Annual Report & Accounts 2020
EUR ASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
About us
Eurasia Mining Plc is a London listed, ESG focused open pit PGM and battery
metals company with the world’s largest soft rock PGM mine (4 PGM as platinum,
iridium, palladium and rhodium) as well as gold at West Kytlim. Eurasia also
operates a world class open pit deposit at Monchetundra with palladium and
EV quality nickel as its main metals, and where a turn key EPCF contract is signed
with Sinosteel.
Both projects have been developed within a 15 year joint venture with Anglo
American Platinum, the world’s largest platinum producer. Eurasia has since been
developing other successful partnerships most recently setting up a joint venture
with Rosgeo, a Russian state owned company, over 9 projects (of which 4
are post Russian feasibility study and have reserves approved) that can add a
further 104.6moz of platinum equivalent Russian Code resources, placing Eurasia
among the majors in terms of its palladium resource.
The group has about $23m in cash with insignificant (c.£0.5) debt, putting
Eurasia in a strong position, while the Company progresses its strategy as
announced on 12 May 2021.
Our Operations
Eurasia is focused on the following mining, development and exploration projects:
MONCHETUNDR A
World class PGM (palladium dominant) and Nickel-Copper
project on Kola Peninsula – cornerstone to a proposed
new open-pittable PGM and battery metals mining
district. Important JV with Rosgeo announced March 2021.
Read more on page 09
WEST KYTLIM
Producing Open Pit PGM mine in the Ural with
a sustainability focus – long term target of world’s
greenest, i.e. lowest carbon PGM ounces.
DFS including enlarged reserve approved in 2020.
Read more on page 07
01
Operational Highlights
West Kytim Producing Mine
■ Tipil license received adjacent to the existing
production license
■ DFS approved to mitigate single asset risk
■ Significant production capacity expansion
through 2020 and early 2021 and overhaul of
mining fleet
■ Strong response to COVID with no
disruption - continuing focus on employee
safety and minimal environmental impact
■ Power line construction tendered to achieve
lowest carbon PGM production
Environmental, Social and
Governance (ESG)
■ Significant Board and management updates
through 2020 and 2021 creating a strong
team with appropriate technical and
commercial skillset
■ Governance principles with support from
top-tier advisers applied through the group
of Companies
■ Sustainability and low environmental impact
focus at our West Kytlim Mine
Monchetundra Open Pit Deposit
■ Approval of the Monchetundra Flanks
license adjacent to the Monchetundra open
pit deposits at West Nittis and Loipishnune
■ Review of local and regional resource
■ Successful signing of Rosgeo joint venture
in which Eurasia will gain a 75% equity stake
in nine PGM and battery metals assets (four
of which are post Russian Feasibility Study
with state approved reserves) with a total
of 104.6Moz of Platinum equivalent (“Pt
eq”) Russian Code reserves and resources
in the immediate vicinity of the Company’s
Monchetundra Project on Kola (announced
on 26 March 2021)
With this Rosgeo joint venture in place, and with
the final approval of the Flanks license surrounding
Monchetundra, the Company has been successful in
establishing a dominant position and a first mover
advantage in Kola for PGM.
Christian Schaffalitzky
Executive Chairman
Contents
Strategic Report
02 Chairman’s Statement
04 Summary Platinum Group Minerals
(“PGM”) Market Update
06 Operations update
07 West Kytlim
09 Monchetundra and Rosgeo JV
11 Key performance indicators
12 Principal Risks and Uncertainties
Corporate Governance
14 Environmental, Social and Governance
17 Strategic Report, Background to
the Company
19 Directors’ Report
25 Independent Auditor’s Report
Financial Statements
33 Consolidated statement of profit or loss
and other comprehensive income
34 Consolidated statement of
financial position
35 Company statement of financial position
36 Consolidated statement of changes
in equity
38 Company statement of changes in equity
39 Consolidated statement of cash flows
40 Company statement of cash flows
41 Notes to the consolidated financial
statements
64 Company information
To find out the most up-to-date
information, visit our website:
www.eurasiamining.co.uk
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
02
Chairman’s Statement
2021 objectives and medium
term strategy
Management has the following
key objectives in 2021:
Continued and targeted
development program at both assets
while strategic negotiations are
progressing as announced on 12 May
2021
Rosgeo Joint Venture development
following a targeted $20m placing
with an institutional investor without
discount at a price of 26.5p
Drive further expansion at West
Kytlim and develop the Company’s
goal for the lowest environmental
footprint at the world’s largest soft
rock PGM mine
I want to pay tribute to our employees
who have worked tirelessly through the
year and thank the shareholders once
again, for your support and patience.
Christian Schaffalitzky
Chairman
The past 2020 financial year, and
indeed the progress early this 2021
year, has brought further major
changes in our development as a
PGM and battery metals Company.
Apart from advancing both our
mining projects in Russia, we
decided to look at crystallising the
value created over the last years.
There was considerable interest in
our Company and assets and the
process progressed well despite
COVID-related international travel
restrictions. Looking back to the
exciting year that was, I will set out
here the progress made during 2020
and the outlook as seen at the time
of writing.
At West Kytlim, the year closed with the
Company operating as owner/operator.
In parallel, we filed and ultimately received
approval for a Definitive Feasibility Study
which allows us to make plans for multiple
mining sites starting this year, while also
reducing the drilling and exploration work
required to upgrade our established reserve
base. At the time of writing, one plant
is operational at site, a second is being
assembled together with a third plant planned
to be added later this quarter. As we noted
during the past year, the mining operation was
unaffected by COVID disruptions and Russia
is now operating without any constraints
on everyday life. Regarding our plans to
further advance our sustainability goals and
low-carbon PGM production as a part of our
focus on best-in-class ESG standards, we are
tendering a technical project to bring grid
power to site to substitute for some of the
diesel-powered infrastructure.
The new Tipil license area was granted in
June to August 2020 and with the surrounding
flanks application, creates a resource base for
a substantial life of mine. West Kytlim is now
a sustainable and long-term low cost PGM
mine in the Urals, where we have established
a dominant position. I would also highlight
the successful completion of the DFS study
effectively doubling mineable reserves and
strengthening West Kytlim’s position as the
world’s largest PGM mine in its segment in
terms of mineable reserves.
At Monchetundra, we received the ‘Flanks’
licence in August 2020 and commenced routine
infill drilling work. More recently, in April 2021
we submitted a detailed exploration project
for the flanks area to develop these prospects
and bring further resources into the scope of
the mine. Significantly, for the long-term plans
for Monchetundra, we commenced a new joint
venture on the Kola peninsula in March 2021
(the “JV” or the “Rosgeo JV”) with Rosgeo
and look forward to adding the projects from
Rosgeo to the JV in due course.
With this joint venture in place, and with
the final approval of the Flanks license
surrounding Monchetundra, the Company
has been successful in establishing a dominant
position and a first mover advantage in Kola
for PGM, which, coincident with developments
in the PGM market has spurred interest in
the Company.
With respect to the board and management,
we were saddened at the loss of Gary Fitzgerald
who was a major factor in the growth of
the Company over almost two decades. His
persistence and patience were a key support
for me and my colleagues and we are pleased
to see his work paying off in the value realised
in the company in recent years. In further
board changes, Iain Rawlinson joined in May
2020 and this year, Tamerlan Abdikeev in April
2021. Both individuals are making important
contributions to the Company and on behalf of
all of us, I welcome them on board.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 03
The environmentally friendly nature of
Eurasia’s mining process and indeed of PGMs
themselves (in terms of their applications
reducing emissions and in fuel cells) have
already been recognised by the inclusion of
Eurasia into the relevant ESG indexes and
portfolios. Eurasia’s full ESG compliance is
a focus of institutional investors including
BlackRock, Fidelity, KLP, Premier Miton, TIAA
and others that have become shareholders in
the Company within the last 12 months.
Lastly the Company’s financial position
remains strong following the completion of a
Placing with institutional investors announced
in August 2020 at the market price, and a
further significant fund raising, completed in
May 2021, also without a discount and raising
gross proceeds of approximately US$20m to
fund the Rosgeo JV projects.
In conclusion, I thank all our team for the
excellent hard work to bring Eurasia to its
current success. In particular I would like to
thank our team in Russia for their perseverance
in driving growth at West Kytlim, and for
successfully making the transition from an
exploration office to a production and mining
focussed operation, and Dmitry Suschov who
left the board to concentrate on M&A activities,
and who successfully closed the deal with
Rosgeo. Both our projects are leaders in their
respective locations and in new PGM districts,
with Monchetundra also holding the potential
to become a world leader.
Christian Schaffalitzky
Executive Chairman
Our investment case
1. Significant exposure to structurally attractive
Palladium market
Palladium comprises 64% of Eurasia’s resources and 50% of expected production
will be Palladium.
Strong Pd price momentum due to a structural market deficit which will remain.
Eurasia provides exposure to low risk and ESG friendly Palladium ounces entering
a market in sustained deficit.
2. Near term, low risk production growth at West Kytlim
and Monchetundra
Simple low cost producing operations at West Kytlim provide immediate & scalable
cash flows at low capital intensity.
Innovative, capital light development and operating model at Monchetundra provide
low cost cash flow.
Russian infrastructure (i.e. power, water) well developed and doesn’t face the same
challenges as South African / Zimbabwean peers.
3. World class Monchetundra asset
Scale of target resource in licence area and surrounding region indicates potential
for a new PGM district.
Eurasia is well positioned and enjoys first mover advantage.
Well understood geology and access to historic drilling data underpins 40Moz
resource estimate 1.
4. Eurasia is an established operator in Russia with deep
in house expertise and a leading ESG position
Mining in Russia is well supported and stable, especially compared to other PGM
producers (South Africa, Zimbabwe).
Relatively low and well managed environmental footprint at mines.
Strong engagement with local communities and government.
5. Seasoned and balanced team of experienced
international and local mining experts
Over 20 years of operational and development history in Russia.
Recognized English speaking leadership team includes founder of CSA International
and CEO of Lesego Platinum / COO Polyus.
Senior management includes local Russian experts with over 100+ years experience
mining in the country.
1. Please refer to RNS dated 4 December 2019
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
04
Summary Platinum Group Minerals (‘PGM’) Market Update
The Palladium market remains in a
significant, and structural deficit,
driving prices to an all-time high
in 2020 of USD/oz:$2,614, later
surpassed in 2021 (May 07, USD/
oz:$2,790). Higher palladium loadings
in gasoline vehicles against reduced
primary supply (mine closures and
processing outages) remain as the
key driver.1
Similarly, primary platinum supply was
significantly reduced in 2020 from the largest
suppliers South Africa (1.2 moz fall in output
to 3.2 moz1) and Russia (59 koz fall in output to
662 koz1) with minor increases from Zimbabwe
and other open pit sources. The market deficit
for 2020, measured at 932Koz by WPIC3 and the
largest annual deficit on record relate mostly to
COVID-19 related mine closures (South Africa
output driven 26% lower YoY3). The market is
forecast to remain in deficit for 20213. Platinum
prices recovered from a dramatic mid-March
COVID related trauma and finished the year
up 18% (to USD/oz:$1,061)2 despite falling
auto catalyst demand in all regions. 2021 sees
strong price gains eventually breaking
USD/oz:$1,200 by early April.2
Rhodium prices increased by more than 500%
in 20202, trading above USD/oz:$14,000 by year
end. Global supply, which had been steady
between 23 and 24 tonnes for the previous five
years was reduced considerably to 18 tonnes,
again due to reduced South African supply1.
Rhodium demand was stable in its minor
components, namely chemical, electronics,
glass and other sectors and slightly increased,
against a five-year average of 27 tonnes per
annum, to 28.7 tonnes in 2020.
Eurasia’s main metal revenues are currently
from the sale of platinum group metals at
the West Kytlim mine however, by resource,
Palladium and Nickel are the dominant
elements in the Company’s metal basket.
The Monchetundra mine is being developed
towards mining, as the cornerstone project in
a proposed new region for PGM and battery
metals mining on Kola Peninsula. Eurasia’s fully
permitted Monchetundra Project, and a recent
joint venture with Russian state company
Rosgeo have created a first mover advantage
on Kola.
1. Johnson Matthey PGM Market Report February 2021.
moz/koz = Millions/thousands of troy ounces.
2. Kitco.com
3. World Platinum Investment Council Platinum Quarterly,
Q4 2020, Published 10 March 2021
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 05
Eurasia has exposure to structurally attractive
Palladium market
Palladium price is up +324% over last 5 years
Palladium price vs platinum and base metals index,
rebased to Palladium price (US$/oz)
Outperformance of Palladium expected to continue
L5Y commodity price performance and broker consensus
projections (US$/oz, nominal)
2,800
2,400
2,000
1,600
1,200
800
400
0
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Palladium
Platinum
Base metals index¹
Palladium demand: automotive market switch to
Palladium drives growth
Palladium demand will increase on the back of increased
penetration of hybrid vehicles and stricter emission
regulations in China and India
Palladium demand expected to continue to outgrow
platinum demand (moz)
Switch to Palladium intensive hybrids away from diesel
benefits Palladium…
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
2020E - 23E CAGR: 4.5%
2020E- 23E CAGR: 1.9%
….overall increase in PGM loadings per vehicle due to
growing emission regulations
2016
2017
2018
2019
2020E
2021E
2022E
2023E
Palladium
Platinum
Source for all charts: Broker research reports,FactSet as of 17 March 2021, LCM Automotive and
Norilsk Nickel Investor Presentation.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 06
EUR ASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
Operations update
Eurasia Mining Plc is an exploration, development,
and palladium, platinum, rhodium, iridium and gold
producing company. Eurasia operates the established
West Kytlim Mine in the Ural Mountains, a now year-
round PGM mine with a sustainability focus, and also its
flagship palladium dominant Monchetundra Project near
Monchegorsk on the Kola Peninsula. Both projects are
based on the Company’s own exploration discoveries
and have been successfully advanced through the
exploration phase to the issue of production licenses.
The Company demonstrates a consistent approach
to achieving operational success by bringing quality
projects from exploration through to mining. West Kytlim
is now in the fourth year of industrial scale production
and has been expanded significantly this year of 2021
as announced on 12 May 2021.
A major exploration tenement, the Monchetundra Flanks,
was granted adjacent the Monchetundra Project on
Kola in 2020. A considerable catalogue of information
on numerous deposits within this license area, including
proprietary company information and information from
the state cadastre of mines indicates a potential further
13M oz PGM in the immediate vicinity of the mine.
An exploration program was subsequently outlined
and has been submitted for approval so that work can
commence in developing these additional deposits. More
recently (on 26 March 2021) a Joint Venture was entered
into with Rosgeo, a state-owned company in relation
to 9 additional assets, 4 of which are post Russian
Feasibility Study.
Operating the established West Kytlim
mine in the Urals Region and the
Monchetundra Project on Kola Peninsula
Kola Peninsula
Monchetundra
Moscow
West Kytlim
EKATERINBURG
Regional offices
Sverdlovsk
Oblast
07
FURTHER EXPLORATION LICENCE
APPLICATIONS
Eurasia is committed to developing West
Kytlim at a scale optimised to maximise
value to its shareholders, while continuing
to assess the potential for further similar
PGM deposits adjacent to the project and
in the locality. The Company manages
the application process closely and has
developed in house expertise in Russian
subsoil licensing and licence applications.
The Tipil and Flanks licence applications
were supported by proprietary in-house
exploration data and extrapolation of
resource and exploration work to areas
adjacent the current mining concession.
TIPIL LICENCE
Additional 24.5Km2 west of the current
mining licence.
PROJECT FLANKS
Additional 50.7km2 surrounds the current
mining licence and includes strike
extensions to identified reserves and
resources. MOD approval received in
May 2020.
WEST KYTLIM
West Kytlim
Producing Open Pit PGM mine in the Ural
Mountains with a sustainability focus – long
term target of world’s greenest, ie lowest
carbon PGM ounces.
Sustainable Mining
• Flexible and modular technology which can
be rapidly deployed or moved to alternative
mining sites.
• Reduced environmental footprint
compared to conventional mining methods,
and less long-term environmental footprint
– no blasting on site and no chemicals used
in the production process.
• Shallow open pitting remediated
immediately with recovery within 5 to 10
years and with no remnant pit or tailing
dumps. Allows the current owner to make
provisions for remediation on realistic
time scales, as opposed to larger scale
operations with remediation at the end
of a 20+ year Life of Mine.
• Moderate capital requirements and annual
start-up costs.
• Potential for Switch on – Switch off mining
depending on market conditions.
• Integrating more readily with the local
environment and community.
2020 Highlights
• Submission and later approval of a
definitive feasibility study covering all
resources and reserves on the main West
Kytlim mining license
• Approvals received for the 24.5Km2 Tipil
License area (Figure 1 below). Flanks area
contours redrawn and re-submitted for
approval to Uralnedra.
• Successful completion of first, owner
operated mining season, delays in
permitting restricted total production
to 1,525oz.
• Fast and decisive COVID action plan and
zero COVID cases.
• First year with year-round stripping works
at site
• Significant increase in mine category
reserves and resources following from the
approved DFS (see table below)
The mining permit for the 2020 season was
awarded on 30 June 2020, meaning production
could not commence on site until that date. A
cost benefit analysis was carried out early in
the year to compare rented machinery options
to purchased and leased fleet combinations.
Negotiations were held with suppliers and the
following machinery list procured on five-year
lease agreement terms;
• 2X Hitachi ZX 330LC-5G excavators
• 1X Hitachi ZX300LLC-5A
• 1X Komatsu D155A-5 bulldozer as well as a
30 tonne Chetra T15 (leased)
• 4X Kamaz 20-tonne K3340 ore trucks
MONCHETUNDRA
MOSCOW
WEST
KYTLIM
EKATERINBURG
STP
Sverdlovsk
Oblast
Malaya
Sosnovka
Kluchiki
N
0
1km
2km
Bolshaya
Sosnovka
West Kytlim Mining License
- 21.5Km2 valid to 2040
West Kytlim Flanks (exploration)
Tipil Area (exploration)
Figure 1: West Kytlim mine license in the Central Urals, with surrounding Flanks and Tipil exploration licences.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
08
WEST KYTLIM (CONTINUED)
In addition, a further Komatsu D155A-5
bulldozer purchased outright in early 2021
2021 Highlights
• Early preparation for 2021 season,
commenced in Q3 2020 and continued
into Q1 2021 – New machinery and mine
buildings, permitting (including forestry),
recruitment and sub-contracting all
arranged during the 2020/21 winter.
• Second washplant on site and assembled
in time for 2021 production season with a
third plant planned to be installed later this
this quarter.
Stripping works continued at the Kluchiki
area throughout the 2020/21 winter, removing
overburden on ore blocks in preparation for
production during 2021. Washing of gravels
subsequently commenced around April 19
as temperatures rose rapidly and abundant
water became available. A mine plan was
finalised in February and March, as permitting
was sought for reserves in the Bolshaya
Sosnovka area. A second washplant was
custom built in the town of Chelyabinsk in
the Southern Urals and shipped to site to
be installed at a prepared location. Both
washplants will be located adjacent to each
other and have similar specifications. The
washplant location (at the Kluchiki area)
has previously been used for gravel washing
and has the necessary hydro infrastructure
(tailings pond, process water pond, dams and
road works). Having both plants at the same
location allows for synergies in how machinery
and other resources are used at the washing
site. When reserves at Kluchiki are worked
out (expected mid-June) both plants will be
serviced with ores from the considerably larger
Bolshaya Sosnovka area. A third washplant
complete with all ancillaries is expected in Q3.
Total production of 1,525oz of raw platinum
(inclusive of Platinum, Palladium, Rhodium
and Iridium) was achieved during the
season, mostly at the Kluchiki site where
production has commenced in 2021 following
concurrently with production at Bolshaya
Sosnovka (see Figure 1 on page 07). The plant
and process applied is similar to previous
seasons – Ore bodies are developed in the pit
using excavators and bulldozers and the free
digging river sediments transported by truck
to a wash plant site. The sediments are fully
disintegrated, and the clay (finest particles)
is removed before the remaining material is
passed over sluice mats. Mineral grains collect
in sluice mats which are emptied daily. This
material is then upgraded on site to a black
sand concentrate which is shipped to the
Ekaterinburg refinery. No chemicals are used
in this purely mechanical and gravity-based
beneficiation process.
No accidents or injuries occurred at site
throughout the year. In general, the
mechanized mining methods used and
automated nature of the process present less
risk of injury to personnel.
Definitive Feasibility Study (‘DFS’)
A DFS commenced in July 2020, managed by
an independent technical and engineering
consulting company, GIP, and was submitted
for approval in September 2020, with final
approval in January 2021. The study drew on
operational data owing to several seasons of
mining at West Kytlim and was successful in
reclassifying reserves and resources within the
mining license to mineable categories without
the need for further drilling and incremental
site by site reserves upgrades. Approval of the
DFS also eliminates single asset risk and allows
for concurrent mining at multiple operating
sites, thereby increasing production volumes
Current GKZ1 approved mineable reserves
at the West Kytlim Project (Tipil and Project
Flanks not included in the table).
Power line
Currently the electricity used to power the
washplants and associated pumps and
peripherals, as well as the laboratory and mine
buildings, is derived from diesel generators.
The Company intends to replace this power
source with grid electrical power by installing
a power line from the township of Kytlim.
Discussions have been advanced with a
specialised contractor and energy provider
Oboronenergo to commence the necessary
reporting and permit applications. Power
supplied in the Kytlim area is from renewable
sources being derived from the Perm Oblast
hydro-electric power stations. The move to
electric power would allow more efficient and
environmentally friendly stripping machinery,
in the form of electrically powered excavators
and draglines, thus removing the greenhouse
gasses (“GHG”) associated with bulldozing
overburden and significantly reducing the GHG
emissions attributable to the mines output.
The power line is seen as a key step in achieving
a long-term management goal of producing
low-carbon PGM, a part of Eurasia’s ESG focus.
Russian Reserves Category
В+С1
С2
В+С1+С2
Gravels
‘000 m3
9,329
4,430
13,760
Raw PGM2,
kg
Native Free Au3
kg
2,920
1,557
4,477
66
10
76
1 GKZ: The Russian state commission on mineral resources.
2 Raw PGM occurs as nuggets of iso-ferrum PGM containing platinum, palladium, iridium and rhodium as well as gold.
3 Further gold occurs as native gold nuggets which are also recovered separate to gold contained in iso-ferrum
PGM nuggets.
Figures 2 and 3 – The majority of mine buildings are built
from wood milled on site – a sensible use of timber felled over
the mined area which reduces the overall impact of the mine
on the environment. A standard clause in our rehabilitation
plans, submitted for approval in advance of a mining permit,
is that an equal area of woodland be planted as was felled for
mining. These images are of a Banya (Russian sauna) and an
enlarged canteen facility.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 09
The Monchetundra Project is Eurasia’s flagship
world class PGM project and comprises two
open pittable deposits near the town of
Monchegorsk on the Kola Peninsula, Northwest
Russia. A production permit was received
in November 2018 and a Detailed Project
Design Report approved in October 2019.
An engineering, procurement, construction
and finance (“EPCF”) agreement, which can
be actioned at management’s discretion,
is in place with Chinese state-owned
company Sinosteel for the turn-key launch
of production and provides for full financing
of the development of the West Nittis and
Loipishnune open pit mines. Preparatory work
for these developments will be commenced
during the coming months which must also
provide for a longer processing life for the
plant, with the additional potential now
expanded, as described below.
In March 2021 the Company entered into a JV
with Rosgeo, a 100% Russian state-owned
company, to gain a 75% equity stake in nine
PGM and battery metals assets (four of which
are post Russian Feasibility Study with state
approved reserves) with a total of 104.6Moz
of Platinum equivalent Russian Code reserves
and resources in the immediate vicinity of the
Company’s Monchetundra Project. The Kola
deposits are predominantly open pittable in
a mining friendly jurisdiction with existing
infrastructure. Having worked in Russia and
Kola for more than two decades and through
a 15-year JV with Anglo American Platinum
and holding the only currently approved PGM
mining permit in the region, Eurasia has a
clear first mover advantage. The Directors
believe the Rosgeo JV has the potential to be
transformational for the Company.
MONCHETUNDRA AND ROSGEO JV
World class PGM (palladium dominant) and
Nickel-Copper project on the Kola Peninsula
– cornerstone to a proposed new PGM mining
district. A significant Joint Venture was signed
in March 2021, which, alongside the approved
mining concession at Monchetundra and
associated satellite deposits, creates the
opportunity to realise a new PGM and battery
metals focussed mining district on Kola.
Directors highlight several dominant and now
established market trends:
• Greener world (including the hydrogen
economy and hydrogen production,
Electric Vehicles (‘EVs’), hydrogen and
electric hybrids) driving the demand for
PGM and battery metals, resulting in more
favourable metal prices and opening new
mining opportunities;
• Open pit mining sources of PGM and battery
metals preferred;
• Expected PGM and battery metals supply
challenges driven by legacy issues in the
traditional mining districts of South African
Republic and Russia; and
• the emergence of Kola as a new district
for predominantly open-pittable PGM and
battery metals (Nickel, Copper and Cobalt)
projects akin to the Finnish style of PGM-
Cu-Ni-Co deposits.
RAIL/ ROAD
MURMANSK
SEA HUB
N K T M a s s i f
MONCHEGORSK
EURASIA
OFFICES
NORILSK
METALLURGICAL
COMPLEX
Figure 4: A welder undertaking maintenance on a trommel
and scrubber at site in 2021. This mechanism rotates
at speed and with the addition of water, delivered at
pressure, disintegrates gravel and river sediments. Further
beneficiation steps are mechanical, and gravity assisted
with no chemicals used in the entire process which results
in a ‘black sand’ PGM, Chrome and Iron concentrate which is
shipped to a refinery in Ekaterinburg.
Kola
Peninsula
MONCHETUNDRA
MOSCOW
WEST
KYTLIM
EKATERINBURG
Sverdlovsk
Oblast
West Nittis
extensions
to NKT
WEST NITTIS
DEPOSIT
5a
LOIPISHNUNE
DEPOSIT
M o n c h e t u n d r a
M a s s s I f
5 kilometer Exclusivity Zone
Flanks License (approved 2020)
M o n c h e p l u t o n
M a s s I f
Mining License (valid to 2038)
Select Flanks deposits and
extensions to known ore bodies
Loipishnune
extensions
N
0
1.0 km
2.0 km
St PETERSBURG
1,208km
Figure 5: Monchetudra license with Loipishnune and West
Nittis deposits and adjacent Flanks license.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 10
MONCHETUNDRA AND ROSGEO JV (CONTINUED)
In March 2021 the Company signed an
agreement to create a new JV with Russian
state-owned company Rosgeo, aimed at
expanding the portfolio of assets on Kola.
The JV allows Eurasia to gain a 75% equity
stake in each of nine mining assets in the
region of Monchegorsk in central Kola and is
an opportunity to create a new global district
for PGM and battery metals. The nine projects
concerned by the JV are comprised of:
• Four palladium, platinum, copper, nickel
and cobalt open pit deposits, at which
Russian Feasibility Studies have been
completed and reserves and resources
(Russian standards) have been approved
by the Russian State Committee of
Reserves (GKZ). These deposits are
considered suitable for toll treatment
with beneficiation and mineral processing
at the proposed plant site between
the Company’s open pit deposits at
Loipishnune and West Nittis. Eurasia has
carried out block modelling and open pits
optimisations on all four of these deposits.
• A further five mostly open pit palladium,
platinum, copper, nickel and cobalt assets
in the Monchegorsk region where Eurasia
has also carried out due diligence, based
on third party reporting and its own
proprietary database of information.
The additional assets significantly increase the
Company’s reserve and resource base on Kola
while the ownership of the Company’s existing
assets at Monchetundra and West Kytlim is not
affected by the JV.
Further commercial developments to date in
2021 – Japan Representative office
In H1 of 2021 the Company established a rep
office in Tokyo Japan, to be overseen by newly
appointed Director Tamerlan Abdikeev. The
Company has noted a particular appetite
for and appreciation of platinum group
minerals from Japan, which has a history of
PGM innovation, a hydrogen focussed pivot
from carbon-based fuel dependence, strong
industrial, investment and jewellery demand,
as well as refining capacity and technology.
• Japan, in 2020 maintained 4th position in
terms of global PGM demand (after China,
Europe and North America)
• Focussed on Hydrogen solutions
(generation and supply chains) as a key
component in attaining zero-carbon
emission goals1.
• Commercially active in PGM mergers and
acquisitions globally2.
1. https://www.meti.go.jp/english/press/2017/pdf/1226_003a.
pdf and https://www.meti.go.jp/
2. https://www.proactiveinvestors.com.au/companies/
news/71213/platinum-group-metals-unveil-latest-south-
african-joint-venture-with-japans-jogmec-2648.html
James Nieuwenhuys
Chief Executive Officer
4 June 2021
2020 Summary
• Approval of the Monchetundra Flanks
license
• Necessary drill core and database audit
including assay of some intervals not
previously analysed for PGM
• Short diamond core drilling program
commenced, to further increase reserves
and resources definition.
• Extensive desktop analyses of the
Monchetundra flanks potential, including
strike extensions of Loipishnune
mineralisation and the extension of West
Nittis mineralisation into the NKT area
(see Figure 5 on previous page) as well as
neighbouring deposits within the Rosgeo JV.
2021 Summary to date
• Significant Rosgeo JV negotiated and
signed – further detail below
• Submission of the exploration project
report for Monchetundra Flanks
The Company has continued to manage
and develop the Monchetundra Project
while commercial negotiations/discussions
regarding a potential sale of the project are
ongoing, including administration and financial
reporting for 80% owned project company
Terskaya Gornaya Kompaniya, desktop
analysis and studies on Monchegorsk and
regional geology, as well as statutory reporting
requirements. This work is demonstrated by
the following key deliverables over the past
12 months:
• Infill drilling program focussed on
Loipishnune and West Nittis ore bodies
• Flanks application submitted in September
2019, later approved in August 2020
• Flanks license exploration project
commissioned in Q4 2020 and submitted
for approval March 2021
• Rosgeo Joint Venture agreement
encompassing 9 PGM and battery metals
projects (4 of 9 which are post Russian
Feasibility Study and with state approved
reserves and resources) adjacent to
the Monchetundra Project and in the
Monchegorsk region signed in March 2021.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 11
Key performance indicators (‘KPI’s’)
Results for the year – the Group has made
a loss before tax of £3,693,308 for the year
ended 31 December 2020 (2019: loss before tax
of £796,268). The single largest item causing
this variation is high volatility of the Russian
Rouble, adverse movement of which resulted
in foreign exchange loss on revaluation of
monetary items in 2020 of £1.5m (against
a 2019 profit of £0.5m). Through 2020 the
Rouble weakened against Pound Sterling
by 24% (2019: gain of 8%)1. Payments to the
group subsidiaries which control the groups
mining projects are structured as long-term
low interest loans. These loans are revalued
annually with exchange losses or gains
reflected in the P&L account. The second most
significant contribution to the loss reported
are increased running costs and corporate
expenses attributable to the expansion of the
business over the period.
Shareholder return – the performance of the
share price. The Company’s shares are quoted
on AIM and the shares have traded at 3.3-42.5p
(2019: 0.41-3.95p) during the year under review.
This considerable share price appreciation has
been influenced by many factors including PGM
market dynamics and metal price appreciation
as well as developments at project level
including application for and award of new
licences.
Exploration and development funding and
expenditure.
The group has significantly expanded
operations at the West Kytlim Mine with the
addition of leased and purchased machinery.
The Group incurred £118,654 (2019: £111,059)
of development costs at West Kytlim and
acquired additional plant and equipment with
a total value of £1,020,928 (2019: £nil); required
to bolster the mining fleet in preparation for
increased mine production during 2021.
In 2020 the Group raised gross funds £7.9
million of (2019: £1.9 million) from the equity
markets and by exercise of warrants and
options. At 31 December 2020 the Group had
a cash balance of £5,404,101 (31 December
2019: £920,013) which allowed it to continue its
existing projects development and continue
with acquisition of equipment to prepare for
the 2021 Mining season at West Kytlim and
expand the scope of the mining operations.
Within 2020 the Group acquired some of the
mining equipment under a five-year lease term.
The balance of the lease commitment at
31 December 2020 was £526,930.
For more details see the operations update
herewith.
Non-financial KPIs
Environmental management – the Group has
environmental policies in place. Performance
against environmental policies is continuously
monitored and annually audited. The Company
carried out a short program of drilling in 2020
in the Monchetundra area with a very minor
environmental impact. At West Kytlim, the
Company is responsible for the technical and
biological rehabilitation of disturbed areas, as
discussed in the environmental section above.
The Group has the necessary resources to bring
the work site back to the required ecological
condition post mining and makes provision
for rehabilitation work (Note 24 below),
thus minimising any environmental impact.
Rehabilitation plans are subject to approval
prior to commencing mining, on a site by site
basis. The Directors consider that rehabilitation
plans are achievable with some involvement
of external specialists to minimise and rectify
any negative impact of current exploration
and operational activities on the environment.
Further details may be found in the operational
update and ESG section herewith.
Health and Safety – the Group has
occupational health and safety policies and
procedures in place ensuring that all efforts
are made to minimise adverse personal and
corporate outcomes, through best practice
training, implementation and monitoring.
These were appropriately reviewed following
the COVID-19 pandemic.
Operational – The Group has had operational
success in mining without the use of
contractors through 2020, and exploration
success by furthering applications for
additional exploration licences adjacent to
both the West Kytlim and Monchetundra
mining permits.
Governance – The board was strengthened
by appointment of a new non-executive
directors in May 2020 as well as a further
non-executive appointment in March 2021,
in line with expansions in the Group’s sphere
of activity. Iain Rawlinson was appointed
as a Non-Executive Director in May 2020
and brings important legal, financial and
regulatory experience. James Nieuwenhuys
was appointed as Chief Executive Officer in
September 2020 having previously serves as
Non-Executive Director from November 2019
thus separating the executive chairman and
Managing Director/ CEO roles. With regret the
Company this year reports the loss of a Director
while serving. Gary Fitzgerald, at the time the
Company’s longest serving employee passed
away in February 2021. Gary was succeeded
by Tamerlan Abdikeev as a Non-Executive
Director, appointed in April 2021 and will
also represent the Company as head of the
Company’s emerging Japan focussed interests.
The Company also appointed SP Angel as a
new Nominated Advisor in May 2020.
Additional Projects and license applications
– Key personnel continue to assess
opportunities in a range of commodities in
Russia and globally, as potential exploration
and development projects
1. Foreign exchange movements quoted based on those used in these accounts namely RUB/GBP;
102.04 (31/12/2020), 82.16 (31.12.2019), 89.02 (31.12.2018)
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 12
Principal Risks and Uncertainties
The risks inherent in a mineral exploration and
development business are kept under constant
review by the Board and the executive team.
The risks affecting the Group and the Company
are set out respectively in the Directors’ report
and Notes 2 (Going concern) and 28 (Risk
management objectives and policies) to the
financial statements and the principal operating
risks affecting the Group are detailed below:
Exploration and project development risks
Inherent risks associated with the failure
to discover or develop an economically
recoverable ore reserve, to conclude a
definitive feasibility study, or to obtain the
necessary consents and approvals for the
conduct of exploration and mining.
The Group maintains appropriate in-house
expertise and engages in discussions with
respective government departments to have
a better understanding of their requirements,
to make sure all regulatory obligations are
met and duly reported, and therefore increase
the prospect of a successful outcome. The
Group progressed several license applications
in parallel through 2020 including the
Monchetundra and West Kytlim applications.
The Group removed risk associated with
resource drilling and reporting at the West
Kytlim project by securing approvals of a
Feasibility Study and subsequent technical
project for all resources at West Kytlim. This
removed a significant reporting ‘bottle neck’
for the project and created a route for capacity
expansion and single asset risk mitigation.
Operating mine risks
Machinery breakdowns, departures from
expected grade and other operational risks may
have a significant impact on West Kytlim mine
revenue which is a component of the group’s
financial capacity. The approval of the technical
project and launch of the 3 plants in 2021
mitigate single asset risk and run of mine risks.
Political risk
The Group’s assets are located in Russia,
in view of sanctions imposed to certain
individuals and companies in Russia from 2014
until the present time, legal and economic
inconsistencies may arise. There has been no
impact on the Group’s activity, but the Group
closely monitors all regulatory requirements
and changes to the laws, rules and regulation
taking steps whenever necessary to comply
with regulation. The group does not engage
with politically exposed or sanctioned persons
or entities and has appropriate corruption
and anti-bribery policies in place. In 2021 the
group entered into a joint venture with Rosgeo,
a state-owned company, a partner that helps
mitigate political risk in Russia.
Environmental issues
The Group’s operations are subject to
environmental regulation, including
environmental impact assessments and
permitting. Russian environmental legislation
comprises numerous federal and regional
codes. The Group makes an assessment of the
environmental impact at the time it applies
for permits and licences, which are subject
to such assessment. By way of example the
Technical Project and mining permit document
submitted for approval in April 2021 for the
West Kytlim mine was preceded by approval of
a rehabilitation plan for all of the reserves and
resources concerned by these reports. Review
and approval of the rehabilitation plan is a pre-
requisite of the mine plan approval. The Group
mitigates risk to the operation arising from
environmental issues by strictly adhering to
relevant environmental laws and codes.
The regulatory environment
The Group’s activities are subject to extensive
federal and regional laws and regulations
governing various matters, including
licensing, production, taxes, mine safety,
labour standards, occupational health and
safety and environmental protections.
Amendments to current laws and regulations
governing operations and activities of
mining companies or more stringent
implementation or interpretation of these
laws and regulations can have a material
adverse impact on the Group and/or delay
or prevent the development or expansion of
the Group’s properties in Russia. The Group
closely monitors all regulatory requirements
and changes to the laws, rules and regulation
taking steps whenever necessary to comply
with regulation.
The board considers the regulatory
environment for mining companies operating in
Russia to be transparent, not more difficult than
other jurisdictions, sufficiently prescriptive and
in general navigable for a company employing
sufficient expertise and resources to manage
that aspect of its business.
The Group maintains close ties to the Russian
Minerals extraction industries for example
by attending industry events with its mining
peers and by maintaining in house Company
expertise in sub-soil legislation. The group has
recently entered into a JV with Rosgeo, a state-
owned exploration and development company
with unparalleled expertise in the Russian
mineral and subsoil licensing regulatory
nomenclature.
Commodity risk
A potential fall in commodity prices could
result in it becoming uneconomic for the Group
to mine its assets. A Russian rouble (that is
largely dependent on the prices of natural
resources) devaluation against USD provides
a natural hedge against a potential fall in
commodity prices as the Company’s costs are
Russian rouble denominated while commodity
prices are USD denominated. The Group closely
monitors the markets for platinum group
metals, changes in their demand and supply,
and the effect these have on metal prices,
with a view to taking necessary measures
in response to such changes. The group has
pursued commodity diversification in targeting
so called battery metals through its Joint
Venture with Rosgeo adding additional Nickel
and Copper as well as Cobalt potential to its
interests. The Group’s cost of production is at
the lower end of the global cost curve when
compared to South Africa which produces up
to 70% of global PGM.
Demand for platinum group metals from their
principal use – autocatalysts, which reduce
harmful engine emissions is perceived by
market commentators to remain strong as
electric vehicle uptake is offset by tighter
emissions control for traditional internal
combustion engine vehicles. For further details
see the PGM market summary section at the
front of this report. .
Loss of key personnel risk
The loss of key personnel consists of the
departure (voluntary or otherwise) of an
important employee, which will, in all
likelihood, result in a financial loss or increased
expense to the small business. The expenses
may be of a temporary or a permanent nature.
These increased expenses relate to the search
for and hiring of a new employee, training costs
for the new hire, possible “signing” bonus and
higher remuneration packages. These types of
risks cannot be avoided. While the Group can
take measures to motivate and retain existing
employees, it has limited powers in dealing
with departures by natural or legislative
reasons. There is not currently a shortage of
Mining industry personnel and expertise in
Russia or London and the Group is confident a
suitable replacement could be found should it
be necessary to replace any key member of staff.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 13
Research and future development
The Group’s activities during the year
continued to be concentrated principally on
mine development and mineral exploration
programs, and the improvement of mining
techniques and metallurgical processes.
While developing its core projects disclosed
in the Operations Update the Company will
continue to study and searching for new “near
production” projects in the geographical area
where its current operations are situated.
This has been demonstrated by the recent
signing of the Rosgeo JV, securing a pipeline
of new PGM projects aimed at realising a new
PGM Mining district on Kola peninsula and by
the establishment of a representative office in
Japan as a base from which to generate new
business opportunities in the far east.
By order of the Board
Keith Byrne
Company Secretary
4 June 2021
Mine revenue from the
operating West Kytlim
Mine is a significant
contributor to the Group’s
working capital, and the
Directors are confident
that this source of
capital can be increased
dramatically from 2021,
due to increased capacity
at the mine site.
Financing risk
The Company has historically relied primarily
on the issue of additional share capital, and
less frequently loan facilities, to maintain
adequate levels of working capital. Mine
revenue from the operating West Kytlim
Mine is a significant contributor to the
Group’s working capital, and the Directors
are confident that this source of capital can
be increased dramatically from 2021, due
to increased capacity at the mine site. The
Group maintains tight financial and budgetary
control to maintain effective cost control.
Forward planning helps ensure The Company
is adequately funded to reach its objectives.
The launch of full-scale platinum and gold
production from 2018 was also important
in mitigating financial risk.
COVID-19 risk
This is a new risk affecting many businesses
around the globe which causes disruption
to operations, business links and processes,
i.e. the Company’s suppliers, corporate
activity as well as networking capacity and
social engagement. The effect of COVID-19,
and measures taken globally to protect
populations, can have direct or indirect impact
on the Group’s operations. The Company
continues to monitor the situation and
will continue to take the required actions,
including consultations, reviews and
tightened expenditure controls as appropriate.
The groups operations have not been affected
and the group does not consider the pandemic
to have effected profitability. The Group
has noted some benefit in more efficient
communication channels which have opened
up connecting employees for meetings on a
weekly, in some cases daily basis.
The Board constantly monitors and assesses
the situation and believes that further or
significant business interruption is now an
unlikely scenario due to the open pit nature
of the mine, which enables employees to limit
interaction. In addition, the employees’ ability
to naturally social distance at the mine site,
in using single cab mining equipment and
individual crew shelters; and the personal
protection that the Company has provided to
them, should result in the operations being
unaffected even as vaccine programs are
advanced across Russia.
The Board considers risk assessment to be
important in achieving its strategic objectives.
Further details of the Group’s financial risk
management policies can be found in note 27.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 14
Environmental, Social and Governance
Environmental
The company’s rehabilitation plans consider
local climate, geochemistry of soils, fertility,
degree of disturbance and specific landscape
and topography features. The Company
and independent advisors determine how
the land will be remediated post mining
and this process is easier to manage for an
operation with a limited (per site) life of mine.
ZAO Kosvinsky Kamen, Eurasia’s project
Company, has seven active permits for forest
plots totalling over 172 hectares. Prior to the
granting of a permit to clear a site from forest
vegetation, a Rehabilitation Plan prepared by
the Company is approved by the Ministry of
Natural Resources of the Sverdlovsk Oblast.
Rehabilitation Plans follow guidelines set out
within the Russian Subsoil licensing including:
• Federal Law “On Environment Protection”
of 10.01.2002 No. 7-FZ;
• Russian Federation (‘RF’) Land Code of
25.10.2001 No. 136-FZ;
• RF Forest Code of 04.12.2006 No. 200-FZ;
• Resolution of the RF Government “On
Land Rehabilitation and Conservation”
of 10.07.2018 No.800.
The Company Rehabilitation Plans and the
Company’s Environmental Officer set out the
necessary land rehabilitation program prior
to application for a mining permit.
Stages within land rehabilitation
at West Kytlim
Stage 1 – Landscaping:
The mined-out area is landscaped using
bulldozers and where necessary excavators
and haul trucks. Large boulders and pit faces
are removed and contoured. Overburden,
mine tailings (no chemicals are used in the
beneficiation process) and topsoil are then
infilled into the pit. This contrasts with regular
open pitting for bulk commodities where pits
are not normally infilled and tails dumps and
pits remain as permanent features on the
landscape.
Stage 2 – Biological rehabilitation:
This involves phytoremediation measures
including soil fertilization and sowing of
perennial grasses as well as forest restoration
in accordance with Article 63.1 of the RF Forest
Code and Order of the RF Ministry for Natural
Resources of 25.03.2019 No. 188 “Rules for
Forest Restoration”. The Company implements
forest and vegetation restoration over an area
equal in size to the sites cleared for mining
purposes.
Water resources are another key area of
importance and potential vulnerability
requiring thorough planning and precautions
in storage and use. Water is abundant
through the summer at the mine site and is
a key element in our beneficiation process.
Contamination is unlikely with fuel trucks and
fuel storage presenting the only small-scale
risks.
Our priorities are to reduce the amount of
water sourced from surface streams and to
prevent any contamination of the Tylai river
and its tributaries. Virtually all process water
at the operation is recirculated through a
system of tailing dams, settling ponds and
drainage trenches. Special attention is paid to
the condition of the dams which are frequently
examined and, if necessary upgraded. The
operation does not contaminate the water
supply and has a minimal impact on aquatic
animal life and associated flora and fauna.
Waste management
The tailings of alluvial mining do not contain
any hazardous substances as no chemicals
are used in the beneficiation process which is
driven by gravity and mechanical operations.
Air emissions
To reduce air emissions, we ensure that
the equipment used onsite complies with
the latest accepted quality standards and
optimize the routes taken by mining vehicles.
Our brand-new fleet of machinery including
bulldozers, excavators and ore haulage trucks
are specified to the latest environmental
compliance standards. We are also focused on
preventing dust pollution at the mine site and
regularly carry out dust suppression measures.
Introduction to Governance
Environmental, Social and Governance
priorities have increasingly become the
focus of commercial entities recognising the
opportunity for companies to effect lasting
change in our society by making a valid
contribution beyond creating employment and
paying taxes. The mining industry is historically
an integral part of Russian industry and society
– Russia is one of a few nations to recognise
a national Geologist’s day, and is recognised
globally as a developed mining jurisdiction
with progressive mineral industry legislation.
The 2020 Fraser Institute ranks Russia in 24th
place globally.1
This section of the report describes how
Directors consider and adopt principles
of corporate governance, and apply them
throughout the group of Companies
while achieving corporate objectives and
ensuring the overall direction, supervision
and accountability of the organisation.
The Section 172 (page 17) Statement describes
how Directors promote the Company for the
benefit of members as a whole. Financial and
non-financial Key Performance Indicators
(page 11) are outlined to measure performance
of the board year on year while Principal Risks
and Uncertainties demonstrate an awareness
of potential obstacles to achieving corporate
goals. The Board has adopted the latest
version of the QCA Corporate Governance
Code (2018) (“QCA Code”) and strives to follow
its 10 principles the fullest extent possible
with support from a set of policies and
procedures documentation reviewed annually
with consultation with the boards legal and
commercial advisors. The environment
is at the forefront of ESG principles for a
mining enterprise and directors consider the
sustainability and environmentally focussed
West Kytlim operation to be an opportunity
to demonstrate a potential new style or type
of lower carbon metal production, competing
not in quantity but in quality with other global
sources of PGM.
Eurasia is committed to ensuring the land
disturbed by mining activities is returned,
post mining, to a safe and stable landform.
Rehabilitation plans, and forestry permits
are a key aspect of mine permitting and are
submitted for approval in advance of final
mining permissions. Typically, these describe
how forestry is managed with an equal amount
of forest planted as is removed for mining.
Open pits are infilled with the overburden
removed prior to mining. Top-soil is also
replaced and the land regenerates over a
period of five to ten growing seasons.
1. https://www.fraserinstitute.org/categories/mining
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 15
Maintaining best-in-class Environmental, Social and Governance position remains a key focus
Eurasia is focussed on ESG activities and ensuring the safety and well-being of
its workers and the environment and is included in the L&G Future World ESG
UK Index; and Liberum’s climate portfolio.
EMPLOYEE SAFETY IS OUR FIRST PRIORITY
COVID-19 response protocols in place:
• Longer roster to reduce travel
• Purchase express Test kits
• More social distancing in crew shelters – separate
compounds for 4 people in shelters for 8
• Face masks are mandatory
• Awareness interviews with employees
• Medical screening before dispatch and upon roster change
• Coordinated meal times to ensure social distancing maintained
ENVIRONMENTAL PROTECTION IS FRONT OF MIND
• Eurasia is committed to ensuring the land disturbed by mining
activities is returned is a safe and stable landform that does not cause
environmental harm and is able to sustain post-mining land use
• Rehabilitation plans envisage works impacting local climate,
geochemistry of soils, fertility, degree of disturbance, specific
landscape and topography features
• New (2020) mining machinery to high efficiency and
environmental standards
• No protected environmental zones within license area
OUR MINE SITES ARE ENGAGED WITH LOCAL
COMMUNITIES
• The mine has a sustainability focus - for example most mine
building structures and interiors are constructed from timber
milled on site
• All mine workers and equipment operators are local (within 70km area)
• Project companies registered locally and taxes are paid locally
• Strong relationships with local communities
• Eurasia has already demonstrated that ESG is a key focus area
and has been included in the L&G Future World ESG UK Index; and
Liberum’s climate portfolio
OVER 20 YEARS’ EXPERIENCE OPERATING IN RUSSIA
• ROSNEDRA (Russian federal agency for subsoil management)
invited Eurasia to represent Russia and its mining opportunities
at PDAC 2020 together with Russian Majors (i.e. Norilsk Nickel,
Polymetal, Fosagro, Polysus)
• Building robust partnerships and developing industry contacts in
the Russian mining sector
• Leveraging an in depth knowledge of the Russian licensing system
in partnership with support from expert Russian and international
technical consultants
• Eurasia is a permanent member of Urals Association of gold
producers whose role is to work alongside government agencies
to optimize legislation and improve business environment
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 16
Environmental, Social and Governance (continued)
Social and Governance
• All mine workers and equipment operators
are from local communities (within 70 km
area)
• Project companies are registered locally,
and taxes are paid locally
• Eurasia is a permanent member of Urals
Association of gold producers whose role
is to work alongside government agencies
to optimize legislation and improve the
business environment
Although the mine site at West Kytlim is remote
and has no immediate local population, the
Company does take the initiative to engage
with local communities, for example as
evidenced in Figure 6 above. The Company
maintains active dialogue with local
administrative centres and persons in
relevant authority.
The Company has adopted the Quoted
Companies Alliance code as a framework
from which to manage corporate governance
principles, further detailed in the Directors
Responsibilities statement below. Some
highlights of the Company’s Governance
principals are:
• Top tier advisers in place as UBS, H.C.
Wainright, Renaissance Capital, ACF Equity
Research, DLA Piper, Gowling GWLG,
Simmons & Simmons and Nomad SP Angel
• Appropriate Non-executive director
representation at board level
• Board sub-committee with oversight role in
Remuneration, Disclosure, Audit
• Strict adherence to relevant regulations
ensured by a complete set of policies and
procedures documentation reviewed
annually in cooperation from company
advisors.
Employee Health and Safety
There were no accidents or injuries at the
West Kytlim mine site or at the Monchetundra
Project during 2020.
Health and Safety protocols are designed
to minimise risk to employee health and
wellbeing. The risk of injury is generally lower
at an open pit operation compared with
underground mining.
COVID-19 Response
The Company introduced a number of
provisions in spring 2020 to minimise the effect
of the COVID-19 pandemic on the business
and these have remained in place for the
2021 season. No incidents of COVID-19 have
been recorded at site and the mine can be
safely operated with correct social distancing
and other COVID-19 measures maintained.
Standard public health measures adopted
in Russia apply at the mine site, which also
naturally benefits from certain features which
make it less susceptible to incidences of
COVID-19.
• The majority of mine workers are either
working in the open air or are enclosed
within a single person cab (excavator, haul
truck or bulldozer), with the exception of
the laboratory facility which has individual
working stations and limited contact.
• Remote working site with no unnecessary
entry and exit from the mine, save for roster
changes and delivery of provisions.
• In addition, meal times are staggered to
avoid crowding in canteen facilities and on-
site crew accommodation is individualised.
James Nieuwenhuys
Chief Executive Officer
4 June 2021
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020Figure 6: Engaging with the local community. A Eurasia excavator and haul truck are pictured clearing some debris in the village of Kytlim. 17
Strategic Report, Background to the Company
Eurasia Mining Plc (“Eurasia” or
the “Company”) is a public limited
company incorporated and domiciled
in Great Britain with its registered
office at International House,
142 Cromwell Road, London,
SW7 4EF, United Kingdom. The
Company’s shares are quoted on AIM,
a market operated by the London
Stock Exchange Group plc.
The principal activities of the Company and
its subsidiaries (the “Group”) are related to
exploration for and production of platinum
group metals (“PGM”), gold and other minerals.
The purpose of the Strategic Report is to inform
members of the Company and help them to
assess how the Directors have performed their
duties under section 172 of the Companies
Act 2006 (duty to promote the success of the
Company).
Companies Act 2006, Section 172(1) Directors
Statement – Promoting the success of the
Company (to be read in conjunction with
the rest of the annual report and with the
Corporate Governance section).
The board takes a
long-term approach to
creating and realising
value for its shareholders
and is keenly aware of
the time scale on which
resource projects are
developed.
The Board acknowledges that there is a legal
requirement for the Company to report on how
the Board and its Committees have considered
the requirements of s.172 of the Companies
Act 2006 in their decision making. A director of
a company must act in the way he considers,
in good faith, would be most likely to promote
the success of the company for the benefit
of its members and, in doing so, have regard
(amongst other matters) to the following
factors:
The likely long-term consequences of any
corporate action or decision;
The board takes a long-term approach to
creating and realising value for its shareholders
and is keenly aware of the time scale on
which resource projects are developed. This
is reflected in the age of the company itself
(incorporated in 1995) and the tenure of
some of its longest standing employees – 6
employees in our Russian offices as well as
4 senior executives, have worked with the
Company for more than a decade.
The interests and professional development
of the company’s employees;
Staff are encouraged to maintain their
professional credentials and the Company
meets annual subscriptions to professional
bodies on behalf of its employees as well as,
from time to time, tuition fees.
The need to foster the company’s business
relationships with suppliers, customers and
other stakeholders;
• The group employs local workers,
contractors and suppliers wherever
possible and maintains a network of
contacts in the industry, for example by
membership of the Urals society of gold
producers.
The impact of the company’s operations on
the communities adjacent its projects and
the environment;
• Rehabilitation plans are submitted as a
necessary aspect of all mineral industry
statutory reporting instruments in Russia.
• The Company’s mine at West Kytlim has
a sustainability focus and management
are resolved to producing greener, lower
carbon PGM, in line with efforts across the
globe to bring climate change awareness
to the mining industry, and messaging
from parts of the company’s shareholder
base, specifically ESG and climate focussed
funds. The addition of a power line to site
at West Kytlim is a key deliverable to ensure
lower carbon PGM production. The board
welcomes initiatives within the mining
industry generally, which are focussed on
lower carbon, indeed zero-carbon mining.
Please see the ESG section of this report for
more information.
The requirement of the company to maintain
a reputation for high standards of business
conduct and corporate governance;
• The Group applies the Quoted Companies
Alliance code and considers its Corporate
Governance responsibilities under their
10 guiding principles (see Directors
Responsibilities section). The Company
also maintains an extensive internal body
of policy and procedures documentation
which is regularly updated and strictly
adhered to. Where necessary the Company
has resort to its Nomad and legal advisors
on matters concerning the UK regulatory
environment.
The need to treat all members of the
company fairly and equitably.
• No individual shareholder/ member has
greater influence, rights or obligations than
any other shareholder.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 18
Strategic Report, Background to the Company (continued)
The Board is ultimately responsible for the
direction, management, performance and
long-term sustainable success of the Company.
It sets the Group’s strategy and objectives,
considering the interests of all its stakeholders.
A good understanding of the Company’s
stakeholders enables the Board to factor the
potential impact of strategic decisions on
each stakeholder group into a boardroom
discussion. By considering the Company’s
purpose, vision and values together with its
strategic priorities the Board aims to make
sure that its decisions are fair and aligned with
corporate strategy and principles. The Board
has always, both collectively and individually,
taken decisions based on their long-term
outcomes and consistently aims to uphold
the highest standards of business conduct.
Board resolutions are always determined with
reference to the interests of the Company’s
employees, its business relationships with
suppliers and customers, and the impact
of its operations on communities and the
environment. This statement serves as an
overview of how the Directors have performed
this duty in 2020 and engaged with the
Company’s key stakeholders to help to inform
the Board’s decision-making.
The Group currently operates in 2 key regions
of Russia – (1) Urals: West Kytlim, which is an
operating platinum group metals and gold
mine in the Central Urals and (2) Kola Peninsula
in Russia, where a mining licence was granted
in 2018 and the Rosgeo JV was created for
additional projects in 2021. At the same time
the Group continues to assess the potential of
other resource projects.
At West Kytlim, the Group made several
PGM discoveries of resources and reserves
suitable for commercial mining and secured
a mining licence in 2015. The Group carried
out pilot mining operations in 2016 and has
been running a commercial operation since
2018, initially employing a mining contractor
for ore extraction from pit to washplant. The
mine has been expanded successfully with
a phased roll out of new machinery added
through successive mining seasons in line with
streamlined statutory reporting requirements
and mineral reserve and resource reporting
(see operation update section for further
details).
West Kytlim mine is directly owned by a
subsidiary ZAO Kosvinsky Kamen and the
Group controls 68% of this subsidiary (note 14).
On the Kola Peninsula the Group’s discovery
of PGM mineralisation in the Monchetundra
area lead to submission of a feasibility study,
on completion of exploration work in 2016.
A mining permit was subsequently granted,
in 2018 for two open-pittable ore bodies at
Loipishnune and West Nittis.
The Monchetundra project is owned by a
subsidiary ZAO Terskaya Mining Company, the
Group controls 80% of this subsidiary (note 14).
More details on both projects are contained in
the Operations Update.
The Board’s aim is to deliver value to its
shareholders by leveraging the significant
experience of its Directors and management
team to develop its projects. The Board is also
focused on maximising shareholder value and
continues to prioritise the potential for asset
sales of the Company. It is the board’s intention
to continue to progress both strategies (project
development and sale of assets) concurrently.
James Nieuwenhuys
Chief Executive Officer
4 June 2021
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 19
Directors’ report
Directors
The Directors who served during the period were:
Christian Schaffalitzky – Executive Chairman
Gary FitzGerald – Non-Executive Director (passed away February 2021)
Dmitry Suschov – Non-Executive Director (resigned 18 September 2020)
Anthony James Nieuwenhuys – Executive Director and CEO (from 18 September 2020, previously Non-Executive Director)
David Iain Rawlinson – Non-Executive Director (appointed 27 May 2020)
Tamerlan Abdikeev – Non-Executive Director (appointed 9 April 2021)
Company Secretary
Keith Byrne
Directors’ interests
Share interests
The Directors of the Company active at 31 December 2020 held the following beneficial interests (including interests held by spouses and minor
children) in the ordinary shares of the Company:
C. Schaffalitzky
G. FitzGerald
Total
Share options and warrants
Options
C. Schaffalitzky
G. FitzGerald
Total
31 Dec 2020
No. of shares
89,569,517
23,378,445
31 Dec 2019
No. of shares
89,569,517
23,378,445
23,378,445
23,378,445
31 Dec 2020
No. of shares
31 Dec 2019
No. of shares
20,000,000
5,000,000
20,000,000
5,000,000
25,000,000
25,000,000
All options granted to the Directors vested by 31 December 2020.
No share options were exercised by the Directors during 2020 (2019 – nil).
Dividends and profit retention
No dividend is proposed in respect of the year (2019: £nil) and the retained loss for the year attributable to the equity holders of the parent of
£3,191,471 (2019: loss of £948,745) has been taken to reserves.
Share capital
The issued capital of the Company as at 31 December 2020 was:
Fully paid ordinary of shares at 0.1 pence each
Deferred shares of 4.9 pence each
Number
of shares
Nominal
value
Share
premium
account
2,758,701,681
143,377,203
2,758,702
7,025,483
28,467,732
–
9,784,185
28,467,732
Risk Management
The Directors consider that assessing and monitoring the inherent risks in the exploration and mine development business, as well as other financial
risks, is crucial for the success of the Group. The Board regularly reviews the performance of the Company’s projects against plans and forecasts.
Further detail on management of financial risks, which includes foreign currency, interest rate, credit, liquidity and capital risks are set out in Note 28.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
20
Directors’ report (continued)
Going Concern
At 31 December 2020 the Group’s net current assets amounted to £ 5,434,669 (2019: £681,055). At the same time the Group had a cash balance of
£5,404,101 (2019: £920,013). The Group’s debt largely consisted of lease agreements set up to acquire mining machinery with a total amount of
£558,614 (no debt at 31 December 2019).
In 2020 the Group raised funds from exercise of warrants and options and one issue of shares on the equity markets. The total funds raised were
£7.9m before fees and commissions.
In 2020 the Group raised funds from exercise of warrants and options and one issue of shares on the equity markets. The total funds raised were
£7.9 mln before fees and commissions.
The Group took full control of the West Kytlim mine in 2020 and increased the scale of mining operations. The project was further capitalised with
addition of purchased and leased machinery during 2020. Funds available have allowed the Company to further expand the mining fleet for the 2021
mining season, including a second washplant and supporting machinery. The mining season in 2021 started in the mid-April, which is six weeks
earlier than the 2020 season. This, and the addition of a second plant and a pending third washplant will ensure higher revenue for 2021.
Expenditure at Monchetundra has been modest through 2020 and thus far in 2021. Future expenditure on further licences within the Rosgeo JV
remains at the Boards discretion A fund raising was completed in May 2021, by issuance of 53,306,751 ordinary shares to a single institutional investor
at the then market price of 26.5p, raising gross proceeds of £14,126,289. An associated warrant is included per ordinary share, at the same price and
with a 3 year term. It is intended that these funds, and future potential warrant funds, will be chiefly directed to the development of projects within
the Rosgeo JV. The EPCF contract, which fully funds the development of the West Nittis and Loipishnune deposits within the Moncetundra Project can
be actioned and can be rolled out to Rosgeo JV projects.
The Directors have concluded that the combination of these circumstances, and the Company’s current cash balance, represent a reasonable
expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, which management have
determined to be 12 months from the signing of this annual report. For these reasons, they continue to adopt the going concern basis in preparing the
annual report and accounts.
2021 events
The following events occurred in 2021 between reporting and audit report dates:
• A Joint Venture was entered into with Rosgeo, a Russian registered and state funded Company, in March 2021. The JV is outside of and separate to
ownership of the Company’s two key assets at Monchetundra and West Kytlim. The Rosgeo Agreement allows Eurasia to gain a 75% equity stake
in each of nine new assets with the remaining 25% equity stakes to be held by Rosgeo. Eurasia will be the operator of the JV and will develop the
additional assets at its discretion.
• The Company established a Representative Office in Tokyo Japan in March 2021 to be overseen by new appointment Director Tamerlan Abdikeev.
• The Company received a proposal in writing regarding a potential substantial asset sale in May 2021 and exited the Code compliant Formal Sale
Process as announced on 12 May 2021.
• A fund raising was completed in May 2021, by issuance of 53,306,751 ordinary shares to a single institutional investor at the then market price of
26.5p, raising gross proceeds of £14,126,289. An associated warrant is included per ordinary share, at the same price and with a 3-year term. It is
intended that these funds will be chiefly directed to exploration and development of projects within the Rosgeo JV.
Directors’ responsibilities statement
The Directors are responsible for preparing the Strategic report and the Directors’ report.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors must prepare the financial
statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 (IFRS). 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
and profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable IFRS, have been followed, subject to any material departures disclosed and explained in the financial statements;
• with contributions from advisors, set the Company and Groups corporate strategy including research and development activities – detailed in the
strategic report above;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time, the financial position of the Company and Group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that: so far as each Director is aware there is no relevant audit information of which the Company’s auditor is unaware; and the
Directors 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.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 21
Directors’ responsibilities statement (continued)
Revenue
All revenues generated by the Group are from sale of metals, within the Russian federation. Currently the sole source of revenue is metal sales from
the West Kytlim Mine. Refinery receipts record the total of metal sales with payments received for platinum and gold, at the market rate, on average
every month throughout the mining season. For reasons related to the nature of metals refining the revenue for other PGM (Rhodium, Iridium and
Palladium) are received when all shipments for that year have been received.
Directors Indemnity
The group maintains Directors and Officers liability insurance as an indemnity provision entered into in June of 2020.
Corporate Governance – The Quoted Companies Alliance Code (‘QCA Code’)
Eurasia Mining applies the QCA Code as a Corporate Governance framework to ensure adequate corporate governance standards as befits the
nature of the Company’s business and the stage attained in the continuing evolution of the Company, and in-line with its corporate strategy and
business goals. The QCA Code sets out ten principles by which the code may be applied to any company. These principles are outlined below as a
demonstration of how the Company meets these requirements.
Delivering Growth
Eurasia has established a strategy designed to promote long term value and a return on investment for its shareholders, a strategy which also
aims to build the Company to an increasingly profitable enterprise while maintaining good corporate governance and social and environmental
responsibility standards. The Company’s aim is to achieve these goals through self-funded exploration and development of marketable resource
projects in various commodities, by developing these projects to operating mines, or by joint venturing or straightforward sale of these assets to
realise a return on investment.
Principle 1:
The Company is currently focused on developing two key assets; The West Kytlim mine produces Platinum group metals (‘PGM’) and gold in the
Ural Mountains, Russia, while the Monchetundra Project is being developed towards production of PGM, gold and battery metals near the town
of Monchegorsk, on the Kola Peninsula, Russia. Further non-core assets are also being progressed and the Company remains active in identifying
further opportunities across a range of commodities and jurisdictions. The Company intends to achieve these goals while maintaining corporate
governance principles in line with those outlined in the QCA Code. The key challenges in achieving this are set out below.
Principle 2:
Eurasia seeks to maintain open, direct and two-way communication with its shareholders through various channels including press releases, the
Company website, twitter feed, company presentations, investor events, video blogs filmed on site at the Company’s projects, live and recorded
video and audio interviews, and lastly direct communication by phone and email through the Company’s contact information. The Company employs
sub-contracted public relations professionals and maintains several third-party contracts to better disseminate Company news-flow. Through
shareholder feedback the Company ensures that it remains in touch with the information requirements of our shareholders, their expectations
regarding their investment, and the motivation behind their voting decisions. Director’s consider shareholder’s motivations and expectations to be
broadly correlated with that of the Company and the Company’s strategy. Shareholders’ information requirements can therefore be summarised as
either operational in nature, or commercial. The Company aims to update on key events within these categories frequently, and in a timely manner as
events materialise. Directors recognise that shareholders require complete and timely information as a necessary input to their investment decisions.
Shareholders make regular contact through the Company’s main office contact details where their calls or emails are dealt with in a timely manner by
a member of staff sufficiently senior to comment on technical and commercial matters. www.eurasiamining.co.uk/contact
Principle 3:
Experienced and knowledgeable long-standing employees are a recognised key asset within the Company and our Corporate Governance principles
seek to cultivate a productive and fulfilling working environment within the Company.
The Company’s mining operation is a further key asset and attention is paid to its impact on society and the various stakeholders important to the
project’s continuous success. These include sub-contractors to the Company, and officials within the Russian sub-soil licensing and other agencies.
The mining operation is in a remote area and where possible employs local persons but does not otherwise impact on a local population. The
Company is devoted to maintaining the strictest environmental policies as required by the Russian sub-soil licensing agencies.
Key personnel from the Company’s subsidiary maintain communication with representatives from the nearest village to the mining operation, the
town of Kytlim in order to ensure feedback on potential issues. The mining community in this area of the Urals is relatively small and there is general
communication between companies operating nearby mines, and with all suppliers to the industry generally. Communication with officials from sub-
soil licensing agencies and their sub-contractors is generally more formal, and within the reporting structures designed by those agencies to protect
the environment, the country’s natural resources and the rights of local populations. Any issue arising from any stakeholder will immediately be dealt
with or communicated to the required level to allow for action to be taken. No such events have occurred in the history of the mining operation and
where an issue may arise it is reported in full to senior management and Directors.
Managing relationships within the Company’s workforce, and its outward interactions with local communities, service providers, and the
environment, all have the potential to impact on the Company’s ability to achieve its medium to long term goals – managing these relationships is
considered a fundamental facet of good Corporate Governance.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 22
Directors’ report (continued)
Corporate Governance – The Quoted Companies Alliance Code (‘QCA Code’) (continued)
Principle 4:
The leading risks at the operational level relate to the reliability of our resource and reserve estimations and our ability to manage the mining
operation to achieve its goals. These risks are mitigated by ensuring we employ qualified and knowledgeable personnel who are adequately
resourced and supported by effective management. Resource exploration involves inherent risks stemming from the fact that information relating
to the mineralisation is not immediately available and is expensive to obtain. Recognising this risk and then managing it effectively is a critical aspect
of a successful resource exploration and development business.
The Company’s annual audit provides an opportunity to reassess the chief risks facing the business at both a corporate and operational level. These
are agreed by directors and delineated and audited on an annual basis, thus ensuring adequate recognition and articulation of each risk category.
Maintaining a dynamic management framework
Principle 5:
The board’s Executive Chairman is Christian Schaffalitzky. James Nieuwenhuys serves as Chief Executive Officer while Iain Rawlinson and Tamerlan
Abdikeev serve as Non-Executive Directors. The board also maintains active advisory roles with occasional appointments made as strategic advisors.
Former non-executive director Dmitry Suschov was appointed as Mergers and acquisitions officer in September 2020. Iain Rawlinson and Tamerlan
Abdikeev are considered to be independent directors.
The board meets when an executive decision requires board approval, and in any event no less than once per six-week period. Board members
are regularly consulted on executive decisions which would benefit from specific input relevant to a board members area of expertise. All board
members are aware of and comfortable with the time and resource requirements associated with their position. Relevant information relating to
a board discussion is carefully prepared and circulated in advance of board meetings. Minutes are kept and then circulated directly after all board
meetings. Minutes are noted on a prescribed form, which includes heading information such as attendance. An attendance record for each director
is also maintained and annualised for distribution within the board. 9 board meetings occurred in the 2020 calendar year as well as three sub-
committee meetings with 100% attendance of Directors current at the time of the meeting.
Separately, the company secretary, is considered a key position necessary in preserving a functional and ergonomic management framework within
the Company and good communication across the group of companies.
Principle 6:
The board has an effective combination of commercial and technical experience, being led by a chair with a strong background in geology, and in
developing successful resource projects and companies, with support from non-executive directors with strong experience in commercial functions
in a range of markets, commodities and jurisdictions. The appointment of James Nieuwenhuys, as Chief Executive Officer was completed in
September 2020. Board members retire on a rota and declare themselves eligible for reappointment at the company’s AGM.
The current board members are listed below:
Christian Schaffalitzky
Executive Chairman
EurGeol, FIMMM, PGeo, CEng. Christian has over 40 years’ experience in mineral exploration. From 1984 to 1992, he founded and managed the
international minerals consultancy, CSA Group, now CSA Global. He was also founder of Ivernia West plc, where he led the exploration and discovery
of the Lisheen zinc deposit in Ireland. Christian is also chairman of Kibo Energy Plc and non-executive director of MetalNRG.
Iain Rawlinson
Non-Executive Director
Iain is an experienced board member and a corporate strategy consultant. He has a law degree from Cambridge University, is a qualified barrister,
and is also an experienced corporate financier. Iain started his career in investment banking with Lazard and Robert Fleming and was one of the
initial partners of Fleming Family & Partners (FF&P) where he led the listing of Highland Gold PLC in 2002. Iain’s independent board appointments in
the corporate sector include Lithic Metals and Energy PLC (2007 to 2009), Dana Petroleum PLC (2005 to 2010), The Monarch Group (2009 to 2014), and
Parkmead Group PLC (2010 to 2020). Iain’s board positions in charities include Tusk Trust (Trustee from 2002 and Chairman from 2005 to 2013).
Tamerlan Abdikeev
Non-Executive Director
Tamerlan holds a master’s degree in International Relations and Modern Japanese Studies from Oxford University and has held a range of positions
in finance houses with an Asian and European focus including corporate planning at the State Street Bank and business development director at
United Investments Japan. In 2005 Tamerlan joined PIMCO, a global investment management firm with more than US$2.21 trillion in assets, as part
of the business management function across Asia Pacific (China, Singapore, Australia) and established the company’s Hong Kong office in 2006. Later
he relocated to PIMCO Europe in Munich, assuming responsibility for regional business development covering Russia, CIS and Eastern European
markets. After returning to Tokyo in 2010 Tamerlan founded INVERO Advisors, an investment, strategy consultancy and M&A boutique focusing on
private equity, project finance, global strategy, business development and cross-border M&A.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 23
Maintaining a dynamic management framework (continued)
James Nieuwenhuys
Chief Executive Officer
James has held senior positions including Chief Executive Officer at Lesego Platinum in South Africa and Chief Operating Officer at Polyus Gold,
Russia’s largest gold miner. James has an engineering background and has also held senior positions at a number of EPC organisations.
The board considers the skill sets currently within the board to be sufficient for the successful running of the business, and the delivery of the stated
corporate strategy and goals for the benefit of shareholders through the medium to long term, however further appointments may be made in due
course. In addition, where more specialised skills are required, the board has access to a network of individuals and organisations with whom it can
consult for further information. This can include input to operational decisions relating to the company’s operating mine, or advice of a commercial
nature. Each board members long standing career in the industry is invaluable in this regard.
Continuing Professional Development (‘CPD’) and membership of institutions which promote best practice in industry is encouraged in all board
members, though not compulsory to board membership. As an example, the professional accreditations PGeo (‘Professional Geologist’, Institute of
Geologists of Ireland) and EurGeol (‘European Geologist’, European Federation of Geologists), attained by the Executive Chairman, are maintained by
strict adherence to a program of quantitative and qualitative CPD activities. Likewise, the Company’s financial controller maintains membership of
the Association of Chartered and Certified Accountants by following a prescribed CPD program. All board members regularly attend industry events
and conferences to keep abreast of developments in their area of expertise. Board members, and Dmitry Suschov, also speak at and chair discussions
at mining industry conferences.
No one board member, or group of board members, dominates decision making within the board. Former non-executive director Dmitry Suschov is a
major shareholder in the business however individual shareholdings are recognised by all board members as separate to and distinct from rights and
responsibilities as effective board members.
The board is further supported by Group Financial Controller Alex Agaev who is an ACCA certified and chartered accountant.
Principle 7:
The remuneration committee, whose membership is considered annually is responsible for evaluating the performance of the executive directors.
As mentioned above board members retire on a fixed rota, and efforts are made with regard to succession planning and appointment of new board
members as required.
New appointments to the board may be suggested by current board members or persons external to the company. The appointment process
involves; assessment of suitability based on qualifications and work history, due diligence by the company and its Nomad, a series of meetings with
board members and key personnel, and ultimately contract negotiation and appointment.
Board evaluations are internal to the company and on an ad-hoc basis, as befits the small scale of the company currently, but not less than once
per year at the time of the company AGM. Adhering to the company’s strategy, achieving the company’s goals, and maintaining good corporate
governance standards are the three most prominent identifiers by which board effectiveness is evaluated. Board evaluation procedures are
considered appropriate for the size and scale of the business currently and the board recognises that these procedures should be subject to review
as and when the board and the Company grow. Board evaluations are not currently made public and it is the Company’s intention to reconsider this
position and ensure continued compliance with the code as the Company develops.
Principle 8:
The company is founded on a culture of following and promoting the highest ethical standards with regard to its commercial transactions, business
practices, strategy, internal employee relations and outward-facing stakeholder and community relationships. The company operates chiefly in the
Russian Federation though it is incorporated in the UK and governed by the laws of England and Wales. The corporate culture and values extend from
the corporate level throughout the organisation irrespective of jurisdiction. An ability to recognise and promote ethical values and behaviours is seen
throughout the organisation as an excellent behavioural asset to an employee or potential employee or indeed board member. The current board
members were chosen with this awareness of the corporate culture and the Company’s ethical standards in mind – new board appointments are also
considered in this light. Corporate culture, and high ethical standards with regard to business practices are considered a critical element in attaining
the Company’s strategy and goals. These standards are reinforced through the appraisal process. High standards of ethics are considered to create
a competitive advantage for the company and are a core element of the Company’s business model, as they ensure the Company’s long-term
sustainability. Eurasia is an equal opportunities employer and the board have recognised a lack of board diversity which should be addressed.
Principle 9:
Maintaining governance structures that are fit for use as the Company evolves in size and complexity is an essential element of good corporate
governance. Maintenance of the corporate governance code is the sole remit of the board chair, who instigates changes in policy, and ensures the
code is applied throughout the organisation.
Non-executive directors are appointed and participate in all board level decisions and also provide scrutiny and oversight of the executive director’s
roles. The board’s non-executive directors are each skilled in different aspects of commercial finance and regulation, with a combined breath
of experience across various markets, commodities and jurisdictions. They communicate regularly with the chair and executive directors and
provide reliable advice in their areas of expertise. The terms and functions of the audit and remunerations committees are set out below. Further,
the company secretary role is seen as a pivotal role within the organisation ensuring regulatory compliance and application of good corporate
governance principles. The secretary is available to non-executive directors to support their information requirements and decision making and
reports directly to the Chairman.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 24
Directors’ report (continued)
Audit Committee
The Audit Committee may examine any matters relating to the financial affairs of the Group and the Group’s audits, this includes reviews of the
annual financial statements and announcements, internal control procedures, accounting procedures, accounting policies, the appointment,
independence, objectivity, terms of reference and fees of external Auditors and such other related functions as the Board may require.
The external Auditors have direct access to the members of the committee, without presence of the executive Directors, for independent discussions.
Two Audit Committee meetings are held during the year; to approve the Interim report and later the Annual Financial Statements. The Audit
Committee opines on whether accounts are in compliance with International Financial Reporting Standards. The Chairman of the Audit Committee
is Iain Rawlinson and the committee comprises Iain Rawlinson and Christian Schaffalitzky, as duly appointed alternate to Gary Fitzgerald, to be
replaced by Tamerlan Abdikeev following completion of the 2020 Group reporting
Remuneration Committee
The Remuneration Committee determines the terms and conditions of employment and annual remuneration of the executive Directors and senior
staff. It consults with the Executive Chairman, takes into consideration external data and comparative third-party remuneration and has access
to professional advice outside the Company. The Chairman of the Remuneration Committee is Iain Rawlinson and the committee comprises Iain
Rawlinson and Tamerlan Abdikeev.
The key policy objectives of the Remuneration Committee in respect of the Company’s executive Directors and other senior executives are: -
• to ensure that individuals are fairly rewarded for their personal contribution to the Company’s overall performance, and to act as an independent
committee ensuring that due regard is given to the interests of the Company’s Shareholders and to the financial and commercial health of the
Company.
Remuneration of executive Directors comprises basic salary, discretionary bonuses, participation in the Company’s Share Option Scheme and other
benefits. The Company’s remuneration policy with regard to options is to maintain an amount of not more than 10% of the issued share capital in
options for the Company’s management and employees which may include the issue of new options in line with any new share issues.
Matters which are reserved strictly for the consideration of the board include, but are not limited to, discussions and decision on Company strategy,
major investment decisions in new business development, commercial arrangements including funding requirements, high-level decisions on
distribution of funds, and recruitment or dismissal of senior personnel and board members.
The above outline of the Company’s corporate governance framework befits the current scale of the Company but will be subject to appropriate
modifications as the Company grows in line with its stated strategy. An annual review of the corporate governance framework is undertaken at
the board meeting preceding or directly following the Company’s AGM. Changes considered to the current corporate governance framework, to be
assessed in due course, include further appointments to the board, and establishing independent bodies to review and assess board performance.
Build trust
Principle 10:
The board seeks to maintain both direct and two-way communication with its shareholders through various channels including the Company
website, Twitter feed, Company Presentations, Investor Events, Video Blogs filmed on site at the Company’s projects, Live and recorded video and
audio interviews, and lastly direct communication by phone and email through the Company’s contact information. Phone calls to the company’s
office are screened and communicated to board members as appropriate. All shareholders may at their discretion chose to attend the company AGM
and speak directly to the board and management.
The Company employs Public Relations professionals and maintains several third-party contracts to better disseminate Company news-flow.
Through shareholder feedback the Company ensures that the boards communication of the company’s progress is thorough and well understood.
Health and Safety
The Group has occupational health and safety policies and procedures in place ensuring that all efforts are made to minimise adverse personal and
corporate outcomes, through best practice training, implementation and monitoring. No serious incidents occurred in the past year.
UK Code on takeover and mergers
Eurasia Mining is subject to the UK City code on takeovers and mergers, which was revised and extended to apply to all companies listed on the AIM
market in October 2013.
Auditors
Grant Thornton UK LLP are willing to continue in office and a resolution proposing their re-appointment as auditors of the Company and a resolution
authorising the Directors to agree their remuneration will be put to shareholders at the Annual General Meeting.
By order of the Board
Keith Byrne
Company Secretary
4 June 2021
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 25
Independent auditor’s report
to the members of Eurasia Mining Plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Eurasia Mining Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended
31 December 2020, which comprise the Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of
financial position, Company statement of financial position, Consolidated statement of changes in equity, Company statement of changes in
equity, Consolidated statement of cash flows, Company 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
accounting standards in conformity with the requirements of the Companies Act 2006 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 2020 and of
the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
• the parent company financial statements have been properly prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 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 the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding 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 our
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions
are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the group or the parent
company to cease to continue as a going concern.
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis of
accounting included evaluation of management’s cashflow forecast for at least 12 months from date of approval of the financial statements, along
with challenge and assessment of the inputs into the forecast. We tested management’s reverse stress test to check that there is adequate headroom
in the forecast to cover unforeseen costs or reduced revenues. We inspected capital and lease commitments entered into and mining license
requirements to check that these have been appropriately incorporated into the forecasts.
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the group’s and the parent company’s business
model including effects arising from macro-economic uncertainties such as COVID-19, we assessed and challenged the reasonableness of estimates
made by the directors and the related disclosures and analysed how those risks might affect the group’s and the parent company’s financial
resources or ability to continue operations over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of directors for the financial statements’
section of this report.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 26
Independent auditor’s report (continued)
to the members of Eurasia Mining Plc
Our approach to the audit
Materiality
Overall materiality:
Overview of our audit approach
Group: £92,800, which represents 2% of the group’s net assets at the planning stage of the audit.
Parent company: £82,000, which represents 2% of the parent company’s gross assets, capped at 90% of the
group’s financial statement materiality.
Key audit matters
Key audit matters were identified as:
• The revenue cycle may include fraudulent transactions (same as previous year);
• Provision for environmental rehabilitation (same as previous year); and
• Recoverability of capitalised exploration costs and mining assets (West Kyltim) (same as previous year).
Our auditor’s report for the year ended 31 December 2019 did not include any key audit matters that have
not been reported as key audit matters in our current year’s report.
Scoping
Significant scoping matters included:
• A visit by the component auditors to the mining site at West Kytlim;
• We contracted our network member firm in Russia to perform specific audit procedures on the financial
information of the local companies, as well as visit the local operations. A component materiality of
£82,000 was used;
• Accounting treatment of new leases entered into, as this is the first year any leases meeting the
recognition criteria of IFRS 16; and
• There have been no further changes in scope from the prior year audit.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those that 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.
Description
Audit response
KAM
Disclosures
Our results/
Key observations
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
27
Key Audit Matter – Group
How our scope addressed the matter – Group
The revenue cycle may include fraudulent transactions
We identified fraud risk in revenue recognition as one of the most
significant assessed risks of material misstatement due to fraud.
Under ISA (UK) 240 ‘The Auditor’s Responsibilities Relating to Fraud in
an Audit of Financial Statements’, there is a presumption that there are
risks of fraud in revenue recognition.
Revenue for the year ended 31 December 2020 was £937,962 (2019:
£1,128,970).
The group operates alluvial mining in Russia for a limited season due to
weather. As the operating season changes each year, the opportunity
presents itself to not record revenues at the start or end of each
season. There is the risk of fraud in the recognition of revenue relating
to the production and sales of metals.
Relevant disclosures in the Annual Report and Accounts 2020
• Financial statements: Note 4.7, Revenue
Provision for environmental rehabilitation
We identified the provision for environmental rehabilitation as one
of the most significant assessed risks of material misstatement due
to error.
This is in relation to the West Kytlim Mine, the operations of which were
taken over by the group in the previous financial year.
There is a risk that the inputs within the provision calculation may not
include all relevant costs as this is a complex calculation requiring
specialised knowledge.
The provision calculation is an estimate which requires specialist
expertise in the industry. The provision has been calculated by their
internal management expert.
The rehabilitation provision as at 31 December 2020 is £52,137
(2019: £78,103).
Relevant disclosures in the Annual Report and Accounts
• Financial statements: Note 24, Provisions
In responding to the key audit matter, we performed the following
audit procedures:
• analysed the group’s revenue recognition accounting policies and
assessed whether the policies are in accordance with International
Financial Reporting Standard (IFRS) 15 ’Revenue from Contracts
with Customers’;
• tested all revenue transactions in the year, agreeing to invoices,
settlement reports and cash receipts;
• checked post year-end receipts to verify that cut-off of revenue is
correct; and
• checked the revenue disclosures were in accordance with IFRS 15.
Our results
Our testing did not identify any material misstatements in the
recognition of revenue.
In responding to the key audit matter, we performed the following
audit procedures:
• obtained an understanding of management’s process relating to
the recognition and valuation of the provision as well as testing
that the accounting treatment was in accordance with IAS 37
‘Provisions, Contingent Liabilities and Contingent Assets’
• utilising the expertise of a specialist in mining (“auditor’s expert”)
and natural resources to analyse management’s workings;
• we inspected the expert’s findings and held discussions with him
to verify that we have a comprehensive understanding of the notes
raised and all aspects have been considered and documented;
• tested management’s calculations for mathematical accuracy and
challenged the assumptions used, including life of the provision,
discount rate used and key cost variables, through agreeing inputs
to licenses and costs into publicly available information and
contracts; and
• checked whether all the required disclosures per IAS 37 are
included in the group financial statements.
Our results
Our audit testing did not identify any material misstatements in the
completeness of the rehabilitation provision and we concluded that
the disclosures are in accordance with IAS 37.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 28
Independent auditor’s report (continued)
to the members of Eurasia Mining Plc
Key Audit Matter – Group
How our scope addressed the matter – Group
Recoverability of capitalised exploration costs and mining assets
(West Kytlim)
We identified recoverability of capitalised exploration costs and
mining assets as one of the most significant assessed risks of material
misstatement due to error.
There is continued capitalised expenditure incurred within the group
relating to the development and operations of the mines.
West Kyltim, which is fully operational, is only operational in summer
months, due to freezing conditions in winter months. The carrying
value of the mining assets for this project as at 31 December 2020 is
£3,142,533 (2019: £3,802,857).
The recoverability of these costs is contingent on the success of the
extraction of the identified reserves, where a lack of recoverability may
constitute an impairment of the asset. In addition, the assumptions
used to calculate the value in use requires significant judgement by
management and the inputs to the calculation such as the metal prices
are sensitive to change.
In responding to the key audit matter, we performed the following
audit procedures:
• obtained management’s impairment assessment relating to the
mining assets and capitalised exploration costs;
• corroborated management’s considerations on the exploration and
evaluation assets where there was no indicator for impairment by
obtaining mining licenses, as well as reserve and resource reports;
• for mining assets where there were indicators of impairment, we
tested the value-in-use calculations performed by management,
which included:
– performed arithmetical checks on the calculation;
– challenged the appropriateness of management’s key
assumptions which included discount rate, commodity price,
recovery rate and production levels used in the model by agreeing
to production reports and cash flows, and to external sources
where applicable; and
– inspected management’s sensitivity analysis on the key
assumptions including commodity prices, production levels,
recovery rates and expected grading of extracted materials.
• checked the financial statements to verify that the disclosures were
appropriately included per IAS 36 ‘Impairment of Assets’.
Relevant disclosures in the Annual Report and Accounts
• Financial statements: Notes 4.11 and 5.1.3, Impairment review of
the mining assets
Key observations
The margin of safety before an impairment is recognised is considered
very low, at a 5% change in revenue production.
Our audit testing did not identify material misstatements in the
assumptions used within the impairment assessment and we have
concluded that the disclosures are in accordance with IAS 36.
We did not identify any key audit matters relating to the audit of the financial statements of the parent company.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit
and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for financial
statements
as a whole
We define materiality as the magnitude of misstatement in the financial statements that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold
£92,800, which is 2% of the group’s net assets at the
planning stage of the audit. We decided not to revise
our materiality during the course of the audit once
the final balance for the group’s net assets, which was
higher than that at the planning stage, was known.
£82,000, which is 2% of the parent company’s gross
assets at the planning stage of the audit, capped at
approximately 90% of the group’s financial statement
materiality.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
29
Materiality measure
Group
Parent company
Significant judgements
made by auditor in
determining the materiality
In determining materiality, we made the following
significant judgements:
In determining materiality, we made the following
significant judgements:
The shareholder perception that the value of the
group is derived from the potential of the underlying
exploration and mining assets;
The primary objective of the parent company is to hold
the investments in the group undertakings, as well as
to provide financing.
The primary object of the group is exploration and
development of mining sites, with the operations at
the West Kytlim site not yet reaching full production
capacity; and
Materiality for the current year is lower than the level
that we determined for the year ended 31 December
2019 to reflect the lower group materiality and the
capping referred to above.
The high public profile of the group, following the
announcement by the Board of a formal sale process.
Materiality for the current year is lower than the level
that we determined for the year ended 31 December
2019.
The measurement percentage and benchmark used
in the prior year was 2% of forecasted group total
assets. Due to the announcement by the Board of
a formal sale, the benchmark used to determine
materiality was changed to the group’s net assets as
we considered the focus of the primary users to have
changed.
Performance materiality
used to drive the extent of
our testing
We set performance materiality at an amount less than materiality for the financial statements as a whole
to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Performance materiality
threshold
£69,600, which is 75% of financial statement
materiality.
£61,500, which is 75% of financial statement
materiality.
Significant judgements made
by auditor in determining the
performance materiality
In determining performance materiality, we made the
following significant judgements:
In determining performance materiality, we made the
following significant judgements:
The control environment is appropriate to the size
of the operations, with adequate detection and
prevention controls designed to mitigate the risks of
material misstatement.
The control environment is appropriate to the size
of the operations, with adequate detection and
prevention controls designed to mitigate the risks of
material misstatement.
Based on prior experience, we have had few
uncorrected misstatements, resulting in a
lower identified risk of cumulative uncorrected
misstatements this year.
Based on prior experience, we have had minimal
uncorrected misstatements, resulting in a
lower identified risk of cumulative uncorrected
misstatements this year.
Specific materiality
We determine specific materiality for one or more particular classes of transactions, account balances or
disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole
could reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements.
Specific materiality
threshold
We determined a lower level of specific materiality for
the following areas: directors’ remuneration.
We determined a lower level of specific materiality for
the following areas: directors’ remuneration.
Communication of
misstatements to the audit
committee
We determine a threshold for reporting unadjusted differences to the audit committee.
Threshold for
communication
£4,640 and misstatements below that threshold that,
in our view, warrant reporting on qualitative grounds.
£4,100 and misstatements below that threshold that,
in our view, warrant reporting on qualitative grounds.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 30
Independent auditor’s report (continued)
to the members of Eurasia Mining Plc
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected
misstatements.
Overall materiality – Group
Overall materiality – Parent company
Net Assets
£4,641,000
Net Assets
£4,641,000
FSM £92,800
FSM £92,800
2%
2%
PM £69,600
75%
PM £69,600
75%
Gross Assets
£8,571,000
Gross Assets
£8,571,000
FSM £82,000
FSM £82,000
2%
2%
TFPUM £23,200
TFPUM £23,200
25%
25%
PM £61,500
75%
PM £61,500
75%
TFPUM £20,500
TFPUM £20,500
25%
25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s and the parent company’s business and in particular matters
related to:
Understanding the group, its components, and their environments, including group-wide controls
• The engagement team obtained an understanding of the group and its environment, including group-wide controls, and assessed the risks of
material misstatement at the group level; and
• The engagement team obtained an understanding of the control environment for each significant component as the finance teams are located in
different geographic locations, each with their own control processes. We have assessed the risks of material misstatement for each component.
Identifying significant components
We have identified the parent company as a significant component as it represents over 15% of the loss before tax. The parent company is also
responsible for obtaining the financing for the group operations; and
The ZAO Kosvinsky Kamen and ZAO Terskaya Mining Company components, which hold the operations for the West Kytlim and Monchetundra sites
respectively, are also considered individually significant.
Type of work to be performed on financial information of parent and other components (including how it addressed the key audit matters)
An audit of the financial information (full scope audit) was performed on the significant components using component materiality:
• All three KAMs above are addressed within the ZAO Kosvinsky Kamen component; and
• The KAM relating to the recoverability of capitalised exploration costs and mining assets is addressed within the ZAO Terskaya Mining Company
component.
There are no KAMs that relate to the parent company, Eurasia Mining Plc.
Specified audit procedures have been performed on the financial information of Urals Alluvial Platinum, which holds some of the mining assets and
exploration costs.
The remaining components have been scoped as immaterial, which require only analytical procedures at group level (analytical procedures)
to be performed.
Performance of our audit
Components at which full-scope audits were performed covered 100% of total revenues and 49% of total assets.
Components at which specified audit procedures were performed covered 48% of total assets.
Communications with component auditors
We held discussions with the component auditors throughout the engagement, which included issuing group instructions during the planning phase
of the engagement, and holding follow up calls to discuss the audit approach during the planning, fieldwork and completion stages of the audit;
During our discussions and within our group instructions, we directed the work we required to be performed. We reviewed the audit files from the
component auditors to ensure that the appropriate audit evidence had been obtained; and
Due to the travel restrictions in place in response to the COVID-19 outbreak, we could not visit the West Kyltim mine. As an alternative, we arranged
for the component auditors to perform a site visit on our behalf.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
31
Changes in approach from previous year
Due to the increased audit risk, we have lowered the materiality used in our audit approach. This has resulted in closer scrutiny of the transactions
and balances under audit.
Audit approach
Full-scope audit
Specified audit procedures
Analytical procedures
No. of
components
% coverage
total assets
% coverage
revenue
% coverage
loss before tax
3
1
3
49
48
3
100
0
0
70
29
1
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts,
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
32
Independent auditor’s report (continued)
to the members of Eurasia Mining Plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. Owing to the inherent limitations of an audit, there is
an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and
performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We have identified the following laws and regulations as being of significance in the context of the group:
• Bribery and corruption; and
• Mining industry and environmental factors.
We have obtained an understanding of the legal and regulatory framework applicable to the group through discussions with management, research
into the industry and our experience. We have gained assurance that management ensures compliance with the framework through the following
means:
• Including tests of detail within our audit approach to identify potential issues of non-compliance; and
• Obtaining internal policies and verifying the implementation thereof.
Our work was designed to identify non-compliance with such laws and regulations by inspecting transactions with government officials and bodies
throughout the year, as well as with any contractors that appeared unusual or outside the usual course of operations. We have also obtained the
mining licenses and inspected them for covenant compliance;
There is a collective experience of almost 30 years between the engagement partner and the managers in the group engagement team within the
mining industry and listed company audits. Accordingly, the group engagement team collectively had the appropriate competence and capabilities
to identify or recognize non-compliance with laws and regulations; and
We have communicated the specific audit procedures to be performed as part of the group audit to the component auditors, in order to identify any
instances of non-compliance with laws and regulations that could give rise to a material misstatement of the group financial statements.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher Raab, ACA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
4 June 2021
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2020
33
Sales
Cost of sales
Gross (loss)/profit
Administrative costs
Investment income
Finance cost
Other gains
Other losses
Loss before tax
Income tax expense
Loss for the period
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss:
NCI share of foreign exchange differences on translation of foreign operations
Items that will be reclassified subsequently to profit and loss:
Parent’s share of foreign exchange differences on translation of foreign operations
Other comprehensive income for the period, net of tax
Total comprehensive loss for the period
Loss for the period attributable to:
Equity holders of the parent
Non-controlling interest
Total comprehensive loss for the period attributable to:
Equity holders of the parent
Non-controlling interest
(Loss)/profit per share attributable to equity holders of the parent:
Basic and diluted loss (pence per share)
The accompanying notes are an integral part of these financial statements.
Year to
31 December
2020
£ £
937,962
(1,131,954)
(193,992)
(1,889,793)
486
(100,886)
–
(1,509,123)
(3,693,308)
–
(3,693,308)
Year to
31 December
2019
1,128,970
(1,082,209)
46,761
(1,401,383)
1,416
–
556,938
–
(796,268)
(50,890)
(847,158)
Note
9
10
10
11
181,670
(10,108)
382,686
564,356
(242,847)
(252,955)
(3,128,952)
(1,100,113)
14
(3,080,336)
(612,972)
(3,693,308)
(948,745)
101,587
(847,158)
(2,697,650)
(431,302)
(1,191,592)
91,479
14
(3,128,952)
(1,100,113)
25
(0.11)
(0.04)
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
34
Consolidated statement of financial position
as at 31 December 2020
ASSETS
Non-current assets
Property, plant and equipment
Assets in the course of construction
Intangible assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Issued capital
Other reserves
Accumulated losses
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
LIABILITIES
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
Current liabilities
Borrowings
Lease liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Total equity and liabilities
These financial statements were approved by the board on 04 June 2021 and were signed on its behalf by:
C. Schaffalitzky
Executive Chairman
The accompanying notes are an integral part of these financial statements.
31 December
2020
£ £
Note
31 December
2019
(restated)
12
12
13
4,295,908
28,957
696,504
3,929,037
35,964
854,995
5,021,369
4,819,996
16
17
13,695
285,081
5,307
5,404,101
1,916
174,669
6,590
920,013
5,708,184
1,103,188
10,729,553
5,923,184
18
20
37,812,856
3,981,370
(30,204,053)
30,291,426
3,632,745
(27,157,778)
11,590,173
6,766,393
14
(1,758,862)
(1,327,560)
9,831,311
5,438,833
22
24
21
22
23
24
425,923
50,186
476,109
31,684
101,007
287,491
1,951
422,133
898,242
–
62,218
62,218
47,225
–
359,023
15,885
422,133
484,351
10,729,553
5,923,184
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
Company statement of financial position
as at 31 December 2020
ASSETS
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Issued capital
Other reserves
Accumulated losses
Total equity
LIABILITIES
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
35
31 December
2020
£ £
Note
31 December
2019
(restated)
12
14
1,507
1,132,246
663
1,132,246
1,133,753
1,132,909
17
106,042
8,226,176
5,247,106
91,561
6,689,106
894,995
13,579,324
7,675,662
14,713,077
8,808,571
18
20
37,812,856
3,924,026
(27,366,492)
30,291,426
3,958,087
(25,968,492)
14,370,390
8,281,021
23
342,687
342,687
527,550
527,550
342,687
527,550
14,713,077
8,808,571
In accordance with section 408(3) of the Companies Act 2006, Eurasia Mining Plc is exempt from the requirement to present its own Statement
of Profit or Loss. The amount of loss for the financial year recorded within the financial statements of Eurasia Mining Plc is £1,432,061
(2019: loss of £874,277).
These financial statements were approved by the board on June 2020 and were signed on its behalf by:
C. Schaffalitzky
Executive Chairman
The accompanying notes are an integral part of these financial statements.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
36
Consolidated statement of changes in equity
for the year ended 31 December 2020
Share
capital
£
Share
premium
£
Deferred
shares
£
Other
reserves
£
Translation
reserve
£
Attributable
to equity
holders of
the parent
£
Retained
loss
£
Non-
controlling
interest
£
Total
£
Balance at 1 January 2019
2,371,569 19,406,269 7,025,483 4,023,610
(82,495) (26,632,516) 6,111,920
(1,419,039) 4,692,881
Restatement of the retained loss
account for the effect of valuations
of exercised option and warrants
previously recognised in share
premium account
–
(310,528)
–
–
–
310,528
–
–
–
Balance at 1 January 2019
(restated)
2,371,569 19,095,741 7,025,483 4,023,610
(82,495) (26,321,988) 6,111,920
(1,419,039) 4,692,881
Issue of ordinary share capital
for cash
Issue of ordinary shares on
exercise of warrants
Issue of shares under employee
share option plan
Share issue cost
Reversal on cancellation or exercise
of options and warrants
Recognition of options under
employee share option plan
116,183
510,185
175,747
874,256
30,258
–
144,224
(52,220)
–
–
–
–
Transaction with owners
322,188 1,476,445
(Loss)/profit for the period
Other comprehensive loss
Exchange differences on translation
of foreign operations
Total comprehensive loss
for the period ended
31 December 2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(112,955)
47,432
(65,523)
–
–
–
–
–
–
–
–
–
–
–
–
(242,847)
–
626,368
–
626,368
– 1,050,003
– 1,050,003
–
–
174,482
(52,220)
112,955
–
–
47,432
–
–
–
–
174,482
(52,220)
–
47,432
112,955 1,846,065
– 1,846,065
(948,745)
(948,745)
101,587
(847,158)
–
–
–
–
(242,847)
(10,108)
(252,955)
–
(242,847)
(948,745) (1,191,592)
91,479 (1,100,113)
Balance at 31 December 2019
(restated)
2,693,757 20,572,186 7,025,483 3,958,087
(325,342) (27,157,778) 6,766,393
(1,327,560) 5,438,833
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
37
Share
capital
£
Share
premium
£
Deferred
shares
£
Other
reserves
£
Translation
reserve
£
Attributable
to equity
holders of
the parent
£
Retained
loss
£
Non-
controlling
interest
£
Total
£
Balance at 1 January 2020
2,693,757 20,572,186 7,025,483 3,958,087
(325,342) (27,157,778) 6,766,393
(1,327,560) 5,438,833
Issue of ordinary share capital
for cash
Issue of ordinary shares on exercise
of warrants
Issue of shares under employee
share option plan
Share issue cost
Reversal on cancellation or exercise
of options and warrants
33,927
7,599,661
22,018
202,983
9,000
–
67,200
(413,359)
–
–
Transaction with owners
64,945 7,456,485
Loss for the period
Other comprehensive income
Exchange differences on translation
of foreign operations
Total comprehensive loss
for the period ended
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(674)
(14,904)
–
(18,483)
(34,061)
–
–
–
–
–
–
– 7,633,588
– 7,633,588
674
225,001
14,904
–
76,200
(413,359)
18,483
–
–
–
–
–
225,001
76,200
(413,359)
–
34,061 7,521,430
– 7,521,430
–
–
(3,080,336) (3,080,336)
(612,972) (3,693,308)
–
–
382,686
–
392,761
186,411
579,172
–
382,686 (3,080,336) (2,697,650)
(431,302) (3,128,952)
Balance at 31 December 2020
2,758,702 28,028,671 7,025,483 3,924,026
57,344 (30,204,053) 11,590,173
(1,758,862) 9,831,311
The accompanying notes are an integral part of these financial statements.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
38
Company statement of changes in equity
for the year ended 31 December 2020
Share
capital
£
Share
premium
£
Deferred
shares
£
Other
reserves
£
Retained
loss
£
Total
£
Balance at 1 January 2019
2,371,569
19,406,269
7,025,483
4,023,610
(25,517,698)
7,309,233
Restatement of the retained loss account
for the effect of valuations of exercised option and
warrants previously recognised in share premium account
–
(310,528)
–
–
310,528
–
Balance at 1 January 2019 restated
2,371,569
19,095,741
7,025,483
4,023,610
(25,207,170)
7,309,233
Issue of ordinary share capital for cash
Issue of ordinary shares on exercise of warrants
Issue of shares under employee share option plan
Share issue cost
Reversal on cancellation or exercise of options and warrants
Recognition of options under employee share option plan
Transactions with owners
Loss and total comprehensive income
116,183
175,747
30,258
–
–
–
322,188
–
510,185
874,256
144,224
(52,220)
–
–
1,476,445
–
–
–
–
–
–
–
–
–
–
–
–
–
(112,955)
47,432
(65,523)
–
–
–
–
–
112,955
–
112,955
(874,277)
626,368
1,050,003
174,482
(52,220)
–
47,432
1,846,065
(874,277)
Balance at 31 December 2019 (restated)
2,693,757
20,572,186
7,025,483
3,958,087
(25,968,492)
8,281,021
Share
capital
£
Share
premium
£
Deferred
shares
£
Other
reserves
£
Retained
loss
£
Total
£
Balance at 1 January 2020
2,693,757
20,572,186
7,025,483
3,958,087
(25,968,492)
8,281,021
Issue of ordinary share capital for cash
Issue of ordinary shares on exercise of warrants
Issue of shares under employee share option plan
Share issue cost
Reversal on cancellation or exercise of options and warrants
33,927
22,018
9,000
–
–
7,599,661
202,983
67,200
(413,359)
–
Transactions with owners
Loss and total comprehensive income
64,945
7,456,485
–
–
–
–
–
–
–
–
–
–
(674)
(14,904)
–
(18,483)
(34,061)
–
674
14,904
–
18,483
7,633,588
225,001
76,200
(413,359)
–
34,061
7,521,430
–
(1,432,061)
(1,432,061)
Balance at 31 December 2020
2,758,702
28,028,671
7,025,483
3,924,026
(27,366,492)
14,370,390
The accompanying notes are an integral part of these financial statements.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
Consolidated statement of cash flows
for the year ended 31 December 2020
Cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation of non-current assets
Finance costs recognised in profit or loss
Investment revenue recognised in profit or loss
Rehabilitation (change in estimate)/cost recognised in profit or loss
Income tax expense recognised in profit or loss
Net foreign exchange (gain)/loss
Expense recognised in respect of options under employee share option plan
Movement in working capital
Increase in inventories
Increase in trade and other receivables
Decrease in trade and other payables
Cash outflow from operations
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Payment for exploration and evaluation assets
Net cash generated from/(used) in investing activities
Cash flows from financing activities
Proceeds from issue of equity shares
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liability
Interest paid
Net cash proceeds from financing activities
Net decrease in cash and cash equivalents
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
The accompanying notes are an integral part of these financial statements.
39
Year to
31 December
2020
£ £
Year to
31 December
2019
Note
(3,693,308)
(847,158)
12
21
10
205,200
100,886
(486)
(14,671)
–
1,509,123
–
181,395
–
(1,416)
77,677
50,890
(556,938)
47,431
(1,893,256)
(1,048,119)
(12,152)
(130,219)
(65,555)
(296)
(139,395)
82,546
(2,101,182)
–
(1,105,264)
(41,260)
(2,101,182)
(1,146,524)
12
13
486
(687,167)
(9,599)
1,416
(191,953)
–
(696,280)
(190,537)
7,934,789
(413,359)
300,000
(306,341)
(81,491)
(96,965)
1,850,853
(52,220)
–
–
–
–
7,336,633
1,798,633
4,539,171
(55,083)
920,013
5,404,101
461,572
5,765
452,676
920,013
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
40
Company statement of cash flows
for the year ended 31 December 2020
Cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation of non-current assets
Finance costs recognised in profit or loss
Investment revenue recognised in profit or loss
Expense recognised in respect of options under employee share option plan
Movement in working capital
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Cash outflow from operations
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Interest received
Amounts advanced to related party
Purchase of property, plant and equipment
Net cash generated from/(used) in investing activities
Cash flows from financing activities
Proceeds from issue of equity shares
Share issue costs
Proceeds from the borrowings
Repayment of borrowings
Net cash proceeds from financing activities
Net decrease in cash and cash equivalents
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
The accompanying notes are an integral part of these financial statements.
Year to
31 December
2020
£ £
Year to
31 December
2019
Note
21
(1,432,061)
(874,277)
–
4,586
416
–
346
–
(238)
47,431
(1,427,059)
(826,738)
(14,481)
(184,863)
(1,626,403)
–
(1,626,403)
(54,621)
243,392
(637,967)
–
(637,967)
–
(1,537,070)
(1,260)
238
(436,600)
–
(1,538,330)
436,362
7,934,789
(413,359)
300,000
(304,586)
1,850,853
(52,220)
–
–
7,516,844
1,798,633
4,352,111
–
894,995
5,247,106
724,304
1
170,690
849,995
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
41
Notes to the consolidated financial statements
for the year ended 31 December 2020
1 General information
Eurasia Mining Plc (the “Company”) is a public limited company incorporated and domiciled in Great Britain with its registered office at International
House, 142 Cromwell Road, London SW7 4EF, United Kingdom and principal place of business at Clubhouse Holborn, 20 St Andrew Street, EC4A 3AG,
United Kingdom. The Company’s shares are listed on the AIM Market of the London Stock Exchange plc. The principal activities of the Company and
its subsidiaries (the “Group”) are related to the exploration for and development of platinum group metals, gold and other minerals in Russia.
Eurasia Mining Plc’s consolidated financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent
company.
2 Going concern
At 31 December 2020 the Group’s net current assets amounted to £ 5,434,669 (2019: £681,055). At the same time the Group had a cash balance of
£5,404,101 (2019: £920,013). The Group’s debt largely consisted of lease agreements set up to acquire mining machinery with a total amount of
£558,614 (2019: £nil).
In 2020 the Group raised funds from exercise of warrants and options and one issue of shares on the equity markets. The total funds raised were
£7.9m before fees and commissions.
A fund raising was closed on 20 May 2021 with gross proceeds of £14,126,289. These funds are available to further exploration and development
at both project but chiefly for development of projects within the Rosgeo JV, and the Kola PGM district.
The Group took full control of the West Kytlim mine in 2020 and increased the scale of mining operations. The project was further capitalised with
addition of purchased and leased machinery during 2020. Funds available have allowed the Company to further expand the mining fleet for the 2021
mining season, including a second washplant and supporting machinery. The mining season in 2021 started in the mid-April, which is six weeks
earlier than the2020 season. This, and the addition of a second plant and a potential contractor owned and operated third washplant will ensure
higher revenue for 2021.
Expenditure at Monchetundra has been modest through 2020 and thus far in 2021. Future expenditure on further licences to be evaluated for
the Rosgeo JV is being considered and remains at the Board’s discretion. An EPCF contract, which fully funds the development of the West Nittis
and Loipishnune deposits within the Monchetundra Project can be actioned.
The Directors have concluded that the combination of these circumstances, and the Company’s current cash balance, represent a reasonable
expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, which management have
determined to be 12 months from the signing of this annual report. For these reasons, they continue to adopt the going concern basis in preparing
the annual report and accounts.
3 Changes in accounting policies
3.1 New and revised relevant standards that are effective for annual periods commencing on or after 1 January 2019
Amendments to IFRS 3 Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations to help entities determine whether an
acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether
market participants are capable of replacing any missing elements, add guidance to help entities assess whether an acquired process is substantive,
narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test.
Amendments to IAS 1 and IAS 8 Definition of Material
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition
states that, ‘Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary
users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific
reporting entity.
The adoption of these Amendments has had no material impact on the financial statements of the Group
3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group
• IFRS 17 – Insurance contracts
• IFRS 10 and IAS 28 (amendments) – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
• Amendments to IFRS 3 Reference to the Conceptual Framework
• Amendments to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use
• Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract
• Annual Improvements to IFRS Standards 2018-2020 Cycle – Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 42
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
3 Changes in accounting policies (continued)
3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group
(continued)
The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Company
in future periods, except as noted below:
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate
or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a
business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent’s profit
or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the
remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the
equity method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new
associate or joint venture.
The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The directors of
the Company anticipate that the application of these amendments may have an impact on the Group’s consolidated financial statements in future
periods should such transactions arise.
3.3 Comparative information
Reclassification
Certain amounts in the consolidated and the Company statement of financial position at 31 December 2019 and the statement of changes in equity
for the year ended 31 December 2019 were reclassified after due consideration. The restatement is due to a classification error whereby other
reserves relating to share options and warrants were being transferred to share premium rather than profit and loss reserve upon exercise.
The treatment of share premium is adjusted for the prior periods with amounts within other reserve being transferred to accumulated losses
as opposed to share premium account. The tables below show the financial statement line items impacted by this restatement.
1 January 2019
Consolidated statement of financial position
Issued capital
Accumulated losses
Consolidated statement of changes in equity
Share premium
Accumulated losses
31 December 2019
Consolidated statement of financial position
Issued capital
Accumulated losses
Consolidated statement of changes in equity
Share premium
Accumulated losses
1 January 2019
Company statement of financial position
Issued capital
Accumulated losses
Company statement of changes in equity
Share premium
Accumulated losses
31 December 2019
Company statement of financial position
Issued capital
Accumulated losses
Company statement of changes in equity
Share premium
Accumulated losses
Initial
presentation
£
Amount of
Presentation
reclassification after adjustments
£
£
28,803,321
(26,632,516)
(310,528)
310,528
28,492,793
26,321,988
19,406,269
(310,528)
19,095,741
(26,632,516)
310,528
26,321,988
30,714,909
(27,581,261)
(423,483)
423,483
30,291,426
(27,157,778)
20,995,669
(423,483)
20,572,186
(27,581,261)
423,483
(27,157,778)
Initial
presentation
£
Amount of
Presentation
reclassification after adjustments
£
£
28,803,321
(25,517,698)
(310,528)
310,528
28,492,793
(25,207,170)
19,406,269
(310,528)
19,095,741
(25,517,698)
310,528
(25,207,170)
30,714,909
(26,391,975)
(423,483)
423,483
30,291,426
(25,968,492)
20,995,669
(423,483)
20,572,186
(26,391,975)
423,483
(25,968,492)
Within the line item on the statement of changes in equity labelled ‘Reversal on cancellation or exercise of options and warrants’ in 2019,
the amount of £112,955 had previously been shown as a credit to share premium, and it is now being shown as a credit to retained losses.
This is applicable to the consolidated and company statements of changes in equity.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
43
4 Summary of significant accounting policies
4.1 Basis of preparation
The consolidated financial statements of the Group and the Company financial statements have been prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006.
These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these consolidated financial statements.
4.2 Presentation of financial statements
The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements. The Group has elected
to present the “Consolidated Statement of Profit or Loss” in one statement.
4.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control
is achieved where the Company has all of the following:
• Power over investee;
• Exposure, or rights, to variable returns from its involvement with the investee;
• The ability to use its power over the investee to affect the amount of investor’s returns.
The results of subsidiaries acquired or disposed of are included in the Consolidated Statement of Profit or Loss from the effective date of acquisition
or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other
members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling
interests consist of the amount of those interests at the date of the original business combination and the non-controlling party’s share of changes
in equity since the date of the combination.
4.4 Business combinations
The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control
of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued
by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are
expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously
recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their
acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration
transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest
in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated
above, the excess amount (ie gain on a bargain purchase) is recognised as a profit or loss immediately.
In a business combination achieved in stages, the Group re-measure its previously held equity interest in the acquiree at its acquisition-date fair
value and recognise the resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate.
4.5 Foreign currencies
Functional and presentation currency
The individual financial statements of each group entity are prepared in the currency of the primary economic environment in which the entity
operates (“the functional currency”). The consolidated financial statements are presented in GBP, which is the functional and the presentation
currency of the Company.
Transaction and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial
position;
• income and expenses for each Statement of Profit or Loss are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions); and
• all resulting exchange differences are recognised as a separate component of other comprehensive income.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 44
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
4 Summary of significant accounting policies (continued)
4.6 Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instrument at
the grant date. Fair value is measured by use of Black Scholes model. The expected life used in the model has been adjusted, based on management’s
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where
the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date
the entity obtains the goods or the counterparty renders the service.
All equity-settled share-based payments are ultimately recognised as an expense in the profit or loss with a corresponding credit to “Share-based
payments reserve”.
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share
premium. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on
vesting or if the share options vest but are not exercised.
When share options lapse or are forfeited the respective amount recognised in the Share-based payment reserve is reversed and credited to
accumulated profit and loss reserve.
4.7 Revenue
To determine whether to recognise revenue, the Group follows a 5-step process:
1 Identifying the contract with a customer;
2 Identifying the performance obligations;
3 Determining the transaction price;
4 Allocating the transaction price to the performance obligations;
5 Recognising revenue when/as performance obligation(s) are satisfied.
The Group earns its revenues primarily from the sale of platinum group metals from the West Kytlim mine. The company enters into a contract with
its main customer to deliver all mined metals extracted from the mine. There is one performance obligation under the sales contract, and that is the
delivery of metals. As such, the entire price under the contract is allocated to the single performance obligation. Revenue is recognised when control
over the metals passes to the customer.
The Group has determined that it is the principal in sales transactions as the Group holds the mining license and has the rights to the underlying
resources. The Group controls the sales process, from selecting the customer to determining sales price.
4.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax payable is based on taxable profit for the year. Taxable profit differs from profit 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. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial
recognition of goodwill, initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised, or
the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal
of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 45
4 Summary of significant accounting policies (continued)
4.9 Property, plant and equipment
Mining assets
Mining assets are stated at cost less accumulated depreciation. Mining assets include the cost of acquiring and developing mining assets and mineral
rights, buildings, vehicles, plant and machinery and other equipment located on mine sites and used in the mining operations.
Mining assets, where economic benefits from the asset are consumed in a pattern which is linked to the production level, are depreciated using a unit
of production method based on the volume of ore reserves. This results in a depreciation charge proportional to the depletion of reserves
Stripping activity asset costs
In alluvial mining operations, it is necessary to remove overburden and other waste in order to improve access to the ore body. Associated costs are
recognised as a stripping activity asset. A stripping activity asset is initially measured at cost and subsequently carried at cost or its revalued amount
less depreciation or amortisation and impairment losses.
A stripping activity asset is depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body
that becomes more accessible as a result of the stripping activity. For some alluvial ore bodies the useful life of this asset can be several months only.
The units of production method is used.
Other assets
Freehold properties held for administrative purposes, are stated in the statement of financial position at cost.
Fixtures and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on
a prospective basis.
The estimated useful lives are as follows:
Property
Plant & machinery
Office, fixture and fittings
30 years
3-30 years
3-5 years
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit or loss.
4.10 Intangible assets
Exploration and evaluation of mineral resources
Exploration and evaluation expenditure comprise costs that are directly attributable to:
• researching and analysing existing exploration data;
• conducting geological studies, exploratory drilling and sampling;
• examining and testing extraction and treatment methods; and/or
• compiling pre-feasibility and feasibility studies.
Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment
of deposits that have been identified as having economic potential. Such capitalised evaluation expenditure is reviewed for impairment at each
statement of financial position date. The review is based on a status report regarding the Group’s intentions for development of the undeveloped
property. Subsequent recovery of the resulting carrying value depends on successful development of the area of interest or sale of the project. If
a project is successful and gets transferred into a mining project a respective intangible asset gets reclassified into a mining asset and accounted
according to provision set in the note 4.9. If a project does not prove viable, all irrecoverable costs associated with the project net of any related
impairment provisions are written off.
4.11 Impairment testing intangible assets and property, plant and equipment
At each statement of financial position date, the Group reviews the carrying amounts of the 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. Where a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is
an indication that the asset may be impaired.
In assessing whether an impairment is required, the carrying value of the asset is compared with its recoverable amount. The recoverable
amount is the higher of the fair value less costs of disposal (FVLCD) and value in use (VIU).The FVLCD is estimated based on future discounted cash
flows expected to be generated from the continued use of the asset, including any expansion prospects and eventual disposal, using market-
based commodity prices, exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital
requirements based on the latest Life of mine plans. These cash flows were discounted using a real post-tax discount rate that reflect the current
market assessments of time value of money.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 46
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
4 Summary of significant accounting policies (continued)
4.11 Impairment testing intangible assets and property, plant and equipment (continued)
Value in use is determined as the present value of the estimated cash flows expected to arise from continued use in its current form and eventual
disposal. Value in use cannot take into consideration future development. The assumptions used in the calculation are often different than those
used in a FVLCD and therefore is likely to yield a different result.
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
(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.
Where an impairment loss subsequently reverses, the carrying amount of the asset (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 (cash-generating unit) in prior years.
A reversal of an impairment loss of the assets 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.
4.12 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes
expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location
and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on
normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
4.13 Cash
Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments with maturities of three months or less from the
acquisition date that are subject to insignificant risk of changes in their fair value.
4.14 Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance
with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial instruments, other than those designated and effective as hedging instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount
outstanding After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall
into this category of financial instruments as well as listed bonds that were previously classified as held-to-maturity under IAS 39.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 47
4 Summary of significant accounting policies (continued)
4.14 Financial instruments (continued)
Subsequent measurement of financial assets (continued)
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value
through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal
and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as
hedging instruments, for which the hedge accounting requirements apply. The category also contains an equity investment. Assets in this category
are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where
no active market exists.
Financial assets at fair value through other comprehensive income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
• they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset.
Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’.
This replaces IAS 39’s ‘incurred loss model’.
Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI,
trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the
issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of
information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial
instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss
allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped
based on the days past due.
Borrowings
Amounts borrowed from third parties are recorded initially at fair value, being the amount received under the agreements less issuance costs,
and subsequently measure at amortised cost using an effective interest rate. There are times when there are conversion options included in the
group’s borrowing agreements. The conversion options are analysed under IAS 32 – Financial Instruments: presentation to determine the proper
classification. If the option is determined to be equity, the fair value of the conversion option is included in other reserves, with the fair value of the
liability portion being recorded as a liability with interest accruing under the effective interest rate. If the conversion option is determined to be a
liability, it is treated as a derivative financial instrument measured at fair value through profit or loss.
When a conversion option is exercised, the fair value of the shares issued is recorded in share capital and share premium. The amortised carrying
value of the liability portion is extinguished. If the conversion option is an equity instrument, this is closed to retained earnings. If the conversion
option is a liability component, it is extinguished. Any difference between the carrying value of the liability and the conversion option and the fair
value of share issued is taken to the profit and loss as gain or loss on extinguishment.
If debt agreements are modified, any difference between the fair value of the original debt and the modified debt is included as a gain or loss on
modification. If the modification is significant, this is considered an extinguishment of the old debt and recognition of new debt.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 48
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
4 Summary of significant accounting policies (continued)
4.14 Financial instruments (continued)
Warrants
The Company may issue warrants in association with debt and equity issuances and as compensation to suppliers or vendors in exchange for
services. These are determined to be equity instruments. When warrants are issued with debt or as compensation to suppliers or vendors, the value
of the warrants are included within the share-based payments reserve that sits within the other reserve. When warrants are issued together with
equity issuances any fair value associated with these are recognised when the warrants are exercised within share premium. On exercise of the
warrants, the value of the warrants will be transferred from other reserves to the profit and loss reserve as applicable.
4.15 Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding
of the discount is recognised as finance cost.
Environmental protection, rehabilitation and closure costs
Provision is made for close down, restoration and environmental rehabilitation costs (which include the dismantling and demolition of infrastructure,
removal of residual materials and remediation of disturbed areas) in the financial period when the related environmental disturbance occurs, based
on the estimated future costs using information available at the reporting date. The provision is discounted using a discount rate equal to yield to
maturity of relevant state bonds and the unwinding of the discount is included in interest expense.
The provision is reviewed on an annual basis for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations.
4.16 Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with
a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and
telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease
unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using
the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase
option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the
lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to
a change in a floating interest rate, in which case a revised discount rate is used).
The Group did not make any such adjustments during the periods presented.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 49
4 Summary of significant accounting policies (continued)
4.16 Leases (continued)
The Group as lessee (continued)
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement
day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the
extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented within property plant and equipment in the consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the
‘Impairment testing intangible assets and property, plant and equipment’ policy.
4.17 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief
Operating Decision-Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as
the Executive Directors of the Group that make the operating decisions.
5 Critical accounting judgements and key sources of estimation uncertainty
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
5.1 Key sources of estimation uncertainty
The following are the key assumptions / uncertainties at the statement of financial position date, which have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
5.1.1 Non-current assets held for sale and discontinued operations
As had previously been announced on 1 July 2020, a formal sale process was initiated to explore strategic options regarding the sale of the company.
As at 31 December 2020, there were no binding agreements relating to the sale of business. As there was no intention to sell a specific asset or group
of the business, but rather the exploration of the sale of all of the outstanding share capital of the business, it was determined that there were no
assets or group of assets that would meet the criteria of discontinued operations or assets held for sale in accordance with IFRS 5 – Non-current
assets held for sale and discontinued operations.
5.1.2 Provision for environmental rehabilitation
Provision is made for close down, restoration and environmental rehabilitation costs based on the estimated future costs using information available
at the reporting date. Costs are estimated based are on the observable local prices, fees and already agreed contract for specific jobs. The provision
is discounted using a risk-free discount rate of from 3.87% to 5.08% attributed to the Russian Federal bonds with corresponding maturity.
5.1.3 Impairment review of the mining assets
The impairment assessment of the West Kytlim mining asset was performed by calculating the higher of fair value less cost of disposal and value
in use and compared against the carrying value of the mining assets. Projected cash flows from 2021 to 2030 were used to assess the fair value less
costs of disposal. The chosen period is consistent with the quantity of the approved reserves and resources and available for mining operations.
No impairment has been recognised.
Assumptions used throughout 2021-2030:
Pt grade 0.287g/m3
Process recovery 70%
Platinum/Gold price $1,100/oz / $1,800/oz
Post-tax discount rate 9.6%
Management has performed a sensitivity analysis on the key variable, such as platinum and production levels and the model is robust up to 5% on
platinum and gold prices and lower than anticipated production levels. Every 0.1% change above the said 5% would cause recognition of impairment
loss in the amount of £14,414.
PGM deliveries commenced in May 2021 at a platinum price substantially higher than that modelled. Stripping of overburden to access platinum
bearing gravels was carried out over the 2020/21 and will ensure better control on production levels during the current season.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 50
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
6 Segmental information
During the year under review management identified the Group consisting of separate segments operating mainly in mining and exploration for and
development of platinum group metals, gold and other minerals in Russia. These segments are monitored, and strategic decisions are made based
upon it and other non-financial data collated from the on-going mining and exploration activities.
The Company is developing two key assets, West Kytlim and Monchetundra, their geography outlined in the following table.
Geographical location
Activity
2020
Non-current assets
Total assets
Total liability
Revenue
Loss for the year
2019
Non-current assets
Total assets
Total liability
Revenue
Profit/(loss) for the year
West Kytlim
Monchetundra
Urals Mountains, Russia Kola Peninsula, Russia
Licenced
mining project
Operating mine and
revenue generating unit
Corporate and
other segments
–
Management
and investment
£
3,999,098
4,231,046
726,276
937,962
(1,754,307)
£
3,624,293
3,731,770
145,388
1,128,970
300,950
£
669,080
804,065
3,590
–
(289,707)
£
814,706
825,307
993
–
7,387
£
353,191
5,694,442
168,376
–
(1,649,294)
£
380,997
1,366,107
337,970
–
(1,257,082)
Total
£
5,021,369
10,729,553
898,242
937,962
(3,693,308)
4,819,996
5,923,184
484,351
1,128,970
(847,158)
All revenue recognised in 2020 and 2019 relate to the sale of PGM from West Kytlim. West Kytlim revenue generated from sale of platinum and other
precious metals to a single customer “Ekaterinburg Non-ferrous Metals Refinery”, being the only regional refinery, processing platinum group metals
and being duly licenced by the Russian governmental to deal with precious metals.
7 Employees
Average number of staff (excluding Non-Executive Directors) employed throughout the year was as follows:
By the Company
By the Group
8 Profit/(loss) for the year
Profit/(loss) for the year has been arrived at after charging:
Staff benefits expense:
Wages, salaries and Directors’ fees (note 26)
Social security costs
Value of options issued to employees
Value of options issued to non-employees
Other short-term benefits
Depreciation
Mineral extraction tax
Audit fees payable to the Company’s auditor for the audit of the Group’s annual accounts
205,200
57,578
110,000
9 Finance cost
Interest on obligations under finance leases
Interest on unsecured borrowings
Unwinding of discounts on provisions
2020
3
54
2019
2
28
Year to 31 December 2020
Company
£
Group
£
Year to 31 December 2019
Company
£
Group
£
1,043,461
120,092
–
–
1,314
1,164,867
581,941
5,034
–
–
1,314
588,289
416
–
110,000
625,479
84,095
27,825
19,606
14,669
770,346
181,395
69,083
48,000
371,713
5,034
14,706
19,606
14,669
425,728
346
–
48,000
Year to
31 December
2020
Group
£ £
Year to
31 December
2019
Group
92,379
4,586
3,921
100,886
–
–
–
–
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
10 Other gains and losses
Gains
Net foreign exchange gain
Losses
Net foreign exchange loss
51
Year to
31 December
2020
Group
£ £
Year to
31 December
2019
Group
–
–
556,938
556,938
(1,509,123)
(1,509,123)
–
–
The majority of the foreign exchange gains and losses are a result of the revaluation of monetary assets and liabilities in the subsidiary accounts
as a result of movements in the Rouble exchange rates.
11 Income taxes
(a) Tax charged in the statement of profit and loss
Current tax
Year to
31 December
2020
Group
£ £
Year to
31 December
2019
Group
–
50,890
There was no tax payable by the Company for the year ended 31 December 2020 (2019: £nil) due to the Company having taxable losses.
(b) Reconciliation of the total tax charge
(Loss)/profit before tax
Current tax at 19% (2019: 19%)
Adjusted for the effect of:
Expenses not deductible for tax purposes
Profits not subject to tax
Tax losses utilised
Unrecognised tax losses carried forward
Actual tax expense
The Group operates in the following jurisdictions with the following applicable tax rates:
Jurisdiction
United Kingdom
Russia
Cyprus
Year to
31 December
2020
Group
£ £
Year to
31 December
2019
Group
(3,693,308)
(796,268)
(701,729)
(151,291)
–
–
–
–
–
–
701,729
202,181
–
50,890
Year to
31 December
2020
Year to
31 December
2019
19%
20%
12.5%
19%
20%
12.5%
No tax is payable for the year ended 31 December 2020 (2019: £50,890) due to the Group and the Company having taxable losses.
The Group’s business operations currently comprise mining projects in Russia, which are either at an exploration stage or in an active production
stage. The Group has tax losses of £23,572,229 (2019: £21,468,087) carried forward on which no deferred tax asset is recognised. These losses may
affect the future tax position by way of offset against profits as and when mining projects reach a full-scale production.
The deferred asset arising from the accumulated tax losses has not been recognised due to insufficient evidence of timing of suitable taxable profits
against which it can be recovered.
Estimated unrecognised tax asset:
Estimated unrecognised tax asset
31 December
2020
31 December
2019
4,478,724
4,078,936
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
52
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
12 Property, plant and equipment
(a) Group property, plant and equipment
Cost
Balance at 1 January 2019
Additions
Disposals
Exchange differences
Balance at 31 December 2019
Additions
Disposals
Exchange differences
Mining asset
£
Stripping
activity asset
£
3,993,607
111,059
–
281,087
4,385,753
118,654
–
(799,896)
–
–
–
–
–
148,618
–
–
Balance at 31 December 2020
3,704,511
148,618
Depreciation
Balance at 1 January 2019
Disposals
Depreciation expense
Exchange differences
Balance at 31 December 2019
Disposals
Depreciation expense
Exchange differences
Balance at 31 December 2020
Carrying amount:
at 31 December 2020
at 31 December 2019
(387,594)
–
(168,981)
(26,321)
(582,896)
–
(84,087)
105,005
(561,978)
–
–
–
–
–
–
–
–
–
Property
£
23,994
–
627
24,621
(1,584)
23,037
(899)
–
(220)
(75)
(1,194)
–
(87)
233
Plant and
machinery
£
Right of
use assets
£
Office fixture
and fittings
£
Total
£
106,550
80,894
–
8,897
196,341
338,237
–
(35,062)
–
–
–
–
–
682,691
–
–
18,853
–
(7,838)
1,231
12,246
–
(178)
(1,926)
4,143,004
191,953
(7,838)
291,842
4,618,961
1,288,200
(178)
(838,468)
499,516
682,691
10,142
5,068,515
(76,968)
–
(11,455)
(6,427)
(94,850)
–
(29,421)
15,290
–
–
–
–
–
–
(92,277)
–
(16,929)
7,838
(739)
(1,154)
(10,984)
178
672
1,811
(482,390)
7,838
(181,395)
(33,977)
(689,924)
178
(205,200)
122,339
(1,048)
(108,981)
(92,277)
(8,323)
(772,607)
3,142,533
148,618
3,802,857
–
21,989
23,427
390,535
590,414
1,819
4,295,908
101,491
–
1,262
3,929,037
The Group’s right of use assets represents plant and machinery type assets acquired under lease terms (note 22).
The stripping asset is also a component of the mining assets; however, this is being shown separate from the mining assets for presentational
purposes. There was no depreciation of the stripping asset in the current period.
(b) Assets in the course of construction
Cost
Balance at 1 January
Exchange differences
Balance at 31 December
2020
£ £
35,964
(7,007)
28,957
2019
33,193
2,771
35,964
Assets in the course of construction represent the Group’s investment in the power line to deliver electricity to the West Kytlim mining site.
At 31 December 2020 the power line had not been commissioned yet. The Group has intention to utilise the line in the course of expanding of its
mining operations.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
12 Property, plant and equipment (continued)
(c) Company’s office fixture and fittings
Cost
Balance at 1 January
Additions
Disposal
Balance at 31 December
Depreciation
Balance at 1 January
Depreciation expense
Disposals
Balance at 31 December
Carrying amount
53
2020
£ £
2,354
1,260
(1,316)
2,298
(1,691)
(416)
1,316
(791)
2019
4,107
–
(1,753)
2,354
(3,098)
(346)
1,753
(1,691)
1,507
663
The Company’s property, plant and equipment are free from any mortgage or charge.
13 Intangible assets
In 2020 intangible assets represented only capitalised costs associated with the Group’s exploration, evaluation and development of mineral
resources.
Cost
Balance at 1 January
Additions
Exchange differences
Balance at 31 December
2020
£ £
2019
854,995
9,599
(168,090)
802,661
–
52,334
696,504
854,995
At 31 December 2020 and 31 December 2019, the intangible assets were represented by the cost capitalised in respect of Monchetundra project.
The Company did not directly own any intangible assets at 31 December 2020 (2019: £nil)
14 Subsidiaries
Details of the Company’s subsidiaries at 31 December 2020 are as follows:
Name of subsidiary
Urals Alluvial Platinum Limited
ZAO Eurasia Mining Service
ZAO Kosvinsky Kamen
ZAO Terskaya Mining Company
ZAO Yuksporskaya Mining Company
Eurasia Mining (UK) Limited
Place of incorporation
Proportion of
ordinary shares held
Cyprus
Russia
Russia
Russia
Russia
UK
100%
100%
68%
80%
100%
100%
Principal activity
Holding Company
Holding Company
Mineral Evaluation
Mineral Evaluation
Mineral Evaluation
Holding Company
The Company’s investments in subsidiaries presented on the basis of direct equity interest and represent the following:
Investment in subsidiaries (i)
2020
£ £
2019
1,132,246
1,132,246
1,132,246
1,132,246
Investment in subsidiaries represents the Company investments made into its 100% subsidiary Urals Alluvial Platinum Limited (the “UAP”), which
in turn controls other subsidiaries within the Group.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
54
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
14 Subsidiaries (continued)
Subsidiaries with material non-controlling interests (“NCI”)
Summary of non-controlling interest
As at 1 January
NCI arising on reduction of interest in subsidiary
(Loss)/profit attributable to NCI
Exchange differences
As at 31 December
Non-controlling interest on subsidiary basis
ZAO Kosvinsky Kamen
ZAO Terskaya Mining Company
ZAO Kosvinsky Kamen
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Non-controlling interests
Profit/(loss) for the year attributable to owners of the parent
Profit/(loss) for the year attributable to NCI
Profit/(loss) for the year
Total comprehensive income for the year attributable to owners of the parent
Total comprehensive income for the year attributable to NCI
Total comprehensive income for the year
ZAO Terskaya Mining Company
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Non-controlling interests
(Loss)/profit for the year attributable to owners of the parent
(Loss)/profit for the year attributable to NCI
(Loss)/profit for the year
Total comprehensive income for the year attributable to owners of the parent
Total comprehensive income for the year attributable to NCI
Total comprehensive income for the year
2020
£ £
2019
(1,327,560)
–
(612,972)
181,670
(1,419,039)
–
101,587
(10,108)
(1,758,862)
(1,327,560)
2020
£ £
2019
(1,055,149)
(703,713)
(723,495)
(604,065)
(1,758,862)
(1,327,560)
2020
£ £
2019
3,850,480
380,566
3,624,293
107,477
4,231,046
3,731,770
6,137,681
442,739
(5,696,821)
(323,434)
6,580,420
(6,020,255)
(2,349,374)
(2,288,485)
(1,294,225)
(1,055,149)
(1,564,990)
(723,495)
(1,199,276)
(555,031)
(1,754,307)
(904,135)
(331,654)
(1,235,789)
2020
£ £
669,080
134,985
804,065
161,540
94,128
255,668
(43,698)
94,762
51,064
2019
814,706
10,601
825,307
1,213,855
57,430
(1,007,186)
(71,200)
1,271,285
(1,078,386)
(467,220)
236,493
(703,713)
(231,766)
(57,941)
(289,707)
(114,493)
(99,648)
(214,141)
(253,079)
350,986
(604,065)
(72)
(20,121)
(12,734)
(9,451)
(3,283)
(12,734)
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
55
15 Other financial assets
Current
Loans to subsidiaries
Group
£
2020
Company
£
Group
£
2019
Company
£
–
–
8,226,176
8,226,176
–
–
6,689,106
6,689,106
The maximum exposure to credit risk at the reporting date is the carrying value of each class of assets mentioned above.
The Group has assessed the estimated credit losses of these loans and given the effective interest rate of the loans is 0%, there would be an
immaterial loss expected on these loans.
16 Inventories
Stores
Group
£
13,695
13,695
2020
Company
£
–
–
Group
£
1,916
1,916
2019
Company
£
–
–
Inventories held by the Group represent stores, stated at the lower of cost and net realisable value.
17 Trade and other receivables
Trade receivables
Prepayments
Other receivables
Due from subsidiaries
Group
£
–
75,041
210,040
–
2020
Company
£
–
22,365
59,942
23,735
285,081
106,042
Group
£
–
41,800
132,869
–
174,669
2019
Company
£
–
39,437
33,566
18,558
91,561
The fair value of trade and other receivables is not materially different to the carrying values presented. None of the receivables are provided as
security or past due.
18 Issued capital
Issued and fully paid ordinary shares with a nominal value of 0.1p
Number
Nominal value (£)
Issued and fully paid deferred shares with a nominal value of 4.9p
Number
Nominal value (£)
Share premium
Value (£)
Total issued capital (£)
2020
Restated
2019
Restated
2,758,701,681 2,693,756,753
2,693,757
2,758,702
143,377,203
7,025,483
143,377,203
7,025,483
28,028,671
20,572,186
37,812,856
30,291,426
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Deferred shares have attached to them the following rights and restrictions:
– they do not entitle the holders to receive any dividends and distributions;
– they do not entitle the holders to receive notice or to attend or vote at General Meetings of the Company;
– on return of capital on a winding up the holders of the deferred shares are only entitled to receive the amount paid up on such shares after the
holders of the ordinary shares have received the sum of 0.1p for each ordinary share held by them and do not have any other right to participate in
the assets of the Company.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
56
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
18 Issued capital (continued)
Issue of ordinary share capital in 2020:
As at 1 January 2020
12 February 2020 – Exercise of warrants
12 February 2020 – Exercise warrants
12 February 2020 – Exercise options
12 February 2020 – Exercise options
18 August 2020 – Share placing for cash
As at 31 December 2020
Price in pence
per share
Number
Nominal value
£
2,693,756,753
2,693,757
1.00
1.24
0.90
0.42
22.5
20,000,000
2,017,871
8,000,000
1,000,000
33,927,057
64,944,928
20,000
2,018
8,000
1,000
33,927
64,945
2,758,701,681
2,758,702
19 Share based payments
Share options and warrants outstanding at the end of the year have the following expiry date and exercise prices:
Expiry date
Share options
2 November 2022
2 November 2022
2 November 2022
Warrants
15 May 2020
16 May 2020
17 September 2021
Weighted average exercise price
Total contingently issuable shares at 31 December
Exercise price
in pence
per share
Number of
options as at
31 December
2020
Number of
options as at
31 December
2019
0.42
0.60
0.90
55,000,000
40,000,000
35,000,000
56,000,000
40,000,000
43,000,000
0.60 130,000,000
139,000,000
1.00
1.00
1.24
–
–
–
–
–
–
–
–
–
20,000,000
10,000,000
2,017,871
32,017,871
0.69
171,017,871
All the listed options ad warrants were exercisable as at 31 December 2020 (2019 – all).
Share options
Movement in number of share options outstanding and their related weighted average exercise prices are as follows:
(Price expressed in pence per share)
Share options
At 1 January
Exercised
Exercised
Exercised
At 31 December
Average
exercise price
2020
No. of
share options
Average
exercise price
2019
No. of
share options
0.62 139,000,000
(1,000,000)
0.42
–
0.60
(8,000,000)
0.9
0.6 130,000,000
0.61
0.42
0.60
0.9
0.62
171,257,748
(14,257,748)
(13,000,000)
(5,000,000)
139,000,000
No options were granted by the Group in 2020 (2019 – nil) to the Directors, Group employees and consultants to the Group. 21,000,000 options have
been authorised in 2018 to be granted at later date. No amounts are paid or payable by the recipient on receipt of the option. The options carry
neither right to dividends nor voting rights. Options may be exercised at any time from the vesting date to the date of their expiry. The Group has no
legal or constructive obligation to repurchase or settle the options in cash.
Out of 173,000,000 options granted by the Group in 2018:
– 72,000,000 options issued with exercise price of 0.42p and vested on the issue date.
– 53,000,000 options issued with exercise price of 0.6p and were due to vest at the date when VWAP achieved 0.6p or above for 10 consecutive days, or
at the latest 31 December 2018. The options vested on 22 November 2018.
– 48,000,000 options issued with exercise price of 0.9p vesting at the date when VWAP achieved 0.9p or above for 10 consecutive days,
or at the latest 30 June 2019. The options vested on 30 June 2019.
All options granted in 2018 expire on 02 November 2022.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
57
19 Share based payments (continued)
Warrants
No warrants were granted by the Group in 2020 (2019 – nil).
Movement in number of warrants outstanding and their related weighted average exercise prices are as follows:
(Price expressed in pence per share)
Warrants
At 1 January
Granted
Exercised
Exercised
Exercised
Expired
At 31 December
20 Other reserves
Capital redemption reserve
Foreign currency translation reserve:
At 1 January
Recognised in the period
At 31 December
Share-based payments reserve:
At 1 January
Recognised in the period
Utilised on exercise of warrants
At 31 December
Average
exercise price
2020
No. of
warrants
Average
exercise price
2019
No. of
warrants
1.02
–
1.00
1.24
–
1.00
–
32,017,871
–
(20,000,000)
(2,017,871)
–
(10,000,000)
–
0.66
–
0.60
0.41
0.83
–
1.02
207,764,955
–
(166,666,666)
(6,053,612)
(3,026,806)
–
32,017,871
Group
£
2020
Company
£
Group
£
2019
Company
£
3,539,906
3,539,906
3,539,906
3,539,906
(325,342)
382,686
57,344
–
–
–
(82,495)
(242,847)
(325,342)
–
–
–
418,181
(18,483)
(15,578)
384,120
418,181
(18,483)
(15,578)
384,120
483,704
47,432
(112,955)
483,704
47,432
(112,955)
418,181
418,181
3,981,370
3,924,026
3,632,745
3,958,087
The capital redemption reserve was created as a result of a share capital restructure in earlier years.
The foreign currency translation reserve represents exchange differences relating to the translation from the functional currencies of the Group’s
foreign subsidiaries into GBP.
The share-based payments reserve represents (i) reserve arisen on the grant of share options to employees under the employee share option plan
and (ii) reserve arisen on the grant of warrants under terms of professional service agreements and/or issued under terms of financing arrangements.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
58
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
21 Borrowings
Current borrowings
Unsecured loan
Group
£
31,684
31,684
2020
Company
£
–
–
Group
£
47,225
47,225
2019
Company
£
–
–
In 2017 the Group entered into unsecured loan facility to borrow up to 57 million Russian Rubbles (RR) at 14% per annum, from Region Metal,
the then contractor and the West Kytlim mine operator. The Group had drawn RR 4.18 million and repaid RR0.9 million by 31 December 2020.
As the contractor’s arrangements had been discontinued the Group has no intention to utilise any more funds from this facility. The loan is for
repayment in 2021.
Within 2020 the Group had drawn and then repaid £300,000 under terms of the Credit Line for US$1m, provided by Dmitry Suschov being a
Non-Executive Director at the drawdown time and the largest shareholder in the business. The loan interest was accrued at 9%.
Reconciliation of movements in borrowings
At 1 January
Borrowed
Interest accrued
Interest paid in cash
Principle paid in cash
Exchange differences
At 31 December
Group
£
47,225
300,000
4,586
(4,586)
(306,341)
(9,200)
31,684
2020
Company
£
–
–
–
–
–
–
–
Group
£
43,586
–
–
–
–
3,639
47,225
2019
Company
£
–
–
–
–
–
–
–
22 Lease liabilities
Leases
The Group leases certain of its plant and equipment. The average lease term is 4.5 years (2019: no lease). The Group has option to purchase the
equipment for a nominal amount at the maturity of the finance lease. The Group’s obligation under finance leases are secured by the lessor’s title to
the leased assets.
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 21.9% to 23.5% per annum.
Less than one year
Between one and five years
More than five years
Less future finance charges
Present value of minimum lease payments
Reconciliation of movements in lease liabilities
Lease acquired
Interest accrued
Interest paid in cash
Principle paid in cash
Exchange differences
At 31 December
Minimum lease payments
Present value of
minimum lease payments
2020
£
201,392
572,791
–
774,183
(247,254)
526,929
Group
£
601,033
92,379
(92,379)
(81,491)
7,387
526,929
2019
£
2020
£ £
2019
–
–
–
–
–
–
101,007
425,923
–
526,929
–
526,929
–
–
–
–
–
–
2020
Company
£
Group
£
2019
Company
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
59
22 Lease liabilities (continued)
Short-term leases
Short-term leases relate to the office premises with lease terms up to one year. The Group does not have an option to purchase the leased asset at the
expiry of the lease period.
Payments recognised as an expense:
Minimum lease payments
Noncancellable operating lease commitments:
No longer than one year
Group
£
12,708
9,531
9,531
2020
Company
£
Group
£
2019
Company
£
–
–
–
16,817
3,941
12,946
12,946
–
–
The short-term lease commitments represent full commitment by the Company under office lease arrangements.
23 Trade and other payables
Trade payables
Accruals
Social security and other taxes
Other payables
Due to related party
Group
£
–
101,090
18,559
167,842
–
287,491
2020
Company
£
–
82,630
3,745
57,729
198,583
342,687
Group
£
–
321,797
11,361
25,865
–
359,023
2019
Company
£
–
308,285
3,396
17,286
198,583
527,550
The fair value of trade and other payables is not materially different to the carrying values presented. The above listed payables were all unsecured.
24 Provision
Long term provision:
Environment rehabilitation
Short term provision:
Environment rehabilitation
Movement in provision is as follows:
At 1 January
Recognised in the period
Utilised in the period
Reduction resulting from re-measurement or settlement without cost
Unwinding of discount and effect of changes in the discount rate
Exchange differences
At 31 December
2020
£ £
2019
50,186
62,218
1,951
52,137
15,885
78,103
2020
£ £
78,103
15,545
(11,986)
(19,301)
3,921
(14,145)
52,137
2019
–
77,677
–
–
–
426
78,103
Provision is made for the cost of restoration and environmental rehabilitation of the land disturbed by the West Kytlim mining operations, based
on the estimated future costs using information available at the reporting date.
The provision is discounted using a risk-free discount rate of from 3.87% to 5.08% (2019: 5.08% to 5.82%) depending on the commitment terms,
attributed to the Russian Federal Bonds.
Provision is estimated based on the sub-areas within general West Kytlim mining licence the company has carried down its operations on by the end
of the reporting period. Timing is stipulated by the forestry permits issued at the pre-mining stage for each of sub-areas. Actual costs in respect of the
long-term provision recognised in 2020 will be incurred within 2021-2022.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
60
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
25 Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary
shares in issue during the year.
(Loss)/profit attributable to equity holders of the Company
Weighted average number of ordinary shares in issue
Basic loss per share (pence)
Potential number of shares that could be issued following exercise of share options or warrants:
Number of exercisable instruments:
Share options
Warrants
2020
£ £
2019
(3,080,336)
(948,745)
2,733,821,972 2,480,335,330
(0.11)
(0.04)
2020
£ £
2019
130,000,000
–
139,000,000
32,017,871
130,000,000
179,017,871
There is no dilutive effect of share options or warrants (2019: Nil) as the group was in a loss position.
26 Related party transactions
Transactions with subsidiaries
In the normal course of business, the Company provides funding to its subsidiaries for reinvestment into exploration projects .
Receivables from subsidiaries
Loans provided to subsidiaries
Payables to subsidiaries
Service charges to subsidiary
The amounts owed by subsidiaries are unsecured and receivable on demand.
Transactions with key management personnel
The Group considers that the key management personnel are the Directors of the Company.
The following amounts were paid and/or accrued to the Directors of the Company who held office at 31 December 2019:
Short-term benefits
Value of the options issued in 2018
2020
£ £
2019
23,735
8,226,176
(198,583)
18,558
6,689,106
(198,583)
120,000
120,000
2020
£ £
254,575
–
254,575
2019
314,508
9,804
324,312
The remuneration of the Directors is determined by the remuneration committee having regard to the performance of individuals and market trends.
No pension contribution has been made for the Directors in 2020 (2019: £nil).
An analysis of remuneration for each Director of the Company in the financial year:
Name
C. Schaffalitzky
J. Nieuwenhuys
I. Rawlinson
G. FitzGerald
D. Suschov
Position
Executive Chairman
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Salaries and
allowances
£
Directors fees
£
85,008
107,067
–
–
–
192,075
–
–
17,500
28,750
16,250
62,500
Within 2020 the Group had drawn and then repaid £300,000 under terms of the Credit Line for US$1m, provided by Dmitry Suschov being
a Non-Executive Director at the drawdown time and the largest shareholder in the business. The loan interest was accrued at 9%.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
61
27 Commitments
At the time of the award of the Monchetundra mining license a royalty payment was calculated by the Russian Federal Reserves Commission. 20% of
this payment was paid in December of 2018 and the remaining 80%, or Rub16.68m (approximately £160,000) to be paid by November 2023.
During 2020 the Group entered into several lease agreements to lease mining plant and equipment. As at 31 December 2020 the average lease term
was 4.5 years and present value of minimum lease payments £526,929 (2019: £nil).
The Group has no other material commitments.
28 Risk management objectives and policies
Financial risk management objectives
The Group’s operations are limited at present to investing in entities that undertake mineral exploration. All investments in exploration are
capitalised on project basis, which are funded by shareholders funds and fixed rate borrowings. The Group’s activities expose it to a variety
of financial risks including currency, fair value and liquidity risk. The Group seeks to minimise the effect of these risks on a daily basis, though
due to its limited activities the Group has not applied policy of using any financial instruments to hedge these risks exposures.
Risk management is carried out by the Company under close board supervision.
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
US Dollars and Russian Roubles. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net
investments in foreign operations. The Group’s policy is not to enter into currency hedging transactions.
The following significant exchange rates have been applied during the year:
GBP
USD
RUB
Average rate
Reporting date spot rate
2020
1.284
92.79
2019
1.276
82.61
2020
1.365
102.04
2019
1.321
82.16
Sensitivity analysis
A reasonably possible strengthening (weakening) of the USD and RUB, as indicated below, against GBP at 31 December would have affected the
measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss before taxes by the amounts shown
below. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and
purchases.
31 December 2020
USD (5% movement)
RUB (5% movement)
31 December 2019
USD (5% movement)
RUB (5% movement)
Equity
£
Strengthening
Profit or loss
£
Equity
£
Weakening
Profit or loss
£
29,075
135,129
7,628
108,443
(26,308)
(122,265)
(6,902)
(98,115)
38,255
116,637
11,634
(14,709)
34,615
(105,529)
(10,527)
13,310
Interest rate risk
As the Group has no significant interest-bearing assets, the group’s operating cash flows are substantially independent of changes in market interest
rates.
The Group has interest-bearing loans and lease liabilities disclosed in the notes 21 and 22. All loans are at a fixed rate of interest.
Fair values
In the opinion of the Directors, there is no significant difference between the fair values of the Group’s and the Company’s assets and liabilities and
their carrying values.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
62
Notes to the consolidated financial statements (continued)
for the year ended 31 December 2020
28 Risk management objectives and policies (continued)
Credit risk
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the consolidated statement of financial position
date, as summarised below:
Non-current loans and advances
Current loans and advances
Trade and other receivables
Cash and cash equivalents
Group
£
–
–
285,081
5,404,101
2020
Company
£
–
8,226,176
106,042
5,247,106
Group
£
–
–
181,259
920,013
2019
Company
£
–
6,689,106
91,561
894,995
5,689,182
13,579,324
1,101,272
7,675,662
The Group’s risk on cash at bank is mitigated by holding of the majority of funds at “A” rated bank.
No significant amounts are held at banks rated less than “B”. Cash is held either on current account or on short-term deposit at floating rate. Interest
is determined by the relevant prevailing base rate. The fair value of cash and cash equivalents at 31 December 2020 are not materially different from
its carrying value.
Recoverability of the loans is dependent on the borrower’s ability to transform them into cash generating units through discovery of economically
recoverable reserves and their development into profitable production.
The Company continuously monitors defaults by the counterparties, identified either individually or by group, and incorporates this information into
its credit risk control. Management considers that all of the above financial assets that are not impaired are of good credit quality.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of Directors, which has built an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group manages
liquidity risk by maintaining adequate reserves, borrowing facilities, cash and cash equivalent by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities.
2020
Borrowings
Lease liabilities
Trade and other payables
2019
Borrowings
Trade and other payables
Current
within
12 months
£
31,684
201,392
287,491
520,567
47,225
359,023
406,248
2 to 5
years
£
Non-current
later than
5 years
£
–
572,791
–
572,791
–
–
–
–
–
–
–
–
–
–
The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities.
2020
Trade and other payables
2019
Trade and other payables
Current
within
12 months
£
342,687
342,687
524,154
524,154
2 to 5
years
£
Non-current
later than
5 years
£
–
–
–
–
–
–
–
–
The tables above have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can
be required to pay. The table includes both interest and principal cash flows.
The contractual maturities reflect the gross cash flows, which may differ to the carrying values of the liabilities at the consolidated statement of
financial position date.
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
63
28 Risk management objectives and policies (continued)
Capital risk
At present the Group’s capital management objective is to ensure the Group’s ability to continue as a going concern.
Capital is monitored on the basis of its carrying amount and summarised as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing
Group
£
2020
Company
£
Group
£
558,614
(5,404,101)
–
(5,247,106)
47,225
(920,013)
–
11,590,173
–
14,370,390
11,590,173
0%
14,370,390
0%
–
6,766,393
6,766,393
0%
2019
Company
£
–
(894,995)
–
8,281,021
8,281,021
0%
Capital structure is managed depending on economic conditions and risk characteristics of underlying assets. In order to maintain or adjust capital
structure, the Group may issue new shares and debt financial instruments or sell assets to reduce debt.
29 Events after the consolidated statement of financial position date
There have been no adjusting events after the consolidated statement of financial position date and the following non-adjusting events;
• A Joint Venture was entered into with Rosgeo, a Russian registered and state funded exploration Company, in March 2021. The Joint Venture
is outside of and separate to ownership of the Company’s two key assets at Monchetundra and West Kytlim. The Rosgeo JV allows Eurasia to gain a
75% equity stake in each of nine new assets with the remaining 25% equity stakes to be held by Rosgeo. Eurasia will be the operator of the JV and
will develop the additional assets at its discretion.
• The Company established a Representative Office in Tokyo Japan in March 2021 to be overseen by newly appointed Director Tamerlan Abdikeev.
• The Company received an expression of interest regarding a potential substantial asset sale in May 2021.
• The Company exited the Code compliant Formal Sale Process on 12 May 2021.
• A fund raising was completed in May 2021, by issuance of 53,306,751 ordinary shares to a single institutional investor at the then market price
of 26.5p, raising gross proceeds of £14,126,289. An associated warrant is included per ordinary share, at the same price and with a 3 year term.
It is intended that these funds, and future potential warrant funds, will be chiefly directed to exploration and development of projects within
the Rosgeo JV.
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTSEURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
64
Company Information
Head Office
Clubhouse Holborn
20 St Andrew Street
London EC4A 3AG
UK
Telephone: +44 (0)20 7932 0418
E-mail: info@eurasiamining.co.uk
www.eurasiamining.co.uk
Registered Office
International House
142 Cromwell Road
London SW7 4EF
UK
Russian Office
Office 219/4
36 Engels Street
Ekaterinburg, 620075
Russia
Telephone: +7 (343) 304 61 53
Company Number: 3010091
ADVISERS
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Auditors
Grant Thornton UK LLP
30 Finsbury Square
London EC2A 1AG
Solicitors
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU
Nominated Adviser and Stockbrokers
SP Angel
35 Maddox Street
Mayfair
London W1S 2PP
EURASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020 EUR ASIA MINING PLC ANNUAL REPORT & ACCOUNTS 2020
65
Design and Production
www.carrkamasa.co.uk
Eurasia Mining Plc
Clubhouse Holborn
20 St Andrew Street
London EC4A 3AG
Telephone: +44 (0)20 7932 0418
E-mail: info@eurasiamining.co.uk
www.eurasiamining.co.uk