Jayride Group Limited
Annual Report 2021

Plain-text annual report

Registered number: 05389216 BLUEJAY MINING PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 BLUEJAY MINING PLC CONTENTS Company Information Chairman’s Report Strategic Report Directors’ Report Statement of Directors’ Responsibilities Corporate Governance Report Independent Auditor’s Report Statements of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Page 2 3 6 9 11 12 17 22 23 24 25 26 27 28 BLUEJAY MINING PLC COMPANY INFORMATION Directors Roderick McIllree (Executive Chairman) Bo Stensgaard (Chief Executive Officer) Eric Sondergaard (Executive Director) – appointed 27 January 2022 Peter Waugh (Non-Executive Director) Michael Hutchinson (Non-Executive Director) Johannus Egholm Hansen (Non-Executive Director) – appointed on 15 March 2021 Ian Henderson (Non-Executive Director) – resigned 5 January 2021 Company Secretary Westend Corporate LLP Registered Office Suite 1 15 Ingestre Place London W1F 0DU Company Number 05389216 Bankers Nominated Adviser Broker Independent Auditor Solicitors HSBC Bank plc 129 New Bond Street London W1J 2JA S.P. Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street London W1S 2PP Hannam & Partners (Advisory) LLP 2 Park Street London W1K 2HX PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW 2 BLUEJAY MINING PLC CHAIRMAN’S REPORT 2021 marked another year that saw disruptions and difficult conditions relating to COVID-19 regulations and restrictions. However, the Company was still able to deliver on several key milestones and make significant progress across all its projects and business areas. During the year the Company signed a $20 million Joint Venture (‘JV’) and earn-in agreement on one of its nickel projects in Finland with one of the world’s largest mining companies. We also strengthened our Board with the appointments of Johannus Egholm Hansen as Non-Executive Director and post year-end, Eric Sondergaard as Executive Director. In addition, Peter Davis was appointed as Project Manager for the Dundas Ilmenite Project (‘Dundas’). Peter has extensive experience in mineral sands and titanium dioxide pigment operations. These additions undoubtedly leave us in a strong position going forward with the Board and management team well equipped with the experience and knowhow to drive the Company forward and deliver on its stated objectives. One of the most significant developments during the Period was the signing of a JV agreement at the Disko-Nuussuaq magmatic massive sulphide nickel-copper-platinum-cobalt project in Greenland with KoBold Metals (‘KoBold’), whereby KoBold will fund exploration on the project. KoBold’s principal investor is Breakthrough Energy Ventures, which is overseen by Bill Gates, and is committed to identifying sustainable supplies of critical and battery metals using their proprietary AI Technology. KoBold recently completed a $192.5 million fundraise, which will fund its work on Disko as well as their other exploration assets. Over the Period, Bluejay also reached agreement to spin out its Finnish Black Shales Assets to Metals One for circa £4 million in cash and shares. (‘Disko’) During 2022 the Company will focus on the continued development of its various assets specifically advancing Dundas to production, supported by early site development and geotechnical work for infrastructure as well as progressing project financing. Greenland Most notably, during the Period, we entered a strategic partnership with KoBold on the Disko project. KoBold may earn up to 51% of the project through significant expenditure over a three-year period. It is of particular significance that KoBold is aligned with our goals to develop critical materials needed for the green transition sourced in an ethical and sustainable manner. In the post period the Company and KoBold released the 2022 work programme plan for Disko. This is the first major exploration campaign to be undertaken by the JV, and will incorporate KoBold’s cutting-edge technology and Bluejay’s operational and local expertise with the objective of targeting massive nickel, copper, cobalt and platinum group metals bearing sulphides. The 2022-programme will include 9,500-line kilometres (‘km’) of fixed-wing/helicopter/drone supported geophysical surveys, and 4,000 geochemical sample locations covering 200-line km of soil sampling. Work is expected to commence in early June with the mobilisation and build-up of the exploration camp starting in mid-May. KoBold’s cutting-edge technology will provide a high degree of confidence in targeting which, alongside Bluejay’s operational expertise in Greenland, increases confidence of a major discovery and the recognition of a new mineral province in West Greenland. The geopolitical turmoil experienced this year has exposed supply risks, and the need to identify and develop new deposits in stable jurisdictions, such as Greenland, has never been greater. Last year Bluejay received approval for the Exploration and Closure Plan for Dundas from the Government of Greenland, the final Government approval. This follows the awarding of the project’s Exploration Licence that was announced in December 2020. On a technical front we continue to progress the engineering optimisation and cost saving studies for Dundas. The £5.2 million of net proceeds received from the placing in March 2022 will be utilised to complete the feasibility study at Dundas to the level required for financial sign-off by a project finance lending syndicate. The Company will commence works this forthcoming field season, completing the necessary engineering, geo-technical and planning activities, including an optimised mine schedule for production. Additionally, the Company has received Letters of Interest from four International Export Credit Agencies, which could form part of the lending syndicate along with commercial banks, and industrial entities that Bluejay has been engaged in communication with over the last 12 months. The syndicate will be led by our Lead Arranger, a leading global investment bank, all within a backdrop of robust ilmenite prices. Following the restart of the pilot plant and commencement of processing in early 2021, the final samples from the pilot plant in Canada were produced in co-operation with the Company’s distribution partner, a large, long established Asian international industrial and trading company. The parcels will be used to target key end consumers identified by our distribution partner, with the aim of consolidating and extending the existing distribution agreement. The pilot processing plant in Canada was successfully restarted in 2021 following its closure in 2020 due to COVID restrictions. This enabled the remaining material shipped from Greenland to be processed to produce concentrate suitable for larger scale testing by key customers. The test work also provided additional valuable data for the detailed design of the industrial scale plant. The pilot plant was decommissioned and closed in December 2021. The output from the pilot plant was shipped for potential customers of the Company’s distribution partner. Feedback in 2022 will enable negotiations to consolidate and extend the existing distribution agreement. Post period, the Danish Geodata Agency, Geodatastyrelsen, published the Electronic Nautical Charts which cover the key seaward approach and coastal waters for shipping to and from Dundas. The charts provide important navigational and 3 BLUEJAY MINING PLC CHAIRMAN’S REPORT bathymetric data which will be utilised during the construction period and the production phase of the project to ensure future safe shipping operation. This enables us to advance discussions with potential bulk-carrier companies regarding the transport of our products from the mine area. Turning to Thunderstone, we received, in late January, initial exploration results from our maiden field programme. These initial results justify continued work to further assess the newly identified gold-silver anomalies as well as other high tenor base-metal results (Cu-Au-Ag-Mo-Zn and Cu-Ni-Cr-Co±Pt, Pd anomalies). Future work will focus on these newly identified anomalies. Additionally, during the year, Greenland held a general election and formed a new coalition Government. Our newly appointed CEO, Bo Stensgaard, met with the newly appointed Minister for Housing, Infrastructure, Mineral Resources and Gender Equality, Ms Naaja Nathanielsen in May 2021. During this meeting the Minister confirmed that the Greenland Government continues to support the Mineral Strategy 2020-2024, which provides the framework for further development of mineral resources in the country. Finland In 2021, the Company entered into a JV and earn-in agreement with Rio Tinto Mining and Exploration Ltd (‘Rio Tinto’) at the Company’s Enonkoski nickel-copper-cobalt-PGM project (‘Enonkoski’). During the year an initial diamond drill programme of 3,000m was completed. The programme targeted mineralisation in the near-mine areas Tevanjoki and Laukunsuo and included a top of bedrock sampling programme with a total of 99 drill holes and downhole electromagnetic surveys on 22 drill holes. All diamond drill cores and top of bedrock core samples have been submitted for analysis with assay results pending. In September, Rio Tinto approved and extended further exploration expenditure which resulted in a further 12 diamond drill holes and one drill hole extension for a total of 4149.45m of drilling. This approval showcased Rio Tinto’s confidence in the project and emphasised the potential of Enonkoski to be a profitable project. From the drill programme, intersections of nickel- copper sulphide droplet zones logged in mafic intrusions were identified, which indicates promising results as these were analogous features of the former mine close to the orebody. Following on from the work carried out in 2021, further confidence in the project was demonstrated when the JV recently announced its planned work programme for 2022. Preliminary plans include 1,500m follow-up diamond drilling at targets drilled last year, up to 60 top of bedrock drill holes focused on new targets and infill sampling, as well as geological mapping and sampling. In July the Company provided an update on its Outokumpu copper-cobalt-gold-silver project (‘Outokumpu’) where Bluejay’s 100% owned subsidiary, FinnAust Mining Finland Oy (‘FinnAust’) identified five drill targets on the Outokumpu Belt. The first stage of the drill programme is focusing on the Haapovaara target with 1,500m of drilling and the Haaponiemi target, a deep target with 2,500m of drilling. The Company is in early discussions with various parties interested in partnering on the project, adding a further potential asset to the Company’s value realisation strategy to monetise its non-flagship assets. The compelling nature of this project’s exploration targets are emphasised by the global demand for base metals to be used within the battery industrial ecosystem, the electrification movement and in the green transition. As a result, the five targets identified at Outokumpu provide an exciting outlook for the project that will, and have, drawn interest from potential partners. Bluejay went on to sign a binding term sheet and entered into a conditional agreement for the sale of its Paltamo and Rautavaara nickel-zinc-copper-cobalt projects (collectively known as The Black Shales Project) to Metals One plc for a combination of cash and shares totalling more than £4 million, further monetising the Company’s portfolio of high-quality mineral projects. This agreement operates in line with a key aspect of the Company’s strategy to develop its range of assets and attract potential partners. Financial Following a period of cash preservation during the peak of the COVID-19 Pandemic, the Company has accelerated activities. The Group’s cash balance at year-end was £2.7 million and has been bolstered following the post-period placing in March. The additional $7 million (£5.38 million before fees) fundraise supported by the Company’s existing institutional shareholders, will enable the Company to complete the feasibility study that is required for Dundas to continue to progress the project into production. Over the year Bluejay has continued its extensive optimisation process to maximise project economics, identify lower cost options for infrastructure, mine, and processing solutions. We ended the year with the receival of the VAT refund, of approximately £1.1 million, from our activities in Finland and Greenland . This was a result of Her Majesty’s Revenue and Customs (‘HMRC’) withdrawing its appeal on the First-Tier Tribunal’s decision. With the case closed, Bluejay can continue to reclaim VAT on its future activities. Outlook The past year saw the Company complete and further develop the portfolio, as well as monetise Company assets with the conditional sale of the Black Shales. The JV agreement with KoBold marked a notable step towards the development of the Disko project with secure funding and world class technology being utilised at the project. 4 BLUEJAY MINING PLC CHAIRMAN’S REPORT The backing of KoBold supports a key part of Bluejay’s strategy to focus on sustainable operations with the highest of Environmental, Social and Governance standards, and developing a supply chain of sustainable battery metals to aid the green transition. The Company’s strategy continues to be based around developing and delivering high-grade, high-tonnage, scalable deposits, with simple processing routes in supportive jurisdictions. The Company has followed this strategy throughout the year and is making good progress, and the successful raise post period will enhance this progress with the completion of the feasibility study at Dundas. In addition, the Company anticipates the receipt of fee income, for its role as field work manager at both Enonkoski and Disko in 2022. The Company, post period, also replenished its balance sheet with our successful $7 million equity raise that will ensure the completion of the feasibility study at Dundas to the point of Project Finance sign off. The outlook at Dundas has grown throughout 2021, the developments made have further outlined the importance and potential of our flagship project. The appointment of the Lead Arranger of the project financing will help move the project towards construction and then commercial production. To further support the financing and development of Dundas, the addition of Peter Davies as Project Manager will provide significant experience, specifically, in mineral sands and titanium dioxide pigment operations. His experience in this industry will aid in the completion of the preparatory works and the necessary requirements for the Lead Arranger to financially sign off pre-construction works. The team has also, already this year, secured the funds to ensure the completion of the feasibility study. Furthering the credentials of the Dundas project, the ERMA announced its official support for Dundas, this will enable it to help secure Dundas ilmenite for end users within the European Union (‘UN’), creating a secure supply chain option for titanium ore and concentrate. The recognition and support of the project from ERMA adds to the support already received from the government of Greenland and the financial support from a leading global investment bank. Conversations with the Deputy Minister for the Ministry of Mineral Resources and the Minister for Housing, Infrastructure, Minerals Resources and Gender Equality in Greenland in 2021 demonstrates the Greenlandic Government’s support for the Company’s projects and ambitions in the country. This continued relationship between the Company and Greenland’s government opens avenues for Bluejay to develop its projects on schedule and allows the Company to provide economic and social benefits to all its stakeholders, including the local communities. The conditional partial divestment of the Black Shale assets in Finland continued the Company’s focus on maintaining its cash flow by monetising certain assets within its portfolio, maintaining our strategy of partnering projects to optimise the best expenditure and ownership outcome for shareholders. On this note we were delighted that our JV partner Rio Tinto confirmed the planned field activities for 2022 at Enonkoski, expected to recommence imminently. We will continue to look for opportunities to further monetise these types of assets to provide further funds to develop our flagship projects. Bluejay’s operating jurisdictions remain supportive, it has large scale resources, high grades, low costs, strong economics, institutional and industry backers, an experienced team and access to end markets. As a result, the outlook for the Company remains extremely positive for the upcoming year. I am grateful to all of the communities in which we operate, our strategic partners, stakeholders, advisors and the entire Bluejay team for their continued support and tireless work. Whilst the immediate global outlook continues to be dominated by COVID and the war in Ukraine we are focused on delivering our key milestones and continuing to progress our portfolio, and look forward to another productive and promising year. In the meantime, we hope everyone continues to stay safe and well and we look forward to providing further updates on Bluejay’s successes in 2022. Roderick McIllree Chairman 18 May 2022 5 BLUEJAY MINING PLC STRATEGIC REPORT The Directors of the Company present their Strategic Report on the Group for the year ended 31 December 2021. Strategic approach The Group’s aim is to create value for shareholders through the discovery and development of economic mineral deposits. The Group’s strategy is to continue to progress the development of its existing projects in Greenland and to evaluate its existing and new mineral resource opportunities with a view to potential joint venture arrangements and/or other corporate activities. Organisation overview The Group’s business is directed by the Board and is managed on a day-to-day basis by the Chief Executive Officer. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and periodic operational reviews. The Board comprises of three Executive Directors and three Non-Executive Directors. The Corporate Head Office of the Group is located in London, UK, and provides corporate support services to the overseas operations. Overseas operations are managed out of the Group’s office in Outokumpu, Finland and Nuuk, Greenland. Review of business Throughout the year, due to the COVID-19 pandemic, the UK, Greenland, Finland and Canadian governments all imposed restrictions on air travel and non-essential work. Bluejay postponed 2021 field work in Greenland on recommendation of the governments and in order to ensure the safety of its employees, contractors and supply chain. In Greenland, the Government have advised that they will be relieving all spending commitments associated with exploration licences in 2021. Alongside Dundas, the Group has a wider portfolio of prospective assets situated in Finland and the Disko area of Greenland. At Disko, the Group signed a joint venture with KoBold Metals to explore the Disko Nuussuaq project in August 2021. In Finland, a drill programme begun at the Hammaslahti Copper-Gold-Zinc Project in May 2021 and was extended in September 2021. Looking forward, Bluejay will commence a 2022 field programme at Disko-Nuussuaq and at Dundas, will complete the bankable feasibility study to continue to progress the project into Production. Bluejay currently has active drill programs in Finland being undertaken by its in-country team. Financial performance review The loss of the Group for the year ended 31 December 2021 before taxation amounts to £2,706,833 (31 December 2020: £2,487,563). The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the Board to assess performance over the period to 31 December 2021. The three main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and development activities: KPI Cash and cash equivalents Administrative expenses as a percentage of total assets Exploration costs capitalised during the period 2021 2020 2,701,792 £5,942,848 8.15% 6.81% £2,887,110 £2,471,136 Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statements of Cash Flows on page 26). Administrative expenses are the expenses related to the Group’s ability to run the corporate functions to ensure they can perform their operational commitments. 6 BLUEJAY MINING PLC STRATEGIC REPORT Exploration costs capitalised during the period consist of exploration expenditure on the Group’s exploration licences net of foreign exchange rate movements. Principal risks and uncertainties The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business risks affecting the Group are set out below. Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group. Exploration risks The exploration and mining business is controlled by a number of global factors, principally supply and demand which in turn is a key driver of global mineral prices; these factors are beyond the control of the Group. Exploration is a high-risk business and there can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be an operating mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results justify the next stage of exploration expenditure ensuring that funds are only applied to high priority targets. The principal assets of the Group comprising the mineral exploration licences are subject to certain financial and legal commitments. If these commitments are not fulfilled the licences could be revoked. They are also subject to legislation defined by the Government; if this legislation is changed it could adversely affect the value of the Group’s assets. Dependence on key personnel The Group and Company is dependent upon its executive management team and various technical consultants. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on its ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. Uninsured risk The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that cannot be insured against or third party claims that exceed the insurance cover. The Group may also be disrupted by a variety of risks and hazards that are beyond control, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupational and health hazards and weather conditions or other acts of God. Funding risk The only sources of funding currently available to the Group are through the issue of additional equity capital in the parent company or through bringing in partners to fund exploration and development costs. The Company’s ability to raise further funds will depend on the success of the Group’s exploration activities and its investment strategy. The Company may not be successful in procuring funds on terms which are attractive and, if such funding is unavailable, the Group may be required to reduce the scope of its exploration activities or relinquish some of the exploration licences held for which it may incur fines or penalties. Financial risks The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge accounting is applied. COVID-19 The outbreak of the global COVID-19 virus resulted in business disruption and stock market volatility. The Group implemented extensive business continuity procedures and contingency arrangements to ensure they were able to continue to operate. Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements. 7 BLUEJAY MINING PLC STRATEGIC REPORT Section 172(1) Statement - Promotion of the Company for the benefit of the members as a whole The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006. The requirements of s172 are for the Directors to: • Consider the likely consequences of any decision in the long term, • Act fairly between the members of the Company, • Maintain a reputation for high standards of business conduct, • Consider the interests of the Company’s employees, • • Consider the impact of the Company’s operations on the community and the environment. Foster the Company’s relationships with suppliers, customers and others, and The Company continues to progress the development of its existing projects in Greenland, which is inherently speculative in nature and, without regular income, is dependent upon fund-raising for its continued operation. The pre-revenue nature of the business is important to the understanding of the Company by its members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under AIM Rules for Companies. The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made during 2021: Finalising the pre-feasibility studies as part of the exploitation licence process; • Continuing evaluation of existing license areas and assessment of targets; • • Expanding the licensed land area; • • • Continued assessment of corporate overheads, expenditure levels and wider market conditions. Identifying and refining both new and previously defined drill targets; Further identification of drill targets and preparation for a percussion drill program; As a mining Group operating in Greenland and Finland, the Board takes seriously its ethical responsibilities to the communities and environment in which it works. We abide by the local and relevant UK laws on anti-corruption & bribery. Wherever possible, local communities are engaged in the geological operations & support functions required for field operations, providing much needed employment and wider economic benefits to the local communities. In addition, we follow international best practise on environmental aspects of our work. Our goal is to meet or exceed standards, in order to ensure we maintain our social licence to operate from the communities with which we interact. The interests of our employees are a primary consideration for the Board. Personal development opportunities are supported and a health and security support network is in place to assist with any issues that may arise on field expeditions. The Group Strategic Report was approved by the Board on 18 May 2022. Bo Stensgaard CEO 8 BLUEJAY MINING PLC DIRECTORS’ REPORT The Directors present the Annual Report on the affairs of Bluejay Mining plc together with the Financial Statements for the year ended 31 December 2021. Dividends The Directors do not recommend the payment of a dividend for the year (31 December 2020: £nil). Directors & Directors’ interests The Directors who served during the year ended 31 December 2021 are shown below and had, at that time the following beneficial interests in the shares of the Company: Roderick McIllree Peter Waugh Michael Hutchinson Bo Stensgaard Johannus Hansen 31 December 2021 31 December 2020 Ordinary Shares 74,677,778 140,224 - Options - - - 135,000 16,100,000 220,000 - Ordinary Shares 74,677,778 140,224 - - - Options - - - 4,100,000 - Further details on options can be found in Note 15 to the Financial Statements. Substantial shareholders The substantial shareholders with more than a 5% shareholding at 18 May 2022 are shown below: Sandgrove Capital Management LLP M&G Plc Roderick McIllree HSBC Bank Plc Corporate responsibility 18 May 2022 Holding Percentage 162,234,872 142,850,649 75,820,635 66,304,298 15.46 % 13.61 % 7.22 % 6.32 % Environmental The Company undertakes its exploration activities in a manner that minimises or eliminates negative environmental impacts and maximises positive impacts of an environmental nature. Bluejay is a mineral explorer, not a mining company. Hence, the environmental impact associated with its activities is minimal. To ensure proper environmental stewardship on its projects, Bluejay conducts certified baseline studies prior to all drill programmes and ensures that areas explored are properly maintained and conserved. Health and safety Bluejay operates a comprehensive health and safety programme to ensure the wellness and security of its employees. The control and eventual elimination of all work related hazards requires a dedicated team effort involving the active participation of all employees. A comprehensive health and safety programme is the primary means for delivering best practices in health and safety management. This programme is regularly updated to incorporate employee suggestions, lessons learned from past incidents and new guidelines related to new projects with the aim of identifying areas for further improvement of health and safety management. This results in continuous improvement of the health and safety programme. Employee involvement is regarded as fundamental in recognising and reporting unsafe conditions and avoiding events that may result in injuries and accidents. Internal controls The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control environment and any related shortfalls during the period. Since the Group was established, the Directors are satisfied that, given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware 9 BLUEJAY MINING PLC DIRECTORS’ REPORT that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. Further details of corporate governance can be found in the Corporate Governance Report on page 12. Supplier payment policy The Group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU). The Group's current policy concerning the payment of trade creditors is to: • • • settle the terms of payment with suppliers when agreeing the terms of each transaction; ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and pay in accordance with the Group's contractual and other legal obligations. Going concern The Consolidated Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group has sufficient funds to meet all committed and contractual expenditure within the next 12 months and to maintain good title to the exploration licences. This will ensure they will still be in a strong financial position once they are able to re-commence exploration activity. The Group’s business activities together with the additional factors likely to affect its future development, performance and position are set out in the Chairman’s Report on pages 3-5. In addition, Note 3 to the Consolidated Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk. Directors’ and Officers’ indemnity insurance The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made during the period and remain in force at the date of this report. Financial Risk Management Objectives The Group has disclosed the financial risk management objectives within Note 3 to these Financial Statements. Events after the reporting period Events after the reporting period are set out in Note 27 to the Financial Statements. Future developments Details of future developments for the Group are disclosed in the Chairman’s Report on page 3. Provision of information to Auditor So far as each of the Directors is aware at the time this report is approved: • • there is no relevant audit information of which the Company's auditor is unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. Auditor PKF Littlejohn LLP has signified its willingness to continue in office as auditor. This report was approved by the Board on 18 May 2022 and signed on its behalf. Bo Stensgaard Director 10 BLUEJAY MINING PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations, including the AIM Rules for Companies. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • • state whether applicable IFRSs in conformity with the requirements of the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company, and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, www.sigmaroc.com. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website. The Directors confirm that they have complied with the above requirements in preparing the Financial Statements. 11 BLUEJAY MINING PLC CORPORATE GOVERNANCE REPORT The Board of Bluejay Mining plc had adopted the QCA Corporate Governance Code (‘the Code’) as its code of corporate goverance. The Code is published by the Quoted Companies Allicance (‘QCA’) and is available at www.theqca.com. The key governance related matter that occurred during the financial year ended 31 December 2021 was the completion and submission of the Environmental Impact Assessment and Social Impact Assessment reports at the Dundas project, both of which have been confirmed compliant for the Public Consultation phase. Corporate Governance Report The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles: Principle One Business Model and Strategy The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of a single strategy for the Company. The principal activity of the Group is the exploration and development of precious and base metals and the aim is to create value for shareholders through the discovery and development of economic resource deposits. The Board implements this strategy by focusing investment into the exploration of world-class mineralised domains, establishing a strict criteria for project selection, utilising industry recognised methods of exploration, developing a results- driven exploration approach, actively monitoring operational and financial performance, measured against deliverable targets and budgets and considering alternative commercial options for projects which no longer meet the established criteria of the Group. This can be summarised as follows: • Continued development of the Dundas ilmenite project in Greenland toward commercialisation. Key milestones recently achieved include approval of the exploration and closure plan. Further detail is included in the Chairman’s Report on pages 3-5. • Entered into a joint venture agreement at Disko-Nuussuaq project in Greenland • Drilling at the Enonkoski project with its joint venture partner Principle Two Understanding Shareholder Needs and Expectations The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. Investors also have access to current information on the Company though its website, www.bluejaymining.com, and via Kevin Sheil, Head of Corporate Development and Strategy or the Company’s PR advisors, BlytheRay who are available to answer investor relations enquiries. Principle Three Considering Wider Stakeholder and Social Responsibilities The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company. Principle Four Risk Management In addition to its other roles and responsibilities, the Audit Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. 12 BLUEJAY MINING PLC CORPORATE GOVERNANCE REPORT The Audit Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified: Activity Operation Risk Injury to staff Regulatory adherence Breach of rules Strategic Market downturn Failure to deliver commerciality Impact Control(s) Injury to staff whilst operating heavy machinery in remote location Censure or withdrawal of authorisation Change in Macro economic conditions Creating a safe working environment through strict procedures and regular training Strong compliance regime instilled at all levels of the Company Ongoing monitoring of economic events and markets. Inability to secure offtake agreements Active marketing and experienced management Financial Misappropriation of Funds Fraudulent activity and loss of funds Robust financial controls and split of duties IT Security Loss of critical financial data Regular back up of data online and locally The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the executive Directors. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the outsourced finance function and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems. Principle Five A Well Functioning Board of Directors As at the date hereof the Board comprised, the CEO Bo Stensgaard, the Executive Chairman Roderick McIllree, COO Eric Sondergaard and three Non-Executive Directors, Peter Waugh, Michael Hutchinson and Johannus Hansen. Biographical details of the current Directors are set out within Principle Six below. Executive and Non-Executive Directors are subject to re-election at intervals of no more than three years. The letters of appointment of all Directors are available for inspection at the Company’s registered office during normal business hours. The Board meets at least three times per annum. It has established an Audit Committee, Remuneration Committee and AIM Compliance Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee. The Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board considers that this is appropriate given the Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. Michael Hutchinson, Peter Waugh and Johannus Hansen are considered to be Independent Directors. The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. In order to be efficient, the Directors meet formally and informally both in person and by telephone. To date there have been at least quarterly formal and informal meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate. 13 BLUEJAY MINING PLC CORPORATE GOVERNANCE REPORT Details of the Directors’ attendance at the Board meetings are set out below: Meetings Attended 3 3 4 4 3 - Meetings eligible to attend 4 4 4 4 3 - Roderick McIllree Michael Hutchinson Peter Waugh Bo Stensgaard Johannus Egholm Hansen (1) Eric Sondergaard (2) Johannus Egholm Hansen was appointed on 15 March 2021 (1) (2) Eric Sondergaard was appointed on 27 January 2022 Principle Six Appropriate Skills and Experience of the Directors The Board currently consists of six Directors and, in addition, the Company has employed the services of Westend Corporate LLP to act as the Company Secretary. The Company is satisfied that given its size and stage of development, between the Directors, it has an effective and appropriate balance of skills and experience across technical, commercial and financial disciplines. The Director’s experience and skills are listed on the companies website, www.bluejaymining.com, The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal. Roderick McIllree Executive Chairman Bo Stensgaard Chief Executive Officer Eric Sondergaard Chief Operations Officer Micheal Hutchinson Non-Executive Director Chairman of the Remuneration Committee and Member of the Audit Committee and AIM Compliance Committee. Peter Waugh Independent Non-Executive Director Chairman of the AIM Compliance Committee, Audit committee and member of the Remuneration Committee. Johannus Egholm Hansen Independent Non-Executive Director Member of the Audit Committee, AIM Compliance Committee and Remuneration Committee. Where necessary the Board has engaged external professional consultants on an ongoing basis to ensure the Company is meeting it’s strategies. The key advisers to the Company are SP Angel Corporate Finance LLP, H&P Advisory Ltd, BlytheRay and Hill Dickinson. The Board have ensured that the all external advisers are knowledgable and provide the required skillset. Principle Seven Evaluation of Board Performance Internal evaluation of the Board, the Committees and individual Directors is to be undertaken on an annual basis and on a three-yearly cycle the evaluations may be facilitated by an independent evaluator. The Board has not yet had any internal reviews. The internal reviews will be in the form of peer appraisal and discussions to determine the effectiveness and performance of the various governance components, as well as the Directors’ continued independence. The results and recommendations that come out of the appraisals for the Directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant. 14 BLUEJAY MINING PLC CORPORATE GOVERNANCE REPORT Principle Eight Corporate Culture The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. A large part of the Company’s activities are centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The Directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. Principle Nine Maintenance of Governance Structures and Processes Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Company’s business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer. Audit Committee The Audit Committee comprises Peter Waugh, Johannus Egholm Hansen and Michael Hutchinson, and Peter Waugh chairs this committee. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit and Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company’s auditors. Remuneration Committee The Remuneration Committee comprises Peter Waugh, Johannus Egholm Hansen and Michael Hutchinson, and Michael Hutchinson chairs this committee. The Remuneration Committee reviews the performance of the executive Directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves bonuses, the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company’s Remuneration Policy. AIM Compliance Committee The AIM Compliance Committee comprises Michael Hutchinson, Johannus Egholm Hansen and Peter Waugh. Peter Waugh chairs this committee. The AIM Compliance Committee is responsible for the coordinating and monitoring the Company’s regulatory responsibilities including liaising with the Nomad and the London Stock Exchange as necessary. The purpose of the AIM compliance committee is to designate responsibility of ensuring best practice and application of the defined corporate governance procedures. Nominations Committee The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee. Non-Executive Directors The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the Chairman and non-executive Directors insofar as both the Chairman and non-executive Directors will be appointed for an initial term of three years and may, at the Board’s discretion believing it to be in the best interests of the Company, be appointed for subsequent terms. The Chairman may serve as a Non-Executive Director before commencing a first term as Chairman. In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement. 15 BLUEJAY MINING PLC CORPORATE GOVERNANCE REPORT Principle Ten Shareholder Communication The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. Investors also have access to current information on the Company though its website, www.bluejaymining.com, and via Kevin Sheil, Head of Corporate Development and Strategy or the Company’s PR advisors, BlytheRay who are available to answer investor relations enquiries. The Company shall include, when relevant, in its annual report, any matters of note arising from the Audit or Remuneration committees. Peter Waugh Non-Executive Director 18 May 2022 16 BLUEJAY MINING PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Opinion Company number: 05389216 We have audited the financial statements of Bluejay Mining Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise the Consolidated and Parent Company Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards 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 2021 and of the group’s and parent company’s loss for the year then ended; the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included: a) Reviewing management’s assessment of going concern. b) Determining if all relevant information has been included in the assessment of going concern including completeness of forecast expenditure. c) Analysing cash flow forecasts and budgets, reviewing the underlying assumptions in relation to expenditure and checking mathematical accuracy. d) Considering the cash position at and after the year end. e) Reviewing the reasonable worst-case forecast scenario prepared by management and the financial resources available to deal with this outcome. 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 or 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. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality for the financial statements as a whole applied to the group financial statements was £328,000 (2020: £360,000) based on 1% of gross assets. We based the materiality on gross assets because we consider this to be the most relevant performance indicator for a mining group in the exploration phase. The performance materiality for the group was £196,800 (2020: £216,000). The materiality for the financial statements as a whole applied to the parent company financial statements was £39,000 (2020: £42,000) based on 2% of the expenses. The performance materiality for the parent company was £23,400 (2020: £25,200). For each component in the scope of our group audit, we allocated a materiality that was less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, The Notes on pages 28 to 50 form part of these Financial Statements. 17 BLUEJAY MINING PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Company number: 05389216 we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. As a group whose trade is in the process of expanding through product development and existing product revenue streams, loss before tax was considered the most appropriate benchmark to shareholders. We agreed with those charged with governance that we would report all differences identified during the course of our audit in excess of £16,400 (2020: £18,000) for the group and £1,950 (2020 : 2,100) for the parent company. Our approach to the audit In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we looked at areas involving significant accounting estimates and judgements by the directors and considered future events that are inherently uncertain, including review of group’s future exploration plans to support impairment assessment of intangible assets. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Of the 8 components of the group, a full scope audit was performed on the complete financial information of 3 components, a limited scope review was performed on a component assessed as material and the remaining components were subject to analytical review as they were not significant or material to the group. Of the 8 reporting components of the group, 2 are located in Finland and audited by a network firm operating under our instruction, 1 component is located in Greenland and audited by a component auditor operating under our instruction and the audit of the remaining components were performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mining exploration entities and publicly listed entities. The Senior Statutory Auditor interacted regularly with the component audit teams during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the group and parent company financial statements. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our scope addressed this matter Carrying value of intangible assets (refer note 7) The group holds exploration and evaluation assets of £27,922,589 which relate to the Dundas Titanium Project in Greenland and a portfolio of copper, zinc and nickel projects in Finland. Intangible assets represent c. 85% of the group’s total assets. The carrying value and recoverability of these assets are tested annually for impairment. The estimated recoverable amount of this balance is subjective due to the inherent uncertainty involved in the assessment of exploration projects. the directors’ We obtained and critically assessed impairment review of intangible assets which considered the areas listed as indicators of impairment under IFRS 6. Our work included the following: • Obtaining the exploration and exploitation licenses and ensuring they remain valid; • Reviewing the responses of component auditors to their working instructions and reviewing our papers; • Reviewing key external reports for indicators of impairment; • Considering the group’s future plans for the that activity and exploration projects and expenditure thereto was planned; and • Considering whether there was an indicator that the carrying amount of capitalised expenditure was not recoverable. The Notes on pages 28 to 50 form part of these Financial Statements. 18 BLUEJAY MINING PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 investments Net in subsidiaries, intercompany receivables (refer note 8) including in The parent company’s net investment in subsidiaries is £34,509,322. The carrying value of the net investment in subsidiaries is ultimately dependent on the value of the underlying assets. Many of the underlying assets are exploration projects which are at an early stage of exploration making it difficult to determine their value. Valuations for these sites are therefore based on judgments and estimates made by the directors - which leads to a risk of misstatement. Company number: 05389216 We have obtained and critically assessed the directors’ impairment review of the carrying value of the parent company’s net investment in the subsidiaries. Our work included: • Reviewing the impairment indicators listed in IFRS 6 including specific consideration regarding the renewal of the exploration licenses; • Obtaining and reviewing available key external reports; • Reviewing the audit working papers of certain components to assess impairment considerations of exploration assets made by their auditors; and for impairment or non-impairment of investment in subsidiaries from loans subsidiaries. • Discussing with management the basis receivable and Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or • • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. The Notes on pages 28 to 50 form part of these Financial Statements. 19 BLUEJAY MINING PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Responsibilities of directors Company number: 05389216 As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management and the application of our cumulative audit knowledge and experience of the sector. • We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from AIM rules and the Companies Act 2006 and local mining and exploration regulations applicable to the subsidiaries. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non- compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to enquiries of management, review of minutes and RNS announcements and review of legal and regulatory correspondence. • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation to the impairment assessment of intangible assets. We addressed this by challenging the assumptions and judgements made by management when evaluating any indicators of impairment. • As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. • As part of the group audit, we have communicated with component auditors the fraud risks associated with the group and the need for the component auditors to address the risk of fraud in their testing. To ensure that this has been completed, we have reviewed component auditor working papers in this area and obtained responses to our group instructions from the component auditors. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. The Notes on pages 28 to 50 form part of these Financial Statements. 20 BLUEJAY MINING PLC STATEMENTS OF FINANCIAL POSITION As at 31 December 2020 Use of our report Company number: 05389216 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. Zahir Khaki (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 18 May 2022 15 Westferry Circus Canary Wharf London E14 4HD The Notes on pages 28 to 50 form part of these Financial Statements. 21 BLUEJAY MINING PLC STATEMENT OF FINANCIAL POSITION As at 31 December 2021 Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 Note £ £ £ £ 6 7 8 1,802,379 27,922,589 - 2,556,911 26,768,227 - 30,651 - 34,509,322 91,862 - 33,168,092 29,724,968 29,325,138 34,539,973 33,259,954 Non-Current Assets Property, plant and equipment Intangible assets Investment in subsidiaries Current Assets Financial assets at fair value through profit or loss Trade and other receivables Cash and cash equivalents 9 10 - 228,909 2,701,792 100,000 1,503,896 5,942,848 - 564,181 2,534,964 100,000 1,248,085 5,649,030 Total Assets Non-Current Liabilities 2,930,701 7,546,744 3,099,145 6,997,115 32,655,669 36,871,882 37,639,118 40,257,069 Deferred tax liabilities 12 496,045 496,045 496,045 496,045 - - - - Current Liabilities Lease liabilities Trade and other payables 11 - 630,833 62,220 1,179,694 - 365,175 62,220 175,928 630,833 1,241,914 365,175 238,148 Total Liabilities 1,126,878 1,737,959 365,175 238,148 Net Assets 31,528,791 35,133,923 37,273,943 40,018,921 Equity attributable to owners of the Parent Share capital Share premium Other reserves Retained losses Total Equity 14 14 16 7,484,355 55,705,882 (7,213,274) (24,448,172) 7,484,232 55,620,034 (6,220,719) (21,749,624) 7,484,355 55,705,882 1,292,323 (27,208,617) 7,484,232 55,620,034 644,738 (23,730,083) 31,528,791 35,133,923 37,273,943 40,018,921 The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the year ended 31 December 2021 was £3,486,819 (profit for year ended 31 December 2020: £773,890). The Financial Statements were approved and authorised for issue by the Board of Directors on 18 May 2022 and were signed on its behalf by: Bo Stensgaard Chief Executive Officer The Notes on pages 28 to 50 form part of these Financial Statements. 22 BLUEJAY MINING PLC CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2021 Continued operations Revenue Cost of sales Gross profit Administrative expenses Other (losses)/gains Foreign exchange gain/(losses) Operating loss Finance (expense)/income Other income Loss before income tax Income tax Loss for the year attributable to owners of the Parent Basic and Diluted Earnings Per Share attributable to owners of the Parent during the period (expressed in pence per share) Year ended 31 December 2021 Year ended 31 December 2020 £ - (199,844) (199,844) (2,662,046) (46,072) 18,235 (2,889,727) (4,251) 187,145 (2,706,833) - £ - - - (2,510,820) 49,360 (65,019) (2,526,479) 1,968 36,949 (2,487,562) 229,963 (2,706,833) (2,257,599) (0.28)p (0.23)p Note 23 23 20 19 21 22 The Notes on pages 28 to 50 form part of these Financial Statements. 23 BLUEJAY MINING PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2021 Loss for the year Other Comprehensive Income: Items that may be subsequently reclassified to profit or loss Currency translation differences Other comprehensive income for the year, net of tax Total Comprehensive Income attributable to owners of the Parent Year ended 31 December 2021 £ Year ended 31 December 2020 £ (2,706,833) (2,257,599) (1,640,140) 1,399,646 (4,346,973) 1,399,646 (4,346,973) (857,953) The Notes on pages 28 to 50 form part of these Financial Statements. 24 BLUEJAY MINING PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2021 Balance as at 1 January 2020 7,484,066 55,463,656 (7,604,567) (19,543,695) 35,799,460 Share capital Share premium Other reserves Retained losses Note £ £ £ £ Total £ Loss for the year Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the year - - - - - - - (2,257,599) (2,257,599) 1,399,646 - 1,399,646 1,399,646 (2,257,599) (857,953) Share based payments Issued Options Expired options 15 14 14 166 156,378 - - - 35,872 (51,670) - - 51,670 156,544 35,872 - Total transactions with owners, recognised directly in equity 166 156,378 (15,798) 51,670 192,416 Balance as at 31 December 2020 7,484,232 55,620,034 (6,220,719) (21,749,624) 35,133,923 Balance as at 1 January 2021 7,484,232 55,620,034 (6,220,719) (21,749,624) 35,133,923 - (2,706,833) (2,706,833) Loss for the year Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the year Share based payments Issued Options Exercised options Total transactions with owners, recognised directly in equity 15 14 14 - - - 123 - 123 - - - 85,848 - (1,640,140) (1,640,140) - 655,870 (8,285) - (1,640,140) (2,706,833) (4,346,973) - - 8,285 8,285 85,971 655,870 - 741,841 85,848 647,585 Balance as at 31 December 2021 7,484,355 55,705,882 (7,213,274) (24,448,172) 31,528,791 The Notes on pages 28 to 50 form part of these Financial Statements. 25 BLUEJAY MINING PLC COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2021 Share capital Note £ Share premium £ Other reserves Retained losses Total equity £ £ £ Balance as at 1 January 2020 7,484,066 55,463,656 660,536 (24,555,643) 39,052,615 Profit for the year Total comprehensive income for the year Share based payments Issued Options Expired Options Total transactions with owners, recognised directly in equity - - - - 15 14 14 166 156,378 - - - - - 35,872 (51,670) 773,890 773,890 773,890 - - 51,670 773,890 156,544 35,872 - 166 156,378 (15,798) 51,670 192,416 Balance as at 31 December 2020 7,484,232 55,620,034 644,738 (23,730,083) 40,018,921 Balance as at 1 January 2021 7,484,232 55,620,034 644,738 (23,730,083) 40,018,921 Loss for the year Total comprehensive income for the year - - - - Share based payments Issued Options Exercised options 15 14 14 123 85,848 - - - - - 655,870 (8,285) (3,486,819) (3,486,819) (3,486,819) (3,486,819) - - 8,285 85,971 655,870 - Total transactions with owners, recognised directly in equity 123 85,848 (647,585) 8,285 741,841 Balance as at 31 December 2021 7,484,355 55,705,882 1,292,323 (27,208,617) 37,273,943 The Notes on pages 28 to 50 form part of these Financial Statements. 26 BLUEJAY MINING PLC STATEMENTS OF CASH FLOWS For the year ended 31 December 2021 Cash flows from operating activities Profit/(Loss) before income tax Adjustments for: Depreciation Gain on sale of financial assets at FVTPL Share options expense Share based payments Intercompany management fees Net finance (income)/costs Non cash loss/(gain) Impairments Income tax received Changes in working capital: Decrease in trade and other receivables Increase/(Decrease) in trade and other payables Net cash used in operating activities Cash flows from investing activities Purchase of property plant and equipment Sale/(purchase) of financial assets at FVTPL Sale of property, plant and equipment Purchase of intangible assets Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from issue of share capital Transaction costs of share issue Net loans granted to subsidiary undertakings Repayment of loans Interest paid Net cash generated from financing activities Group Company Year ended Year ended 31 December 2021 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Note £ £ £ £ 6 15 19 21 9 11 6 6 7 14 14 (2,706,833) (2,487,563) (3,486,826) 773,890 460,713 (75,497) 655,870 - - 4,251 454 - - 606,585 - 35,872 156,544 - (1,968) 4,371 14,299 229,963 83,645 (75,497) 655,870 - (722,716) (668,198) 103,308 - 35,872 156,544 (574,921) (641,556) 2,329,977 (1,648,862) - - - - 1,377,664 305,100 1,413,873 1,054,892 (321,408) (345,257) 171,081 (820,248) (604,786) (1,482,054) (298,791) (1,561,081) (26,037) 75,497 179,245 (243,854) (100,000) - (2,887,110) (2,471,136) 379 6,697 (22,433) (17,331) 75,497 (100,000) - - 379 - - 6,697 (2,658,026) (2,808,293) 53,443 (110,634) 85,970 - - (62,220) (252) 23,498 - - - (80,814) (1,528) (82,342) 85,970 - - - (2,892,470) (2,795,805) (62,220) (80,814) - - (2,868,720) (2,876,619) Net decrease/(increase) in cash and cash equivalents (3,239,314) (4,372,689) (3,114,068) (4,548,334) Cash and cash equivalents at beginning of year 5,942,848 10,314,701 5,649,030 10,197,337 Exchange gain on cash and cash equivalents (1,742) 836 2 27 Cash and cash equivalents at end of year 10 2,701,792 5,942,848 2,534,964 5,649,030 The Notes on pages 28 to 50 form part of these Financial Statements. 27 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 1. General information The principal activity of Bluejay Mining plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is the exploration and development of precious and base metals. The Company’s shares are listed on the AIM of the London Stock Exchange and the open market of the Frankfurt Stock Exchange. The Company is incorporated and domiciled in England. The address of its registered office is Suite 1, 15 Ingestre Place, London, W1F 0DU. 2. Summary of significant Accounting Policies The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated. 2.1. Basis of preparation of Financial Statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) in conformity with the Companies Act 2006. The Consolidated Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on business combination. The Financial Statements are presented in Pound Sterling rounded to the nearest pound. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed in Note 4. 2.2. New and amended standards (a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 January 2021 The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 December 2021 but did not result in any material changes to the financial statements of the Group or Company. ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows: Standard IFRS 3 IAS 37 IAS 16 Annual improvements IAS 8 IAS 1 Impact on initial application Reference to Conceptual Framework Onerous contracts Proceeds before intended use 2018-2020 Cycle Accounting estimates Classification of Liabilities as Current or Non- Current. Effective date 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 1 January 2023 The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on the Group’s results or shareholders’ funds 2.3. Basis of Consolidation The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee; • • Rights arising from other contractual arrangements; and 28 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 • The Group's voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation. 2.4. Going concern The Consolidated Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group has sufficient funds to meet all committed and contractual expenditure within the next 12 months and to maintain good title to the exploration licences. This will ensure they will still be in a strong financial position once they are able to re-commence exploration activity. The Group’s business activities together with the additional factors likely to affect its future development, performance and position are set out in the Chairman’s Report on pages 3-5. In addition, Note 3 to the Consolidated Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk. The Directors have a reasonable expectation that the Group and Company have sufficient resources to continue in the current economic climate and for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group and Company Financial Statements. 2.5. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 2.6. Foreign currencies (a) Functional and presentation currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of the UK parent entity and UK subsidiary is Pound Sterling, the functional currency of the Finnish subsidiaries is Euros and the functional currency of the Greenlandic subsidiaries is Danish Krone. The Financial Statements are presented in Pounds Sterling which is the Company’s functional and Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. (c) 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 period end date presented are translated at the period-end closing rate; • income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and • all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the 29 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain or loss on sale. 2.7. Intangible assets Exploration and evaluation assets The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Exploration and evaluation assets are recorded and held at cost Exploration and evaluation assets are not subject to amortisation, as such at the year-end all intangibles held have an indefinite life, but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units (‘CGU’s’), which are based on specific projects or geographical areas. The CGU’s are then assessed for impairment using a variety of methods including those specified in IFRS 6. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement. Exploration and evaluation assets recorded at fair-value on business combination Exploration assets which are acquired as part of a business combination are recognised at fair value in accordance with IFRS 3. When a business combination results in the acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset. 2.8. Investments in subsidiaries Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. 2.9. Property, plant and equipment Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates: Office Equipment – 5 years Machinery and Equipment – 5 to 15 years Software – 2 years Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. If an impairment review is conducted following an indicator of impairment, assets which are not able to be assessed for impairment individually are assessed in combination with other assets within a cash generating unit. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other (losses)/gains’ in the Income Statement. 2.10. Impairment of non-financial assets Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is 30 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.11. Financial assets (a) Classification The Group classifies its financial assets at amortised cost and at fair value through the profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (b) Recognition and measurement Amortised cost Regular purchases and sales of financial assets are recognised on the trade date at cost – the date on which the Group commits to purchasing or selling the asset. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership. Fair value through the profit or loss Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL.The Group holds equity instruments that are classified as FVTPL as these were acquired principally for the purpose of selling in the near term. Financial assets at FTVPL, are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. Fair value is determined by using market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the ‘fair value hierarchy’): - Level 1: Quoted prices in active markets for identical items (unadjusted) - Level 2: Observable direct or indirect inputs other than Level 1 inputs - Level 3: Unobservable inputs (i.e. not derived from market data). The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur. The Group measures its investments in quoted shares using the quoted market price. (c) Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. 31 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. (d) Derecognition The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. This is the same treatment for a financial asset measured at FVTPL. 2.12. Financial liabilities Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and loans. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income. Trade and other payables After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. Derecognition A financial liability is derecognised when the associated obligation is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income. Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost. 2.13. Leases Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments, less any lease incentives receivable; 32 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 • Variable lease payment that are based on an index or a rate, initially measured using the index or the rate as at the commencement date; The exercise price of a purchase option; and • • Payment of penalties for terminating the lease. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-ofuse asset in a similar economic environment with similar terms, security and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. Rent payable under operating leases on which the short term exemption has been taken, less any lease incentives received, is charged to the income statement on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. 2.14. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. 2.15. Equity Equity comprises the following: • • • “Share capital” represents the nominal value of the Ordinary shares; “Share Premium” represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares; “Other reserves” represents the merger reserve, foreign currency translation reserve, redemption reserve and share option reserve where; o o o o o “Merger reserve” represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange; “Foreign currency translation reserve” represents the translation differences arising from translating the financial statement items from functional currency to presentational currency; “Reverse acquisition reserve” represents a non-distributable reserve arising on the acquisition of Finland Investments Limited; “Redemption reserve” represents a non-distributable reserve made up of share capital; “Share option reserve" represents share options awarded by the group; • “Retained earnings” represents retained losses. 2.16. Share capital, share premium and deferred shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement. Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of £100,000 per each share held. 2.17. Share based payments The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted: • • • including any market performance conditions; excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and including the impact of any non-vesting conditions (for example, the requirement for employees to save). The fair value of the share options and warrants are determined using the Black Scholes valuation model. 33 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity. When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised. 2.18. Taxation No current tax is yet payable in view of the losses to date. Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 3. Financial risk management 3.1. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are hedged. Risk management is carried out by the London based management team under policies approved by the Board of Directors. Market risk (a) Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, Danish Krone and the British Pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiaries in either British Pounds, Euros, USD or Danish Krone. The Group does not hedge against the risks of fluctuations in exchange rates. The volume of transactions is not deemed sufficient to enter into forward contracts as most of the foreign exchange movements result from the retranslation of inter company loans. The Group has sensitised the figures for fluctuations in foreign exchange rates, as the Directors acknowledge that, at the present time, the foreign exchange retranslations have resulted in rather higher than normal 34 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 fluctuations which are separately disclosed, and is predominantly due to the exceptional nature of the Euro exchange rate in the last two years in the current economic climate. Further detail is in note 3.3 (b) Price risk The Group is not exposed to commodity price risk as a result of its operations, which are still in the exploration phase. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. The Group has exposure to equity securities price risk, as it holds listed equity investments. Credit risk Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. Liquidity risk In keeping with similar sized mineral exploration groups, the Group’s continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed. With exception to deferred taxation, financial liabilities are all due within one year. 3.2. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts. At 31 December 2021 the Group had borrowings of £nil (31 December 2020: £nil) and defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time. Given the Group’s level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial. 3.3. Sensitivity analysis On the assumption that all other variables were held constant, and in respect of the Group and the Company’s expenses the potential impact of a 10% increase/decrease in the UK Sterling:Euro and UK Sterling:DKK Foreign exchange rates on the Group’s loss for the period and on equity is as follows: Potential impact on Euro expenses: 2021 (Loss)/profit before tax for the year ended 31 December 2021 Equity before tax for the year ended 31 December 2021 Group Company Group Company Increase/(decrease) foreign exchange rate in 10% -10% £ (2,500,119) (2,482,004) £ (3,486,819) (3,486,819) £ 32,660,976 30,817,450 £ 37,273,943 37,273,943 Potential impact on DKK expenses: 2021 Loss before tax for the year ended 31 December 2021 Equity before tax for the year ended 31 December 2021 Group Company Group Company Increase/(decrease) foreign exchange rate in 10% -10% £ (2,599,449) (2,382,675) £ (3,486,819) (3,486,819) £ 33,704,713 29,773,713 £ 37,273,943 37,273,943 35 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 4. Critical accounting estimates and judgements The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to: Impairment of intangible assets – exploration and evaluation costs Exploration and evaluation costs have a carrying value at 31 December 2021 of £28,111,021 (2020: £26,768,227) Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the period warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Income Statement. Useful economic lives of property, plant and equipment The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful economic lives and residual values of the assets, taking into account that the assets are not used throughout the whole year due to the seasonality of the licence locations. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on economic utilisation and the physical condition of the assets. See note 6 for the carrying amount of the property plant and equipment and note 2.9 for the useful economic lives for each class of assets. Share based payment transactions The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and suppliers for various services received. No share options or warrants were issued in the current year. The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 16. 5. Segment information Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the period the Group had interests in three geographical segments; the United Kingdom, Greenland and Finland. Activities in the UK are mainly administrative in nature whilst the activities in Greenland and Finland relate to exploration and evaluation work. The Group had no turnover during the period. 2021 Revenue Administrative expenses Foreign exchange Finance expense Other income Loss before tax per reportable segment Additions to PP&E Additions to intangible asset Reportable segment assets Greenland £ - 550,576 31,404 2,055 30,105 1,291,644 3,604 2,668,436 25,257,377 36 Finland £ - 88,335 - 1,795 155,540 90,575 - 218,674 4,777,642 UK £ - 2,023,135 (13,169) 401 1,500 1,324,614 22,433 - 2,620,650 Total £ - 2,662,046 18,235 4,251 187,145 2,706,833 26,037 2,887,110 32,655,669 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 2020 Revenue Administrative expenses Foreign exchange Finance income Other income Loss before tax per reportable segment Tax refund Additions to PP&E Additions to intangible asset Reportable segment assets 6. Property, plant and equipment Group Cost As at 1 January 2020 Exchange Differences Additions Greenland £ - 616,555 49,380 3,511 23,613 632,639 - 226,523 2,049,686 25,088,651 Finland £ - 81,831 - (17) 13,336 39,760 - - 421,450 4,903,362 UK £ - 1,788,719 15,638 (1,526) - 1,815,164 229,963 17,331 - 6,856,661 Total £ - 2,487,105 65,018 1,968 36,949 2,487,563 229,963 243,854 2,471,136 36,848,674 Right of use assets £ Software £ Machinery & equipment Office equipment £ £ Total £ 182,542 - - 37,093 - 9,221 3,255,384 192,414 226,523 52,931 182 8,110 3,527,950 192,596 243,854 As at 31 December 2020 182,542 46,314 3,674,321 61,223 3,964,400 As at 1 January 2021 Exchange Differences Additions Disposals As at 31 December 2021 Depreciation As at 1 January 2020 Charge for the year Exchange differences 182,542 - - (182,542) 46,314 - 7,503 - 3,674,321 (224,094) 3,604 (250,093) 61,223 2 14,930 - 3,964,400 (224,092) 26,037 (432,635) - 53,817 3,203,738 76,155 3,333,710 40,565 81,130 - 25,272 11,089 - 665,389 502,650 41,232 28,301 11,716 145 759,527 606,585 41,377 As at 31 December 2020 121,695 36,361 1,209,271 40,162 1,407,489 As at 1 January 2021 Charge for the year Disposals Exchange differences 121,695 60,847 (182,542) - 36,361 9,020 - - 1,209,271 377,068 (70,848) (83,481) 40,162 13,778 - - 1,407,489 460,713 (253,390) (83,481) As at 31 December 2021 - 45,381 1,432,010 53,940 1,531,331 Net book value as at 31 December 2020 60,847 9,953 2,465,050 21,061 2,556,911 Net book value as at 31 December 2021 - 8,436 1,771,728 22,215 1,802,379 Depreciation expense of £460,713 (31 December 2020: £606,585) for the Group has been charged in administration expenses. 37 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Company Cost As at 1 January 2020 Additions As at 31 December 2020 As at 1 January 2021 Additions Disposals As at 31 December 2021 Depreciation As at 1 January 2020 Charge for the year As at 31 December 2020 As at 1 January 2021 Charge for the year Disposals As at 31 December 2021 Net book value as at 31 December 2020 Net book value as at 31 December 2021 Right of use assets Software Office equipment £ £ £ Total £ 182,542 - 37,093 9,221 45,832 8,110 265,467 17,331 182,542 46,314 53,942 282,798 182,542 - (182,542) 46,314 7,503 - 53,942 14,930 - 282,798 22,433 (182,542) - 53,817 68,873 122,689 40,565 25,272 21,791 87,628 81,130 11,089 11,088 103,307 121,695 36,361 32,879 190,935 121,695 60,847 (182,542) 36,361 9,020 - 32,879 13,778 - 190,935 83,645 (182,542) - 45,381 46,657 92,038 60,847 - 9,953 8,436 21,062 91,862 22,215 30,651 Depreciation expense of £83,645 (31 December 2020: £103,307) for the Company has been charged in administration expenses. 7. Intangible assets Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated. These are measured at cost and have an indefinite asset life. Once the pre-production phase has been entered into, the exploration and evaluation assets will cease to be capitalised and commence amortisation. Group 31 December 31 December Exploration & Evaluation Assets - Cost and Net Book Value Cost As at 1 January Additions Exchange differences As at year end Provision for impairment As at 1 January Impairments As at year end Net book value 38 2021 £ 35,641,812 2,887,110 (1,732,748) 36,796,174 8,873,585 - 8,873,585 27,922,589 2020 £ 32,012,092 2,471,136 1,158,584 35,641,812 8,873,585 - 8,873,585 26,768,227 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 The Dundas project in Greenland has a current JORC compliant mineral resource of 117 million tonnes at 6.1% ilmenite (in- situ) and has been confirmed as the highest-grade mineral sand ilmenite project globally. Exploration projects in Finland and the Disko project in Greenland are at an early stage of development and there are no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment: • The Group’s right to explore in an area has expired, or will expire in the near future without renewal; • No further exploration or evaluation is planned or budgeted for; • A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or • Sufficient data exists to indicate that the book value will not be fully recovered from future development and production. Following their assessment, the Directors concluded that no impairment charge was required at 31 December 2021. 8. Investments in subsidiary undertakings Shares in Group Undertakings At beginning of period At end of period Loans to Group undertakings Total Company 31 December 2021 31 December 2020 £ £ 558,342 558,342 558,342 558,342 33,950,980 32,609,750 34,509,322 33,168,092 Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. Subsidiaries Country of incorporation and place of business Proportion of ordinary shares held by parent (%) Proportion of ordinary shares held by the Group (%) Nature of business Name of subsidiary Registered office address Centurion Mining Limited Suite 1, 15 Ingestre Place, London, England, W1F 0DU Centurion Universal Limited Suite 1, 15 Ingestre Place, London, England, W1F 0DU Finland Investments Limited Suite 1, 15 Ingestre Place, London, England, W1F 0DU FinnAust Mining Finland Oy FinnAust Mining Northern Oy Kummunkatu 23, FI-83500 Outokumpu, Finland Kummunkatu 23, FI-83500 Outokumpu, Finland Finland United Kingdom United Kingdom United Kingdom Finland 100% 100% Dormant 100% 100% Holding 100% 100% Holding Nil Nil 100% Exploration 100% Exploration Disko Exploration Limited Suite 1, 15 Ingestre Place, London, England, W1F 0DU United Kingdom 100% 100% Exploration Dundas Titanium A/S c/o Nuna Advokater ApS, Qullilerfik 2, 6, Postboks 59, Nuuk 3900, Greenland All subsidiary undertakings are included in the consolidation. Greenland Nil 100% Exploration 39 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held. 9. Trade and other receivables Current Trade receivables Amounts owed by Group undertakings Prepayments VAT receivable Other receivables Total Group Company 31 December 2021 31 December 2020 31 December 2021 31 December 2020 £ £ 4,300 317,502 £ 4,306 £ 4,620 - 75,187 82,858 66,564 - 484,476 172,400 99,353 794,532 292,509 70,239 - 5,160 96,040 737,059 237,966 228,909 1,503,896 564,181 1,248,085 The fair value of all receivables is the same as their carrying values stated above. At 31 December 2021 all trade and other receivables were fully performing. No ageing analysis is considered necessary as the Group has no significant trade receivable receivables which would require such an analysis to be disclosed under the requirements of IFRS 7. The carrying amounts of the Group and Company’s trade and other receivables are denominated in the following currencies: UK Pounds Euros Danish Krone 2021 £ 94,946 106,173 27,790 2020 £ 1,039,017 71,770 393,109 Group Company 31 December 31 December 31 December 31 December 2020 £ 2021 £ 564,181 - - 1,248,085 - - The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. 228,909 1,503,896 564,181 1,248,085 10. Cash and cash equivalents Group Company 31 December 31 December 31 December 31 December 2021 £ 2020 £ 2021 £ 2020 £ Cash at bank and in hand 2,701,792 5,942,848 2,534,964 5,649,030 All of the UK entities cash at bank is held with institutions with an AA- credit rating. The Finland and Greenland entities cash at bank is held with institutions whose credit rating is unknown. 40 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 The carrying amounts of the Group and Company’s cash and cash equivalents are denominated in the following currencies: UK Pounds Euros Danish Krone 11. Trade and other payables Trade payables Accrued expenses Other creditors Group Company 31 December 31 December 31 December 31 December 2021 £ 2020 £ 2021 £ 2020 £ 2,571,644 5,668,404 2,534,964 5,649,030 85,168 44,980 240,283 34,161 - - - - 2,701,792 5,942,848 2,534,964 5,649,030 Group Company 31 December 31 December 31 December 31 December 2021 £ 409,282 131,048 90,503 2020 £ 377,026 350,576 452,092 2021 £ 250,928 60,676 53,571 2020 £ 78,448 83,764 13,716 630,833 1,179,694 365,175 175,928 Trade payables include amounts due of £225,538 in relation to exploration and evaluation activities. The carrying amounts of the Group and Company’s trade and other payables are denominated in the following currencies: UK Pounds Euros Danish Krone Group Company 31 December 31 December 31 December 31 December 2021 £ 351,688 173,781 105,364 2020 £ 231,456 529,326 418,912 2021 £ 365,175 - - 2020 £ 175,928 - - 630,833 1,179,694 365,175 175,928 12. Deferred tax An analysis of deferred tax liabilities is set out below. Group 2021 £ Company 2020 £ 2021 £ 2020 £ Deferred tax liabilities - Deferred tax liability after more than 12 months 496,045 496,045 Deferred tax liabilities 496,045 496,045 - - - - The Group has additional capital losses of approximately £8,704,033 (2020: £8,793,930) and other losses of approximately £7,234,636 (2020: £6,719,484) available to carry forward against future taxable profits. No deferred tax asset has been recognised in respect of these tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset. 41 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 13. Financial Instruments by Category Group 31 December 2021 31 December 2020 Assets per Statement of Financial Performance receivables Trade and other prepayments) Financial assets at fair value through profit or loss Cash and cash equivalents (excluding Amortised cost £ 153,722 - 2,701,792 2,855,514 FVTPL £ - - - - Total £ Amortised cost £ FVTPL £ 153,722 - 2,701,792 1,404,543 5,942,848 - - 100,000 - Total £ 1,404,543 100,000 5,942,848 2,855,514 7,347,391 100,000 7,447,391 Liabilities per Statement of Financial Performance Trade and other payables (excluding non- financial liabilities) Finance lease liability 31 December 2021 31 December 2020 Amortised cost Total Amortised cost Total £ £ £ £ 630,833 - 630,833 630,833 - 630,833 1,179,690 1,179,690 62,220 1,241,910 1,241,910 62,220 Company Assets per Financial Performance Statement of Trade and other receivables (excluding prepayments) Financial assets at fair value through profit or loss Cash and cash equivalents 31 December 2021 31 December 2020 Amortised cost £ 493,492 - 2,534,964 3,028,456 FVTPL Total Amortised cost FVTPL Total £ - £ £ 493,492 1,152,045 £ - - - - 2,534,964 - 3,028,456 - 5,649,030 6,801,075 100,000 - 100,000 £ 1,152,045 100,000 5,649,030 6,901,075 Liabilities per Statement of Financial Performance Trade and other payables non-financial (excluding liabilities) Finance lease liability 31 December 2021 31 December 2020 At amortised cost Total At amortised cost £ £ £ Total £ 365,175 365,175 175,928 175,928 - - 365,175 365,175 62,220 238,148 62,220 238,148 42 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 14. Share capital and premium Group and Company Number of shares Share capital Ordinary shares Deferred shares Deferred A shares Total 31 December 2021 31 December 2020 972,857,613 971,629,460 31 December 2021 97,285 31 December 2020 97,162 558,104,193 558,104,193 558,104 558,104 68,289,656,190 68,289,656,190 6,828,966 6,828,966 69,820,617,996 69,819,389,843 7,484,355 7,484,232 Issued at 0.01 pence per share Number of Ordinary shares Share capital Share premium £ £ Total £ As at 1 January 2020 969,969,397 96,996 55,463,656 55,560,652 Issue of new shares – 10 November 2020 As at 31 December 2020 As at 1 January 2021 Exercise of warrants – 23 December 2021 1,660,063 971,629,460 971,629,460 1,228,153 166 97,162 97,162 123 156,378 156,544 55,620,034 55,717,196 55,620,034 55,717,196 85,848 85,971 As at 31 December 2021 972,857,613 97,285 55,705,882 55,803,167 Deferred Shares (nominal value of 0.1 pence per share) As at 1 January 2020 As at 31 December 2020 As at 1 January 2021 As at 31 December 2021 Deferred A Shares (nominal value of 0.1 pence per share) As at 1 January 2020 As at 31 December 2020 As at 1 January 2021 As at 31 December 2021 Number of Deferred shares 558,104,193 558,104,193 558,104,193 558,104,193 Number of Deferred A shares 68,289,656,190 68,289,656,190 68,289,656,190 68,289,656,190 Share capital £ 558,104 558,104 558,104 558,104 Share capital £ 6,828,966 6,828,966 6,828,966 6,828,966 On 23 December 2021, the Company issued and allotted 1,228,153 new Ordinary Shares at a price of 7 pence per share as an exercise of warrants. 43 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 15. Share based payments The Company has established a share option scheme for Directors, employees and consultants to the Group. Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices: Grant Date Expiry Date Exercise price in £ per share 17 December 2016 17 December 2021 9 June 2017 23 July 2019 23 July 2019 23 July 2019 10 July 2020 10 July 2020 9 June 2022 23 July 2023 23 July 2023 23 July 2023 30 July 2025 30 July 2025 15 February 2021 15 February 2021 15 February 2021 15 February 2025 15 February 2025 15 February 2025 0.07 0.165 0.10 0.15 0.20 0.10 0.15 0.15 0.20 0.25 Options & Warrants 31 December 2021 31 December 2020 - 1,025,000 5,200,000 5,200,000 5,600,000 5,150,000 2,100,000 11,000,000 11,000,000 11,000,000 1,228,153 1,025,000 5,200,000 5,200,000 5,600,000 5,150,000 2,100,000 - - - 57,275,000 25,503,153 The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash. The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters used are detailed below: 2017 Options 2019 Options 2019 Options 2019 Options Granted on: Life (years) Share price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) Granted on: Life (years) Share price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) Granted on: Life (years) Share price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) 9/6/2017 5 years 15.5p 0.56% 31.83% - 20% 34 23/7/2019 4 years 7.45p 0.5% 21.64% - 20% 31 23/7/2019 4 years 7.45p 0.5% 21.64% - 20% 5 23/7/2019 4 years 7.45p 0.5% 21.64% - 20% 1 2020 Options 2020 Options 2021 Options 2021 Options 10/7/2020 5 years 6.16p 0.5% 30.24% - 20% 5 15/2/2021 4 years 9.20p 0.5% 61.47% - 20% 270 15/2/2021 4 years 9.20p 0.5% 61.47% - 20% 213 10/7/2020 5 years 6.16p 0.5% 30.24% - 20% 31 2021 Options 15/2/2021 4 years 9.20p 0.5% 30.24% - 20% 173 44 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 The expected volatility of the options is based on historical volatility for the six months prior to the date of granting. The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life. A reconciliation of options and warrants granted over the year to 31 December 2021 is shown below: Outstanding at beginning of period Expired Exercised Granted Outstanding as at period end Exercisable at period end 2021 2020 Weighted average exercise price (£) 0.1556 - 0.0700 0.2000 0.1830 0.1830 Number 25,503,153 - (1,228,153) 33,000,000 57,275,000 57,275,000 Weighted average exercise price (£) 0.1898 - - 0.125 0.1556 0.1556 Number 34,303,153 (16,050,000) - 7,250,000 25,503,153 25,503,153 2021 2020 of Range exercise prices (£) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years) 0 – 0.05 - - 0.05 – 2.00 0.1830 57,275,000 - 3.18 - 3.18 - - 0.1574 25,503,153 - 3.68 - 3.68 During the period there was a charge of £655,870 (2020: £35,872) in respect of share options. 16. Other reserves Group Foreign currency translation reserve Reverse acquisition reserve Redemption reserve £ £ £ Merger reserve £ Share option reserve £ Total £ At 31 December 2020 166,000 1,205,544 (8,071,001) 364,630 114,108 (6,220,719) Currency translation differences Expired Options Issued Options - - - (1,640,140) - - - - - - - - - (8,285) (1,640,140) (8,285) 655,870 655,870 At 31 December 2021 166,000 (434,596) (8,071,001) 364,630 761,693 (7,213,274) 45 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 17. Employee benefit expense Group Company Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Staff costs (excluding Directors) £ £ £ £ Salaries and wages Social security costs Retirement benefit costs Other employment costs 369,708 99,068 2,049 27,425 498,250 597,146 69,984 6,621 523 674,274 360,134 64,356 2,049 2,093 428,632 317,044 40,011 6,098 523 363,676 The average monthly number of employees for the Group during the year was 11 (year ended 31 December 2020: 13) and the average monthly number of employees for the Company was 7 (year ended 31 December 2020: 9). Of the above Group staff costs, £245,743 (year ended 31 December 2020: £455,385) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the year. 18. Directors' remuneration Executive Directors Roderick McIllree Bo Stensgaard Non-executive Directors Ian Henderson 1 Johannus Hansen 2 Peter Waugh Michael Hutchinson (1) Resigned on 5 January 2021 (2) Appointed on 15 March 2021 Year ended 31 December 2021 Short-term benefits Post- employment benefits Share based payments £ £ £ Total £ 196,534 221,800 18,500 - - 238,498 215,034 460,298 12,879 23,309 24,000 38,750 - - 533 - - - - - 12,879 23,309 24,533 38,750 517,272 19,033 238,498 774,803 Of the above Group directors’ remuneration, £338,296 (31 December 2020: £123,683) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the year. The above figures do not include employer portion of NIC. These have been included in note 17. 46 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Executive Directors Roderick McIllree Bo Stensgaard Non-executive Directors Ian Henderson Peter Waugh Michael Hutchinson Year ended 31 December 2020 Short-term benefits Post- employment benefits £ £ 53,391 106,250 38,750 18,600 90,375 2,421 - - 867 - 307,366 3,288 Share based payments £ - - - - - - Total £ 55,812 106,250 38,750 19,467 90,375 310,654 Details of fees paid to Companies and Partnerships of which the Directors detailed above are Directors and Partners have been disclosed in Note 25. The remuneration of Directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. 19. Finance income Group Year ended Year ended 31 December 31 December 2021 £ (4,251) (4,251) 2020 £ 1,968 1,968 Group Year ended Year ended 31 December 31 December 2021 £ 46,072 46,072 2020 £ 49,360 49,360 Interest income/(expense) from cash and cash equivalents Finance Income/(expense) 20. Other gain/(losses) Other gains Other gain/(losses) 21. Income tax expense No charge to taxation arises due to the losses incurred. The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows: 47 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Loss before tax Tax at the applicable rate of 20.68% (2020: 21.62%) Effects of: Expenditure not deductible for tax purposes Depreciation in excess of/(less than) capital allowances Net tax effect of losses carried forward Tax (charge)/refund Group Year ended 31 December 2021 Year ended 31 December 2020 £ £ (2,491,062) (2,487,562) (515,152) (537,811) 99,228 89,897 326,027 - 153,133 79,656 75,059 229,963 The weighted average applicable tax rate of 20.68% (2020: 21.62%) used is a combination of the 19% standard rate of corporation tax in the UK, 20% Finnish corporation tax and 30% Greenlandic corporation tax. The Group has a potential deferred income tax asset of approximately £1,285,093 (2020: £959,066) due to tax losses available to carry forward against future taxable profits. The Company has tax losses of approximately £7,234,636 (2020: £6,719,484) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset. 22. Earnings per share Group The calculation of the total basic earnings per share of (0.28) pence (31 December 2020: (0.23) pence) is based on the loss attributable to equity holders of the parent company of £2,706,833 (31 December 2020: £2,257,600) and on the weighted average number of ordinary shares of 971,659,743 (31 December 2020: 970,205,253) in issue during the year. In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 15. 23. Expenses by nature Cost of Sales Exploitation licence fees Total cost of sales Administrative expenses Employee expenses Establishment expenses Travel & subsistence Professional & consultancy fees IT & Software Insurance Depreciation Share Option expense Payments to acquire royalties Other expenses Total administrative expenses 48 Group Year ended 31 December 2021 £ Year ended 31 December 2020 £ 199,844 199,844 438,982 89,137 38,082 692,470 19,612 75,548 460,713 655,870 - 191,632 - - 367,891 72,010 111,954 970,021 20,366 73,192 606,585 35,872 200,000 52,929 2,662,046 2,510,820 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Services provided by the Company’s auditor and its associates During the year, the Group (including overseas subsidiaries) obtained the following services from the Company’s auditors and its associates: Fees payable to the Company’s auditor and its associates for the audit of the Parent Company and Consolidated Financial Statements Fees payable to the Company’s auditor for other services Group Year ended 31 December Year ended 31 December 2021 £ 58,004 11,385 2020 £ 69,375 47,540 24. Commitments License commitments Bluejay now owns 11 mineral exploration licenses and one exploitation licence in Greenland. Licence 2015/08, 2020/114 and 2021/08 is a part of the Dundas project and licences 2011/31, 2012/29, 2017/01, 2018/16, 2019/116, 2020/03, 2020/06, 2020/10 and 2020/22 are part of the Disko projects in Greenland. These licences include commitments to pay annual licence fees and minimum spend requirements. As at 31 December 2021 these are as follows: Group Not later than one year Later than one year and no later than five years Total 25. Related party transactions Loans to Group undertakings Group Minimum spend requirement £ Total £ 1,900,420 2,028,733 24,546,462 24,845,723 License fees £ 128,313 299,261 427,574 26,446,882 26,874,456 Amounts receivable as a result of loans granted to subsidiary undertakings are as follows: Finland Investments Ltd FinnAust Mining Finland Oy Centurion Mining Limited Dundas Titanium A/S Disko Exploration Limited At 31 December (Note 8) Company 31 December 2021 £ 31 December 2020 £ - 7,311,625 345 23,462,907 3,176,103 - 7,474,317 345 22,719,222 2,415,191 33,950,980 32,609,075 Loans granted to subsidiaries have increased during the year due to additional loans being granted to the subsidiaries, and foreign exchange gain of £2,190,977, given that no loans were repaid during the year. These amounts are unsecured and repayable in Euros and Danish Krone on demand from the Company. All intra Group transactions are eliminated on consolidation. 49 BLUEJAY MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Other transactions The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors’ Report. PMW Consultancy Services, operated by Peter Waugh as a sole trader, was paid a fee of £50,000 for the year ended 31 December 2021 (31 December 2020: £40,000) for consulting services to the Company. There was a balance of £nil owing at year end (31 December 2020: £nil). 26. Ultimate controlling party The Directors believe there is no ultimate controlling party. 27. Events after the reporting date On 27 January 2022, the Company appointed Eric Sondergaard as a Non-Executive Director to the board. On 24 March 2022, the Company raised £5,400,000 via the issue and allotment of 76,857,134 new Ordinary Shares at a price of 7 pence per share. As part of this placing, there was director dealings of £120,000. 50 

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