Altius Minerals
Annual Report 2019

Plain-text annual report

ALTUS STRATEGIES PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Company Registration No. 10746796 (England and Wales) Altus Strategies Plc Contents 31 December 2019 | Annual Report Contents .......................................................................................................................................................... 2 Company Information ...................................................................................................................................... 3 Key Highlights .................................................................................................................................................. 5 Chairman’s Statement ..................................................................................................................................... 6 Business Overview ........................................................................................................................................... 7 Chief Executive’s Review ............................................................................................................................... 10 Strategic Report ............................................................................................................................................. 17 Key Performance Indicators .............................................................................................................................. 17 Principal Risks and Uncertainties ...................................................................................................................... 18 Corporate and Social Responsibility .................................................................................................................. 21 Financial Review ............................................................................................................................................ 23 Review of Operations by Country .................................................................................................................. 25 Projects held by the Group or operating under joint ventures .......................................................................... 25 Projects in which the Group holds purely a royalty interest ............................................................................. 32 Corporate Governance Report ....................................................................................................................... 34 Directors’ Report ........................................................................................................................................... 43 Directors’ Remuneration Report .................................................................................................................... 47 Statement of Directors’ Responsibilities ........................................................................................................ 52 Independent Auditor’s Report to the Members of Altus Strategies plc in Respect of Canadian National Instrument 52-107 ......................................................................................................................................... 57 Group Statement of Comprehensive Income ................................................................................................. 61 Group Statement of Financial Position .......................................................................................................... 62 Company Statement of Financial Position ..................................................................................................... 63 Group Statement of Changes in Equity .......................................................................................................... 64 Company Statement of Changes in Equity ..................................................................................................... 65 Group Statement of Cash Flows ..................................................................................................................... 66 Company Statement of Cash Flows ................................................................................................................ 67 Notes to the Financial Statements ................................................................................................................. 68 Page | 2 Altus Strategies Plc 31 December 2019 | Annual Report Company Information Board Non-executive Chairman Chief Executive Officer Executive Director Non-executive Director Non-executive Director Non-executive Director David Netherway Steven Poulton Matthew Grainger Robert Milroy Michael Winn Karim Nasr (appointed 06 April 2020) Chief Financial Officer Martin Keylock Company Secretary Martin Keylock Company number 10746796 Registered office Independent Auditor Bankers The Orchard Centre 14 Station Road Didcot Oxfordshire OX11 7LL United Kingdom PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD United Kingdom HSBC Bank Plc 186 Broadway Didcot Oxfordshire OX1 1BE United Kingdom Nominated Adviser & Broker SP Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street London W1S 2PP United Kingdom Page | 3 Altus Strategies Plc Solicitors 31 December 2019 | Annual Report Phanar Legal Limited 14 Old Queen Street London SW1H 9HP United Kingdom Northwest Law Group Suite 704, 595 Howe Street Vancouver, British Columbia V6C 2T5 Canada Registrar (UK) Computershare Investor Services Plc The Pavilions Bridgwater Road Bristol BS13 8AE United Kingdom Registrar (Canada) Computershare Investor Services Inc. 510 Burrard St, 3rd Floor Vancouver, British Columbia V6C 3B9 PR Adviser Canada Blytheweigh 4-5 Castle Court London EC3V 9DL United Kingdom Page | 4 Altus Strategies Plc Key Highlights Corporate highlights: 31 December 2019 | Annual Report - - Joint venture and net smelter return (“NSR”) royalty agreement signed with Glomin Services Ltd on two gold projects in western and southern Mali Sale of two gold projects in western Mali to TSX-V listed Desert Gold Ventures Inc for equity, milestone payments and 2.5% NSR royalty Joint venture with Resolute Mining Ltd on gold project in southern Mali extended by two years - - Option agreement signed on Toura nickel-cobalt project in western Côte d’Ivoire - Discussions with potential joint venture partners across project portfolio - Acquisition of a 2.5% NSR royalty held on a gold project held by the Company’s subsidiary in western Mali (concluded post year-end) - Agreements to terminate joint venture with ASX-listed Canyon Resources Ltd in return for shares in Canyon (initial 15 million shares received post year-end) and to transfer licence under joint venture to Canyon for further shares in Canyon and a royalty Operational highlights: - Grant of Zager copper and gold licence in northern Ethiopia - Gold prospects discovered at Zager project - Gold prospects further defined at Daro project in northern Ethiopia - Drill targets defined at Diba gold project in western Mali Financial highlights: - Strategic Investment Agreement with La Mancha to raise £6.5m / C$11.2m (concluded post year-end) - Non-brokered private placement of £2.4m / C$4.1m (before expenses) in December 2019 - Cash outflow of £1.6m / C$2.7m from operating activities during the year - Cash and marketable securities of £2.5m / C$4.2m (cash £2.2m / C$3.7m and listed equity £0.3m / C$0.5m as at 31 December 2019) Page | 5 Altus Strategies Plc 31 December 2019 | Annual Report Chairman’s Statement Reflection on the year I am delighted to reflect on another exceptionally productive year for Altus. We continued to deliver on the Company’s strategy of building a diversified portfolio of project and royalty interests across Africa. Toward the end of this pivotal year, we announced that a strategic investment agreement had been signed with La Mancha which is a pre-eminent Africa-focused mining investment group. Post the reporting period, this transaction was successfully completed. The Company now has a strong working capital balance sheet including cash of £7.7 million / C$13.5 million as at the date of this report and the support of a significant strategic industry investor. During the period, Altus made a number of discoveries at our existing projects, entered into a joint venture (“JV”) on two of our gold projects in Mali, sold two further gold projects in Mali, agreed to vend our bauxite project in Cameroon to our JV partner and signed an option agreement on our nickel-cobalt application in Côte d’Ivoire. These deals culminated in us generating cash, potential future milestone payments linked to the performance of these projects and five new royalties. We also continued to show a disciplined approach, by dropping ground that we did not have confidence in, to focus on areas with higher geological potential including staking new ground over prospective targets. Management and Board For a company of our size, Altus has a strong senior management, board and corporate governance procedures. During the year we were pleased to further strengthen these with the promotion of Martin Keylock to the position of Chief Financial Officer and Company Secretary. Martin joined Altus as Financial Controller in 2018. Further to the completion of the La Mancha strategic investment, we are also delighted to have welcomed Karim Nasr to the board. Karim is the CEO of La Mancha and I am certain Altus will benefit tremendously from his considerable business acumen and insights. Looking forward At the time of writing the world is facing a human crisis caused by the COVID-19 pandemic. While Altus is well positioned to weather the economic storm, we cannot predict with certainty the outcomes or duration of this very challenging period. I give my best wishes to all our team, our shareholders, our stakeholders and their families during this difficult and uncertain time. As we look towards a brighter future, Altus is in a strong position with a robust treasury, an exceptional shareholder register and a first-class team of resource professionals. I am confident we will continue to deliver on all our objectives as well as exceed expectations. On behalf of the Board, I thank the entire team at Altus for their contributions to such a successful year and I thank our existing and new shareholders for their continued support. “David Netherway” David Netherway Non-Executive Chairman 28 April 2020 Page | 6 Altus Strategies Plc 31 December 2019 | Annual Report Business Overview Our project and royalty generator business model Altus is a resource project and royalty generator that seeks to make and monetise mineral discoveries in Africa. The Company is based in the UK and is dual-listed in the UK (AIM: ALS) and in Canada (TSX-V: ALTS). The Company identifies and acquires geologically prospective exploration licences through its local African subsidiaries, makes new or advances existing discoveries and seeks joint ventures with third parties to take the projects toward production. Altus seeks to receive short term income from project transactions as well as performance milestones from the projects and retains long term royalty interests on each. The business is managed from our UK head office in Oxfordshire and is currently active in Mali, Ethiopia, Morocco, Liberia, Côte d’Ivoire and Cameroon. The business model is designed to create significant, but low-risk exposure for Altus shareholders to the high values which can be created from a potential economic discovery, as well as its future cash flows. In the short term this reduces the Company’s general and administrative costs, while also generating cash and equity income from project level transactions. The royalties generated on the Company’s assets, or which it otherwise acquires, are designed to yield sustainable long-term income for Altus shareholders without them having to assume the technical or financial risks associated with owning equity in a producing mine. As such the model is designed to create a virtuous circle, where our portfolio and income streams continually grow. Our business model Risk diversification is at the heart of the Company’s philosophy, and this is enacted by exploring for a variety of minerals at multiple locations across several jurisdictions. Altus currently has a diversified and growing portfolio of sixteen projects, spanning six countries and across six different commodities. This diversification means that the portfolio is constantly evolving: new licences are added, licences that are not considered to be good prospects are relinquished and those for which exploration and sample analysis indicate that a potentially economic discovery can be made are proactively marketed for a joint venture partnership or outright sale. The Company also seconds its team to manage joint ventures in Page | 7 Altus Strategies Plc 31 December 2019 | Annual Report the early stages, which reduces our costs and ensures exploration continuity on the ground. Our royalty generation pyramid Altus generates projects by selectively acquiring mineral exploration licences and advancing projects through the work of its technical team of exploration geologists. At each level, any projects that prove to be uneconomic are dropped. Successful projects progress up the pyramid toward advanced exploration with JV partners and eventually the definition and monetisation of the resource. As each project matures and develops Altus reduces its ownership, but retains a royalty interest on its future cash generation. Over half of the Company’s portfolio comprises gold projects, the most advanced of which are located in western and southern Mali. Aside from gold, Altus is focused on metals that the Company believes will be critical in the transmission, storage and efficient use of electricity in the coming decade, as the world seeks to decarbonise. Copper will be paramount among these and as such Altus is exploring for economic copper deposits in northern Ethiopia and central Morocco. Other metals such as cobalt, lithium, vanadium and aluminium also have a critical part to play, as will specialist and less well-known rare-earth metals, including neodymium and praseodymium that are used in the high-quality magnets of electric motors. Focus on Africa Altus is focused on Africa where, due to the relative lack of exploration using modern techniques, economic mineral deposits can still be discovered outcropping at surface. According to a recent survey by MinEx Consulting, 24% of global discoveries in the prior decade were found on the continent, despite Page | 8 Altus Strategies Plc 31 December 2019 | Annual Report it being the recipient of only 14% of the global exploration budgets. The same survey reported that deposits in Africa (excluding South Africa) are being discovered at average depths of just 9m, which is much shallower than the average global depth of 78m. In Canada the average discovery depth is over 125m. A growing portfolio of assets across Africa This opportunity to make discoveries across Africa, without recourse to expensive subsurface exploration, geophysical technologies or extensive drilling programmes, means that the Company can potentially generate more value, at greater speed and with lower risk in Africa, than in almost any other part of the world. Given the collective geographical, geological and operational expertise of the Altus management and advisory teams, the board considers that Altus is ideally positioned to exploit this opportunity. Page | 9 Altus Strategies Plc 31 December 2019 | Annual Report Chief Executive’s Review In the last year we have built on our track record of making and monetising discoveries in Africa. Following these transactions, the private placement and the strategic investment from La Mancha, Altus has established an incredibly robust foundation from which to accelerate the growth and value of the business. Introduction I am delighted to report on a highly productive year for Altus, in which we have made discoveries, divested assets through joint ventures, sold assets and grown our portfolio of royalty interests. The year culminated in a £2.4 million (C$4.2 million) private placement and a £6.5 million (C$11.2 million) strategic investment agreement with La Mancha Holding S.à r.l. (“La Mancha”) which closed after the year end. I am confident that the investment by La Mancha will prove transformational for the Company. In this report I review the current extraordinary market conditions, discuss our business model, review the key developments up until the date of this report and set out our objectives for the year ahead. Market conditions At the time of writing, nations across the world are taking unprecedented action in response to the COVID-19 pandemic. First and foremost, Altus puts the welfare of its team and their families as its top priority. We have responded to the situation by repatriating our staff to their home countries and implementing remote working policies in the UK. We are fortunate that there is a considerable amount of desk based ‘remote sensing’ work that has to be completed. This includes the assimilation and analysis of open-source historic reports and data including satellite imagery, in order to define new targets for Altus to explore. This work will be conducted on our existing licences, on new areas within countries where we are already active and also in countries where Altus does not have a presence. While scientists work to generate vaccines, as well as treatments, unprecedented peacetime measures are being imposed to restrict travel and public gatherings in order to protect the most vulnerable. These stringent measures are also designed to alleviate the potentially overwhelming demands on their respective healthcare systems, as well as the professionals working on the front line. The restrictions and the uncertainty as to their likely duration, will have substantial economic ramifications. While raising the capital reserve ratios of investment banks was a key response to the 2008 crisis, few would have envisaged or modelled such a dramatic global economic shock. Central Banks are acting in concert to implement overtly inflationary monetary policies in order to prevent widespread and simultaneous business and personal insolvencies. Such a scenario would prove highly deflationary and lead almost inextricably to global depression and a systemic banking crisis. Interest rates have been slashed to record lows in many countries and ‘liquidity’ is being created (or more directly, new money printed) to purchase government and even corporate bonds and ETFs. In coordination with the Central Banks, many governments are unveiling unprecedented fiscal stimulus packages. These include deferring or underwriting tax and employment costs and are designed to allow companies to remain in business, if not necessarily trading. Energy costs typically represent around 25% of the operating cost of a mine. It is therefore important to note the dispute that erupted in March 2020 between Russia and Saudi Arabia within OPEC, the cartel which seeks to fix global oil prices. The conflict revolved around Saudi Arabia’s desire to cut production Page | 10 Altus Strategies Plc 31 December 2019 | Annual Report in order to sustain prices, as opposed to Russia’s preference to maintain foreign exchange revenues. In response to Russia’s position, Saudi Arabia has seemingly flooded the market with production, causing a barrel of WTI crude to plunge below US$20 by 30 March 2020 (a price last seen in 2002 and down from US$60 at the end of 2019). Reduced demand from industry, aviation and other transportation resulting from COVID-19, is only amplifying the negative impact on the revenues from the shale fields of Ohio, to the oil wells of the Niger delta. If the current relatively low prices are sustained through 2020, the potential destabilising effects for the oil producers in the developing world could be dramatic. All of these events and responses may have profound implications for the production and price of commodities as well as for the prices and access to capital of the companies which explore for and mine them. Market outlook Since the start of 2020 international equity markets have experienced record-breaking falls and dramatic volatility reminiscent of the collapse of 2008. Foreseeing a deep global recession, stock markets have fallen severely and in unison as investors reconfigure their valuations in the face of such an uncertain outlook. It is not simply earnings that are in doubt, but in many cases the fundamental commercial viability of the businesses they own. In the four weeks after closing at 29,551 on 12 February 2020, the Dow Jones Industrial Average lost 35% falling below 20,000. The FTSE performed no better, closing at times below 5,000, a level first hit in 1997. Market circuit-breakers have been triggered numerous times to prevent precipitous falls which are only fuelled further by automated stop loss selling. Regulators have also intervened to introduce restrictions on short selling of certain shares deemed most vulnerable to speculation. If the turmoil continues, or the economic outlook deteriorates significantly, they may be forced to intervene more substantially. Money has been pulled out of almost all liquid investment classes, including gold and funnelled into cash. Government bond prices are performing strongly as their yields fall to record lows. The US dollar, the world’s remaining reserve currency is in high demand from cash investors seeking sanctuary, or to repay the margin calls on leveraged investments. Despite the strategic investment from La Mancha, Altus’ share price has not been immune to the dramatic short term sell off in equities. The gold price started 2019 below US$1,300/oz and performed strongly through the year, supported by continued central bank buying, finishing the year more than 20% higher at US$1,569. After the year end gold hit a high of US$1,755 in April 2020. The GDX, an exchange-traded fund for gold miners, performed even more strongly than gold during 2019, up 38% at 29.28, having started at 21.09, only to lose almost 50% of that by March 2020. Gold and other commodities are generally priced in US dollars and as such are inversely correlated to the dollar’s strength. The recent dollar surge, compounded with market expectations for falling economic activity, have intensified commodity price falls. ‘Doctor copper’ the bellwether for global growth has fallen to around US$4,500/t, down 25% from the end of 2019. These are prices last seen in the immediate aftermath of the 2008 financial crisis. As such it is not surprising that mining equities have mirrored and, in many cases, exaggerated the falls in the wider blue-chip markets. As with the monetary response witnessed after 2008, we are already seeing central banks seeking to shore-up and ultimately reflate equity and other markets. Mining shares and perhaps especially gold equities, can therefore be expected to rebound eventually. The timing and nature of the rebound is currently Page | 11 Altus Strategies Plc unpredictable. 31 December 2019 | Annual Report Notwithstanding the apparent resumption of industrial activity in China, the short-term effects of the pandemic will likely result in the demand for commodities and manufactured products (cars, phones and such) being reduced. However, it is also likely that the supply of commodities will also fall, as mines either temporarily close, or output is reduced, to protect the health and safety of personnel and in the event of bottle necks restricting the supply of inbound machinery components, or the export of these commodities. Metals may therefore reach their supply / demand price equilibrium at or even above their pre-crash levels. Companies with high quality projects and royalties should therefore continue to be in demand. The plethora of inflationary monetary and fiscal policies that have been announced, will if implemented likely feed into nominally and real-term higher gold prices in the years ahead. As such the valuations for high-quality gold mining and development companies, which have not escaped the immediate sell- off, may rise considerably over time. Meanwhile, if the current lower energy prices are sustained by OPEC, then copper and other metal producers which do not have significant short-term financing risks, may well be able to sustain positive production margins. We are now entering a period of limited but unknown duration, when the access to traditional capital markets is likely to be at best impaired and at worst closed for many companies. This may be a prelude to material merger and acquisition activity of projects and businesses. Those companies such as Altus, with relatively strong balance sheets and which are least reliant on raising short term debt or equity capital, will likely be in the ascendency, as their boards and shareholders seek to consolidate accretive opportunities. In my report last year, I noted that we had experienced a decade of uninterrupted economic growth. This had been fuelled by low interest rates which, when combined with loose monetary policies, had created significant distortions and bubbles in asset prices. The dramatic falls in stocks in the first quarter of 2020 underscores the merits of our business model. While not immune to the recent turmoil in markets, it has amplified the intrinsic benefits in Altus from: - - - - - - employing a portfolio-approach with geological, commodity and jurisdictional diversification; being counter-cyclical, investing in exploration for new mines when the costs to do so is at its lowest and the likely future value of discoveries is at its highest; employing third party capital to advance multiple projects simultaneously; generating short term income through joint venture payments and project sales; creating potential long term income streams from project royalties; and identifying and making accretive project, royalty and corporate acquisitions. Strategy Implementation Altus completed a series of exploration campaigns during the year, including soil, stream sediment, geophysical and remote sensing programmes. This work resulted in the discovery of a number of new gold, copper and silver prospects. Most notable was the definition of numerous drill targets at four of our gold projects in Mali. Our exploration teams also successfully expanded the size of our copper and silver prospects at the Agdz project in central Morocco and the copper and gold prospects at our Daro project in northern Ethiopia. During the year the Company relinquished the Mandoum bauxite licence in central Cameroon and was Page | 12 Altus Strategies Plc 31 December 2019 | Annual Report granted the Zager copper-gold licence in northern Ethiopia. Exploration conducted by our field teams, targeting potential volcanogenic massive sulphide belts has already generated very promising results. At the end of the period Altus had two exploration licence applications pending, both located in Côte d’Ivoire with one for gold and one for nickel-cobalt. Transactions The Company successfully closed a number of project and royalty transactions in the year, including: - The sale of two gold projects in western Mali to TSX-V listed Desert Gold Ventures, in return for $50,000 in cash, 3,000,000 shares of Desert Gold, the potential for future project milestone payments and a 2.5% NSR royalty on each project. - A joint venture with Glomin Services on two gold projects, in western and southern Mali respectively. Under the JV Glomin has the right to earn up to an 80% initial interest in the projects in return for US$100,000 in cash on commencement, up to US$1,450,000 in milestone cash payments and a 2.5% NSR royalty on each project. - - The extension of our joint venture with ASX and LSE-listed Resolute Mining to May 2021, on the Pitiangoma Est gold project in southern Mali, whereby Resolute has the option to earn a 70% interest in the project by spending US$3 million and completing a feasibility study. The termination of our joint venture with ASX-listed Canyon Resources in return for 25,000,000 shares in Canyon (15,000,000 shares received to date) and the transfer of the joint venture licence to Canyon for 5,000,000 further shares in Canyon and a US$1.50/ton life of mine royalty on future bauxite production from the former joint venture licence. - An option agreement with Firering Holdings in respect of the Company’s Ni-Co licence application in eastern Côte d’Ivoire, whereby Firering may earn a 95% interest in the licence in return for the payment of €15,000 and an NSR royalty linked to the price of nickel. - An agreement with AGMEX in respect of the acquisition of a 2% NSR royalty held on the Company’s Lakanfla project in western Mali. The transaction completed after the period. As at the end of the period Altus had the following active joint venture and royalty interests: Project Counterparty Country Metal Joint Royalty Lakanfla Tabakorole Pitiangoma Est Ndablama Glomin Services Mali Glomin Services Resolute Mining (1) Mali Avesoro Resources (2) Mali Mali Sebessounkoto Sud Desert Gold Djelimangara Toura Birsok Notes: Desert Gold Firering Holdings (3) Canyon Resources (4) Mali Mali Gold Gold Gold Gold Gold Gold Venture Active Active Active 2.5% NSR 2.5% NSR 2.0% NSR Project sold 2.5% NPI Project sold 2.5% NSR Project sold 2.5% NSR Côte d’Ivoire Nickel Option stage 1.0% NSR Cameroon Bauxite Vended-in US$1.50/t 1 Altus retains an option to convert its project interest into the NSR royalty 2 Net Profit Interest royalty is on the southern portion of the Ndablama gold project 3 Royalty is up to 1.0% of gross revenue from the project, net of transport costs 4 Subject to the transfer of the Birsok licence to Canyon, NSR royalty is conditional upon the award of a mining licence to Canyon on their adjacent Minim Martap bauxite project During 2019 we elected to discontinue our discussions with Raptor Resources in respect of the Page | 13 Altus Strategies Plc 31 December 2019 | Annual Report Company’s portfolio of projects in Morocco and with Corben Resources in respect of the Company’s gold projects in northern Cameroon and western Liberia. Funding The Company’s Ordinary Shares are listed on the AIM market (AIM: ALS) of the London Stock Exchange in the UK and the TSX Venture Exchange (TSX-V: ALTS) in Canada. Our dual listing provides the Company with enhanced exposure to current as well as potential investors and counterparties for project transactions. Market sentiment Market conditions remained challenging through 2019 for the majority of junior resource companies seeking to raise capital. However, the enthusiasm for and prices of companies active in the cannabis sector also started to wane, in a similar fashion to that of cryptocurrencies the year before. The emergence and dominance of these two sectors only served to starve the junior resource sector from critically important speculative investment capital. The most agile resource companies such as Altus, have adapted their strategies in order to source patient capital, including strategic partnerships with larger mining companies, private equity funds or specialist investors. Notwithstanding the market backdrop, the shares of Altus performed strongly during the year, rising from a low in January of 14p to 31p as at 31 December (stated on a post-consolidation basis, following the consolidation of Altus’ shares on a five old into one new Ordinary Share, effective 21 February 2020). This performance reflects the substantial disconnect which had emerged between the value of our assets and their price in the market, the significant positive news flow during the year which included a number of discoveries, joint ventures, project transactions and the announcement of our strategic investment agreement with La Mancha as discussed in more detail below. Non-Brokered Private Placement On 20 December 2019, the Company announced a conditional non-brokered private placement of 9,265,760 (post-consolidation) new Ordinary Shares at a price of C$0.45 / £0.26 per share (post- consolidation) raising approximately £2.40 million / C$4.16 million before expenses. A number of directors participated in the placement, subscribing for a total of 1,455,248 new Ordinary Shares (post- consolidation) with an aggregate value of £0.38 million / C$0.65 million. The first tranche of the placement closed on 20 December 2019 and the second and final tranche closed on 27 January 2020 as detailed below. We were delighted with the participation in the placement by existing shareholders, as well as a number of new investors. One of our new shareholders is Delphi Unternehmensberatung AG (“Delphi”) a family office investment fund based in Heidelberg, Germany. Following the placement and the investment by La Mancha, Delphi holds a 9.99% interest in the Company. La Mancha Strategic Investment On 04 December 2019, the Company entered into a Strategic Investment Agreement with La Mancha, whereby subject to shareholder and regulatory approval La Mancha would subscribe for 24,845,878 new Ordinary Shares (post-consolidation) at a price of C$0.45 per share for aggregate gross proceeds of C$11,180,645 / (£6,459,928 at the time) before expenses. A General Meeting of the Company’s shareholders was held on 18 February 2020 in respect of the proposed investment by La Mancha and all resolutions were duly passed, as described in ‘Subsequent Events’ below. La Mancha is a pre-eminent Africa-focused mining investment group, which has a notable track record in deal selection and value creation. The group is the wholly-owned mining investment vehicle of the Page | 14 Altus Strategies Plc 31 December 2019 | Annual Report Sawiris family and as at 31 December 2019 had strategic investments in three publicly traded mining companies: a 29.9% holding in Endeavour Mining Corp. [TSX: EDV], a 30.2% holding in Golden Star Resources Ltd. [TSX: GSC and NYSE: GSS] and a 6.64% holding in Evolution Mining Ltd [ASX: EVN]. These three companies have operations in Africa and Australia with aggregate production in excess of 1.7 million gold equivalent ounces per year. La Mancha’s strategic investment in Altus is its first external investment into the listed mineral exploration sector. The Directors believe the investment not only represents a strong industry endorsement of the Altus team, portfolio and business model but that it will prove transformative for Altus, providing the capital and expertise to fast track the Company’s project and royalty generation activities, as well as unlocking new external growth opportunities. Specifically, the transaction benefits the Company by providing: - - - - additional capital to allow Altus to grow its portfolio of projects and royalties across Africa, as well as advance its existing projects further and faster than would otherwise have been possible; access to potential new project and corporate opportunities, introduced either directly or indirectly through La Mancha’s significant network in Africa and the resource sector more broadly; a robust balance sheet, as compared to our peer group, during an optimal period in the mining cycle, which will strengthen the Company’s position when negotiating accretive acquisition opportunities; the appointment of up to two La Mancha directors to Altus’ board, the first being Karim Nasr which occurred on 06 April 2020, which will bring additional operating and technical expertise within the mining sector and in Africa; and - wider market recognition of the Company, its capabilities and ambitious growth plans which may attract further investors to the Company’s equity and potential partners for its projects. La Mancha’s investment has resulted in it owning a 35.45% share of the Company (as at 09 April 2020 – see Director’s Report, page 43), and was subject to a waiver by the UK Panel on Takeovers and Mergers under Rule 9 of the City Code on Takeovers and Mergers in respect of the obligation of La Mancha to make a mandatory offer for the Company. La Mancha entered into a relationship agreement with the Company and its nominated advisor, SP Angel Corporate Finance LLP, which included provisions to maintain the operating independence of the Company, for any transactions between La Mancha and the Company to be conducted on an arm’s length basis, and for the Company to continue operating under its existing corporate governance regime. La Mancha will retain the right to appoint one director to the Board of the Company as long as it holds a 15% interest in the Company, and two directors while its interest is at least 25%. Director shareholdings Further to the non-brokered private placement and investment by La Mancha, the board of Altus has an aggregate beneficial shareholding in the Company of 14,223,454 Ordinary Shares (post consolidation), representing 20.29% of the current issued share capital. The directors’ shareholdings and their participation in the most recent private placement underscores the strong alignment of interests between the Company’s board and shareholders. As has been the case in previous years, in order to preserve cash for operating expenditures, a number of directors elected to defer receipt of their fees, salaries and where applicable, pension contributions Page | 15 Altus Strategies Plc 31 December 2019 | Annual Report during the year. While these accruals were settled during, or shortly after the period, it is notable that the majority of the amounts paid to the directors were re-invested by those directors back into Altus through the private placement. Altus Concert Party There have been no changes in the constitution of those shareholders who may be deemed to be acting in concert (the “Concert Party”), as defined by the Takeover Panel of the London Stock Exchange. The Concert Party consists of Steven Poulton, Susannah Poulton, Matthew Grainger, Anna Grainger, David Netherway and Diane Rissik. These parties in aggregate hold interests in 10,092,038 Ordinary Shares in the Company (post-consolidation), equivalent to 14.40%. of the Company's issued and voting share capital. These individuals do not currently hold any options or warrants in the Company. Shareholders should note that the Concert Party is free to increase its aggregated interest to 29.99% of the Company's issued and voting share capital without incurring an obligation under Rule 9 of the Takeover Code. Outlook Last year I reported on a significant increase in the number of JV and investor enquiries received by the Company, with the majority emanating from Canada and Australia. These resulted in a number of successful joint ventures and other transactions during the year. I am pleased to report that the level of interest has only accelerated, despite COVID-19, which bodes well for the Company’s potential further deal flow in 2020. Our key objectives for 2020 are to: - Continue to grow the number of projects in our portfolio. - Advance the exploration work programmes across our existing portfolio of licences. - Complete a number of royalty-based joint venture and other transactions on our existing assets. - Identify potential project, royalty and corporate acquisition opportunities and where possible conclude accretive transactions on these. Our long-term objective is to generate significant positive cashflow for shareholders from a diversified portfolio of high-quality royalties, project sales and joint ventures. In the last year we have built on our track-record of making and monetising discoveries in Africa. Following these transactions, the private placement and the strategic investment from La Mancha, Altus has established an incredibly robust foundation from which to accelerate the growth and value of the business. We are in such a strong position largely due to the vision, energy and professionalism of each member of our entrepreneurial team and I take this opportunity to thank them for their collective endeavours. I also take this opportunity on behalf of the Board to thank our new and existing shareholders for their continued support. “Steven Poulton” Steven Poulton Chief Executive Officer 28 April 2020 Page | 16 Altus Strategies Plc Strategic Report 31 December 2019 | Annual Report Key Performance Indicators The Board use a mixture of financial and non-financial KPIs to help monitor the performance of Altus’ group of companies (the “Group”). The Group is at a pre-revenue stage of development, which means that the main financial KPIs relate to the management of cash and expenditure. Cash balance 31 December 2019 £2,212,642 31 December 2018 £724,785 The Group’s cash balance increased by £1.5 million as it raised £2.4 million (C$4.1 million) in December 2019, through the placement of 46,328,802 new Ordinary Shares at £0.052 (C$0.09) per share. The placement closed in two tranches with 32,328,802 Ordinary Shares issued and admitted to trading on AIM on 23 December 2019 and 14,000,000 Ordinary Shares issued and admitted to trading on AIM on 29 January 2020. After the year end, in February 2020 the Group raised a further £6.5 million (C$11.2 million) through a strategic investment by La Mancha Holdings S.à r.l with 124,229,389 new Ordinary Shares issued and admitted to trading on AIM on 24 February 2020. During the six-month period prior to the fundraise, the Group sought to preserve its cash balance by focusing expenditure on its most prospective projects as well as pursuing potential joint venture and project sale transactions across its portfolio. The Group’s cash on hand is sufficient to fund all projected expenditure for a minimum of 24 months. Portfolio size – projects in which Altus holds an interest Royalties / under JV Projects Applications 31 December 2019 31 December 2018 8 (4) 3 (2) 16 17 2 3 The size of the Group’s portfolio reflects the scale and diversification of the Group’s project interests. Altus selectively acquires mineral exploration licences and generates and advances projects through the work of its technical team of exploration geologists. Any projects that prove to be uneconomic are dropped, and successful projects progress to advanced exploration with JV partners and eventually the definition and monetisation of the underlying asset. Altus reduces its ownership throughout this process, but typically retains a royalty interest on each of the project’s future cash generation. Altus capitalises the cost of its exploration licence renewals. As a number of these licences are renewed on a typical two-yearly cycle, particularly in Mali, not all of these costs were incurred during 2019. The Company was granted the Zager exploration licence in northern Ethiopia during the year and the Mandoum exploration licence in Cameroon expired during 2019. The KPI, capitalisation of expenditure costs, has not been recorded for 2019 as it was considered to be closely associated to the portfolio size and had an immaterial impact on the balance sheet. Single largest exposure by geography and mineral 31 December 2019 31 December 2018 By Geography Mali - 29% Mali - 33% By Mineral Gold – 57% Gold – 56% Risk diversification is at the heart of the Company’s philosophy, and this is enacted by exploring for a variety of minerals at multiple locations across several jurisdictions. The single largest exposure figures Page | 17 Altus Strategies Plc 31 December 2019 | Annual Report are an indication of the level of diversification of risk within the Group’s portfolio. As well as Mali, the Group has interests in Ethiopia, Cameroon, Morocco, Côte d’Ivoire and, until relinquished after the period, Liberia. The Group continually assesses potential licence applications and project acquisitions in new jurisdictions. Aside from gold, Altus is focusing on metals that it believes will be critical in the increasingly decarbonised electricity industry, particularly copper. The Group also has interests in nickel, zinc and bauxite projects. Exploration costs and Administrative expenses 2019 2018 Exploration costs Administrative expenses 60% 63% 40% 37% The Group focuses on deploying its cash on activities that are likely to maximise the value to shareholders while maintaining a strict control on administrative overheads. Exploration costs includes African-employed geologists, on site costs, assays and analysis and exploration support costs in Africa. In 2019 UK geologists’ salaries, and an allocation of UK management time and UK exploration support costs are also included. Under this measurement the percentage of Exploration costs for 2018 has been re-stated from 34% to 63%. Using the adjusted method shows Exploration costs as a proportion of total operating costs to be in line with the previous year. This reflects the maintenance of the portfolio size, no changes to the size of the team and control of non-exploration spending. There was an overall increase in Administrative expenses reflecting a first full year of costs as a dual listed company on the UK’s AIM and Canada’s TSX-V. Principal Risks and Uncertainties Risk description and impact Risk management strategy The Group’s projects may not contain Risk is diversified by holding a portfolio of economically recoverable volumes of minerals or projects. At every stage of the exploration metals, due to insufficient quality or quantity. process, projects are rigorously reviewed, both Delays in the construction and commissioning of consultants, to determine if the results justify mining projects or other technical difficulties the next stage of exploration expenditure. may make the deposits unattractive to exploit. internally and by qualified third-party Exploration activities, particularly more advanced The Group aims to comply with provisions of activities such as drilling, carry a risk of local PDAC’s E3+ guidance on responsible environmental damage or other issues, such as exploration as applicable. It maintains its own fuel spills, contamination of water courses, dust Environmental Management Plan, which is creation and damage to agricultural land or wild regularly reviewed, and publicised to site-based flora and fauna. employees. This contains a set of actions for each project based on a policy of Avoid, Mitigate, Remedy. Page | 18 Altus Strategies Plc 31 December 2019 | Annual Report Risk description and impact Risk management strategy Exploration activity exposes the Group’s The Group keeps the wellbeing of its employees employees to additional health and safety risks, as the highest of its priorities. Employees must such as accessing sites, use of equipment, and be up to date with all recommended exposure to extreme weather or other vaccinations, FCO travel advice is followed at all environmental hazards. times, and regular first aid and other operational training is provided. The outbreak of Covid-19 could pose a serious The threat of global health epidemics such as threat to the health of the Group’s employees. Covid-19 is managed by a range of measures including a cessation of international travel, enabling all employees to reach their home countries, increased working from home where possible, and following public health advice. An extended period of restrictions on movement Due to the portfolio nature of the Group’s could disrupt exploration activity on the Group’s business, some projects are at a stage of projects. development that requires office-based work such as remote sensing and historical data analysis. At times of restricted movement employees can be allocated to such projects to maintain momentum on the development of the portfolio and to minimise redundancy or underemployment. A reduction in global demand for gold, copper Altus has adopted a counter-cyclical business or other metals could lead to a significant fall in model which seeks to grow fastest during the value of the Group’s exploration assets and economic downturns. It has structured itself as the cash flow from any production, or even result a Company that can run extremely lean in the abandonment of a project should it prove operations to undertake early-stage uneconomical to develop. Similarly, commodity exploration. The Company does not expose prices could fall in reaction to changes in itself to significant long-term liabilities or international economic trends, impacting the spending commitments, and works with funded revenue generated by projects in which the JV partners for the advanced stages of Group holds an interest. This may have a exploration. material adverse impact on the operating results and financial condition of the Group. The successful exploration and development of The Group intends to secure capital by bringing natural resources on any project will require in joint venture partnerships including significant capital investment. established mining groups and investors, and through the issue of additional equity capital in The Group may not be successful in procuring the Company. This strategy is evidenced the requisite funds on terms which are through Altus’ joint venture agreement with acceptable to it (or at all) and, if such funding is Resolute Mining, a mid-tier gold producer unavailable, the Group may be required to which is listed on the ASX as well as its joint reduce its level of exploration activity and divest venture with Glomin Services, and the presence Page | 19 Altus Strategies Plc 31 December 2019 | Annual Report Risk description and impact Risk management strategy or relinquish its assets. of a number of leading natural resources sector investors on the Company’s share register. The exploration licences and operations of the The Group makes every effort to ensure it has Group are in jurisdictions outside the United robust commercial agreements covering its Kingdom, which subjects the Group to political activities. It maintains comprehensive risk. Adverse impacts could include the documentation covering its licence assets and withdrawal or suspension of licences, and the board and management oversee the good cancellation or onerous changes to permits or standing of these assets. regulatory consents. The Group is dependent upon a small executive The Remuneration Committee reviews the team and other key personnel. The loss of these Company’s compensation package annually to employees or the inability to attract additional ensure that it remains competitive (see qualified personnel as the Group grows restrict Directors’ remuneration report, pages 47-51). the ability of the Group to manage an expanded The Company maintains strong links with portfolio of projects. industry bodies and training establishments to ensure access to a wide pool of talent. As a UK-based junior mining project and royalty In the last three years Altus has listed on both generator, Altus could struggle to attract JV the AIM in the UK and the TSX-V in Canada, partners to advance its projects to mine- building a shareholder base and an industry readiness, and to create a long-term revenue reputation. Potential partners are engaged in stream. these markets and elsewhere, including the ASX market in Australia. Altus actively markets its portfolio through news releases and its website, and networks with investors and partners at conferences and industry events. Brexit – failure of the UK and EU to agree a trade Altus does not expect to have any significant deal. exposure to the European market in the short and medium terms. Any Brexit issues are considered to have limited effect on the Company’s African operations. Financial risks Material financial risks are listed below. Financial risks are also discussed in Note 24. It will take some time for revenue streams from The Group aims to maximise the opportunities active mines to positively impact Altus’ cashflow, for converting projects into revenue-generating and until then, the Group will be reliant on assets by advancing the exploration of its funding from shareholders. licences and actively marketing them to potential partners, whist at the same time maintaining a disciplined attitude to expenditure and preserving its cash. The Group also seeks joint ventures on its projects with third parties, which can reduce the Group’s reliance on shareholder funding. Page | 20 Altus Strategies Plc 31 December 2019 | Annual Report Risk description and impact Risk management strategy The Group’s shareholder financing is When funds are received a cashflow forecast is denominated in pounds sterling and Canadian prepared by currency to identify the anticipated dollars. Its exploration expense is incurred in US currency transactions that will be required over dollars and a range of African currencies. the period that the funds are expected to be used. FX transactions are undertaken at the earliest opportunity to minimise currency risk. Corporate and Social Responsibility The Board of Directors of Altus is committed to the consideration of all stakeholders in its decision- making process and to the respectful treatment of stakeholders in the conduct of the Group’s business. In addition, the directors are conscious of the obligations imposed by section 172 of the Companies Act 2006, their response to which is set out in the following paragraphs. Sustainability and environmental protection Altus is committed to conducting its business operations in a sustainable manner and strives continuously to limit the impact of its activities on the natural environment and on the local communities in the regions where it has operations. Altus is a mineral explorer and royalty business, not a mining company, therefore, the environmental impact directly associated with its activities is minimal. To ensure proper environmental stewardship on its projects, Altus ensures that all areas it explores are properly maintained, conserved and rehabilitated. A central tenet of the Group’s policy is the Environmental Management Plan (EMP), which guides the Group’s on-site activities from the planning stage through on-site operation to the return of sites to local communities once the Group’s activity has finished. Many of the areas of operation are regions of subsistence farming, and Altus and its employees are aware that the impact of operations may not be limited to nuisance or upset, but could have a serious impact on the livelihoods of local people. As a result, the Group operates a number of policies to prevent problems and to remediate those that cannot be avoided. Where arable or grazing land is affected, rates of compensation are agreed with the local authorities before any invasive activity begins. Meetings are held with local stakeholder groups to explain the project, to listen to local concerns and to mitigate any potential problems. At the other end of the project cycle, once activities have ceased, the Group arranges for replanting of crops or the promotion of flora re-growth, and returns to monitor progress after six months. Community engagement Altus is mindful that it has the capacity to have a positive impact in its areas of operation, many of which are remote and offer little alternative opportunity to local people. It employs a range of local people from trained geologists to administrative support and drivers. At the end of 2019 it employed 17 people in five African countries (2018: 14 people in five countries). To some of the local people in the more rural sites, Altus offers the opportunity to get involved in the exploration activity and to gain transferable skills such as operating geotechnical equipment. Altus has also assisted geology students from the University at Mekele in Ethiopia to visit its exploration sites. Human rights Altus is committed to best-practice in socially and morally responsible exploration and in the Page | 21 Altus Strategies Plc 31 December 2019 | Annual Report development of mineral resources for the benefit of all stakeholders. The activities of the Group are in line with applicable laws on human rights. Health & Safety Altus takes the health and wellbeing of its employees extremely seriously and works continuously to minimise the hazards encountered. A comprehensive health and safety programme is maintained incorporating official guidelines, industry best practice, lessons from previous incidents and employee suggestions. There were no road traffic accidents in 2019 affecting the Group although there was one in each of the two preceding years, both involving third party drivers and vehicles. While Altus could not have prevented these accidents, they starkly reiterated the importance of high safety standards. Altus continues to review all of its standards regularly and to stringently vet its suppliers and service providers. Employees Altus understands that its team is central to its future development and success. The aim of the Group is to create an environment that will attract and retain staff, and motivate employees to maximise their potential. The Company provides a fair remuneration package, and gives due consideration to requests for flexible working arrangements. It aims to give employees exposure to wider aspects of the Company’s operations. The Group promotes a culture of openness among its employees and welcomes their input into the good running of its operations. Altus has a long track record in recruiting and training promising geologists. Each year the Group typically offers at least one MSc level project thesis to students of geology or mining geology in the UK. The Group is also proud to provide internships for recent graduates, allowing them to gain flexible work experience and if available the opportunity for a full-time role with the Group. The Group welcomes diversity within its workforce and does not discriminate against its employees, workers or job applicants on the grounds of age, gender, ethnicity, disability, nationality, race, religious beliefs, or sexual orientation. Page | 22 Altus Strategies Plc Financial Review Income 31 December 2019 | Annual Report Income from recharging costs to JV partners reduced from £90,000 to £60,000 mainly due to the reduction in recharges related to the JV arrangement with Canyon Resources Ltd on the Birsok licence in central Cameroon. Expenses Exploration costs increased from £631,000 to £1,101,000 (see note 6), however this reflected a change in methodology for the allocation of costs between Exploration and Administration, including UK- employed geologists, UK technical management time and UK exploration support, which, had the same method been applied in the comparative year would have resulted in Exploration costs of £1,152,000. This reflects a consistency in operations from 2018 to 2019, in which the team size was maintained and the level of on-site activity was similar across the portfolio of projects. The Group’s cash resources were deployed across its portfolio in 2019 with four countries recording Exploration costs of between £200,000 and £300,000; these were Mali, Ethiopia, Cameroon and Morocco. Mali became the area of greatest spend in 2019 at £269,000, compared to a greatest spend in 2018 of £146,000 in Cameroon. The Group had six projects in Mali for most of the year until two were sold to TSX-V listed Desert Gold Ventures Inc. under a milestone-and-royalty based agreement in October 2019. The six projects in Mali were acquired in January 2018 as part of the Plan of Arrangement with Legend Gold Corp. (“Legend”). Administrative expenses in the Income Statement reduced from £1,221,000 to £785,000 in 2019 (see note 7), although as mentioned above, this reflected a change in allocation methodology, which, had it been applied in the comparative period would have resulted in Administrative expenses of £700,000. This rise in like-for-like expenses from £700,000 to £785,000 was mainly due to the effects of foreign exchange revaluations of the Group’s bank accounts, the payment of staff bonuses in 2019 (none were paid in 2018), and the timing of costs for audit fees. In addition, a single licence was impaired in 2019 valued at £39,000, compared to a single licence impairment of £20,000 in 2018. There was a reduction in the use of outside consultants, resulting in a reduction of £29,000. Staff costs increased from £746,000 to £856,000. Underlying salaries were consistent with the comparative year and bonuses for 2019 were £86,875 compared to £2,000 in 2018. Also recorded in 2019 was a bonus figure for 2017 of £43,125 which had been deferred and not paid at the request of the recipients. All of the directors apart from Michael Winn, who was required to remain independent, participated in the private placement undertaken by the Company in December 2019. The directors subscribed for a total of 6,774,263 new shares (pre-consolidation) at a price of £0.052 / C$0.09 per share with an aggregate value of £0.35 million / C$0.61 million. The category of Listing and acquisition related costs was expanded for 2019 to include legal, regulatory and other such costs relating to joint venture and other corporate deals. This change contributed to an increase in such costs from £19,000 to £89,000, and included costs expensed through the Income Statement relating to the strategic investment in the Group by La Mancha Holdings S.à r.l., as well as residual costs relating to the Plan of Arrangement with Legend from 2018. Other income and costs included a loss recorded on the sale of the Company’s 100% holding in Legend Gold Mali Holdings (BVI) Inc. and its Djelimangara and Sebessounkoto Sud licences in Mali, held through Page | 23 Altus Strategies Plc 31 December 2019 | Annual Report its wholly owned local subsidiary. This recognised no income in respect of future milestone or royalty payments (see note 12) and a fair value loss on the group’s investments in Canyon Resources Ltd and Desert Gold Ventures Inc. (acquired in October 2019) of £85,000 (2018: £282,000 gain). The Group submitted a claim for an R&D tax credit in the UK of £129,031 through its subsidiary Altus Exploration Management Limited for the 2017 tax year. The claim was settled in full by HMRC in February 2020. The table below shows local costs in each location of the Group’s operations. Details of expenditure are included in notes 5 to 14 to the Financial Statements. £'000 Geologists Executive Non-exec Admin Consultants Site costs Travel Office Legal & prof. Listing/deals Other UK 213 397 80 130 9 0 46 46 156 89 194 1,359 Assets and cash Canada Cameroon Ethiopia 33 - - 26 4 3 13 5 38 - 11 134 32 - - 20 1 24 38 3 6 - 31 156 - - - - - - - - 68 - - 68 Ivory Coast Liberia Mali Morocco Total 375 397 80 240 24 36 118 70 290 89 256 1,975 39 - - 37 0 8 18 14 3 - 5 123 36 - - 1 7 (0) 0 0 0 - 6 51 0 - - 0 0 0 0 0 15 - 1 15 22 - - 26 2 2 2 2 4 - 7 68 The net assets of the Group reduced from £5,266,000 to £4,530,000, which included a drop in non- current assets from £4,964,000 to £3,588,000 while net current assets increased from £302,000 to £1,008,000. The drop in non-current assets was due to the sale of two of the Group’s Mali gold licences, which had a brought forward value of £794,000, the impairment of the Mandoum bauxite licence asset in Cameroon valued at £39,000, the sale of part of the Group’s investment in Canyon Resources Ltd worth £674,000, and a fair value loss on the investments in Canyon Resources Ltd and in Desert Gold Ventures Inc. of £85,000. In current assets, trade and other receivables increased from £79,000 to £196,000 due to the outstanding R&D tax credit at the end of the year. The Group’s cash balance increased from £725,000 to £2,213,000. This reflected the timing of the private placements. The Group raised £2.3 million in April 2018 and £2.4 million in December 2019. The 2019 fundraise was a non-brokered private placement of 46,328,802 Ordinary Shares (pre-consolidation) at an issue price of £0.052 (C$0.09) per share with existing and new institutional and private investors. Part of the fundraise was subject to additional regulatory approval in respect of one of the investors, which meant that it was recorded as a current liability rather than as share capital until approval was received in January 2020. After the year end, on 18 February 2020, a General Meeting of the Company’s shareholders was held which approved a strategic investment by La Mancha Holdings S.à r.l. This investment concluded on 21 February 2020 and raised £6.5 million (C$11.2 million) before expenses through the issuance of 124,229,389 new Ordinary Shares (pre-consolidation) at an issue price of £0.052 (C$0.09) per share. Subsequent to their investment La Mancha holds 35.45% of the issued share capital of the Company. Based on the spending profile of 2019 and a two-year budget broadly covering 2020 and 2021 the cash balance at the end of the year will be sufficient to fund operations for the whole of 2020. The Group will continue to manage its cash resources carefully while making the best use of new funds to advance the Group’s existing portfolio and to take advantage of new opportunities. Page | 24 Altus Strategies Plc 31 December 2019 | Annual Report Review of Operations by Country Projects held by the Group or operating under joint ventures Mali Operations At the end of the period Altus held four projects in Mali. The projects are held through the Company’s 100% owned subsidiary, LGN Holdings (BVI) Inc., which became part of the Group in January 2018 through a plan of arrangement with Legend. Two of the projects (Diba and Lakanfla) are located in the Kayes region of western Mali, approximately 450km northwest of the capital city of Bamako while two others (Tabakorole and Pitiangoma Est) are located in southern Mali, approximately 280km and 300km southeast respectively of Bamako. The Company previously held six projects in Mali. However, this has reduced to four following the successful completion of a royalty and property sale transaction with TSX-V listed Desert Gold Ventures Inc. The transaction was completed 31 October 2019 on the contiguous Djelimangara and Sebessounkoto Sud projects in return for US$50,000 in cash, 3 million shares in Desert Gold, with a value at that time of £213,000 (C$360,000), and a 2.5% NSR on each project (see below for Projects in which the Group holds a royalty interest). Korali Sud (Diba) Gold Project (83.1 km2), Western Mali Korali Sud (“Diba”) is located 13km southwest of the Sadiola gold mine, which is operated by AngloGold Ashanti (JSE: ANG, NYSE: AU, ASX: AGG), IAMGOLD (TSX: IMG, NYSE: IAG) and the Malian government. Both Sadiola and Korali Sud are situated on the Senegal-Malian shear corridor within the world renowned ‘Kenieba window’. Korali Sud hosts the Diba historical resource (see Table 1 below), as prepared for Legend by AMEC Americas Limited (“Technical Report and Mineral Resource Estimate Diba Badiazila Gold Property Mali, West Africa”, 30 June 2013) and filed on SEDAR by Legend on 20 September 2013. A Qualified Person has not done sufficient work to classify this historical estimate as current mineral resources and Altus is not, therefore, treating this historical estimate as a current mineral resource. However, it remains relevant to the Project and Altus believes it is also reliable. To verify this historical estimate so that the resource can be considered current, Altus would be required to contract a qualified and independent consultant to review historical drilling data and prepare a resource estimate in accordance with current resource methodology. The resource comprises stacked lenses which dip approximately 35-40 degrees ESE within the oxide zone. Table 1: Diba project historical mineral resource Category Tonnes (t) Grade (g/t Au) Metal (oz Au) Indicated 6,348,000 Inferred 720,000 1.35 1.40 275,200 32,500 Notes: Applying a 0.5g/t cut-off grade and a US$1,200/oz gold price as reported in the 2013 technical report. Historical drill results from the Diba prospect (unverified by the Group) include 12m at 20.66 g/t Au and 32m at 2.06 g/t Au. Diba has a potentially low mining strip ratio with relatively limited overburden and a high proportion of the potential mineralisation is in the oxide zone. Deeper drilling at Diba targeting the sulphide zone has intersected 1.32 g/t Au over 45m (from 93m). The sulphide zone remains open at Page | 25 Altus Strategies Plc depth. 31 December 2019 | Annual Report Oxide gold mineralisation at Diba is mainly found in saprolite that is within 50m of the surface, across a compact 1,200m² area that has been drilled to date. The deposit is controlled by a number of structures, with gold occurring as fine-grained disseminations and localised high-grade calcite-quartz veinlets. During the period, the Company completed a detailed review and reinterpretation of historical data and two programmes of systematic termite mound sampling. Three drill targets have been defined within the licence area from these programmes: Diba NW, a 2.6km2 soil anomaly which is immediately along strike and northwest of the current historic Diba resource, Diba East, approximately 2km2 in size and located immediately to the east of the historic Diba resource and Diba SW, located approximately 0.5km and along strike of the Diba historical resource. Diba SW is defined by a discontinuous 1.2km long gold in termite soil anomaly along the flanks of a ferricrete capped ridge and is also coincident with a VTEM geophysical anomaly. Based on the discovery of Diba SW, the Company undertook a reinterpretation of the historical geochemical, geophysical and topographical data proximal to the historic Diba resource which has successfully defined at least three further potential prospects, increasing the total number of new prospects at Diba to six. Given the number and potential scale of these prospects, Altus believes the opportunity to increase the size of the historic resource at Diba is considerable. The Company has prepared a phase one exploration programme for Diba, which incorporates an initial 5,000m of drilling and while intending to undertake this work it is also open to a joint venture partner should satisfactory terms be available. Lakanfla Gold Project (24 km2), Western Mali Lakanfla is located 5km east of Korali Sud and 6.5km from (and considered to be geologically analogous to) the karst-type FE3 and FE4 open pits that form part of the Sadiola gold mine. It is also considered to be geologically analogous to the Yatela karst-type gold deposit, which was mined between 2001 and 2015, located 35km to the northwest. Nevertheless, mineralization hosted on these properties is not necessarily indicative of mineralization hosted at Lakanfla. The project hosts a significant number of active and historical artisanal gold workings coincident with major geochemical and gravity anomalies surrounding a granodiorite intrusion. Historical drilling (unverified by the Group) has returned encouraging intersections including 9.78 g/t Au over 12m and 5.20 g/t Au over 16m. Historical drilling targeted breccia mineralisation of the granodiorite, and intersected low-grade gold mineralisation in limestones, voids and loose sands at depth, features which are indicative of a karst. The presence of a low gravity geophysical anomaly and corresponding surface slumps features are also considered to be significant indicators. The karst targets remain to be drill tested. On 2 December 2019, the Company signed a Joint Venture Agreement with Glomin Services Ltd (“Glomin JVA”) on the Lakanfla project and the Tabakorole project. Tabakorole is located in south- eastern Mali. Under the terms of the joint venture. Altus will receive up to US$1.45 million in milestone cash payments and will retain a 2.5% NSR royalty on each project. The Glomin JVA will involve an initial 3,500m drilling programme at Lakanfla. Tabakorole Gold Project (100 km2), Southern Mali Page | 26 Altus Strategies Plc 31 December 2019 | Annual Report Tabakorole is located 280km south of the capital city of Bamako and sits on the Massagui Belt, which hosts the Morila gold mine operated by Barrick. Exploration to date has identified a 2.7km long shear zone which is up to 200m wide and hosts a historical mineral resource, see table 2 below. The resource was prepared by H. Andrew Daniels, Consulting Geologist, P.Geo in a report entitled “Technical Report on the Mineral Resource Update, June 2007 FT Project Mali, West Africa”, dated July 27, 2007 and filed on SEDAR on July 27, 2007 by North Atlantic Resources Ltd. A Qualified Person has not done sufficient work to classify this historical estimate as current mineral resources and Altus is not, therefore, treating this historical estimate as a current mineral resource. However, it remains relevant to the Project and Altus believes it is also reliable. To verify this historical estimate so that the resource can be considered current, Altus would be required to contract a qualified and independent consultant to review historical drilling data and prepare a resource estimate in accordance with current resource methodology. Historical drilling (unverified by the Group) has returned encouraging intersections including 16m at 9.31 g/t Au, 14m at 9.84 g/t Au and 60m at 2.91 g/t Au. Table 2: Tabakorole project historical mineral resource Category Oxide Sulphide Tonnes (t) Grade (g/t Au) Metal (Oz Au) Indicated Inferred Indicated Inferred 1,040,000 960,000 6,840,000 9,590,000 1.01 1.114 0.94 1.03 34,000 35,000 207,000 318,000 On 2 December 2019 the Company signed the Glomin JVA on Tabakorole (see Lakanfla above). The Glomin JVA will involve an initial 1,500m drilling programme, a 520 line km ground geophysical survey and a 2,000 sample soil sampling programme at Tabakorole. Following the period end the Company announced that it had commenced an air core drilling programme and a ground magnetics geophysical survey at Tabakorole under the Glomin JVA. Pitiangoma Est Gold Project (106 km2), Southern Mali Pitiangoma Est is located 300km southeast of the capital city of Bamako. The licence is subject to a joint venture with ASX-listed Resolute Mining Limited and is located on the Syama shear zone, 15km from the Tabakoroni gold deposit and 40km from the Syama gold mine (both owned by ASX listed Resolute Mining Ltd). Resolute can earn up to a 70% interest in the project by funding US$3million in exploration and completing a feasibility study. Thereafter Altus may elect to co-fund its 30% interest on a pro rata basis, or exchange its interest for a 2% NSR royalty. Prior to the JV with Resolute, exploration at Pitiangoma Est included regolith sampling (6,930 soil and 1,230 auger samples), lithological mapping, airborne VTEM geophysics, BLEG stream sediment sampling and RC drilling (2,160m) as well as diamond drilling (6,450m). These work programmes were completed by Endeavour Mining Corporation which held the project prior to it being acquired by Legend. Since the commencement of the joint venture, Resolute has reportedly completed a gradient array IP survey, 329 air core drill holes for a total of 14,193m and seven RC drill holes for a total of 708m. On 8 May 2019 the Company announced that it had signed a two-year extension to the joint venture with Resolute until May 2021. At the time of writing the Company is awaiting results from the most recent field exploration programme. Page | 27 Altus Strategies Plc 31 December 2019 | Annual Report Cameroon Operations Altus holds three projects in Cameroon including the Laboum gold project, held through the Company’s 99% owned subsidiary, Auramin Ltd, the Birsok bauxite project and the Bikoula & Ndjele iron ore project each of which are held though the Company’s 97.3% owned subsidiary, Aluvance Ltd. Laboum Gold Project (189 km2), Northern Cameroon Laboum is located 600km northeast of the capital city of Yaoundé. The licence hosts a major Pan-African age, regional shear zone which is up to 5km wide and which comprises highly prospective Birimian metavolcanic and metasedimentary rocks. Results of a ground magnetic survey and regional soil sampling programme completed by the Company have defined numerous anomalies coincident with structural targets. Dilational and fold structures are considered to be excellent targets for potentially economic gold deposits. Rock chip sampling by the Company has produced grades including 24.50 g/t Au, 16.15 g/t Au from quartz veins and 6.86 g/t Au from sheared and silicified metasediments. The Laboum licence is currently pending renewal. On 24 April 2019 the Company signed a letter of Intent with Corben Resources Ltd on the Laboum and Zolowo gold projects. After the end of the period the parties agreed by mutual consent to discontinue discussions. Birsok (Birsok & Mandoum licences, central Cameroon, 372km², bauxite) The Birsok licence is located 370km northeast of the capital city of Yaoundé. From 2013 to October 2018 they were under a joint venture with ASX-listed Canyon Resources Ltd. The project is contiguous with Canyon’s Minim-Martap, a potential tier-one bauxite project. On 11 February 2019, the Company announced that it had signed a Termination Agreement, a Sale and Purchase Agreement and a Royalty Agreement with Canyon. For termination of the joint venture Altus will receive a total consideration of 25 million Canyon shares. On 11 February 2020, the Company received an initial 15 million Canyon shares, with the balance of 10 million shares to be received in twelve months from that date. For vending the Birsok project to Canyon, Altus will receive an additional 5 million Canyon shares. The royalty will pay Altus US$1.50/tonne for bauxite mined from the Birsok project (subject to Canyon receiving a mining licence on its contiguous Minim Martap project). Details of these agreements with Canyon are available on the Group’s website (www.altus-strategies.com/news, entry dated 11 February 2019). Altus has agreed with Canyon to escrow the first 15 million shares issued in respect of the JV termination for 12 months from the date of issue. During the period the joint venture management committee elected to not pursue the renewal of the Mandoum licence. The Birsok licence is currently pending renewal. Bikoula (200 km2) & Ndjele (200 km2) Iron Ore Project, Southern Cameroon The Bikoula and Ndjele licences are located 150km south of the capital city of Yaoundé. The licences are on the western geological strike of the Nkout iron ore deposit and 160km west of the Mbalam iron ore deposit. The licences are adjacent to the road linking to the deep-water port at Kribi and are 30km north of the proposed trans-Cameroon east-west iron ore rail line. The Group has defined a maiden JORC-compliant Inferred Mineral Resource of 46 Mt at 44% Fe, including a supergene haematite cap of 5 Mt at 52.7% Fe. The independent resource report was prepared by Coffey Mining South Africa (Pty) Ltd and entitled ‘Mineral Resource Estimation and Classification of the Bikoula Iron Ore Project in Cameroon’ and dated April 2014. The resource was calculated on less than 25% of the strike of a 17km-long Libi Hills airborne geophysical target. To date 48 drill holes have been completed at Bikoula. During 2018, Altus pitted a large airborne magnetic Page | 28 Altus Strategies Plc 31 December 2019 | Annual Report anomaly at the Nkout North prospect. This work discovered further supergene haematite within reddish clayey soils. The Group considers this prospect and the undrilled remainder of the Libi Hills prospect to represent excellent targets for the definition of further high-grade iron ore resources. The Bikoula and Ndjele licences are currently pending renewal. Altus is seeking a partner to advance the project with further drilling along the anomaly, and the preparation of an independent mineral resource estimate. Morocco Operations Altus holds four projects in Morocco through its 100% owned subsidiary, Aterian Resources Ltd, targeting copper, lead, zinc, silver and gold. Agdz Copper-Silver Project (60 km2), Central Morocco Agdz comprises four contiguous permits in the Anti-Atlas Mountains, 350km south of the capital city Rabat and 14km from the Bouskour copper mine which is operated by Managem, the Moroccan state mining group. Altus has carried out geological mapping, surface outcrop sampling, reconnaissance trenching and ground magnetic surveys. This work has defined strongly mineralised and altered zones and a clear structural context. Three main prospects have been identified to date at Makarn, Amzwaro and Minière from which rock-chip samples have returned assay results up to 26.5% Cu and 448 g/t Ag and an initial rock-chip channel sample returned 1.25% Cu and 96 g/t Ag over 9.3m, with grades up to 2.26% Cu and 223 g/t Ag. Rock-chip and spoil samples from the Minière prospect, which hosts multiple underground workings that exploit a series of sub-parallel alteration zones, have returned 13.0% Cu, 6.0% Cu and 5.0% Cu. Mapped alteration in the Makarn prospect is analogous to that of the Bouskour mine (the mineralisation hosted at Bouskour is not necessarily indicative of mineralisation hosted at Agdz) and has been mapped over a 0.5km strike length to date. Exploration work conducted during the year at Agdz included surface mapping, and sampling. Altus is actively seeking a JV partner for Agdz to conduct trenching and to undertake a maiden drill programme. Takzim Copper-Zinc Project (72 km2), Central Morocco Takzim comprises five permits located 35km northeast of the city of Marrakech and 7km east of the historical Bir-n-Hass copper mine. No significant exploration work was conducted on Takzim during the year. Zaer Copper Project (96 km2), Central Morocco Zaer comprises six permits located 80km south of the capital city of Rabat in the Hercynian Massif, which contains three large granitic plutons that have been intruded into a sequence of sediments. The region hosts active and historical mines for copper, tin, tungsten, lead and zinc. Zaer is strategically located covering a 20km strike length of metamorphic aureole along a granite-metasediment contact. No significant exploration work was conducted on Zaer during the year. Ammas Zinc-Lead Project (32 km2), Central Morocco Ammas is comprised of two permits, located 30km south of the city of Marrakech. The project is 3km southeast and along strike of Managem’s Hajjar Zn-Pb-Cu VMS mine (the mineralisation hosted at Hajjar is not necessarily indicative of mineralisation hosted at Ammas). The Hajjar mine exploits a number of buried and folded massive sulphide lenses. No significant exploration work was conducted on Ammas during the year. Page | 29 Altus Strategies Plc 31 December 2019 | Annual Report Ethiopia Operations Altus holds three projects in Ethiopia at Tigray-Afar, Daro, and Zager. All three projects are held by the Company’s 100% owned subsidiary, Altau Resources Ltd and are located on the prospective Arabian Nubian Shield of Northern Ethiopia. Daro Copper-Gold Project (412 km2), Northern Ethiopia Daro is located 570km north of Ethiopia’s capital city, Addis Ababa and 95km west of the Company’s Tigray-Afar Cu-Ag project. The project targets potential Volcanogenic Massive Sulphide (“VMS”) copper and gold deposits. It is situated in the Neo-Proterozoic Nakfa Terrane, which hosts a number of significant VMS base metal and gold deposits and mines. Prospecting and regional mapping has identified key geological markers for a VMS deposit type setting. These include the presence of bimodal volcanics, extensive chert horizons and associated metasediments, which conform to an ophiolite complex of ancient oceanic crust and seafloor sediments. To date, five priority prospects: Keren, Teklil, Wedihazo and Simret have been defined by the Company on the licence. The Keren prospect strikes for 2km with grab and outcrop samples returning up to 37 g/t Au and 10.35 g/t Au. At the 2.5km long Teklil prospect, located within an ophiolite complex, rock chip and grab samples have returned 24% Cu, 6.51 g/t Au and 203 g/t Ag. Rock chip and grab sample results at the 0.5km long Wedihazo prospect, have returned up to 22.3% Cu and 0.24 g/t Au. At the Simret prospect, grab samples have returned up to 944 g/t Ag, 3.55 g/t Au and 2.72% Pb and discovered Au-Ag-Cu-Pb-Zn bearing quartz veins and gossanous float. During 2019 Altus discovered the Wedi Keshi gold prospect when the Company’s Sentinel remote sensing programme identified a highly altered quartz-feldspar porphyry intrusion. The prospect has now been mapped for approximately 2km in length and 300m in width and is coincident with a series of discontinuous hard gold workings which likely represent the primary source for gold in the alluvial artisanal workings in the area. Gold grades from rock chip sampling of quartz veins and altered wall rock material include 21.6 g/t Au 14.1 g/t Au, 8.5 g/t Au and 7.3 g/t Au. Altus also completed a reconnaissance ground gravity geophysical survey along an initial 300m section of the Teklil prospect, which identified a potentially significant gravity anomaly adjacent to key VMS markers, including a gossanous outcrop sample which returned 6.95% Cu. Altus is actively seeking a JV partner for Daro to conduct trenching and to complete a geophysical gravity survey with the aim of defining targets for a maiden drill programme. Zager Copper-Gold Project (285 km2), Northern Ethiopia The Zager prospect was granted in June 2019 and is located in the Semien Mi’irabawi Zone of Tigray in northern Ethiopia, approximately 175km northwest of the Tigray state capital of Mekele and 610km north of Addis Ababa. It is 80km west of the Company’s Daro project and 15km north of the Harvest polymetallic VMS project. The project targets potential VMS copper and gold deposits. It is situated in the Neo-Proterozoic Nakfa Terrane, which hosts a number of significant VMS base metal and gold deposits and mines. During the period the Company completed a maiden programme of prospecting and ground truthing. This programme resulted in the discovery of five hard rock artisanal gold workings, two of which have Page | 30 Altus Strategies Plc 31 December 2019 | Annual Report shafts estimated to be up to 15m deep. Follow up exploration has identified eight additional hard rock artisanal gold workings. Three of the newly identified workings are situated on the margin of a large alluvial gold field, where densely spaced excavations cover an area of approximately 500m by 1,000m. Rock chip sampling, primarily of quartz veins and spoil from the hard rock sites, have returned grades including 27.1 g/t Au, 7.3 g/t Au and 2.9 g/t Au. Polymetallic mineralisation has also been observed at a number of localities, with galena, chalcopyrite and bornite identified in hand specimen. These observations have been supported by rock chip sample results up to 1.5 % Pb, 0.2 % Cu and 24 g/t Ag. Tigray-Afar Copper-Silver Project (242 km2), Northern Ethiopia Tigray-Afar is located 580km north of Ethiopia’s capital city, Addis Ababa and 95km east of the Company’s Daro Cu-Au project. An evaluation of previous exploration data by the Company, has identified a potential sediment hosted copper target within a 5km long VTEM conductor. The zone hosts gossans at surface, which are interpreted to overlay a potential copper sulphide source which has yet to be drill tested. No further work was undertaken during the year. The next steps for the project will be to conduct a 2,000m five hole programme to test the presence of sedimentary hosted copper mineralisation. Altus is actively seeking a JV partner for Tigray-Afar. The Tigray-Afar licence is currently pending renewal. Liberia Operations Altus holds one licence, Zolowo, in Liberia through its 100% owned subsidiary, Auramin Ltd, targeting orogenic lode gold deposits within the Man Shield, which forms part of the West African Craton. Zolowo Gold Project (466 km2), Western Liberia Zolowo is located 190km northeast of the capital city of Monrovia. The licence targets a significant 33km long Archaean-age greenstone belt on the West African Craton. Previous results from sampling of in situ quartz veins and spoil from artisanal workings returned encouraging grades up to 30.70g/t Au, 9.10g/t Au, 8.8g/t Au, 4.3g/t Au and 2.95g/t Au. The next phase of work will include systematic soil and trenching programme. On 24 April 2019 the Company signed a letter of Intent with Corben Resources Ltd on the Laboum and Zolowo gold projects. After the end of the period the parties agreed by mutual consent to discontinue discussions. Subsequent to the end of the period, the Company elected to relinquish the Zolowo licence given the comparatively high cost of undertaking mineral exploration in Liberia. Côte d’Ivoire Operations Altus holds one granted licence, Prikro, and two licence applications in Côte d’Ivoire. The licence and applications are held through the Company’s 100% owned subsidiary, Aeos Gold Ltd. Prikro Gold Project (369.5 km2), Eastern Côte d’Ivoire Prikro is located 240km northeast of the country’s largest city, Abidjan. The project targets a folded and sheared Birimian-aged greenstone sequence intruded by felsic plutons, and hosts historical Au, Cu, Zn and Mo mineral occurrences. No material exploration was undertaken on the project during the year. During 2019, the Company announced that it had signed an option agreement on its Toura exploration licence application with Firering Holdings Limited (“Firering”) upon exercise of which Firering will earn a 95% interest in the project, and Altus will receive a cash payment of €15,000, a 5% capped free carried interest and a royalty linked to the nickel price. Further details are available on the Company’s website (www.altus-strategies.com/news, entry dated 25 July 2019). Page | 31 Altus Strategies Plc 31 December 2019 | Annual Report Projects in which the Group holds purely a royalty interest Leopard Rock Gold Prospect (90 km2), Western Liberia The Leopard Rock prospect is part of the 457km2 Bea Mountain Mining Licence in western Liberia, approximately 100km northwest of the capital city, Monrovia, and is held by Avesoro Resources Inc. [AIM/TSX: ASO], which was taken private in January 2020. It is located in the north-eastern part of the licence area, approximately 40km northeast of the New Liberty Gold Mine and 2km southeast of the Ndablama project. The target area is underlain by Archaean greenstones comprising amphibolite gneisses and ultramafic schists situated within the pressure shadow of the adjacent granitic batholith and along the western margin of a shallow westerly-dipping shear. This deformation zone is gently folded around the edge of the intrusion forming an open west-plunging anticline that is the key host of mineralisation. Gold is associated with shear-hosted disseminated sulphides and hydrothermal alteration, namely silicification, magnetite destruction, phlogopite and chlorite. Exploration across the Leopard Rock and Ndablama prospects began in 2007 with a series of channels highlighting the potential for gold mineralisation within the granitoid's pressure shadow. A significant soil sampling programme was then undertaken on a 50m x 100m grid which defined a 13 km long gold- in-soil anomaly up to 100 m wide. This zone coincided with the margin of the granitoid and the southern extents formed the basis of the Ndablama and Leopard Rock prospects. An induced polarisation survey was then carried out by Fugro in 2012 over a 1.8km2 area which outlined a 500m zone of potential sulphide mineralisation in between these two areas of interest, and suggests both prospects are hosted by a continuation of the same NW-SE trending structure. Subsequent trenching and channelling at Leopard Rock confirmed the presence of sub-surface gold with highlights including 11m at 6.4 g/t Au and 4m at 6.4 g/t Au, and the initial 24 hole drill programme subsequently returned intercepts of 4m at 17.6 g/t Au, 6m at 9.4 g/t Au and 4 m at 13.9 g/t Au. Altus holds a 2.5% Net Profit Interest royalty on the former Archaean Gold licence that encompasses the Leopard Rock prospect under a royalty agreement with Aureus Mining Inc. (now Avesoro Resources Inc.) in May 2013. Djelimangara & Sebessounkoto Sud Gold Projects (55 km2 and 28 km2), Western Mali On 31 October 2019, the Company announced that it had completed a transaction with TSX-V listed Desert Gold Venture Inc. (“Desert Gold”), for the sale of and a royalty on the Djelimangara and Sebessounkoto Sud gold projects. The projects are located in the Kayes region of western Mali, approximately 450km northwest of the capital city of Bamako. The transaction included the payment to the Company of US$50,000 in cash and 3,000,000 Desert Gold shares which at the time of the transaction had a value of approximately £248,500 (C$420,000). Subject to project milestones being achieved, the Company may receive an additional US$200,000 in cash and up to 5,000,000 additional Desert Gold shares. The transaction also includes a 2.5% NSR of which 1.5% can be repurchased by Desert Gold for up to US$6.0m, depending on the size of the NI 43-101 reserve at the time of a definitive feasibility study. Sebessounkoto Sud is located 15km south east of the Diba project. Historical trenching undertaken by Barrick (formerly Randgold Resources), reportedly returned up to 0.68g/t Au over 61m. During 2018 the Group defined the Soa gold prospect covering a 2.7km long gold-in-soil anomaly, identified from mapping artisanal workings, and sampling spoil and termite mounds. Spoil samples returned up to Page | 32 Altus Strategies Plc 31 December 2019 | Annual Report 5.18g/t Au, 3.98g/t Au and 2.4g/t Au. Djelimangara is located 3km southeast of the Diba project, and comprises four priority prospects: Sourounkoto, Kamana, Woyanda and Manankoto. These are characterised by gold-in-soil anomalies of up to 2.5km in length, coincident with hard rock gold workings in fine metasediments. Historical drilling (unverified by the Group) has reportedly returned encouraging intersections including 1.34g/t Au over 30m. Cautionary note regarding historical data Readers are cautioned that data on the Mali licences in this written disclosure is historical exploration data that has not been verified by a Qualified Person. Not all historical samples are available and Altus does not have complete information on the quality assurance or quality control measures taken in connection with the exploration results, or other exploration or testing details regarding these results. There has been insufficient exploration to define current resources and the Company cautions that there is a risk further exploration will not result in the delineation of current mineral resources. The historical data should therefore not be relied upon until the Company can confirm it. Qualified Person The technical disclosure in this document has been read and approved by Steven Poulton, Chief Executive Officer of Altus. He has not verified the historical data disclosed in this document but has no reason to question its accuracy. A graduate of the University of Southampton in Geology (Hons), he also holds a Master's degree from the Camborne School of Mines (Exeter University) in Mining Geology. He is a Fellow of the Institute of Materials, Minerals and Mining and has over 20 years of experience in mineral exploration and is a Qualified Person under the AIM rules and National Instrument 43-101 “Standards of Disclosure of Mineral Projects” of the Canadian Securities Administrators (“NI 43-101”). Page | 33 Altus Strategies Plc 31 December 2019 | Annual Report Corporate Governance Report Introduction Since the implementation of changes to the London Stock Exchange AIM rules in September 2018 Altus has formally adopted the QCA Corporate Governance Code, and applies the ten principles of the QCA Code as set out in the statement below and detailed in this report. Section 19 of the Corporate Finance Manual issued by the TSX Venture Exchange (the “TSX-V”) requires only that the corporate governance practices and processes they adopt be appropriate. Therefore, since its listing on the TSX-V, the Group has continued to follow the same practices that it adopted upon listing on AIM in London in 2017. The Group’s AIM Compliance Code, dating from its listing, is published on the Company’s website at https://www.altus-strategies.com/corporate/corporate-governance/ and in September 2018 it published its Corporate Governance Statement. Details of the Group’s response to the framework laid down by the QCA are contained within this report and other sections of the Annual Report and Financial Statements as follows. Corporate governance principle Strategy and business model Reference Business Overview Shareholder needs and expectations Corporate Governance Report Responsibilities to stakeholders Strategic Report Risk management Composition of the Board Corporate Governance Report Strategic Report Financial Statements note 24 Corporate Governance Report Board experience, skills and capabilities Corporate Governance Report Board performance evaluation Corporate culture Governance structures Corporate Governance Report Corporate Governance Report Corporate Governance Report Communication with shareholders/stakeholders Corporate Governance Report Page(s) 7-9 34-42 17-22 34-42 17-22 85-87 34-42 34-42 34-42 34-42 34-42 34-42 Statement of Corporate Governance The Board of Directors is responsible for the management of the Group on behalf of its shareholders. The objective of the Group is to create long term value for shareholders, and the Board is responsible for delivering that objective through its governance of the Company and its subsidiaries. The Directors have overall responsibility for the corporate governance of the Group and recognise the importance of the highest standards of behaviour and accountability. Several aspects of the business in its current guise offer particular challenges to the Board in respect of its approach to corporate governance, in particular:  Complexity of operation in relation to size The Group’s current activities include managing licence assets, entering JV and royalty arrangements, transferring licences and companies and managing a group structure across 10 jurisdictions, all with a team of 23 employees plus consultants.  Expansion of operations Page | 34 Altus Strategies Plc 31 December 2019 | Annual Report Having expanded into new areas of project operation from four to six countries in 2018, as well as dual listing its stock on the TSX-V in Canada, the Company is continuously analysing opportunities to expand its area of operations into new jurisdictions.  Areas of operation The focus of Altus’ exploration and the location of all of its intangible assets is Africa. Of the six countries in which it currently has project operations, only one (Morocco) appears inside the top 100-ranked countries in the World Bank’s international index of ease of doing business (May 2019).  Becoming a listed company In quick succession the Company listed in London and, 10 months later, in Toronto. This opportunity brought with it responsibilities to shareholders predominantly in Europe and North America, and obligations for compliance with two regulatory regimes. The Board is mindful that a strong corporate culture has a fundamental impact on the development of the Company’s strategy, and is an essential tool in delivering that strategy, as well as in judging risk, meeting challenges and dealing with external stakeholders. The Board seeks to foster a culture of openness, respect, frequent communication and shared responsibility. To do this it promotes interaction between the Board and senior management, employees in various locations, shareholders and partners. Members of the Board make themselves accessible and willing to act as a sounding board or a source of guidance, and by example encourage the permeation of this culture throughout the management and wider team, both in the UK and Africa. The effect of this open culture is to encourage dialogue at all levels, and to provide an environment in which all employees can have the confidence to raise issues and offer solutions without fear of recrimination or censure. With openness comes shared responsibility, as management is not viewed as a closed shop where all decisions are taken. Instead, employees are expected to act on issues, in discussion with relevant parties, rather than leave their resolution to someone else. In the development and implementation of strategy this enables free and frank discussion of options and their relative merits. It encourages all employees to highlight risks, and facilitates timely discussion of issues and challenges, as well as swift and well-considered responses and actions. The values that bind the team together extend to its dealings with external stakeholders, encouraging engagement with shareholders, project partners and local communities in areas of exploration, and displaying a respect and sense of responsibility that fosters mutual co-operation. Board Composition The Group’s Board of Directors comprises a non-executive Chairman, a Chief Executive Officer, one Executive Director and two further non-executive Directors. The Group’s business is directed by the Board and is managed on a day-to-day basis by the Chief Executive Officer and Executive Director, who are based at the Company’s registered offices in Didcot, United Kingdom. The Group’s Chief Financial Officer since July 2019 is not a director of the Company, and is also based at the registered office. The Chairman and both non-executive Directors are classified as independent by the TSX-V. After the period end, the completion of a strategic investment by La Mancha (see Chief Executive’s Review on pages 10- 16) gave La Mancha the right to appoint up to two non-executive directors to the Board. The first of these appointments was announced on 6 April 2020 with Karim Nasr being appointed to the Board. The articles of association were changed at the Group’s 2019 AGM to mandate that all directors, Page | 35 Altus Strategies Plc 31 December 2019 | Annual Report including those appointed since the previous AGM, retire and stand for re-election at the AGM every year. In 2019 all directors served for the whole of the year. The Board members combine a broad range of skills and expertise in the fields of geology and mineralisation, strategy, finance and corporate governance. Those in office at the end of the year are as follows. Position Non-executive Chief Executive Executive David Netherway Steven Poulton Matthew Grainger Chairman Appointment date 21-May-17 28-Apr-17 28-Apr-17 Status Independent Not independent Not independent Member Member - - - - Audit Committee Remuneration Committee Position Robert Milroy Non-executive Appointment date 21-May-17 Status Independent Audit Committee Remuneration Committee Chair Chair David Netherway Non-Executive Chairman Michael Winn Non-executive 30-Jan-18 Independent Member Member Karim Nasr Non-executive 06-Apr-20 Not independent Member Member David is a mining engineer with over 40 years of experience in the mining industry. David was involved in the construction and development of the New Liberty, Iduapriem, Siguiri, Samira Hill and Kiniero gold mines in West Africa and has mining experience in Africa, Australia, China, Canada, India and the Former Soviet Union. David served as the CEO of Shield Mining until its takeover by Gryphon Minerals, prior to that he was the CEO of Toronto listed Afcan Mining Corporation, a China focused gold mining company that was sold to Eldorado Gold in 2005. He was also the Chairman of Afferro Mining which was acquired by IMIC in 2013. David has held senior management positions in a number of mining companies including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc. He is a former director of Altus Resource Capital and Altus Global Gold. David was non-executive chairman of Kilo Goldmines [TSX: KGL] during 2019 but did not stand for re-election on 16 March 2020; he was a former director of Avesoro Resources Inc. (formerly Aureus Mining; [AIM/TSX: ASO, taken private in January 2020]); he is currently the non-executive chairman of Canyon Resources [ASX: CAY] which is Altus’ former partner in the Birsok Project and he is a non-executive director of Kore Potash plc [ASX, AIM & JSE: KP2]. Steven Poulton Chief Executive Officer Steven is the Chief Executive and co-founder of Altus Strategies and a director of its exploration subsidiaries. He holds an Honours degree in Geology from Southampton University and a Master's degree in Mining Geology from the Camborne School of Mines. He started his career with Mano River in 1998, joining the board in 2007. In 2002 he co-founded and was Chief Executive of Ariana Resources, a gold producer in Turkey which listed on AIM in 2005 [AIM: AAU]. In 2004 he founded and was interim Chairman of African Aura Resources which listed on the TSX-V in 2008 and which through its merger with Mano River in 2009 created African Aura Mining. In 2011 African Aura Mining was divested into Page | 36 Altus Strategies Plc 31 December 2019 | Annual Report Afferro Mining, which was acquired by IMIC in 2013 for approximately US$200m, and west African gold producer Avesoro Resources (formerly Aureus Mining). In 2007 he was a founding non-executive director of west Africa focused diamond development company Stellar Diamonds. Stellar listed on AIM by way of a reverse takeover of West African Diamonds in 2010 and was acquired by Newfield Resources [ASX:NWF] in 2018. In 2008 Altus co-founded and Steven was joint Investment Manager to Altus Resource Capital, a five-year closed-ended and long-only investment fund, focused on junior resource equities. Altus Resource Capital listed on the LSE in 2009 and by 2011 had approximately US$150m of assets under management. He is a director of Aegis Asset Management and a co-founder of industry networking groups 'The Oxford Mining Club' and 'Resource IQ'. He is a Fellow of the Geological Society of London, a Fellow of the Institute of Materials, Minerals and Mining and a member of the Association of Mining Analysts. Matthew Grainger Executive Director Matthew is an Executive Director and co-founder of Altus Strategies and a director of its exploration subsidiaries. He holds an Honours degree in Earth Science from Anglia Ruskin University and a Master's degree in Mining Geology from the Camborne School of Mines. Matthew joined Cambridge Mineral Resources in 1999 and in 2002 he co-founded Ariana Resources which listed on AIM in 2005 [AIM: AAU]. In 2006 he joined African Aura Resources as Chief Operating Officer which listed on the TSX-V in 2008 and, through its merger with Mano River in 2009, created African Aura Mining, which in 2011 was divested into Afferro Mining which was acquired by IMIC in 2013 and gold producer Avesoro Resources (formerly Aureus Mining). Matthew is a director of Aegis Holdings and a co-founder of industry networking groups The Oxford Mining Club and Resource IQ. Robert Milroy Non-Executive Director Robert is Chairman of Milroy Capital Ltd a family investment company that manages various private equity investments in natural resources, engineering, renewable energy and commercial real estate. He has over 40 years of operational experience either as an owner or senior manager in the investment, mining and petroleum industries. He was a founding and Managing Director of the Corazon Capital Group; a Guernsey regulated investment management and stockbroking company for 14 years until its takeover by Canaccord Genuity in 2010. In addition, he was the Managing Director of Eagle Drilling, a drilling firm that specialised in hard rock core drilling in Central and Western Africa. Currently he is a Non-Executive Director of the EV Private Equity Funds III, IV, V, V Plus and Chairman of the Zeropex Group Ltd a water engineering firm. Previously he was a Non-Executive Director of Altus Resource Capital, Altus Global Gold and Genuity Energy a UK onshore oil and gas exploration firm. Robert graduated with a Bachelor of Commerce (Honours) from the University of Manitoba in 1971. He is a Member of the Association of Mining Analysts, Chartered Institute for Securities & Investment, Petroleum Exploration Society of Great Britain and Institute of Directors. Michael D. Winn Non-Executive Director Michael was the Chairman and CEO at Legend, a TSX-V listed company which was acquired by Altus in January 2018. Michael is President of Seabord Capital Corp. which provides investment analysis and financial services to companies operating in the energy and mining sectors and he is the President of Seabord Services Corp., a Canadian company providing management and regulatory services to private & public mining companies. Michael is also the Chairman of EMX Royalty Corp. He worked as an analyst for Global Resource Investments Ltd. from 1993 to 1997 where he specialized in the evaluation of Page | 37 Altus Strategies Plc 31 December 2019 | Annual Report emerging oil and gas and mining companies, and has worked in the oil and gas industry since 1983 and the mining industry since 1992. Michael is currently a director and officer of several TSX-V and NYSE listed companies operating in Canada, Latin America, Europe and Africa. He holds a B.S. in Geology from the University of Southern California. Karim Nasr Non-Executive Director (appointed 06 April 2020) Karim is the Chief Executive of La Mancha Group, an investment company with a portfolio of gold mining assets in West Africa, having joined as its Chief Financial Officer in 2018. He is also a director of La Mancha’s TSX-listed subsidiary, Golden Star Resources Ltd. Prior to La Mancha, Karim was the CEO and CIO of Digital World Capital (DWC), an FCA regulated investment manager in Telecom and Media companies. At DWC, Karim was in charge of the investment strategy and risk management for the DWC Cross Com Fund on a discretionary basis and of the special situation investments and debt restructuring advisory practice for private clients on a non-discretionary basis. Prior to DWC, Karim was in charge of Corporate Finance for Wind Telecom, one of the largest mobile operators by subscribers, where, from 2001 to 2011, he led over 225 financing and investment projects in the telecom sector, closed US$68 billion in debt and equity financings, US$67 billion in M&A, managed up to US$30 billion in liabilities, and closed major landmark debt restructuring deals. From 1996 to 1999, Karim was the CEO of Anzima s.a.l., a Lebanese IT consulting and software firm. He started his career in 1995 at An-Nahar s.a.l., a Lebanese print media group. Karim holds a Masters in Management from the University of Paris IX Dauphine with a major in Finance. He is fluent in English, Arabic and French. Martin Keylock Chief Financial Officer Martin was promoted to the position of Chief Financial Officer on 1 July 2019, having joined the Group as its Financial Controller in November 2018. He took over from David Miles, who served as the CFO after the conclusion of the Plan of Arrangement with Legend in January 2018. David is continuing to act as an adviser to the Group, through the Group’s existing service agreement with Vancouver-based Seabord Services Corp. Martin has over 17 years of experience in corporate accounting. Prior to joining Altus, he worked in the telecoms and architecture sectors, and most recently as Financial Controller at Velocys plc, a multinational, AIM-listed renewable fuels business. He has been a member of the ACCA since 2007, and holds an MA from the University of Glasgow and an MSc from Aston University in the United Kingdom. Segregation of duties The responsibilities of the Chairman include providing leadership to the Board, the efficient organisation and conduct of the Board’s function, setting the Board’s agenda, briefing all directors in relation to issues arising at Board meetings and ensuring that adequate time is available for discussion of all agenda items. The Chairman is also responsible for ensuring an effective strategy is in place for communicating with shareholders, arranging Board performance evaluation, promoting a culture of openness and debate by facilitating the effective contribution to the Board of non-executive directors in particular, and for ensuring constructive and respectful relations between the executive and non- executive directors and between the Board and senior management. The executive director’s co-ordinate the day-to-day running of the Group, and are responsible for making recommendations to the Board regarding short and medium-term budgets, targets, strategies and objectives for the Group. Page | 38 Altus Strategies Plc 31 December 2019 | Annual Report The Company makes available independent professional and legal advice to all directors, to ensure they are able to discharge their duties. In addition, all Board members have access to the services of the Company Secretary, who is responsible for ensuring compliance with all Board procedures. Function of the Board and its Committees The Board is responsible for approving the Group strategy and policies, for safeguarding the assets of the Group, and is the ultimate decision-making body of the Group in all matters except those that are reserved for specific shareholder approval. The Board generally meets on a quarterly basis with additional meetings as and when required. Through these meetings it provides control, guidance and oversight in reference to those matters reserved for its decision. This includes: - approval of the budget and business plan - major capital expenditure - acquisitions and disposals - risk management policies - approval of the financial statements The Board delegates certain aspects of its responsibilities to the Board committees which have terms of reference as listed below. Audit Committee The Audit Committee comprises Robert Milroy, David Netherway and Michael Winn and is chaired by Robert Milroy. It meets at least four times a year. The committee has responsibility for ensuring the integrity of the financial statements, and that the financial performance of the Company is properly measured and reported by overseeing the production of annual and interim accounts and results announcements, and confirming any changes to accounting policies. The Audit Committee has unrestricted access to the Company’s external auditor in London, PKF Littlejohn LLP. It reviews reports from the auditor, including recommendations regarding accounting and other internal controls. It advises the Board with regard to the appointment of the auditor and monitors the extent of non-audit services undertaken. The committee monitors the effectiveness of internal controls and risk management systems on behalf of the Board (see “Risk Management” section later in this report). Remuneration Committee The Remuneration Committee comprises Robert Milroy, David Netherway and Michael Winn and is chaired by Robert Milroy. It meets at least once a year. The committee has responsibility for determining the Group’s remuneration policies, and, within these terms, for making recommendations to the Board on the individual remuneration packages of the Company’s Chief Executive, Chairman and the Executive and Non-executive Directors. This includes salary, bonus and incentive payments, and awards of shares and share options. Decisions regarding remuneration of the Group’s employees are delegated to the Group’s management, subject to approval of the annual budget and interim forecasts by the Board. The committee may consult with the Chief Executive as appropriate. No Director may be involved in any discussions relating to their own remuneration. Page | 39 Altus Strategies Plc 31 December 2019 | Annual Report Nomination Committee Given the size of the Board and the long-term stability of the management team, the Board has not yet established a separate Nomination Committee. The Board is collectively responsible for reviewing the structure, size and composition (including skills, knowledge and experience) of itself and its committees, and for considering appointments of additional and replacement directors. Meeting attendance Attendance at the meetings of the Board and committee meetings during the year is set out below. The denominator is the number of meetings the director was eligible to attend. Board Audit Committee Remuneration 5/6 7/7 7/7 7/7 7/7 3/4 n/a n/a 4/4 4/4 Committee 2/2 n/a n/a 2/2 2/2 David Netherway Steven Poulton Matthew Grainger Robert Milroy Michael Winn Responsibilities of the Board Internal controls The Board acknowledges its responsibility for the Group’s system of internal controls and procedures for the purpose of protecting shareholders’ interests and safeguarding of the Group’s assets. This covers operations, financial and risk management and regulatory compliance. Such systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives; any system can provide only reasonable, and not absolute, assurance against material misstatement or loss. In adopting its controls and procedures, the Board takes into consideration their appropriateness to the Group, given its size, complexity, stage of development, regulatory environment (AIM and TSX-V) and areas of operation. In at least one of the meetings of the Audit Committee each year the Group’s internal controls and procedures are reviewed for effectiveness, and amended, updated and expanded as deemed necessary. The Board ensures that its controls are applied as consistently as possible across its subsidiary companies in the UK and overseas. The two most significant assets of the Group are its exploration licences and its cash balances. The Board reviews the standing of the licences each quarter with respect to the fulfilment of local requirements to submit renewals, reports and other documentation, to pay fees and taxes, and to undertake certain levels of exploration. The Board also monitors the Group’s treasury management, which institutions it holds money with and the balance of currencies held relative to its operational requirements. Risk Management The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by senior management of forecasts, project milestones, budgets and timelines. In identifying potential risks, the Board looks at: Inherent risk of mining prospects - - Macroeconomic environment, particularly with regard to the gold price Page | 40 Altus Strategies Plc 31 December 2019 | Annual Report - Financing environment - Operational environment The Board has concluded that given the size and level of development of the Group it is currently not appropriate to establish an internal audit function, although it will keep this option under review. Anti-bribery and anti-corruption The Company has implemented an anti-bribery and anti-corruption policy and also implemented appropriate procedures to ensure that the Board, employees and consultants of the Group comply with the UK Bribery Act 2010. Financial information The Group’s management has adopted internal controls to provide reasonable assurance regarding the reliability of financial information, both for internal financial control, and for the preparation of published financial statements. These controls are set out in a framework document entitled ‘Financial Position and Prospects Procedures’. The controls are reviewed regularly throughout the year. Management accounts are produced on a monthly basis, results are reviewed against an annual budget and periodic reforecasts, and significant variances are reported. The financial statements for 2019 have been reviewed by the Audit Committee in consultation with the Group’s auditor, PKF Littlejohn LLP. Particular attention was paid to the Group’s cash position, presentation of the accounts on a going concern basis and access to future funding, and to support for the value of the Group’s intangible assets as represented by its capitalised licence costs. The Audit Committee regularly reviews the provision of non-audit services from its auditors. It is satisfied that the provision of non-audit services by PKF Littlejohn LLP is compatible with the general standard of independence for auditors and does not give rise to any conflict of interest. Share dealing code The Company has adopted a share dealing code for the Directors and applicable employees to ensure compliance with the AIM rules relating to dealings in the Company’s securities and with the Market Abuse Regulations as applied to AIM-listed companies. Relations with shareholders The Board is accountable to the Company’s shareholders and as such it is important for the Board to appreciate the aspirations of shareholders and equally that the shareholders understand how the actions of the Board and short-term financial performance relate to the achievement of the Group’s longer-term goals. The Board is committed to effective communication with the shareholders of the Company. Formal communication is provided through the publication of the Annual Report and quarterly operational updates and financial results. In addition, news releases are issued throughout the year and the Company maintains a website (www.altus-strategies.com) on which press releases, corporate presentations and financial information are available to view. Shareholders and other interested parties can subscribe to receive notification of news updates and other documents from the Company via email. Enquiries from individual shareholders on matters relating to the business of the Company are welcomed. Executive Directors meet and hold calls with major shareholders to discuss the progress of Page | 41 Altus Strategies Plc 31 December 2019 | Annual Report the Company and provide periodic feedback to the Board following meetings with shareholders. This includes travelling to Canada and the US to meet North American-based shareholders. The Board welcomes the attendance of shareholders at the Annual General Meeting and the Executive Directors are happy to answer shareholders’ questions. By order of the Board “David Netherway” David Netherway Chairman 28 April 2020 Page | 42 Altus Strategies Plc 31 December 2019 | Annual Report Directors’ Report The directors present their annual report and financial statements for the year ended 31 December 2019. Company Altus Strategies plc is the parent company of the Group. It is a public limited company listed on London’s AIM and Toronto’s TSX-V and incorporated and registered in the United Kingdom. The registered office address is The Orchard Centre, 14 Station Road, Didcot, Oxfordshire, OX11 7LL, United Kingdom. Principal activity The principal activity of the Group and Company is that of a project and royalty generator in the field of mineral exploration. An overview of the business model is included on pages 7-9, and a detailed review of the Group’s activities, together with expected future developments and objectives of the Group, is provided within the Strategic Report on pages 17-22. Results and dividends The results for the year are set out in the Group Statement of Comprehensive income. No ordinary dividends were paid during the year (2018: £Nil). The directors do not recommend payment of a final dividend. Directors The directors who, unless otherwise indicated, held office during the year and up to the date of signature of the financial statements were as follows: David Netherway (Non-executive Chairman) Steven Poulton (Chief Executive Officer) Matthew Grainger (Executive Director) Robert Milroy (Non-executive Director) Michael Winn (Non-executive Director) Karim Nasr (Non-executive Director) – appointed 06 April 2020 Substantial shareholdings The Directors are aware of the following substantial interests or holdings in 3% or more of the Company’s ordinary called up share capital as at 09 April 2020 (number of Ordinary Shares post- consolidation). Major shareholders (* indicates Director of the Company) La Mancha Holdings S.à r.l. DELPHI Unternehmensberatung AG Steven Poulton* Resource Capital Investment Corp. Michael Winn* David Netherway* Share Capital Number of shares % of issued 24,845,878 7,000,000 5,565,096 4,691,600 3,743,980 2,441,375 capital 35.45% 9.99% 7.94% 6.69% 5.34% 3.48% Details of the share capital and movements in share capital during the year are disclosed in note 27 to Page | 43 Altus Strategies Plc 31 December 2019 | Annual Report the financial statements. During the year no share options were issued to directors. Company’s listing The Company’s ordinary shares have been trading on AIM in London since 10 August 2017 and on TSX- V in Toronto since 6 June 2018. Going Concern and availability of finance The Directors have a reasonable expectation that the Group and Company will be able to access adequate financial resources to continue in operational existence for the foreseeable future and, therefore, they continue to adopt the going concern basis in the preparation of the annual report and financial statements. Further details on the Directors’ assumptions are included in the statement on going concern in note 1 of the financial statements. Website publication The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website (www.altus-strategies.com) and for ensuring the annual report and the financial statements are made available on its website. Financial statements are published on the website in accordance with UK legislation governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The Group is compliant with AIM Rule 26 regarding the Group’s website. Principal Risks and uncertainties The principal risks and uncertainties of the Group are outlined in the Strategic Report on pages 17-22. Share dealing The Company has adopted a share dealing code for the Directors and relevant employees in accordance with the AIM Rules and Market Abuse Regulations and takes proper steps to ensure their compliance. Details of this code are set out in the Corporate Governance Report on pages 34-42. Directors and their interests The Directors who served during the year, together with their directly beneficial interests in the shares of the Company were as follows (number of shares pre-consolidation). 31 December 2019 Pre- consolidation 12,206,875 27,825,481 10,427,828 1,937,179 18,719,898 31 December 2019 Post- consolidation 5.81% 2,441,375 5,565,096 13.24% 4.96% 2,085,566 0.92% 387,436 8.90% 3,743,980 31 December 2018 6.04% 10,750,600 25,150,000 14.14% 5.14% 0.32% 18,719,898 10.52% 9,147,500 575,000 David Netherway1 Steven Poulton2 Matthew Grainger3 Robert Milroy4 Michael Winn5 1. Includes 266,680 Ordinary Shares post-consolidation held by Diane Rissik (1,333,400 pre-consolidation) 2. Includes 320,000 Ordinary Shares post-consolidation held by Susannah Poulton (1,600,000 pre consolidation) 3. Includes 144,000 Ordinary Shares post-consolidation held by Anna Grainger (720,000 pre-consolidation) 4. Held through Milroy Capital Limited a company controlled by Robert Milroy 5. Figure for 31 December 2018 incorrectly stated as 17,969,898 shares in 2018 annual report; correct % was stated Page | 44 Altus Strategies Plc 31 December 2019 | Annual Report Key performance indicators (KPIs) Information on the Group’s KPIs is included in the Strategic Report on pages 17-22. Section 172 requirements The Group’s response to the requirements of section 172 of the Companies Act 2006 is included in the Strategic Report on pages 17-22. Suppliers & Contractors The Group has a prompt payment policy and seeks to ensure that all liabilities are settled within the supplier’s terms. Through fair dealings the Group aims to cultivate the goodwill of its contractors, consultants and suppliers. Future developments The Group will continue to execute its project and royalty generator business model during 2020. this is expected to include: - - - continuing to grow the number of projects in our portfolio in our existing countries of operations as well as in new jurisdictions; completing a number of royalty-based joint venture and other transactions on our existing assets; and identifying potential project, royalty and corporate acquisition opportunities and where possible concluding accretive transactions on these. Financial risk management In common with all other businesses, the Group is exposed to a variety of financial risks that arise from its area of operations. These include the effect of changes in foreign currency exchange rates, funding risk, credit risk and liquidity risk. The Group has a risk management programme in place that seeks to limit the adverse effects on the financial performance of the Group. The Group does not use derivative financial instruments to manage foreign currency risk and, as such, no hedge accounting is applied. Financial risks are detailed in the Principal risks and uncertainties section of the Strategic Report on page 18 and in note 24 of the financial statements. Events after the reporting date The events after the reporting date are set out in note 30 to the Financial Statements. Directors’ and Officers’ Indemnity Insurance The Group maintains Directors and Officers insurance, and its provision for qualifying third-party indemnity for the benefit of its Directors and Officers was in place throughout the year and remained in place at the reporting date. Annual General Meeting The Annual General Meeting of the Company will be held at the Company’s offices of the Company on Tuesday 16 June 2020. Auditor PKF Littlejohn LLP has indicated its willingness to continue in office as the Group’s auditor. A resolution Page | 45 Altus Strategies Plc 31 December 2019 | Annual Report proposing that they be re-appointed will be put forward at the Annual General Meeting. Statement of disclosure to auditor So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the Directors individually have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information. On behalf of the board, “Steven Poulton” Steven Poulton Chief Executive Officer 28 April 2020 Page | 46 Altus Strategies Plc 31 December 2019 | Annual Report Directors’ Remuneration Report Remuneration Committee The Remuneration Committee comprises Robert Milroy, David Netherway and Michael Winn and is chaired by Robert Milroy. It meets at least once a year. Further details are included in the Corporate Governance Report on pages 34-42. Due to the parent company’s listing on AIM it is not required to comply with the following regulations, and has therefore excluded certain disclosures required by these regulations. Report Regulations 2013 - - UKLA Listing Rules - the disclosure provisions under schedule 8 to SI 2008/410 of the Large and - Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 Remuneration policy for Executive and Non-executive Directors The remuneration policy for executive directors is designed to provide a competitive package, to reward good performance and to align the directors’ interests with those of shareholders. The package includes basic salary (which may be partly deferred and paid in shares), bonus and company pension contributions in line with Group policy, as well as share options, although during 2019 no share options were held by or granted to any director. Remuneration packages are reviewed annually. Bonuses for executive directors in 2019 were set at 75% of basic salary and linked to a number of KPI targets. Considering targets that had been met and other performance factors, the Committee determined that a bonus of 37.5% of basic salary would be payable for the year and this was paid in 2020. Non-executive Directors receive only basic fees and do not receive bonuses or company pension contributions. They are included in the policy on share options although during 2019 no options were held, granted or exercised. Contracted and deferred remuneration In each year directors may choose to defer some of their remuneration, whether this is salary or company pension contributions, until such time as the Company has the liquid resources available to be able to settle the deferred amounts in cash. Deferred remuneration is recorded in the accounts by way of an accrual. A correction was made to the accounts during 2018 to increase the accrual in respect of the period up to the end of 2017, which means that the charge for the comparative year appears higher than the salary or fees that were due for that year. The total value of directors’ remuneration for 2019 was £411,875, comprising £305,000 for executive director salaries and non-executive director fees, £84,375 for executive director bonuses and £22,500 for executive director pension contributions. In respect of salaries and fees, £242,340 was paid during the year, of which £172,340 was paid in December. In respect of bonuses, £21,563 was paid in the year, which was a deferred bonus from 2017. All of the 2019 bonuses were outstanding as at 31 December 2019. The balances of deferred salary and bonuses were paid in March and April 2020. Certain directors participated in the private placement in December, subscribing for a total of 6,774,263 shares for total proceeds to the Company of £352,262 (C$609,684). Page | 47 Altus Strategies Plc 31 December 2019 | Annual Report The table below is a reconciliation of remuneration payable for 2019, accrual adjustments for prior years and the charge in the accounts in the year as recorded in note 10 to the financial statements. David Steven Matthew Netherway Poulton Grainger £ £ £ Robert Milroy £ Michael Total Winn £ £ Salary / Fees 35,000 125,000 100,000 25,000 20,000 305,000 Bonuses Pensions Total - - 46,875 12,500 37,500 10,000 - - - - 84,375 22,500 35,000 184,375 147,500 25,000 20,000 411,875 The deferred bonus in respect of 2017 that was disclosed in the Directors’ Remuneration Report in 2018 had not been accrued and the charge for this of £64,687 was added during the year. The accrual for deferred salary for 2017 was found to be £1,819 too high and was reduced in the year. Adding these two adjustments to the figures for 2019 brought the total charge in the accounts for the combined directors’ remuneration to £474,743. Remuneration payable for the three years 2017 – 2019 Remuneration payable to the directors of Altus for the last three years, comprising salary or fees, bonus and pension contributions is in the table below. Payable: Salary/fees Bonus Pension Total David Steven Matthew Netherway Poulton Grainger £ 35,000 35,000 29,166 - - - - - - 35,000 35,000 29,166 £ £ 125,000 122,500 86,250 46,875 - 74,503 12,500 12,250 8,625 184,375 134,750 169,378 100,000 100,000 86,250 37,500 - 150,502 10,000 10,000 8,625 147,500 110,000 245,377 Robert Milroy £ 25,000 25,000 20,833 - - - - - - 25,000 25,000 20,833 Michael Winn £ 20,000 18,333 - - - - - - - 20,000 18,333 Total £ 305,000 300,833 222,499 84,375 - 225,005 22,500 22,250 17,250 411,875 323,083 - 464,754 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 Page | 48 Altus Strategies Plc 31 December 2019 | Annual Report Remuneration paid during the three years 2017 – 2019 Remuneration actually paid to directors (prior to the applicable deductions of tax or national insurance), either in cash or equity, for the last three years was as follows. David Netherway Steven Poulton Matthew Grainger Robert Milroy* Michael Winn Total Chairman CEO Executive Non-executive Non-executive Cash Equity Cash Equity Cash Equity Cash Equity Cash Equity Cash Equity Total £ £ £ £ £ £ £ £ £ £ £ £ £ Received: Salary/fees Bonus Pension Total 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 74,167 - - - - - - - - 74,167 - - - - 6,250 97,500 - - 91,090 86,000 - 70,833 75,000 37,500 72,500 68,083 33,750 - - - - - - - - - - 31,378 - - - 6,250 97,500 - - - - - - - - 21,563 - 128,940 17,675 - 40,200 63,750 86,000 75,000 68,878 72,500 237,223 33,750 - - - - - - - - - 70,833 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 242,340 183,500 - 242,340 - 183,500 105,583 181,250 286,833 21,563 - 160,318 17,675 - 40,200 281,578 183,500 - - 21,563 - - 160,318 - - - 17,675 - 40,200 - 281,578 - 183,500 306,101 181,250 487,351 * Robert Milroy is a director through Milroy Capital Ltd Equity received in lieu of cash payment of salary/fees in 2017 was at a price of 12.5p (pre consolidation) and included amounts due from 2015, 2016 and 2017: David Netherway £75,000 (600,000 shares), Steven Poulton £72,500 (580,000 shares), Matthew Grainger £33,750 (270,000 shares) Page | 49 Altus Strategies Plc 31 December 2019 | Annual Report Deferred remuneration for the three years 2017 – 2019 Remuneration that directors elect to defer in order to preserve the Company’s cash balance in respect of the three years 2017-2019, and which formed the balance of deferred remuneration at the end of the year is as follows: Deferred: Salary/fees Bonus Pension Total 2019 2018 2017 2019 2017 2019 2018 2017 Prior 2019 2018 2017 Prior Total David Steven Matthew Netherway Poulton Grainger £ £ £ Robert Milroy £ - - - - - - - - - - - - - - 116,250 36,250 25,000 28,750 46,875 43,125 12,500 12,250 8,625 29,250 327 - 37,500 - - - - - 175,625 73,750 37,250 80,500 29,250 327 - - 322,625 74,077 Michael Total Winn £ 20,000 18,333 - - - - - - - 20,000 18,333 - - £ 172,500 43,660 28,750 84,375 43,125 12,500 12,250 8,625 29,250 269,375 55,910 80,500 29,250 38,333 435,035 - - - - - - - - - - - - - - Purchase of Company shares by directors In addition to deferring remuneration, the directors of the Company have used their own cash to purchase shares in the Company; these purchases in 2017-2019 were as follows (pre-consolidation): David Steven Matthew Robert Michael Total Netherway Poulton Grainger Milroy* Winn Chairman CEO Executive Non-exec. Non-exec. 2019 Value £ Shares 75,727 139,125 66,578 70,834 1,456,275 2,675,481 1,280,328 1,362,179 Average price p 5.20 5.20 5.20 5.20 2018 Value £ Shares Average price p 2017 Value £ Shares - - - 25,613 15,055 11,798 795,431 400,000 325,000 3.22 3.76 3.63 41,479 163,084 101,518 31,250 1,114,000 2,056,800 3,017,800 250,000 Average price p 3.72 7.93 3.36 12.50 Total Value £ Shares 158,685 516,519 299,724 156,930 3,684,275 8,379,943 8,115,928 2,512,179 Average price p 4.31 6.16 3.69 6.25 * Purchased by Milroy Capital Ltd - - - - - - - - - - - - 352,264 6,774,263 5.20 52,465 1,520,431 3.45 337,331 6,438,600 5.24 1,131,856 22,692,325 4.99 Page | 50 Altus Strategies Plc 31 December 2019 | Annual Report Service period Both executive directors have service contracts with the Group with notice periods of three months. No director has a service agreement with a notice period in excess of three months. Share options The Company and its subsidiaries have not had any outstanding share options since Altus Strategies plc’s AIM listing in 2017, when the previous scheme was cancelled. During the year, the Company received shareholder approval to adopt a share option scheme to issue share purchase options to directors and employees and the Company plans to grant such options during 2020. By order of the Board “Robert Milroy” Robert Milroy Chairman of the Remuneration Committee 28 April 2020 Page | 51 Altus Strategies Plc 31 December 2019 | Annual Report Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the AIM and in accordance with the rules of the TSX-V. In preparing these financial statements, the directors are required to: - - select suitable accounting policies and apply them consistently state whether applicable IFRSs as adopted by the European Union have been followed for the Group and Parent Company financial statements, subject to any material departures disclosed and explained in the financial statements - make judgements and accounting estimates that are reasonable and prudent - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website. On behalf of the board “Steven Poulton” Steven Poulton Chief Executive Officer 28 April 2020 Page | 52 Altus Strategies Plc 31 December 2019 | Annual Report Independent Auditor’s Report to the Members of Altus Strategies plc Opinion We have audited the financial statements of Altus Strategies plc (the parent company) and its subsidiaries (the group) for the year ended 31 December 2019 which comprise the Group Statement of Comprehensive Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Changes in Equity, the Group and Parent Company Statements of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion:     The financial statements give a true and fair view of the state of the group’s and of the parent company's affairs as at 31 December 2019 and of the group’s and parent company’s loss for the year then ended; The group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; The parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and The financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter We draw your attention to note 1 of the financial statements, which describes the directors of the group and parent company’s assessment of the COVID-19 impact on its ability to continue as a going concern. The directors have explained that the events arising from the COVID-19 outbreak do not impact the group’s use of the going concern basis of preparation nor do they cast significant doubt about the group’s and parent company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. Our opinion is not modified in this respect. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:   the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the directors have not disclosed in the financial statements any identified material uncertainties Page | 53 Altus Strategies Plc 31 December 2019 | Annual Report that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Our application of materiality The materiality applied to the group financial statements was £140,000 (2018: £180,000), based on thresholds for net assets and the loss before tax. The performance materiality for the group was £98,000 (£126,000). The materiality applied to the parent company financial statements was £30,000 (£60,000) based upon the loss before tax. The performance materiality for the parent company was £21,000 (£42,000). An overview of the scope of the audit In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. 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. The accounting records of the parent company and all subsidiary undertakings are centrally located and audited by us based upon materiality or risk. The key audit matters addressed, and how these were addressed are outlined below. 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 year 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. Key Audit Matter How the scope of our audit responded to the key audit matter Valuation and recoverability of We reviewed the Group’s exploration exploration assets and, for the parent licences and permits to confirm good title company, amounts due from and standing. For licences which had subsidiary and related undertakings expired and are in the process of renewal, (refer notes 16,18 and 20). we assessed the relevant factors, in conjunction with discussions with The carrying value of intangible assets as management, regarding the likelihood of at 31 December 2019 is £3,202,950 (2018: renewal. £4,071,870) which comprises costs associated with early stage exploration We reviewed the terms and status of the licenses and projects in Africa. The joint venture agreements in place, in carrying value of investments in conjunction with the accounting subsidiaries, together with intra-group treatment adopted under the terms of receivables, was £9,190,705 (2018: those agreements. £7,287,035) as at 31 December 2019. Page | 54 Altus Strategies Plc 31 December 2019 | Annual Report The early stage projects were reviewed for These carrying values are tested annually indicators of impairment in accordance for impairment. There is a risk that the with IFRS 6. We discussed with carrying values are impaired given they management the scope of their future comprise early stage exploration projects budgeted and planned expenditure on and therefore require an assessment of the licence area, together with a review of impairment indicators under IFRS 6. The subsequent events in relation to disposals recoverability of investments and intra of licenses and subsidiaries. group receivables in turn are based upon the recoverability of the underlying The recoverability of amounts due from exploration projects. subsidiary and related undertakings were assessed by reference to the underlying exploration projects. Other information The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of our audit:   the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report. We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:   adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or Page | 55 Altus Strategies Plc 31 December 2019 | Annual Report   certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as 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 A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this [Signed] David Thompson (Senior Statutory Auditor) for and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD 28 April 2020 Page | 56 Altus Strategies Plc 31 December 2019 | Annual Report Independent Auditor’s Report to the Members of Altus Strategies plc in Respect of Canadian National Instrument 52-107 Opinion We have audited the group financial statements of Altus Strategies plc and its subsidiaries (the group) for the year ended 31 December 2019 which comprise the Group Statement of Comprehensive Income, the Group Statement of Financial Position, the Group Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). In our opinion: - - the group financial statements present fairly, in all material respects, the financial position of the group as at 31 December 2019 and 31 December 2018 and its financial performance and its cash flows for the years then ended; and the group financial statements have been properly prepared in accordance with IFRSs as issued by the IASB. Basis for Opinion: We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by the IASB 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 International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the group financial statements in the UK, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter We draw your attention to note 1 of the financial statements, which describes the directors of the group and parent company’s assessment of the COVID-19 impact on its ability to continue as a going concern. The directors have explained that the events arising from the COVID-19 outbreak do not impact the group’s use of the going concern basis of preparation nor do they cast significant doubt about the group’s and parent company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. Our opinion is not modified in this respect. 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 year 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. Page | 57 Altus Strategies Plc 31 December 2019 | Annual Report Key Audit Matter How the scope of our audit responded to the key audit matter Valuation and recoverability of exploration We reviewed the Group’s exploration licences assets and, for the parent company, amounts and permits to confirm good title and standing. due from subsidiary and related undertakings For licences which had expired and are in the (refer notes 16,18 and 20). process of renewal, we assessed the relevant factors, in conjunction with discussions with The carrying value of intangible assets as at 31 management, regarding the likelihood of December 2019 is £3,202,950 (2018: £4,071,870) renewal. which comprises costs associated with early stage exploration licenses and projects in Africa. The We reviewed the terms and status of the joint carrying value of investments in subsidiaries, venture agreements in place, in conjunction with together with intra-group receivables, was the accounting treatment adopted under the £9,190,705 (2018: £7,287,035) as at 31 terms of those agreements. December 2019. The early stage projects were reviewed for These carrying values are tested annually for indicators of impairment in accordance with IFRS impairment. There is a risk that the carrying 6. We discussed with management the scope of values are impaired given they comprise early their future budgeted and planned expenditure stage exploration projects and therefore require on the licence area, together with a review of an assessment of impairment indicators under subsequent events in relation to disposals of IFRS 6. The recoverability of investments and intra licenses and subsidiaries. group receivables in turn are based upon the recoverability of the underlying exploration The recoverability of amounts due from projects. Other information subsidiary and related undertakings were assessed by reference to the underlying exploration projects. The other information comprises the information included in the annual report and the management discussion and analysis, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the group financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Page | 58 Altus Strategies Plc 31 December 2019 | Annual Report Responsibilities of the directors The directors are responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group financial statements, the Directors are responsible for assessing the group’s 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. The directors are responsible for overseeing the Company’s financial reporting process. 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 International Standards on Auditing (ISAs) 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. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the group’s financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. - Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation (i.e. gives a true and fair view). - Are required to report on consolidated financial statements, obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for the audit opinion. Page | 59 Altus Strategies Plc 31 December 2019 | Annual Report We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The partner in charge of the audit resulting in this independent auditors’ report is David Thompson. [Signed] David Thompson (Engagement Partner) for and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD 28 April 2020 Page | 60 ALTUS STRATEGIES PLC Group Statement of Comprehensive Income For the Year Ended 31 December 2019 Company Registration No. 10746796 Continuing operations Management fees and costs recovered from Notes 4 6 7 11 4 12 13 joint venture partners Exploration costs expensed Administrative expenses Listing and acquisition related costs Loss from operations Finance (costs)/ income Other income Other gains/ (losses) on investments Loss before taxation Income tax Loss for the year Other comprehensive income Exchange differences on retranslation of net assets of subsidiaries Total comprehensive loss for the year Loss for the year attributable to: - Owners of the parent company - Non-controlling interest Total comprehensive income for the year attributable - Owners of the parent company - Non-controlling interest 2019 £ 59,911 (1,101,000) (785,031) (88,595) (1,914,715) (8,338) 151,875 (627,444) (2,398,622) - (2,398,622) Restated 2018 £ 89,678 (1,151,899) (700,113) (19,284) (1,781,618) 62 1,977 282,227 (1,497,352) - (1,497,352) (5,587) (76,992) (2,404,209) (1,574,344) (2,372,787) (25,835) (2,398,622) (2,378,374) (25,835) (2,404,209) (1,494,863) (2,489) (1,497,352) (1,571,855) (2,489) (1,574,344) Earnings per share (pence) attributable to the owners of the parent Basic earnings per share 14 (1.34) (0.90) The notes on pages 68-94 form part of these financial statements. Page | 61 ALTUS STRATEGIES PLC Group Statement of Financial Position As at 31 December 2019 Company Registration No. 10746796 Notes 15 16 28 18 19 20 21 20 22 21 27 27 Non-current assets Intangible assets Property, plant and equipment Right of use assets Investments at fair value through profit or loss Current assets Trade and other receivables Held-for-sale assets Cash and cash equivalents Total assets Current liabilities Trade and other payables Held-for-sale liabilities Provisions Non-current liabilities Trade and other payables Total liabilities Net current assets Net assets Equity Share capital Share premium Translation reserve Other reserves Retained earnings Total equity attributable to owners of the parent Non-controlling interest Total equity 2019 £ 3,202,950 3,190 80,262 302,072 3,588,474 196,219 66,023 2,212,642 2,474,884 6,063,358 (1,438,875) (13,182) (15,000) (1,467,057) (65,797) (1,532,854) 1,007,827 4,530,503 2,102,284 7,378,369 (82,579) 5,755,070 (10,524,314) 4,628,830 (98,327) 4,530,503 2018 £ 4,071,870 7,932 - 883,763 4,963,565 79,292 - 724,785 804,077 5,767,642 (486,934) - (15,000) (501,934) - (501,934) 302,143 5,265,708 1,777,827 6,018,822 (76,992) 5,770,070 (8,151,527) 5,338,200 (72,492) 5,265,708 The notes on pages 68-94 form part of these financial statements. The financial statements were approved by the board of directors and authorised for issue on 28 April 2020 and are signed on its behalf by: “Steven Poulton” Steven Poulton Chief Executive Officer Page | 62 ALTUS STRATEGIES PLC Company Statement of Financial Position As at 31 December 2019 Company Registration No. 10746796 Notes 2019 £ 2018 £ Non-current assets Investments in subsidiaries Investments at fair value through profit or loss Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Total liabilities Net current assets Net assets Equity Called up share capital Share premium Other reserves Retained earnings Total equity 17 16 19 21 27 27 4,608,930 4,608,930 208,953 4,817,883 4,598,461 219,343 4,817,804 9,635,687 (1,005,510) (1,005,510) - 4,608,930 2,705,706 37,544 2,743,250 7,352,180 (117,033) (117,033) 3,812,287 8,630,177 2,626,217 7,235,147 2,102,284 7,378,369 27,456 (877,932) 1,777,827 6,018,822 42,456 (603,958) 8,630,177 7,235,147 As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own statement of comprehensive income and related notes. The Company’s loss for the year was £273,974 (2018: £221,296). The notes on pages 68-94 form part of these financial statements. The financial statements were approved by the board of directors and authorised for issue on 28 April 2020 and are signed on its behalf by: “Steven Poulton” Steven Poulton Chief Executive Officer Page | 63 ALTUS STRATEGIES PLC Group Statement of Changes in Equity For the Year Ended 31 December 2019 Balance at 1 January 2018 Year ended 31 December 2018 Loss for the year Other comprehensive loss for the year Total comprehensive income for the period Issue of share capital Share issue costs Issue of warrants Warrants exercised Total transactions with owners, recognised directly in equity Balance at 31 December 2018 Year ended 31 December 2019 Loss for the year Other comprehensive loss for the year Total comprehensive income for the year Share Share premium Translation Other Notes capital account reserve reserves Retained earnings £ Non- Total controlling equity interest £ £ Total £ 5,727,614 (6,656,664) 1,146,758 (70,003) 1,076,755 £ £ 1,076,808 999,000 - - - - - - 27 684,519 5,103,396 - - (146,274) - 16,500 62,700 701,019 5,019,822 £ - - (76,992) (76,992) - - - - - £ - - - - - 42,456 - 42,456 (1,494,863) (1,494,863) (2,489) (1,497,352) - (76,992) - (76,992) (1,494,863) (1,571,855) (2,489) (1,574,344) - - - - - 5,787,915 (146,274) 42,456 79,200 5,763,297 5,338,200 - - - - - 5,787,915 (146,274) 42,456 79,200 5,763,297 (72,492) 5,265,708 1,777,827 6,018,822 (76,992) 5,770,070 (8,151,527) - - - - - - - (5,587) (5,587) - - - - - - (15,000) (2,372,787) (2,372,787) (25,835) (2,398,622) - (5,587) - (5,587) (2,372,787) (2,378,374) (25,835) (2,404,209) - - 1,684,004 (15,000) - - 1,684,004 (15,000) Issue of share capital Warrants expired 27 324,457 1,359,547 - - Total transactions with owners, recognised directly in equity 324,457 1,359,547 (5,587) (15,000) (2,372,787) (709,370) (25,835) (735,205) Balance at 31 December 2019 2,102,284 7,378,369 (82,579) 5,755,070 (10,524,314) 4,628,830 (98,327) 4,530,503 The notes on pages 68-94 form part of these financial statements. Page | 64 ALTUS STRATEGIES PLC Company Statement of Changes in Equity For the Year Ended 31 December 2019 Share Share premium Other Retained capital account reserves earnings Total Notes £ 1,076,808 £ 999,000 - - 27 684,519 - 16,500 701,019 5,103,396 (146,274) - 62,700 5,019,822 £ - - - 42,456 - 42,456 £ £ (382,662) 1,693,146 (221,296) (221,296) - - - - - 5,787,915 (146,274) 42,456 79,200 5,763,297 Balance at 1 January 2018 Year ended 31 December 2018 Loss and total comprehensive income for the year Issue of share capital Share issue costs Issue of warrants Exercise of warrants Total transactions with owners, recognised directly in equity Balance at 31 December 2018 1,777,827 6,018,822 42,456 (603,958) 7,235,147 Year ended 31 December 2019 Loss and total comprehensive income for the year Issue of share capital Expiry of warrants Total transactions with owners, recognised directly in equity - - 27 324,457 1,359,547 - - - - (15,000) (273,974) (273,974) - - 1,684,004 (15,000) 324,457 1,359,547 (15,000) (273,974) 1,395,030 Balance at 31 December 2019 2,102,284 7,378,369 27,456 (877,932) 8,630,177 The notes on pages 68-94 form part of these financial statements. Page | 65 ALTUS STRATEGIES PLC Group Statement of Cash Flows For the Year Ended 31 December 2019 Cash flows from operating activities Loss from continuing operations Less: movement in depreciation Less: impairment of intangible assets Equity-settled share based payments Foreign exchange on foreign operations Decrease in trade and other receivables Increase in trade and other payables Other working capital 2019 £ 2018 £ (1,914,715) (1,781,618) 26,210 39,210 22,103 - 32,203 185,083 29,213 7,331 20,529 - (77,082) 34,712 7,453 1,977 Net cash outflow used in operating activities (1,580,693) (1,786,698) Investing activities Cash acquired on purchase of subsidiary Proceeds from sale of subsidiary Proceeds from sale of investment Purchase of intangible assets Purchase of property, plant and equipment Interest received Interest paid Net cash generated from/(used in) investing activities Financing activities Net proceeds from the issue of shares Proceeds for which issue of shares pending (see note 21) Principal element of lease payments Interest element of lease payments Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Exchange movements on cash and cash equivalents Cash and cash equivalents at end of the year Significant non- cash transactions - 38,664 673,852 (30,587) (1,321) 14 (183) 680,439 1,684,004 722,482 (12,073) (6,302) 2,388,111 1,487,857 724,785 - 2,212,642 13,222 - - (270,534) (12,876) 62 - (270,126) 2,258,175 - - - 2,258,175 201,351 523,344 90 724,785 On 7 November 2019 Altus Strategies plc was issued 3 million shares in Desert Gold Ventures Inc. as consideration for the purchase of the Company’s subsidiary, Legend Mali Holdings (BVI) Inc., and its indirect holding in the Djelimangara and Sebessounkoto Sud licences located in western Mali. The notes on pages 68-94 form part of these financial statements. Page | 66 ALTUS STRATEGIES PLC Company Statement of Cash Flows For the Year Ended 31 December 2019 Cash flows from operating activities Loss before tax Less: Interest paid Less: FV loss on investments Equity-settled share based payments Decrease in trade and other receivables Increase in trade and other payables Increase in intercompany balances Other working capital Net cash used in operating activities Investing activities Purchase of investments in subsidiaries Purchase of investments Interest paid 2019 £ 2018 £ (273,974) (221,296) 183 3,242 22,103 10,915 (18,957) - - - 283 14,676 (1,740,820) (2,167,381) (15,000) (2,012,308) (2,373,718) - (138,000) (208,953) (183) - - Net cash used in investing activities (209,136) (138,000) Financing activities Proceeds from the issue of shares Proceeds for which issue of shares pending (see note 21) Net cash generated from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Exchange movements on cash and cash equivalents Cash and cash equivalents at end of the year 1,684,004 722,482 2,406,486 185,042 37,544 (3,243) 219,343 2,258,175 - 2,258,175 (253,543) 291,087 - 37,544 Significant non- cash transactions On 7 November 2019 the Company was issued 3 million shares in Desert Gold Ventures Inc. as consideration for the purchase of the Company’s subsidiary, Legend Mali Holdings (BVI) Inc., and its indirect holding in the Djelimangara and Sebessounkoto Sud licences located in western Mali. The notes on pages 68-9 form part of these financial statements. Page | 67 ALTUS STRATEGIES PLC Notes to the Financial Statements For the Year Ended 31 December 2019 Accounting policies Company information Altus Strategies plc is a public company limited by shares and incorporated in England and Wales. The registered office is 14 Station Road, Didcot, Oxfordshire, OX11 7LL, United Kingdom. The Group consists of Altus Strategies plc and all of its subsidiaries, as listed in note 17. Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS interpretations committee (IFRS IC) interpretations as adopted for use in the European Union and with IFRS and their interpretations issued by the IASB. The consolidated financial statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, (except as otherwise stated). The financial statements have been prepared on the historical cost basis, as modified by the valuation of financial assets at fair value through profit or loss. The principal accounting policies adopted are set out below. The financial statements are prepared in British Pounds Sterling (£), which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest whole pound. As permitted by section 408 of the Companies Act 2006, the Company has not presented its own statement of comprehensive income and related notes. The Company’s loss for the year was £273,974 (2018: £221,296). Basis of consolidation The consolidated financial statements comprise the financial statements of Altus Strategies plc and its subsidiaries as at 31 December 2019. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has: power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee The ability to use its power over the investee to affect its future Generally, there is a presumption that a majority of the voting rights results in control. To support this presumption and when the Group has less than a majority of the voting rights or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has the power over an investee, including: The contractual arrangements with the other vote holders of the investee Rights arising from other contractual arrangements The Group’s voting rights and potential voting rights - - - - - - Page | 68 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. “Joint ventures” as referred to in the financial statements refer to agreements with exploration partners and not joint ventures as defined within IFRS 11. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent company of the Group and to the non-controlling interests, even if this results in the non- controlling interests having a deficit balance. All inter-group assets and liabilities, equity income, expense and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Going concern Between December 2019 and February 2020, the Group concluded a non-brokered private placement of shares and a strategic investment from La Mancha (see Chief Executive’s Review pages 10-16), which together brought funds of £8.9 million (C$15.4 million) into the Group. As outlined in announcements pertaining to this funding, the Group intends to deploy these funds to accelerate its existing project and royalty generation activities, and to make new project and royalty acquisitions. In response to the dramatic impact that the coronavirus pandemic is having on the global economy, on the mining sector and on all aspects of business operations, the Group has reviewed its activities and expenditure for the forthcoming months. All on site project activities were suspended in advance of local movement restrictions and closures of international borders, and the geological team switched to home- based research and analysis. Apart from the costs of maintaining its staff and its normal business operations, much of the expenditure envisaged under the Group’s post-funding budget is discretionary. There is significant scope to adjust levels of expenditure in line with long term expectations of financial constraint. Given the Group’s cash balances as a result of the inflow of funds, and notwithstanding the severity of the economic impact of coronavirus, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. It has sufficient cash to maintain its current business operations for at least twelve months and does not expect to have to raise funds to provide additional working capital in that time. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. Exceptional items Exceptional items are disclosed separately in the financial statements where it is necessary to do so, to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount. IPO and acquisition related costs are included as exceptional items in profit or loss. Page | 69 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Fair value measurement IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Group uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards. Foreign exchange Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the Statement of Comprehensive Income for the period. Other reserves Other reserves consist of a non-distributable merger reserve from historic acquisitions and the share based payment reserve as a result of the share based payments outlined in note 26. Adoption of new and revised standards and changes in accounting policies New and amended standards adopted by the Group and Company The Group and Company have applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2019: IFRS 16 Leases IFRIC 23 Uncertainty over Income Tax Treatments - - - - Annual Improvements to IFRS Standards 2015-2017 Cycle IAS 28 (Amendments) Long-term interests in Associates and Joint Ventures On 1 January 2019, the Group adopted all of the requirements of IFRS 16 – Leases. IFRS 16 Leases was issued in January 2016 and provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. At 1 January 2019 the Group had no leases with a lease term greater than 12 months. Consequently, the adoption of the standard resulted in no impact to the opening financial statements. Periodic payments made in respect of mineral exploration site licences are capitalised under the rules of IFRS 6 and are outside the scope of IFRS 16. One new lease was signed during the financial year. In the Statement of Financial Position the right-of- use asset is recorded in Non-current assets and the lease liability is split between Current liabilities for the portion due within 12 months (£18,198) and Non-current liabilities for the remainder (£65,797). To determine the split between principal and interest in the lease the Company applied an estimate of the interest it would have to pay in order to finance payments under the new lease. This method was adopted as the Company was not able to ascertain the implied interest rate in the lease agreement and does not have borrowings to use as a benchmark. The impact of the estimate is currently considered to be immaterial to the financial statements, but the Directors will review this approach as appropriate. The Page | 70 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 figures brought into the Statement of Financial Position represented 2% of Non-current assets, 3% of Current liabilities and 100% of Non-current liabilities. The net effect on Net Assets at 31 December 2019 is a reduction of £3,735. See note 28 for further detail. Other than as described above, there has been no material impact on the financial statements as a result of the adoption of the new and amended standards. New and revised IFRSs in issue but not yet effective The Group and Company have not applied the following new and revised Standards and Interpretations that have been issued but are not yet effective: Amendments to references to the conceptual framework in IFRS standards Amendments to IFRS 3 Business Combinations Amendments to IAS 1 and IAS 8: Definition * subject to EU endorsement Effective date 1 January 2020 *1 January 2020 1 January 2020 The Group is evaluating the impact of the new and amended standards above. The directors believe that these new and amended standards are not expected to have a material impact on the Group and Company's results or shareholders' funds. Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are shown in the following notes. Other gains and losses Impairment of deferred exploration costs Share based payments Note 12 Note 15 Note 26 Segmental analysis Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. At the current stage of the Group’s development, management considers there to be one income segment, which is the recovery of exploration expenses and associated management costs from joint venture partners. Income attributable to this segment in 2019 was £59,911 (2018: £89,678). Page | 71 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Group Management fees and costs recovered from joint venture partners Loss from operations Reportable segment assets Reportable segment liabilities Management fees and costs recovered from joint venture partners Loss from operations Reportable segment assets Reportable segment liabilities UK 2018 £ 40,678 Africa 2018 £ 49,000 Total 2018 £ 89,678 (1,143,365) 1,565,829 (441,477) (638,253) 4,201,813 (60,547) (1,781,618) 5,767,642 (501,934) 2019 £ 13,163 2019 £ 46,748 2019 £ 59,911 (1,312,527) (602,185) (1,914,715) 2,597,590 3,465,768 6,063,358 (1,455,318) (77,536) (1,532,854) Other income of £151,875 in the year included an R&D tax credit of £129,031 that was submitted during the year in respect of 2017 and settled by HMRC in February 2020; there was no corresponding credit in the comparative year. Operating loss Operating loss for the year is stated after Exchange losses/(gains) Exploration and development costs (note 6) Listing and acquisition related costs Depreciation (including right-of-use assets) Share-based payments Operating lease charges 2019 £ 2018 £ 31,825 (25,726) 1,101,000 1,151,899 88,595 26,210 22,103 26,774 19,284 7,331 12,854 38,222 Exploration and development costs The Group’s costs derived from its operations in countries in which it holds licences are detailed below. Location and licence Cameroon (3 projects) Ethiopia (3 projects) Côte d’Ivoire (1 project) Liberia (1 project) Mali (4 projects) Morocco (4 projects) Total Administrative Operational Travel Total expenses expenses expenses 2019 £ 136,484 115,449 51,045 33,019 148,268 131,018 615,283 2019 £ 71,426 89,505 22,585 46,705 102,693 80,626 413,540 2019 £ 13,193 38,185 - 441 17,952 2,406 2019 £ 221,103 243,139 73,630 80,165 268,913 214,050 72,177 1,101,000 Page | 72 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Location and licence Cameroon (3 projects) Ethiopia (2 projects) Côte d’Ivoire (1 project) Liberia (1 project) Mali (6 projects) Morocco (4 projects) Other UK costs (see below) Total Administrative Operational Travel Total expenses expenses expenses 2018 £ 103,594 61,800 21,993 34,954 92,136 62,680 16,017 520,997 914,171 2018 £ 31,934 46,453 15,375 41,295 18,794 18,058 25 - 2018 £ 10,437 14,339 6,664 19,387 7,690 7,277 - - 2018 £ 145,965 122,592 44,032 95,636 118,620 88,015 16,042 520,997 171,934 65,794 1,151,899 During the year the Zager licence in Ethiopia was granted and the Djelimangara and Sebessounkoto Sud licences in Mali were sold to Desert Gold (see note 15). The Company has two licence applications pending in Côte d’Ivoire. The table of figures for the comparative year has been condensed as geologists’ salaries and other staff and support costs, which were the material costs in each country, were previously not split between projects but were recorded as “general” costs. In the Statement of Comprehensive Income on page 61 the total figure for Exploration costs in 2018 has been restated from £630,902 to £1,151,899 to incorporate an allocation of UK costs, including geologists’ salaries, management time and UK support costs. The allocation reflects the reduction in Administrative costs as outlined in note 7. Administrative expenses Administrative expenses include the balances in the table below. Audit fees for the financial year 2018 were recorded in 2019, and fees for the financial year 2019 were accrued in 2019. Rent for the UK office now falls under IFRS 16 (see note 28), reducing premises costs and increasing depreciation. Group Employee costs (note 9) Consultants and contractors Legal fees Audit, accountancy & tax Registrar fees Other professional expenses Travel expenses Premises and office expenses Exchange (gains)/losses Depreciation of property, plant and equipment Impairment of licence Other expenses 2019 £ 315,890 8,981 55,734 98,289 17,761 89,534 53,981 10,222 31,825 26,210 39,210 37,394 785,031 2018 restated £ 282,923 37,848 25,488 37,642 40,047 119,059 59,693 63,349 (25,726) 7,331 20,198 32,261 700,113 2018 £ 746,022 56,808 25,488 37,642 40,047 100,073 84,151 88,826 (25,726) 7,331 20,529 39,919 1,221,110 Page | 73 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Auditor’s remuneration Fees payable to the company’s auditor for the financial year were as follows. For audit services Audit of the financial statements of the group and company 2019 £ 22,000 2018 £ 21,500 Employees Employee benefits The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received. Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits. The average number of employees of the Group during the year was as follows. Altus Strategies plc has no employees and incurs no remuneration costs. Group Directors Employees (excluding consultants and associates) 2019 Number 2018 Number 5 23 28 5 23 28 Of the employees, 8 are employed in the UK and 15 are employed in four countries in Africa. Remuneration of African-contracted employees is included in Exploration Costs. Remuneration of Directors and UK-contracted employees comprised the following costs. Group Wages, salaries and non-executive directors’ fees Bonuses Social security costs Pension costs Other costs 2019 £ 554,879 130,000 65,061 105,730 (400) 855,270 2018 £ 660,469 1,500 49,877 25,420 8,756 746,022 Directors’ remuneration Details of directors’ remuneration are included in the Directors’ Remuneration Report on pages 47-51. As noted in the report, the 2018 salaries figures and 2019 bonus include additional accruals for fees relating to prior years. Further, each director had elected to defer some or all of their fees/salary. Page | 74 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Fees/salaries Bonuses Pensions Total 2019 2018 2019 2018 2019 2018 2019 2018 £ £ £ £ £ £ £ £ 35,000 25,000 20,000 49,583 38,541 18,333 - - - - - - - - - - - - 35,000 25,000 20,000 49,583 38,541 18,333 Non-executive directors David Netherway Robert Milroy Michael Winn Executive directors Steven Poulton 125,000 181,679 Matthew Grainger 100,000 113,667 46,875 37,500 - 12,500 3,995 184,375 185,674 - 10,000 7,675 147,500 121,342 Total 305,000 401,803 84,375 - 22,500 11,670 411,875 413,473 Bonus accrual 2017 Salary accrual 2017 Total - (1,819) - - 64,687 - - - - - - - 64,687 (1,819) 303,181 401,803 149,062 - 22,500 11,670 474,743 - - - During 2019 retirement benefits accrued under defined contribution schemes for 2 executive directors (2018: 2 directors). The deferred bonus in respect of 2017 that was disclosed in the Directors’ Remuneration Report in 2018 had not been accrued and the charge for this was recognised during the year. The accrual for deferred salary for 2017 was found to be £1,819 too high and was reduced in the year. Finance (costs)/ income Group Interest on bank deposits Interest on lease liabilities (note 28) Other gains and losses 2019 £ (169) (8,169) (8,338) 2018 £ 62 - 62 See note 23 for accounting policy and detail of financial assets held at fair value through profit or loss. Group Unrealised Fair value gains/(losses) on financial assets at fair value (85,085) 282,227 2019 £ 2018 £ through profit or loss Realised Loss on disposal of investments Loss on disposal of subsidiaries (21,444) (520,915) (627,444) - 282,227 Page | 75 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 During 2019 the Group sold its interest in Legend Gold Mali Holdings (BVI) Inc., which, through its subsidiary Etruscan Resources Mali SARL, holds the Djelimangara and Sebessounkoto Sud gold licences in western Mali. The loss recorded was based on the carrying value of the investment measured against the initial consideration received from the purchaser, Desert Gold Ventures Inc. Djelimangara and Sebessounkoto Sud gold projects were held on the books as assets with a value of £379,851 and £392,978 respectively. As a result of the sale of the assets for a total of £251,914, being £38,664 (US$50,000) in cash and £213,250 (3 million shares) in equity of Desert Gold, the company wrote off an amount of £520,915. The sale agreement that was announced on 31 October 2019 included further milestone payments to the Group subject to progress on the projects and a 2.5% net smelter return royalty. No income has been recognised in respect of these future payments as the likelihood of them occurring is considered too contingent at this stage. Income tax Income tax represents the sum of the tax currently payable and deferred tax. Current tax Current tax is based on taxable profit or loss for the year. Taxable profit or loss differs from net profit or loss as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date. Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority. Current tax for the year is as follows. Group Income tax expense 2019 2018 £ - £ - Page | 76 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Current tax for the year for the Company was £nil (2018: £nil). The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits/ (losses) of the consolidated entities as follows. Group Loss before taxation Expected tax charge based on the standard rate of corporation tax in the UK of 19% (2018: 19%) Tax effect of: 2019 £ (2,398,622) 2018 £ (1,497,352) (455,738) (284,497) - Expenses not deductible for tax purposes - Impairment not deductible for tax purposes - Unutilised tax losses for which no deferred tax asset is 61,632 7,450 386,656 42,581 3,900 238,016 recognised Tax expense for the year - - The Group has tax losses of approximately £1,718,000 (2018: £1,331,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset. Earnings per share The basic loss per share is calculated by dividing the loss attributable to owners of the parent company by the weighted average number of ordinary shares in issue during the year. Dilution is represented by a number of warrants outstanding, which at the end of the year numbered 28,303,477 (pre-consolidation). No diluted earnings per share is presented as the loss-making nature means the warrants are anti-dilutive. Loss attributable to owners (£) Weighted average number of ordinary shares in issue Basic loss per share (pence) 2019 (2,398,622) 179,031,226 (1.34) 2018 (1,494,863) 166,350,683 (0.90) Intangible assets Expenditure on exploration activities is written off against profit or loss in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated. Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis. Deferred exploration costs: Not amortised Deferred exploration costs comprise exploration licence fees capitalised in accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources.” Licences are initially measured at cost. Management tests quarterly whether deferred exploration costs require impairment. Each exploration licence is subject to a quarterly review either by a consultant or senior Company geologist to determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long-term metal prices, Page | 77 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 anticipated resource volumes and grades, permitting and infrastructure, external factors affecting the project, as well as the likelihood of on-going funding from current or potential joint venture partners. In the event that a licence does not represent an economic exploration target and results indicate that there is no additional upside, or that future funding from joint venture partners is unlikely, a decision will be made to discontinue exploration. A further review of the recommendations of the consultant or senior Company Geologist is then performed by management. At 1 January Revaluations At 31 Disposals & and FX December 2019 Additions impairment adjustments 2019 Group Mali Korali Sud (Diba) 1,373,508 Lakanfla Djelimangara Sebessounkoto Sud Tabakorole Pitiangoma Est Adjustment on 599,233 390,476 403,970 592,447 585,712 exercise of warrants (85,000) Cameroon Laboum Bikoula Ndjele Birsok Mandoum Ethiopia Tigray-Afar Daro Zager Morocco Agdz Takzim Côte d’Ivoire Prikro Toura (application) Liberia Zolowo 38,043 35,130 6,327 65,130 39,210 15,752 - - 4,706 616 1,474 1,338 3,798 - - - - 6,579 - - 8,402 7,926 1,986 - - 743 1,070 2,481 (62) - 1,462 - - - - (379,851) (392,978) - - - - - - (65,130) (39,210) - - - - - - - - (37,365) 1,336,143 (16,303) (10,625) (10,992) (16,118) (15,935) 582,930 - - 582,908 569,777 85,000 - - - - - - - - - - - - - - 46,445 43,056 8,313 - - 16,495 1,070 2,481 4,644 616 2,936 1,338 3,798 4,071,870 30,587 (877,169) (22,338) 3,202,950 Page | 78 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 At 1 January Additions through acquisition FX At 31 of Disposals & adjust- December 2018 Additions subsidiary impairment ments 2018 Group Mali Korali Sud (Diba) Lakanfla Djelimangara Sebessounkoto Sud Tabakorole Pitiangoma Est Adjustment on exercise of warrants Cameroon Laboum Bikoula Ndjele Birsok Mandoum Ethiopia Tigray-Afar Daro Negash Morocco Agdz Takzim Zaer Côte d’Ivoire Prikro Toura (application) Liberia Zolowo Bella Yella - - - - - - - 22,203 17,419 2,054 44,130 29,375 7,078 13,982 - 13,955 6,965 - - 15,840 17,711 4,273 21,000 9,835 14,406 1,346 - 331 1,759 - - - - - 20,198 151,875 - - 2,947 616 - 1,474 1,338 3,798 - 1,361,729 583,598 389,066 389,066 583,598 583,598 (85,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (331) - - - - - - (20,198) (20,529) 4,701 1,653 1,410 949 1,884 2,114 - - - - - - - - - - - - - - - - 1,373,508 599,233 390,476 403,970 592,447 585,712 (85,000) 38,043 35,130 6,327 65,130 39,210 15,752 - - 4,706 616 - 1,474 1,338 3,798 - 12,711 4,071,870 122,158 3,805,655 Property, plant and equipment Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases: Fixtures and fittings 4 years straight line Computers 2 years straight line Plant and Machinery 4 years straight line Motor vehicles 2 years straight line The gain or loss arising on the disposal of an asset is determined as the difference between the sale Page | 79 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 proceeds and the carrying value of the asset, and is recognised in profit or loss. Impairment of non-current assets At each reporting end date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Group Cost At 1 January 2019 Additions Disposals At 31 December 2019 Amortisation and At 1 January 2019 Charge in the year Disposals At 31 December 2019 Carrying amount At 31 December 2018 At 31 December 2019 Plant and Fixtures, Computer Motor Total machinery fittings equipment vehicles and equipment £ 795 - - 795 330 139 - 469 465 326 £ £ £ £ 44,949 - - 44,949 44,119 572 - 44,691 24,043 1,321 - 25,364 17,406 5,352 - 22,758 77,693 - (10,140) 67,553 77,693 - (10,140) 67,553 147,480 1,321 (10,140) 138,661 139,548 6,063 (10,140) 135,471 830 258 6,637 2,606 7,932 3,190 - Page | 80 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Group Cost At 1 January 2018 Acquisition of subsidiary Additions Disposals At 31 December 2018 Amortisation and At 1 January 2018 Acquisition of subsidiary Charge in the year Disposals At 31 December 2018 Carrying amount At 31 December 2017 At 31 December 2018 Plant and Fixtures, Computer Motor Total machinery fittings equipment vehicles and equipment £ 240 - 555 - 795 240 - 90 - 330 465 £ £ £ £ 4,359 40,769 - (179) 44,949 3,022 40,769 507 (179) 44,119 22,612 - 12,321 (10,890) 24,043 21,563 - 6,734 (10,891) 17,406 23,140 54,553 - - 77,693 23,140 54,553 - - 77,693 1,049 6,637 830 50,351 95,322 12,876 (11,069) 147,480 47,965 95,322 7,331 (11,070) 139,548 7,932 Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Subsidiaries Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently held at fair value; as there is no active market, fair value is considered to be amortised cost less impairments. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss. None of the non-controlling interests is material to the group. At 1 January 2019 / 31 January 2018 Additions Disposals 2019 £ 4,608,930 - - 4,608,930 Company 2018 £ 965,808 3,643,122 - 4,608,930 Altus Strategies plc has direct investments in the following subsidiary undertakings. Page | 81 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Name of undertaking Altus Exploration Management Limited1 LGN Holdings (BVI) Inc11 Incorporated % Holding Principal activity UK BVI 100.00 Business support services 100.00 Holding company Altus Strategies plc is the ultimate parent but not the immediate parent of the following subsidiary undertakings. Name of undertaking Aeos Gold Limited1 Auramin Limited1 Aluvance Limited1 Alures Mining Limited1 Altau Resources Limited1 Aterian Resources Limited1 Oxford Mining Club Limited1 Altau Resources Limited2 Aucam SA5 Valnord SA5 Mining & Exploration Services Limited6 Azru Resources SARL AU8 AuCrest Sarl4 Legend Gold Mali SARL12 LGC Exploration Mali SARL12 LGC Piti SARL12 Incorporated % Holding Principal activity UK UK UK UK UK UK UK Ethiopia Cameroon Cameroon Liberia Morocco Côte d’Ivoire Mali Mali Mali 100.00 Gold exploration 99.00 Gold exploration 97.26 Iron ore exploration 100.00 Bauxite exploration 100.00 Copper exploration 100.00 Mineral exploration 50.00 Events 100.00 Copper exploration 97.26 Iron ore exploration 99.00 Gold exploration 99.00 Gold exploration 100.00 Copper exploration 100.00 Gold exploration 100.00 Gold exploration 100.00 Gold exploration 100.00 Gold exploration The following are dormant subsidiaries. Name of undertaking Aeos Resources Limited3 Altaucam Resources Limited3 Altau Holdings Limited3 Avance African Group Limited3 Aucam Resources Limited3 Inland Exploration Limited3 Westcoast Exploration Limited3 Mansion Resources Limited3 Altar Resources Limited3 Eagle Resources Limited3 Enigma Resources Limited3 Atlas Minerals3 Atlantic Minerals3 Alboran Minerals3 Addax Minerals3 Akkari Minerals3 Incorporated % Holding Principal activity Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles Seychelles 100.00 Dormant 100.00 Dormant 100.00 Dormant 97.26 Dormant 97.26 Dormant 100.00 Dormant 100.00 Dormant 99.00 Dormant 99.00 Dormant 99.00 Dormant 99.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant Page | 82 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Aures Minerals3 Azilal Minerals3 Altus Diamonds3 Avanor SARL4 Avanex SARL4 Bauxex SA5 Af Resources SARL AU7 Adrar Resources SARL AU7 Altus Mining (SL)9 Apalex Sarl4 Aza Minerals Sarl7 Akassori10 Legend Mali (BVI) II Inc Legend Mali (BVI) III Inc Legend Mali (BVI) IV Inc Legend Mali (BVI) V Inc Legend Mali (BVI) VI Inc Seychelles Seychelles Seychelles Côte d’Ivoire Côte d’Ivoire Cameroon Morocco Morocco Sierra Leone Côte d’Ivoire Morocco Chad BVI BVI BVI BVI BVI 100.00 Dormant 100.00 Dormant 100.00 Dormant 97.26 Dormant 97.26 Dormant 97.26 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant 100.00 Dormant On 31 October 2019 the Group sold its holding in Legend Gold Mali Holdings (BVI) Inc. and its subsidiaries Etruscan Resources Mali SARL and LGC Kayes SARL. The registered office addresses applying to the tables in this note are as follows. Registered office addresses. 1. 14 Station Road, Didcot, Oxfordshire OX11 7LL, United Kingdom 2. Bole Sub-City, Kebele 08/09, House No. 811/A, P.O. Box 2633, Addis Ababa, Ethiopia 3. Suite 24, First Floor, Eden Plaza, Eden Island, Victoria, PO Box 438, Mahé, Seychelles 4. Cocody Les Deux Plateux, Rue des Jardins, Résidence Aziz, Porte B, 20 BP 725 Abidjan 20, Côte d’Ivoire 5. BP: 5405 Bastos, Dernier poteau, Yaoundé, Cameroon 6. PO Box 10-3218, 1000 Monrovia 10, Liberia 7. Appt 9, IMM 18, Rue Jbel Tazekka, Agdal, Rabat, 10090, Morocco 8. 46, Avenue Oqba, Appt No. 2, Agdal, Rabat, Morocco 9. 2, Berthan Macauley Street, Freetown, Sierra Leone 10. Quartier Diguel Nord, N’Djamena, Chad 11. MMG Trust (BVI) Corp, Pasea Estate, Road Town, Tortola, British Virgin Islands 12. Porte 608, Rue 136, Korofina Nord, Bamako, Mali Investments The Group holds both financial assets at amortised cost and financial assets at fair value through profit and loss. See note 23 for further information on the accounting policies applied to financial assets. Investments carried at fair value through profit or loss comprise listed equity shares (Level 1). The fair value of these equity shares is determined by reference to published price quotations in an active market. Page | 83 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 2019 £ 883,763 213,250 (673,852) (21,444) (99,645) 302,072 Group 2018 £ 601,536 - - 282,227 883,763 2019 £ - 213,250 - (4,297) 208,953 Company 2018 £ - - - - - At 1 January Additions Disposals Gains/losses on disposal Revaluation gains/ (losses) Trade and other receivables Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade 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 receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method. Trade receivables VAT recoverable Amounts due from group undertakings Amounts due from related parties Prepayments R&D tax credit Other receivables Group 2018 £ - 22,048 - 2019 £ 75 15,732 - 33,432 15,380 129,031 2,569 196,219 30,037 27,204 - 3 79,292 Company 2018 £ - 10,695 2,678,105 2019 £ - 4,592 4,581,775 - 12,094 - - 4,598,461 - 16,906 - - 2,705,706 Trade receivables - credit risk All trade receivables are denominated in £ sterling and are fully performing. Fair value of trade receivables The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value. No significant receivable balances are impaired at the reporting end date. Held-for-sale assets Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount or fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the balance sheet in accordance with IFRS 5. On 11 February 2019 the Group announced that it had concluded various agreements with Canyon Page | 84 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Resources Ltd (“Canyon”) that included the transfer of the Group’s subsidiaries Aucam Resources Ltd and Aucam SA, and the Group’s Birsok licence in Cameroon to Canyon. At the reporting date the transfer was still pending and the assets and liabilities of Aucam SA were designated as held-for-sale. Non-current assets Intangible assets Current assets Cash and cash equivalents Prepayments Current liabilities Amounts due to related parties Trade and other payables 2019 £ 65,130 399 494 66,023 (13,182) Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Other payables in 2019 for both Group and Company includes funds received from a shareholder amounting to £722,481 as part of the Private Placement in December 2019, for which part of the share issue was deferred until January 2020 pending regulatory approval. Liabilities arising from a lease are initially measured on a present value basis. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. Current liabilities Trade payables Amounts due to group Amounts due to related parties Accruals and deferred income Lease liabilities (IFRS 16) Other payables Non-current liabilities Lease liabilities (IFRS 16) Provisions Group 2018 £ 2019 £ Company 2018 £ 2019 £ 57,570 - 69,311 545,186 18,198 748,610 1,438,875 109,615 - - 291,582 - 85,737 486,934 53,965 162,849 - 39,018 - 749,678 1,005,510 34,477 - - 17,154 - 65,402 117,033 65,797 1,504,672 - 486,934 - 1,005,510 - 117,033 Provisions are recognised when the Group or Company has a legal or constructive present obligation as a result of a past event and it is probable that the Group or Company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding Page | 85 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. Provisions Group 2019 £ 2018 £ 15,000 15,000 Company 2019 £ - 2018 £ - All provisions are expected to be settled within 12 months of the reporting date. A provision has been recognised in accordance with IAS 37 in respect of the company's obligation to its landlord for dilapidations on the expiry of its lease. The provision has been recognised because there is an obligation at the reporting date as a result of an onerous contract, where outflow is probable to settle the obligation and a reliable estimate can be made. Financial instruments The Group’s financial instruments, and their respective accounting policies are as follows. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities. Financial assets Financial assets are recognised in the statement of financial position when the Group or Company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition. Financial assets are measured at either amortised cost or at fair value through profit or loss. Financial assets at fair value through profit or loss are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are held at amortised cost. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. The Group’s and Company’s loans and receivables comprise trade and other receivables and cash and cash equivalents. Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition. Impairment of financial assets Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date. For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows. Page | 86 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. Derecognition of financial assets Financial assets are derecognised 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 to another entity. Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition. Derecognition of financial liabilities Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire. Equity instruments Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. The Group’s financial assets are recorded as follows. Group Investments Cash and cash equivalents Trade and other receivables 2019 2019 2018 2018 Assets at Assets at Assets at Assets at amortised cost FVPL amortised FVPL £ - 2,212,642 180,839 2,393,481 £ 302,072 - 302,072 cost £ - 724,785 52,089 776,874 £ 883,763 - - 883,763 Page | 87 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 The Company’s financial assets are recorded as follows. Company Investments Investments in subsidiaries Cash and cash equivalents Trade and other receivables 2019 2019 2018 2018 Assets at Assets at FVPL Assets at Assets at amortised cost amortised FVPL £ - - 219,343 4,586,366 4,805,709 £ 208,593 4,608,930 cost £ - - - - 37,544 2,688,801 £ - 4,608,930 - - 4,817,523 2,726,345 4,608,930 The Group and Company have the following financial liabilities. Group Trade and other payables Company Trade and other payables Financial risk management 2019 2018 Liabilities at amortised Liabilities at cost £ 1,504,672 £ 1,005,510 amortised cost £ 195,352 £ 99,878 The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk, price risk and interest rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groups financial performance. There has been no change in the Group’s risk management programme from previous years. Market risk The Group’s activities potentially expose it to market risks, which is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rate and foreign currency risk, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates and foreign exchange rates. Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from holding cash in various currencies. The Group's functional currency is pound sterling, and major purchases are transacted in pounds sterling, US dollars, West African francs, Ethiopian birr, Moroccan dirham and the Liberian dollar. The Group’s head office expenditures are mainly incurred in pounds sterling and the majority of its exploration costs are incurred in the local African currencies. When funds are received a cashflow forecast is prepared by currency to identify the anticipated currency transactions that will be required over the period that the funds are expected to be used. FX transactions are undertaken at the earliest opportunity to minimise currency risk. For the year ended 31 December 2019, the Group had an exchange loss of £31,825 (2018: £25,726 gain) which was not material to its operations. Page | 88 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Commodity price risk The Group’s principal activity is the exploration for economic mineral deposits in Africa. The Group is therefore exposed to commodity price risks in the valuation of base minerals, which may impact the commercial viability of the licences it holds or impact the raising of future financing. The Group therefore maintains a diversified portfolio of licences in order to mitigate the risk of changes in the prices of individual base metals. Credit risk Credit risk is the risk of suffering financial loss should the Group’s customers, clients or counterparties fail to fulfil their contractual obligations to the Group. The Group’s core business is the exploration for economic mineral deposits in Africa and therefore the majority of expenditure is incurred in cash. The Group therefore only has significant exposure on its cash and cash equivalents. The Group mitigates this risk by depositing surplus cash with financial institutions with acceptable credit ratings. The carrying value of financial assets approximates their fair value and the maximum exposure as at the Statement of Financial Position date is outlined in the following table. Group Trade receivables Other receivables R&D tax credit VAT recoverable Amounts due from related parties Prepayments Cash and cash equivalents Held-for-sale assets 2019 £ 75 2,569 129,031 15,732 33,432 15,380 2,212,64 66,023 2,474,88 2018 £ - 3 - 22,048 30,037 27,204 724,785 804,077 Interest rate risk Interest rate risk is the possibility that changes in interest rates will result in higher financing costs or reduced income from the Group’s interest-bearing financial assets and liabilities. The Group is primarily financed through equity and interest rate risk arising on interest income is immaterial. The Group therefore does not currently consider it necessary to actively manage interest rate risk. Liquidity risk Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management is achieved by maintaining sufficient cash balances and the availability of funding through an adequate amount of committed credit facilities. The Group manages liquidity by maintaining sufficient cash with banks to meet its changing commitments. The Group’s objective is to ensure that there are sufficient committed financial resources to meet its current obligations and its future business requirements for a minimum of twelve months. At present the Group does not make use of any credit or debit facilities. The table below presents the cash flows payable by the Group under remaining contractual maturities at the Statement of Financial Position date. The amounts disclosed in the table are the contractual undiscounted cash flows. The carrying values of financial liabilities approximates their fair values. Page | 89 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 2019 Trade payables Lease payables Other payables Accruals and deferred income Provisions Available-for-sale liabilities 2018 Trade payables Other payables Accruals and deferred income Provisions Retirement benefit schemes Up to 3 months £ 126,882 6,250 737,639 545,186 - 13,182 1,429,139 Up to 3 months £ 109,615 31,203 291,582 - 432,400 3 to 12 months Over 12 months £ - 18,750 10,970 - - - 29,720 3 to 12 months £ - 32,603 - - 32,603 £ - 58,995 - - 15,000 - 73,995 Over 12 months £ - 21,931 - 15,000 36,931 Total £ 126,882 83,995 748,609 545,186 15,000 13,182 1,532,854 Total £ 109,615 85,737 291,582 15,000 501,934 Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. For those employees that pay into a Self-Invested Personal Pension scheme (SIPP) the Company matches their contributions up to an agreed salary percentage. At 31 December 2019 unpaid employer’s pension liabilities stood at £81,518 (2018: £74,557) of which £62,875 was for Executive Directors (2018: £57,800). Defined contribution scheme Charge for the year Share based payments 2019 £ 105,730 2018 £ 25,420 Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity. When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value. Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately. Page | 90 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Equity instrument movements in the year No shares were allotted to directors or employees during the year (2018: nil shares), but 425,053 shares were allotted to consultants in respect of services provided resulting in a charge to the income statement of £22,103 (2018: £nil). The Company does not currently operate a share option scheme either for directors or employees. Of the schemes previously in operation there were no options outstanding at 31 December 2019. No expense was recorded in the year in respect of share options schemes (2018: £nil). During the year no warrants were issued (2018: 911,861) and 300,000 warrants expired. On 19 December a private placement was concluded that resulted in the issue of 32,328,802 shares. The issue of shares subscribed for by directors and employees was included in this placement. The details of the warrants outstanding at the end of the year are as follows. 2019 2018 Outstanding as at 1 January 28,603,477 Number Weighted average exercise price (£) 0.164 Weighted average exercise Number price (£) 110,000 Granted Expired Exercised - - 30,253,477 (300,000) 0.048 (110,000) - - (1,650,000) Outstanding as at 31 December 28,303,477 Exercisable at 31 December 28,303,347 0.173 0.173 28,603,477 28,603,477 0.100 0.158 0.100 0.048 0.164 0.164 The weighted average remaining life of the warrants outstanding is 3.2 years. Share capital and share premium Share capital and share premium include ordinary shares in Altus Strategies plc issued to shareholders and warrants and options that have been exercised. Company At 1 January 2018 Issue of new shares Share issue costs Exercise of warrants At 31 December 2018 Issue of new shares At 31 December 2019 Number of shares* share capital Ordinary 107,680,814 68,451,872 - 1,650,000 177,782,686 32,445,775 210,228,461 £ 1,076,808 684,519 - 16,500 1,777,827 324,457 2,102,284 * All shares have been issued, authorized and fully paid Share premium £ 999,000 5,103,396 (146,274) 62,700 6,018,822 1,359,546 7,378,369 Page | 91 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 Details on the share consolidation which occurred on 20 February 2020 are provided below under subsequent events. Leases The group holds one lease that it accounts for under IFRS 16. Other leases are either small in value or cover a period of less than 12 months. The lease, which is for the Company’s UK office, was signed early in the year and therefore no qualifying leases were held when the standard was adopted on 1 January 2019, and there was no impact on the financial statements resulting from adoption of the standard (see also note 1). To determine the split between principal and interest in the lease the Company applied an estimate of the interest it would have to pay in order to finance payments under the new lease. This method was adopted as the Company was not able to ascertain the implied interest rate and does not have borrowings to use as a benchmark. The impact of the estimate is currently considered to be immaterial to the financial statements, but the Directors will review this approach as appropriate. For the year Cash outflow Capital Interest Depreciation charge Interest charge At 31 December 2019 Right-of-use asset At 1 January Additions Depreciation At 31 December Lease liability Less than 12 months Greater than 12 months Total lease liability 2019 £ 18,375 12,073 6,302 20,064 8,169 - 100,326 (20,064) 80,262 18,198 65,797 83,995 Lease liabilities are included in trade and other payables as shown in note 21. Rent payable under operating leases, less any lease incentives received, is charged to Administrative expenses on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. At the reporting date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, on which the short-term exemption has been taken, which fall due as Page | 92 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 follows. Group Within one year Between 2 and 5 years 2019 £ 4,791 - 4,791 2018 £ 4,519 - 4,519 Related party transactions For detail on directors’ remuneration in the year see the Directors’ Remuneration Report on pages 47-51 and note 10. Seabord Services Corp. (“Seabord”) is a management services company that provides to the Group the services of its adviser, David Miles, and his administrative support team. Seabord provided similar services to Legend Gold Corp. before its acquisition by the Group in January 2018, and David Miles was the Chief Financial Officer of the Company until 1 July 2019 through a contract with Seabord. One non-executive director of the Group is also a director of Seabord. The value of services provided by Seabord in the year was £43,936 (2018: £21,295). The amount payable to Seabord at the end of the year was £69,311 (2018: £44,775). Canyon Resources Ltd (“Canyon”) is a joint venture partner of the Group in respect of the Birsok project in Cameroon. One non-executive director of the Group is also a director of Canyon. The value of services provided to Canyon during the year was £5,951 (2018: £18,580). The amount receivable from Canyon at the end of the year was £43,501 (2018: £37,550). The Aegis group of companies (“Aegis”) comprises Aegis Holdings Ltd, Aegis Asset Management Ltd, Aegis Asterion Ltd and Aegis Exploration Management Ltd, and shares three directors with the Group (Aegis Exploration Management Ltd two directors). The value of costs recharged to Aegis during the year was £300 (2018: £482). The amount receivable from Aegis at the end of the year was £790 (2018: £490). Subsequent events Issue of equity On 7 January 2020 the Company announced that it had issued 2,000,000 shares to AGMEX Sarl (“AGMEX”) in respect of an agreement relating to a royalty held by AGMEX on the Company’s Lakanfla gold project in western Mali. On 27 January 2020 the Company announced that it had closed the second and final tranche of a non- brokered private placement (the first part of which took place in December 2019) issuing 14,000,000 shares to Delphi Unternehmensberatung AG, which increased its holding in the Company to 35,000,000 shares (pre share consolidation). On 21 February 2020 the Company announced that all of the conditions had been fulfilled in respect of a strategic investment in the Company by La Mancha Holdings Sarl (“La Mancha”), and that 124,229,389 shares had been issued to La Mancha. The issue was approved at a General Meeting of shareholders on 18 February 2020. The shares were issued at a price of C$0.09 resulting in funding to the Company of C$11,180,645. La Mancha became a cornerstone shareholder of the Company with a 35.4% of the enlarged share capital. Page | 93 ALTUS STRATEGIES PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 The shareholders also approved the consolidation of the Company’s shares (the “Share Consolidation”) at the General Meeting. Under the Share Consolidation one consolidated Ordinary Share (“Consolidated Ordinary Share”) was issued for every five existing Ordinary Shares. The Share Consolidation occurred after the close of trading in the Company’s shares on AIM and the TSX-V on 21 February 2020. Dealings in the Consolidated Ordinary Shares commenced on 24 February 2020. The ISIN and CUSIP for the Consolidated Ordinary Shares is GB00BJ9TYB96 and G03676122 respectively Investments On 11 February 2020 the Company announced that it had received 15 million shares in ASX-listed Canyon Resources Ltd (“Canyon”), which were issued in accordance with the JV Termination Agreement (“JVTA”) signed in February 2019. The shares had a market value of £1.1 million (C$1.9 million) at that time and are subject to a voluntary 12-month escrow. The JVTA related to the Company’s Birsok bauxite licence in Cameroon. The income arising from the receipt of the shares was considered contingent at the reporting date as, during 2019, the approval of Canyon’s shareholders to issue the shares had expired, and the renewed approval given in November 2019 was due to expire in February 2020. Coronavirus The outbreak of the coronavirus pandemic in the months after the reporting date is considered to be a non-adjusting event. As outlined in note 1, the Group is continuing to report on a going concern basis, and while on site activity has been suspended, staff are working on desktop studies to generate exploration targets across the Group’s portfolio and in new jurisdictions. The Group’s response to the outbreak is described in the Chief Executive’s Review on pages 10-16. The unknown length of the outbreak is a source of uncertainty and the Board will continue to monitor events and to provide updates as the situation develops. Page | 94 

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