either
a consultant or senior company geologist to determine if the exploration results returned during the year warrant further
exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration the
expected costs of extraction, long term metal prices, anticipated resource volumes and supply and demand outlook. In the
event that a project does not represent an economic exploration target and results indicate there is no additional upside, a
decision will be made to discontinue exploration.
Fair value of assets acquired
During the year the group acquired a number of interests in different projects and these acquisitions did not fall within the
scope of IFRS 3 but rather IFRS 6. As a result, these assets acquired were required to initially be recognised as fair value.
The Directors assessed the fair value of all project interests acquired as being equal to the fair value of the consideration to
acquire said interests in projects. See note 9 for further details
Share based payment transactions
The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as
part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for
shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in
Note 17.
5. Segmental Information
As at 31 December 2022, the Group operates in three geographical areas, the UK, Mexico and Australia. The Company
operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Australia
and Mexico relate to exploration and evaluation work. The reports used by the chief operating decision maker are based on
these geographical segments.
The Group generated no revenue during the year ended 31 December 2022 (2021: $Nil).
2022
Administrative expenses
Other gains/(losses)
Finance income
Australia
(171,000)
-
-
Mexico
$
UK
$
Total
$
(98,000)
-
(2,083,000)
(30,000)
(2,352,000)
(30,000)
-
7,000
7,000
Operating loss from continued operations per
reportable segment
Reportable segment assets
Reportable segment liabilities
Reportable segment net assets
(171,000)
(98,000)
(2,106,000)
(2,375,000)
15,660,000
(291,000)
15,369,000
783,000
(15,000)
768,000
2,163,000
18,606,000
(157,000)
2,006,000
(463,000)
18,143,000
Segment assets and liabilities are allocated based on geographical location.
39
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
2021
Administrative expenses
Operating loss
Net finance charges
Loss for the year attributable to equity
shareholders of the parent
Reportable segment assets
Reportable segment liabilities
Reportable segment net assets
6. Expenses by Nature
Directors’ fees (Note 20)
Employee wages and salaries
Fees payable to the Company’s auditors for the audit of the consolidated
financial statements
Professional, legal and consulting fees
Insurance
Office and administrative expenses
Depreciation
Travel and subsistence
Share option expense
Other expenses
Foreign exchange movement
Total administrative expenses
7. Taxation
Australia
$
Mexico
$
UK
$
Total
$
(95,000)
(95,000)
-
(107,000)
(107,000)
-
(2,053,000)
(2,053,000)
(3,000)
(2,255,000)
(2,255,000)
(3,000)
(95,000)
(107,000)
(2,056,000)
(2,258,000)
3,650,000
(102,000)
3,548,000
71,000
(11,000)
9,336,000
(673,000)
60,000
8,663,000
13,057,000
(786,000)
12,271,000
2022
$
438,000
307,000
59,000
962,000
82,000
90,000
102,000
133,000
192,000
42,000
(55,000)
2021
$
382,000
261,000
35,000
922,000
52,000
90,000
-
14,000
166,000
159,000
174,000
2,352,000
2,255,000
Group
2022
$
2021
$
Loss before tax from continued operations
(2,375,000)
(2,258,000)
Income tax using the weighted corporation tax rate 18.6% (2021: 19%)
(442,000)
(429,000)
Expenditure not deductible for tax purposes
Effect of differing tax rates across jurisdictions
Net tax effect of losses carried forward on which no deferred tax asset
is recognised
Income tax for the year
57,000
-
385,000
-
122,000
307,000
-
-
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 18.6% (2021: 19%) used is a combination of the 19% standard rate of corporation
tax in the UK, 25% Australian corporation tax and 30% Mexican tax rate. The Group has accumulated tax losses of
approximately $30,459,000 (2021: $28,389,000) available to carry forward against future taxable profits.
40
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Under IFRS, a net deferred tax asset 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.
8.
Intangible Assets
Exploration & Evaluation Assets at Cost and Net Book Value
Balance as at 1 January
Additions
Asset acquisitions (Note 9)
Foreign exchange differences
As at 31 December
2022
$
5,939,000
3,029,000
7,688,000
(1,017,000)
15,639,000
2021
$
3,641,000
2,432,000
-
(134,000)
5,939,000
Deferred exploration costs relate to the initial acquisition of the licences and subsequent exploration expenditure incurred in
evaluating the projects.
The additions in the year relate to the following license/project acquisitions:
• Acquisition of 100% of Munni Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia
• Acquisition of 100% of the Vivash Gorge Iron Ore Project in the Pilbara region of Western Australia from ASX-listed
Zenith Minerals Ltd
• Acquisition 90% of the Hancock and Brockman iron ore projects in the Pilbara region of Western Australia from
Windfield Metals Pty Ltd
In accordance with IFRS 6, the Directors undertook an assessment of the following areas and circumstances which could
indicate the existence of impairment:
• The Group’s right to explore in an area has expired or will expire in the near future without renewal.
• No further exploration or evaluation is planned or budgeted for.
• A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a
commercial level of reserves.
• Sufficient data exists to indicate that the book value may not be fully recovered from future development and production.
The Directors do not consider the assets to be impaired.
9. Acquisition of Exploration and Evaluation Assets
During the year, the Company acquired the following projects (together the “Projects”):
• Munni Munni Platinum Group Metals and Gold Project
• Vivash Gorge Iron Ore Project
• Hancock and Brockman iron ore projects
The Directors have treated the Projects as asset acquisitions. As the acquisitions were not considered to meet the definition
of a business combination under IFRS 3 and therefore they judged the fair value of the assets acquired to be equal to the fair
value of the consideration.
In accordance with IFRS 3, "Business Combinations," a business combination is defined as a transaction or event where an
acquirer obtains control over one or more businesses. Control is typically achieved through the acquisition of shares or other
forms of ownership interest. On the other hand, an asset acquisition refers to a transaction where the acquirer obtains control
over a set of identifiable assets and liabilities that do not constitute a business.
As per the above it is deemed that the Projects are all asset acquisitions due to the following reasons:
•
•
•
•
•
These acquisitions were of exploration licenses rather than businesses.
There were no processes in place to generate outputs independently.
There was no workforce acquired as part of the acquisitions.
There was no market relationships or presence as these are license tenements.
The fair value of the assets is deemed to be the value paid by Alien Metals which was done at arms length
41
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Munni Munni
On 22 March 2022, the Company announced that it had entered into an acquisition agreement to acquire 100% of Munni
Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia. The total consideration of $5,318,000
was satisfied as follows:
•
•
•
by the issue of 138,703,396 new Ordinary Shares to the sellers at a price of 0.7935 pence per Ordinary Share for a
total of USD $1,383,000.
by the issue of 358,617,818 new Ordinary Shares to the sellers at a price of 0.699 pence per Ordinary Share for a
total of USD $3,576,000.
$500,000 AUD in cash consideration (USD $359,000)
The consideration was based on an agreed price between the Company and vendor. The fair value assigned to the intangible
assets is equal to the fair value of the consideration being $5,318,000
Vivash Gorge
On 20 June 2022, the Company announced that it had entered into an acquisition agreement to acquire 100% of the Vivash
Gorge Iron Ore Project in the Pilbara region of Western Australia from ASX-listed Zenith Minerals Ltd. The total consideration
of $68,000 USD was satisfied by the issue of 7,827,883 Ordinary Shares of no par value were issued for 0.7272 pence per
share.
The Directors conclusion was that the transaction was an asset acquisition. The fair value assigned to the intangible assets
is equal to the fair value of the consideration being $68,000.
In addition, Zenith Minerals Ltd is entitled to performance shares contingent on certain milestones, and a royalty of
US$1.00/dwt (Dry Weigth Tonnes) of the quantity of shipped ore derived from the area within the boundaries of the Vivash
Gorge license area. The milestones are as follows:
•
•
•
that number of Shares equal to the value of A$50,000 at a deemed price equal to the VWAP of Shares in the 10
trading days prior to the release of an announcement on the London Stock Exchange (LSE) confirming an initial,
economic direct shipping ore (DSO) resource being defined at the area covered by the Licence, reported in
accordance with the JORC Code and estimated (or based on documentation prepared) by a Competent Person as
defined by the JORC Code.
that number of Shares equal to the value of A$100,000 at a deemed price equal to the VWAP of the Shares in the
10 trading days prior to the release of an announcement on the LSE confirming the conversion of the Licence from
an exploration licence to a mining licence; and
that number of Shares equal to the value of A$200,000 at a deemed price equal to the VWAP of the Shares in the
10 trading days prior to the release of an announcement on the LSE confirming an economic, > 10Mt DSO resource,
reported in accordance with the JORC Code and estimated (or based on documentation prepared) by a Competent
Person as defined by the JORC Code.
Hancock and Brockman
On 20 December 2022, the Company announced that it had entered into an acquisition agreement to acquire 90% of the
Hancock and Brockman iron ore projects in the Pilbara region of Western Australia from Windfield Metals Pty Ltd. The total
consideration of $1,834,000 USD was satisfied as follows:
• by the issue of 260,000,000 new Ordinary Shares to the sellers at a price of 0.7935 pence per Ordinary Share for a
total of USD $1,414,000
• by the issue of 100,000,000 Warrants exercisable at 1 pence on or before 31 December 2025 valued at $347,000
USD
• £60,000 GBP in cash consideration (USD $73,000)
The consideration was based on an agreed price between the Company and vendor. The fair value assigned to the intangible
assets is equal to the fair value of the consideration being $1,834,000.
Prior to the above, on 18 February 2022, the Company was required to issue certain securities to Windfield as agreed on 26
February 2020 as part of the consideration for the acquisition of a 51% interest in the Hamersley Project from Windfield. The
agreed consideration includes the issuance of 100,000,000 performance shares to be issued at a Deemed Issue Price of
0.11p per share in two equal tranches convertible on a 1-for-1 basis into ordinary shares of the Company upon achievement
of the following performance hurdles:
42
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
•
•
10,000,000 tonne JORC inferred resource at greater than 54% Iron “Fe” (“Hurdle 1”); and
20,000,000 JORC inferred resource at greater than 54% Iron “Fe” (“Hurdle 2”).
The first hurdle was achieved in September 2021, Windfield has requested conversion of 50,000,000 performance shares
into Ordinary Shares for a total value of $468,000 USD. The directors did not consider the second performance hurdle to be
satisfied as a 20,000,000 JORC resource has not yet been confirmed.
Further, as part of the acquisition agreement, a contingent performance payment will be payable on certain conditions being
met as follows:
•
•
•
In the event of a Tenement Sale: 50% of the value uplift attributable to the project;
In the event of an IPO/Spin-out event on a recognised stock exchange: 50% of the value uplift attributable to the
project; or
In the event a decision to mine is made: 50% of the project valuation uplift attributable to the projects.
In each case, the uplift payments are reduced by 50% of the incurred project expenditure.
10. Assets under Construction
Balance as at 1 January
Additions
As at 31 December
2022
$
291,000
164,000
455,000
2021
$
-
291,000
291,000
Mining plant equipment, recertification costs and the related transport costs capitalised as a Mining asset in A.C.N 643 478
371 Pty Ltd in relation to the headframe and associated equipment for the Elizabeth Hill Silver mine.
11. Right of use assets and lease liability
At the reporting date, the Group had their London offices under lease agreement. The agreement was signed on 21 April
2021 and covers office rent for the period from 1 May 2021 until 28 Feb 2023, with monthly payments of £6,916 (US$9,514)
and a deposit of £20,748 (US$28,542). The Group recognised the following right of use asset and related lease liability in
respect of this lease agreement:
Right of use asset
Balance as at 1 January
Additions
Depreciation
Foreign exchange differences
As at 31 December
2022
$
131,000
-
(102,000)
(12,000)
17,000
2021
$
-
209,000
(76,000)
(2,000)
131,000
The depreciation charge of $102,000 (2021: $76,000) is recognised under Administration Expenses.
43
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Lease liability
Balance as at 1 January
Additions
Rental payments in the reporting period
Foreign exchange differences
As at 31 December
A maturity analysis of the undiscounted minimum lease payments due are as follows:
No later than one year
As at 31 December
12. Trade and Other Receivables
VAT receivable
Prepayments
Other receivables
As at 31 December
2022
$
131,000
-
(102,000)
(12,000)
17,000
2021
$
-
209,000
(76,000)
(2,000)
131,000
$
17,000
17,000
2022
$
133,000
95,000
90,000
318,000
2021
$
-
80,000
185,000
265,000
Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values
stated above. These assets, excluding prepayments, are the only form of financial asset within the Group, together with cash
and cash equivalents.
The carrying amounts of the Group‘s trade and other receivables are denominated in the following currencies:
UK Pounds
US Dollars
Australian Dollars
Mexican Peso
As at 31 December
2022
$
173,000
-
75,000
70,000
318,000
2021
$
167,000
-
61,000
37,000
265,000
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.
The Group does not hold any collateral as security. All trade and other receivables are considered fully recoverable and
performing.
44
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
13. Cash and Cash Equivalents
Cash at bank and in hand
2,177,000
6,431,000
2022
$
2021
$
14. Trade and Other Payables
Trade payables
Other payables
Accrued expenses
As at 31 December
2022
$
272,000
69,000
105,000
446,000
2021
$
451,000
-
204,000
655,000
The carrying amounts of the Group‘s trade and other payables are denominated in the following currencies:
UK Pounds
US Dollars
Mexican Peso
Australian Dollars
As at 31 December
2022
$
148,000
37,000
15,000
246,000
446,000
2021
$
542,000
-
11,000
102,000
655,000
45
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
15. Share Capital and Share Premium
The Company is authorised to issue an unlimited number of common shares of no par value.
Issued share capital
Group
Number of shares
Total
$
At 1 January 2021
3,420,791,048
65,181,000
Issue of Ordinary Shares on exercise of warrants – 15 January 2021
Issue of Ordinary Shares on project acquisition – 10 February 2021
Issue of Ordinary Shares on exercise of warrants – 23 March 2021
Issue of Ordinary Shares on exercise of warrants – 13 May 2021
Issue of Ordinary Shares on exercise of warrants – 20 August 2021
Issue of Ordinary Shares on exercise of options – 10 September 2021
Issue of Ordinary Shares on exercise of warrants – 20 September 2021
Issue of Ordinary Shares on exercise of warrants – 19 November 2021
Issue of Ordinary Shares for cash – 22 November 2021
Issue Costs – 22 November 2021
At 31 December 2021
Share issue costs – 1 January 2022
Issue of Ordinary Shares on exercise of warrants – 21 January 2022
Issue of Ordinary Shares on exercise of options – 21 January 2022
Issue of Ordinary Shares on exercise of warrants – 10 February 2022
Issue of Ordinary Shares on exercise of warrants – 10 February 2022
Issue of Ordinary Shares as consideration for asset acquisition – 23 February 2022 (Note 9)
Issue of Ordinary Shares on exercise of warrants – 14 March 2022
2,000,000
100,000
2,222,222
4,200
35,332
8,000
1,000
9,000
-
-
5,000,000
17,000
40,600
1,400,000
1,000
5,000
470,588,223
5,502,000
-
(302,000)
3,902,181,625
70,422,000
-
202,247,000
1,100,000
1,111,111
816,666
50,000,000
3,333,333
(60,000)
367,000
4,000
5,000
3,000
467,000
12,000
Issue of Ordinary Shares as consideration for asset acquisition – 22 March 2022 (Note 9)
138,703,396
1,384,000
Issue of Ordinary Shares as consideration for asset acquisition – 22 March 2022 (Note 9)
358,617,818
3,577,000
Issue of Ordinary Shares on exercise of warrants – 22 March 2022
Issue of Ordinary Shares on exercise of warrants – 22 March 2022
Issue of Ordinary Shares on exercise of warrants – 13 April 2022
Issue of Ordinary Shares on exercise of warrants – 13 April 2022
Issue of Ordinary Shares on exercise of warrants – 13 April 2022
Issue of Ordinary Shares on exercise of options – 26 April 2022
Issue of Ordinary Shares as consideration for asset acquisition – 20 June 2022 (Note 9)
Share issue costs – 7 September 2022
66,666,666
26,610,661
14,000
122,267
984,375
2,000,000
7,827,883
-
153,000
73,000
1,000
1,000
3,000
7,000
69,000
(12,000)
Issue of Ordinary Shares for cash – 8 September 2022
300,000,000
1,814,000
Share issue costs – 28 September 2022
Share issue costs – 28 September 2022
Issue of Ordinary Shares on exercise of options – 1 December 2022
-
-
2,500,000
(29,000)
(99,000)
8,000
Issue of Ordinary Shares as consideration for asset acquisition – 20 December 2022 (Note 9)
260,000,000
1,416,000
At 31 December 2022
5,324,836,801
79,586,000
46
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
On 21 January 2022, 202,247,000 Ordinary Shares of no par value were issued for cash at 0.15 pence each for the exercise
of warrants. The share price at the time of exercise was 0.68 pence per share.
On 21 January 2022, 1,100,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options.
The share price at the time of exercise was 0.68 pence per share.
On 10 February 2022, 1,111,111 Ordinary Shares of no par value were issued for 0.30 pence each for the exercise of
warrants. The share price at the time of exercise was 0.97 pence per share.
On 10 February 2022, 816,666 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants.
The share price at the time of exercise was 0.97 pence per share.
On 23 February 2022, 50,000,000 Ordinary Shares of no par value were issued for 0.78 pence each as part of the
consideration due to Winfield Metals Pty Ltd.
On 14 March 2022, 3,333,333 Ordinary Shares of no par value were issued for for 0.3 pence per share for the exercise of
warrants. The share price at the time of exercise was 0.82 pence per share.
On 22 March 2022, 138,703,396 Ordinary Shares of no par value were issued at 0.7935 pence per share as part of the
consideration for the acquisition of Munni Munni
On 22 March 2022, 358,617,818 Ordinary Shares of no par value were issued for 0.699 pence per share as part of the
consideration for the acquisition of Munni Munni
On 22 March 2022, 66,666,666 Ordinary Shares of no par value were issued at 0.19 pence per share for the exercise of
warrants. The share price at the time of exercise was 0.82 pence per share.
On 22 March 2022, 26,610,661 Ordinary Shares of no par value were issued for 0.25 pence per share for the exercise of
warrants. The share price at the time of exercise was 0.82 pence per share.
On 13 April 2022, 14,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The
share price at the time of exercise was 0.80 pence per share.
On 13 April 2022, 122,267 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The
share price at the time of exercise was 0.80 pence per share.
On 13 April 2022, 984,375 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The
share price at the time of exercise was 0.80 pence per share.
On 26 April 2022, 2,000,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options.
The share price at the time of exercise was 0.77 pence per share.
On 20 June 2022, 7,827,883 Ordinary Shares of no par value were issued for for 0.73 pence per share as part of the
consideration for the acquisition of Vivash Gorge.
On 8 September 2022, 300,000,000 Ordinary Shares of no par value were issued for 0.5 pence per share for cash.
On 1 December 2022, 2,500,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options
The share price at the time of exercise was 0.52 pence per share.
On 20 December 2022, 260,000,000 Ordinary Shares of no par value were issued for 0.7935 pence per Ordinary Share as
part of the consideration for the acquisition of Hancock and Brockman.
16. Other reserves
Foreign currency translation reserve
Share based payment reserve
Warrant reserve
2022
$
694,000
771,000
739,000
2021
$
2,225,000
1.179,000
865,000
47
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Foreign currency translation reserve – the foreign currency translation reserve represents the effect of changes in exchange
rates arising from translating the Financial Statements of subsidiary undertakings into the Company’s presentational currency.
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 to Note 17 for more information.
The warrants reserve arises on the issue of warrants. Refer to Note 17 for further information.
17. Share Based Payments
Share options outstanding at 31 December 2022 have the following expiry dates and exercise prices:
Grant date
2017
2018
2019
2019
2019
2019
2019
2020
2020
2020
2021
2021
2021
2022
Total
Expiry date
09-Feb-22
14-May-23
28-Mar-24
28-Mar-24
28-Mar-24
28-Mar-24
28-Mar-24
30-Aug-23
30-Aug-23
30-Aug-23
21-Oct-24
21-Oct-24
21-Oct-24
26-Sep-26
Exercise price
in £ per share
0.0100
0.0025
0.0025
0.0025
0.0022
0.0030
0.0045
0.0045
0.0050
0.0055
0.0100
0.0115
0.0145
0.008 – 0.014
Number
2022
2021
-
10,642,373
-
12,342,509
3,000,000
3,000,000
4,000,000
18,750,000
18,750,000
22,500,000
10,000,000
10,000,000
15,000,000
345,000,000
472,984,882
1,250,000
15,142,373
1,100,000
12,342,509
3,000,000
3,000,000
4,000,000
18,750,000
18,750,000
22,500,000
10,000,000
10,000,000
15,000,000
-
134,834,882
Warrants outstanding at 31 December 2022 have the following expiry dates and exercise prices:
Grant date
2019
2020
2020
2020
2020
2020
2020
2020
2020
2021
2022
2022
Total
Expiry date
31-Jan-22
10-Mar-22
10-Mar-22
18-May-23
10-Sep-23
18-May-23
10-Mar-22
19-Mar-22
30-Nov-23
17-Nov-24
14-Sept-25
31-Dec-25
Number
Exercise
price in £
per share
0.0015
0.003
0.0015
0.0012
0.006
0.015
0.0025
0.0019
0.013
0.085
0.0025
0.0025
2022
2021
-
-
-
2,625,000
12,000,000
11,208,125
-
-
13,600,000
23,529,401
7,200,000
100,000,000
170,162,526
202,247,000
37,444,444
3,333,333
2,625,000
12,000,000
11,208,125
40,495,680
66,666,666
13,600,000
-
-
-
389,620,428
The estimate of the fair value of the share options and warrants is measured based on the Black-Scholes model. The
parameters used for options and warrants granted in the year ended 31 December 2022 are detailed below:
48
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
Granted on:
Life (years)
Exercise price (pence per share)
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Total fair value (£000)
Granted on:
Life (years)
Exercise price (pence per share)
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Total fair value (£000)
2022 Options
26/9/2022
3 years
8p
1.7%
12.8%
-
20%
5
2022 Options
26/9/2022
3 years
12p
1.7%
12.8%
-
20%
1
2022 Options
26/9/2022
3 years
10p
1.7%
12.8%
-
20%
1
2022 Options
26/9/2022
3 years
14p
1.7%
12.8%
-
20%
1
2022 Warrants
19/12/2022
3 years
2.5p
3.49%
69%
-
20%
329
The expected volatility is based on the historical share prices over the prior 6 month period of the Company share price.
The movement of share options for the year to 31 December 2022 is shown below:
As at 1 January
Granted (not yet vested)
Exercised
Expired
2022
2021
Weighted
average
exercise
price (£)
0.0100
0.0100
0.0100
0.0100
Number
134,834,882
345,000,000
(5,600,000)
(1,250,000)
Number
104,834,882
35,000,000
(5,000,000)
-
Outstanding as at 31 December
472,984,882
0.0100
134,834,882
Weighted
average
exercise
price (£)
0.0041
0.0124
0.0025
-
0.0100
Exercisable at 31 December
127,984,882
0.0100
104,834,882
0.0100
The movement of warrants for the year to 31 December 2022 is shown below:
As at 1 January
Granted
Exercised
Expired
Outstanding as at 31 December
Exercisable at 31 December
2022
2021
Weighted
average
exercise
price (£)
0.0024
0.0025
0.0024
0.0024
0.004
0.004
Weighted
average
exercise
price (£)
Number
395,322,602
0.0024
-
-
(5,702,354)
0.0025
-
389,620,248
389,620,248
-
0.0024
0.0024
Number
389,620,248
130,729,411
(301,906,079)
(48,281,064)
170,162,516
170,162,516
The weighted price and life for warrants and options for the year end 31 December 2022 is as follows:
49
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
2022
Range of
exercise
prices ($)
0.04-0.6
Weighted
average
exercise
price ($)
Weighted
average
remaining life
expected
(years)
Weighted
average
remaining life
contracted
(years)
Number of
shares
0.0083
643,174,418
2.29
2.29
The total fair value charged to the statement of comprehensive income for the year ended 31 December 2022 and included
in administrative expenses was $192,000 (2021: $166,000).
Options and warrants exercised in 2022 resulted in 307,506,073 shares being issued (2021: 10,702,000) at a weighted
average price of £0.0025 each (2021: £0.0025).
During the year 178,000,000 incentive options were conditionally granted to certain directors and management and are to be
awarded on the basis of certain milestones being met as follows:
IOCA Offtake
IOCA Finance Term Sheet
•
•
• Mining Licence Approval
• First Ore Mined
• 4 500,000 Fe Tonnes Exported
• 1,000,000 Fe Tonnes Exported
Performance Conditions one through to five have a 24-month vesting period and Performance Condition six has a 36-month
vesting period with an exercise price yet to be determined. The estimate of the fair value of the incentive options is measured
based on the Black-Scholes model. The parameters used are detailed below:
Granted on:
Life (years)
Exercise price (pence per share)
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Total fair value (£000)
2022 Options
14/11/2022
2 years
4.5p
1.7%
16.5%
-
-
46
Based on the probability of the milestones being reached in 2022 and the fair value derived, the charge for 2022 is deemed
to be immaterial and therefore not recognised for the year ended 31 December 2022.
18. Net finance charges
Finance charges
Interest income
Group
2022
$
-
7,000
7,000
2021
$
(4,000)
1,000
(3,000)
50
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
19. Employees
Staff costs (excluding Directors)
Salaries and wages
Social security costs
Pensions
Group
2022
$
2021
$
256,000
243,000
13,000
38,000
11,000
7,000
307,000
261,000
The average monthly number of employees during the year was 6 (2021: 5).
20. Directors' Remuneration
2022
Executive Directors
B Brodie Good
R McIllree
Non-executive Directors
D J Smith
J L Battershill
M C Culbert
Short Term
Employment
benefits
$
Share based
payment
$
Total
$
210,000
27,000
74,000
63,000
32,000
-
-
210,000
27,000
-
192,000
-
74,000
255,000
32,000
406,000
192,000
598,000
Employers tax contributions of $31,000 have not been included in the above. During the year, Jonathan Battershill was issued
35,000,000 options with fair value charged to the statement of comprehensive income for $192,000.
2021
Executive Directors
B Brodie Good
Non-executive Directors
D J Smith
J L Battershill
M C Culbert
Short Term
Employment
benefits
$
Share based
payment
$
Total
$
254,000
22,000
276,000
67,000
38,000
23,000
-
67,000
136,000
4,000
174,000
27,000
382,000
162,000
544,000
51
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
21. Loss per Share
The calculation of the total basic losses per share of 0.050 cents (2021: loss 0.065 cents) is based on the losses attributable
to equity owners of the group of $2,375,000 (2021: $2,258,000) and on the weighted average number of ordinary shares of
4,712,310,829 (2021: 3,476,524,868) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise of share options or
warrants would be to decrease the loss per share.
22. Commitments
(a) Work programme commitment
As at 31 December 2022, Alien Metals owned 16 mineral exploration licenses in Australia and 9 mineral exploration licenses
in Mexico. These licences include commitments to pay annual licence fees and minimum spend requirements as follows:
Less than 1 year
1 to 5 years
Total
(b) Lease agreements
License
fees
$
Minimum
spend
requirements
$
Total
$
152,000
609,000
761,000
758,000
3,257,000
4,015,000
910,000
3,866,000
4,776,000
The Group has their London offices under lease agreement. The agreement was signed on 21 April 2021 and covers office
rent for the period from 1 May 2021 until 28 Feb 2023, with monthly payments of £6,916 (US$9,514) and a deposit of £20,748
(US$28,542). The lease payments have been treated in line with IFRS 16. As at 31 December 2022, $19,028 remained
payable in respect of this lease.
23. Related Party Transactions
Transactions with key management personnel
During the year ended 31 December 2022 the Company entered into the following transactions involving key management
personnel:
During the year Orwellian Investments, a company in which Daniel Smith is a director, charged the Company a total of $52,000
(2021: $49,524) for directors’ fees. There was $3,000 outstanding balance at 31 December 2022 (2021: $5,404).
During the year iLaw, a company in which Mark Culbert is a partner, charged the Company a total of $4,320 (2021: $17,498)
for legal fees. There was a balance of no outstanding at 31 December 2022 (2021: $4,451).
During the year JJB Advisory, a company in which Jonathan Battershill is a director, charged the Company a total of $33,000
(2021: $28,889) for corporate advisory fees. There was no outstanding balance at 31 December 2022 (2021: nil).
Daniel Smith and Guy Robertson are directors of Artemis Resources Ltd. During the year, Alien acquired of 70% of the Munni
Munni project from Artemis Resources Ltd.
24. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
25. Events after the Reporting Date
52
ALIEN METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
On 12 January 2023, following the receipt of an Exercise Notice, the Company issued 2,500,000 ordinary shares of no par
value in the capital of the Company at an issue price of 0.25 pence per share.
On 26 April 2023, the Company reported its JORC Mineral Resource Estimate for the Hancock Project of 9.1Mt at 60.3% Fe
and JORC Probable Ore Reserve 1.9Mt at 60.2% Fe.
On 5 May 2023, the Company’s wholly owned subsidiary, Iron Ore Company of Australia Pty Ltd, acquired Mallina Exploration
Pty Ltd for a total consideration of $30,000 AUD payable with $10,000 AUD upon the Execution date of the agreement and
$20,000 AUD within 15 days of a Mining licence being granted. At this stage the directors consider the acqusition to be outside
the scope of IFRS3, as Mallina Exploration Pty Ltd is not deemed to be a business under IFRS3 and therefore will be classified
as an Asset Acqusition.
On 17 May 2023, following the receipt of an Exercise Notice, the Company issued 8,142,373 ordinary shares of no par value
in the capital of the Company at an issue price of 0.25 pence per share
53