Mineral & Financial Investments
Annual Report 2020

Plain-text annual report

M&FI Mineral & Financial Investments Limited Annual Report and Financial Statements for the year ended 30 June 2020 HIGHLIGHTS       Year-end Net Asset Value £5,474,000, up 7.0%, from £5,114,000 in past 12 months Net Asset Value Per Share fully diluted (FD) 15.5p, up 6.9%, from 14.5p, in past 12 months NAVPS FD has increased at compound annual growth rate (CAGR) of 21.1% since 31 December 2015 Net Asset Value has increased at CAGR of 57.4% since 31 December 2015 Investment Portfolio now totals £5,315,000 up 7.3%, from £4,952,000 in past 12 months. Our performance has consistently exceeded that of the FTSE 350 Mining index and of the CRB Commodity Index since 2015. NET ASSET VALUE 31 Dec. 2016 31 Dec. 2017 30 June 2018 30 June 2019 30 June 2020 CAGR (%) Net Asset Value (‘000) £1,495 £2,603 £2,623 £5,114 £5,474 50.4% Fully diluted NAV per share 6.25p 7.43p 7.49p 14.50p 15.50p 29.9% Share price v NAV per share M&FI VALUATION 16.0p 14.0p 12.0p 10.0p 8.0p 6.0p 4.0p 2.0p 0.0p 30 June 2013 June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 NAVPS (FD) MAFL Share Price (pence) Mineral & Financial Investments Limited (“M&FI”) is an investing company with the objectives of a mining finance house, which includes providing investment in and capital to finance mining companies and/or projects to provide our shareholders with superior returns. We will seek to provide financing and act as a good partner in exchange for meaningful ownership levels, and board representation if needed and appropriate. We will provide advisory services when possible and will be willing to make follow-on investments in the investee companies if, and when, appropriate. The full details of our investing policy are set out in the Directors’ Report on page 10. 1 Mineral & Financial Investments Limited CONTENTS REPORTS Company Information Chairman’s Statement Chief Operating Officer’s Report and Investment Review Strategic Report Directors' Report Corporate Governance Report Report on Remuneration Independent Auditor’s Report FINANCIAL STATEMENTS Consolidated Income Statement and Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements page 2 3 5 8 10 12 17 19 23 24 25 26 27 2 Mineral & Financial Investments Limited COMPANY INFORMATION DIRECTORS: REGISTERED OFFICE: COMPANY NUMBER: SECRETARY: NOMINATED ADVISER: JOINT BROKERS: REGISTRARS: SOLICITORS: AUDITORS: Jacques Vaillancourt (Chairman) James Lesser Sean Keenan 190 Elgin Avenue George Town Grand Cayman KY1-9005 Cayman Islands Incorporated in the Cayman Islands with registered number 141920 Walkers SPV Limited W H Ireland 24 Martin Lane London EC4R 0DR UK W H Ireland 24 Martin Lane London EC4R 0DR UK Novum Securities Ltd. 10 Grosvenor Gardens London SW1W 0DH UK Link Market Services (Jersey) Limited PO Box 532 St Helier Jersey JE4 5UW Charles Russell Speechlys 5 Fleet Place London EC4M 7RD Shipleys LLP Registered Auditor Chartered Accountants 10 Orange Street London WC2H 7DQ COMPANY’S WEBSITE: www.mineralandfinancial.com 3 Mineral & Financial Investments Limited CHAIRMAN’S STATEMENT for the year ended 30 June 2020 Dear fellow shareholders, Mineral & Financial Investments Limited M&FI is an investing company with the investment approach and objectives of a mining finance house, which includes providing investment in and capital to finance mining companies and/or projects while providing our shareholders with superior returns. We will seek to provide financing and act as a good partner in exchange for meaningful ownership levels, and board representation if needed and appropriate, all of which with the intention of outperforming mining indices. We will provide advisory services when possible and will be willing to make follow-on investments in the investee companies if, and when, appropriate. The full details of our investing policy are set out in the Directors’ Report on page 10. During the twelve-month fiscal period ending 30 June 2020 your company generated net trading income of £726,000 which translated into a net profit of £353,000 or 1.0p (FD) per share for the period. At the period end of 30 June 2020, our Net Asset Value (NAV) was £5,474,000 an increase of 7.0% from the June 30, 2020 NAV of £5,114,000. The Net Asset Value per Share – fully diluted (NAVPS-FD) as at 30 June 2020 was 15.5p, a 6.9% increase from the 14.5p NAVPS FD. We continue to be effectively debt free, with working capital of £5.5million. M&FI Net Asset Value Audited - (basic) £6,000,000 £4,000,000 £2,000,000 £0 30 June 2013 June 30, 2014 June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 The world is a very different place since our last Annual Report to shareholders. Global economic performance was devastated in 2020 by the outbreak of Coronavirus. Its origins appear to be from within Hunan province, China, but its spread has been global and its impact near total. The IMF’s forecast for world output in 2020 declined by 7.80%, from +3.40% to -4.40%. Put another way, if these forecasts are correct, it will take all of 2020 and 2021 for the global economy to end up where it was as at the end of 2019. The world will have lost 2 years of growth. These very dark clouds do, as the adage goes, have a (faint) silver lining – Expected inflationary pressures will be lower over the course of the next few years. It is noteworthy that the IMF estimates that China will have positive economic growth in 2020 (and 2021). The larger question is what structural changes to behaviour and consumption will ensue from these extended lockdowns, and what economic impact will this cause? Our sense is that there will be more economic dislocation than is currently anticipated. A return to what was once deemed to be normal is unlikely before sometime in 2021 IMF – World Economic Outlook1 October 2020 2016 2017 2018 2019 2020 2 Old (E) World Output Advanced Economies Emerging Markets and Developing Economies Consumer Prices Advanced Economies 3.20% 3.70% 3.60% 2.80% 3.40% 1.70% 4.40% 2.40% 4.70% 2.30% 4.50% 1.70% 3.70% 1.70% 4.60% Emerging Markets and Developing Economies 4.30% 4.00% 4.80% 5.10% 0.80% 1.70% 2.00% 1.40% 2.00% 4.80% 0.80% 5.00% Despite an obvious need for liquidity and stimulus to confront the economic hardship caused by the Pandemic, rates in the US for 10-year US treasuries are up 11.1% year on year (June 30, 2020: 0.70% vs June 30, 2019: 0.63%). The acknowledged economic necessity and central bank objectives are not resulting in a decline in interest rates as would be expected. For several years cynical observers have assumed that Central Banks were keeping yields low to reduce governmental borrowing costs as opposed to the traditional objective of creating a stable economic and low inflationary outlook. Are we at the 1 International Monetary Fund, “World Economic Outlook: A long and Difficult Ascent”, 7 October 2020 2 International Monetary Fund, “World Economic Outlook: Global Manufacturing Downturn, Rising Trade Barriers”, October 15, 2019 2020 New (E) -4.40% -5.80% -3.30% 2021 (F) 5.20% 3.90% 6.00% 1.60% 4.70% 4 Mineral & Financial Investments Limited CHAIRMAN’S STATEMENT for the year ended 30 June 2020 crossroads where Central Banks are no longer able to bend the markets to their will? Have Central Banks’ tools become increasingly ineffective? Will markets, rather than Central Banks, dictate the interest rates at which governments can borrow? Global Stock Index performance July 1, 2019 to June 30, 2020 Shanghai Shenzhen CSI 300 Index Standard & Poor 500 Index Euro Stoxx 50 Index Hang Seng FTSE 100 Nikkei 225 01/07/2019 30/06/2020 % change 3825.6 2941.7 3473.7 28542.6 7425.6 21275.9 4163.9 3106.7 3234.1 24301.6 6169.7 22288.1 8.8% 5.6% -6.9% -14.9% -16.9% 4.8% Global equity markets, during our fiscal year ending June 30, 2020 were mixed. Of the six equity markets we use as yardsticks, the worst performing was the FTSE 100, declining 16.9%, due in part to the pandemic coupled with the uncertainty of what trade relationships with the EU will emerge from the on and off negotiations. The best performing equity market we track was the Shanghai CSI 300 Index, which rose 8.8%. There appears to be an alignment of equity market performance, economic performance and economic risk – but not of the financial damage being wreaked on government budgets due to lower takings and increased subsidies. We expect an environment of very modestly rising interest rates, due to capital markets demanding higher rates to compensate for the economic risks associated with exploding governmental debt and rapidly increasing money supply, pointing towards inflationary pressures devaluing currency values. We expect equity markets to be highly challenged in 2021 when confronted with slow economic recovery, inflationary pressures, interest rates which are flat to rising very slightly and the prospect of increased taxation to fund the economic safety nets extended by virtually all of the governments of the G7. Commodities generally struggled during the period framed by our fiscal year. As measured by the Reuters CRB Total Commodity Index, commodities overall declined 22.9% during the period. As is usual, within a broad index such as the CRB Index, variances between commodity performances were wide. Energy prices were down - WTI was down (-26.4%), while precious metals performed very strongly, Gold (+28.4%), Silver (+19.6%), Palladium (+45.8%) and Rhodium (+108.6%). Base metals mixed with Copper (+7.0%) and Aluminium (+23.8%) up, while Nickel (-4.6%), Zinc (-9.7%) and Lead (-13.6%) declined during our fiscal year. We believe commodity prices will be buoyed in 2021 by a growing shift from financial assets to hard assets and a weakening US dollar. During the year our emphasis has been to continue diversification while increasing exposure to precious metals. The Strategic Portfolio has sought advanced stage exploration or early stage development precious metal investment opportunities. During the period we increased our investments in Cerrado Gold and Golden Sun Resources. Cerrado will be completing a listing in November 2020 on the Toronto Stock Exchange. We have decided to write down our CAP Energy investment by 60% as a matter of prudence in light of the decline in oil prices. CAP has succeeded in making important changes that have resulted in its increased ownership of all three of its offshore oil fields by buying out its partners during the period of weak oil prices. M&FI continues to be seeking suitable strategic investment opportunities that we believe will generate above average returns while adhering to our standards of prudence. We thank you for your support and we will continue to work diligently, thoroughly and with prudence to advance your company’s assets and market position. Jacques Vaillancourt, CFA Executive Chairman 27 November 2020 5 Mineral & Financial Investments Limited OPERATING REPORT AND INVESTMENT REVIEW for the year ended 30 June 2020 OPERATIONS We believe the key to creating shareholder value is sound investment performance and low operating costs. More specifically operating costs which grow at a slower rate than the accretion in the Net Asset Value. M&FI’s full year realised/Unrealised gains in fiscal 2020 totalled £726,000. Our full year Administrative costs totalled £338,000, a 20.4% increase over the previous period. The increased costs are largely associated with the integration and 100% ownership of TH Crestgate and the associated operating costs of a Swiss corporate entity. We are very attentive to our operating costs and remain focused on keeping them as low as possible while toiling to increase our net asset value. INVESTMENT PORTFOLIO The fiscal period remained challenging for the natural resource sector. The Goldman Sachs (spot) Commodity Index declined by 14.4%, while the FTSE 350 Mining Index declined 23.5% during the 12-month period ending June 30, 2020. Our Investment portfolios outperformed the FTSE 350 Mining Index by 30.8%, rising 7.3% year on year to £5,315,000, largely due to the increased weighting in precious metals. We increased our overall weighting to precious metals during the period to 49% of our Investment Assets. The result of our efforts during the year was to increase the Net Asset Value per share (NAVPS) as of June 30, 2020 by 6.6% to 15.46p from 14.50p a year prior. Portfolio Breakdown Portfolio Allocations Commodity Allocations Cash & Equiv. 5% Energy 6% Tactical 18% Financial Secs 1% Cash & Equiv. 5% Strategic 77% Base Metals 39% Precious Metals 49% ETF Portfolio Gold ETF: During the 12-month fiscal period the Company's gold ETF position (Zuercher Kantonal Bank Gold ETF and UBS Gold (CH) ETF) rose in value by 29.4%. We believe the position has been an excellent hedge against the weakening of the US dollar, our reporting currency is GBP. According to the World Gold Council in 2019, global total gold demand was flat year on year. The World Gold Council during the same period noted that demand for ETF’s and similar products increased by 328.6 tonnes year on year. Additionally, the Gold Council noted that Central Banks and other Financial Institutions gold purchases were up 2%, year on year to 667.7 tonnes. The annual supply of gold from mines, according the World Gold Council, was down 1% in 2019 to 3,530.9 tonnes. The key appeal of our gold position is as a liquid proxy for gold investments and as hedge against weakening currencies resulting from the widespread monetary stimulus from Central Banks. A physical gold position is a core holding in our portfolio, its weighting will vary according to our market perspective. Silver ETF: During the 12-month fiscal period the Company's silver ETF (Zuercher Kantonal Bank Silver ETF) exposure rose in value by 22.4%. The appreciation in Silver has lagged behind that of gold. According to data from the Silver Institute, mine supply of silver is down 1.3% during the past year and overall supplies (including recycling) are up 0.4% year on year. Silver’s uses have been undergoing a massive evolution. Since 2011, Photography has seen Compound Annual Growth Rate (CAGR) of negative 7.3%, while photovoltaic demand has experienced a 6 Mineral & Financial Investments Limited OPERATING REPORT AND INVESTMENT REVIEW for the year ended 30 June 2020 positive CAGR of 4.7% and investment demand for Silver has increased by 100 million ounces. We view silver as a levered complement to our gold investment. Indexed Performance M&FI NAVPS vs. FTSE 350 Mining Index & GSCI 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 Dec 31, 2016 March 31, June 30, 2017 Sept 30, 2017 Dec 31, 2017 March 31, June 30, 2018 Sept 30, 2018 Dec 31, 2018 March 31, June 30, 2019 Sept 30, 2019 Dec 31, 2019 March 31, June 30, 2020 2017 2018 2019 2020 MAFL NAVPS Index (Dec 31, 2015) FTS 350 Mining Index (Dec 31/2015) Goldman Sachs Commodity Index (Dec 31 2015) Copper ETF: Lately copper has been the “tomorrow” metal. Copper is viewed as being critical to the portable power and electrification. We have not re-purchased a copper position. The economic slowdown has kept all base metals at the bottom of the performance tables for the first six months of 2020. We believe in the future prospects of copper demand; however, the issue has long been the constant trickle of new copper mines entering the market. Equity portfolio Amongst the equity portfolio the following investments are noteworthy. Redcorp Empreedimentos Mineiros Lda.: Your company owns 100% of TH Crestgate (“THC”). which owns 75% of Redcorp Empreedimentos Mineiros Lda. Redcorp is a Portuguese company whose main asset is the Lagoa Salgada Project. In June 2018, THC entered into a sale and earn-in agreement with the Canadian listed company, Ascendant Resources. The sale of 25% of Redcorp to Ascendant was completed for cash and shares valued at US$2,600,000. Thereafter, Ascendant can earn into 80% ownership by completing US$9,000,000 of exploration work on the project. Additionally, Ascendant must make payments totalling US$6,000,000 to THC, of which US$1,500,000 has been received. The project has been advanced from approximately 9.67Mt with Zinc Equivalent grade of 6.7% when Ascendant took leadership of the project to approximately 23Mt with Zinc Equivalent grade of 8.24% on the measured and indicated component of the resource. A Preliminary Economic Assessment (PEA) was completed during the period on the North Zone of the Lagoa Salgada Project which indicated a pre-tax NPV of US$137M and IRR of 37% at an 8% discount rate, using US$1.20/lb Zinc price and 80% recoveries. CAP Energy: CAP has used the weak markets for oil and gas to great effect. CAP successfully bought out its operating partner in all three of its West African offshore properties. CAP now owns 90% (up from 44.1%) of the offshore Senegal Djiféré block. Additionally, CAP successfully acquired a 52% interest in Block 1 offshore Guinea- Bissau raising their interest to 76%. CAP also acquired 58.5% of the important and valuable Block 5-B license offshore Guinea Bissau, raising its interest to 85.5% of the license. These transactions were non-cash, for which payments will be owed if and when the blocks are sold. In 2019 CAP completed a small private placement at 200p per share. Despite the improved net ownership of the potential resources in these fields, we felt that the decline 7 Mineral & Financial Investments Limited OPERATING REPORT AND INVESTMENT REVIEW for the year ended 30 June 2020 in the price of oil, the decline of publicly listed comparable companies and the absence of any objective valuation from a financing that the most prudent path was to reduce our carrying value by 60% to 80p. The expansion in global oil supply between 2010 and 2020 was in large part from US oil fields which employed enhanced oil recovery techniques. These wells have higher operating costs that result in poor to negative returns at current prices. We believe that demand for hydrocarbons has peaked. Additionally, we believe that supply levels in time will slowly decline, partly due to reduced exploration activity, field depletion and high cost production is gradually being shut- in. Therefore, we are mildly optimistic for oil prices to creep up to the US$50/bbl level over the next year. CAP’s projects are potentially enormous projects which should attract potential partners to advance them. Until then we will maintain a prudent approach on the valuation of this investment. Ascendant Resources: The Group has acquired a shareholding in Ascendant Resources (ASND), a Toronto Stock Exchange listed zinc explorer, through an earn-in partnership agreement. Zinc prices declined 50% from February of 2018 levels, when zinc reached US$1.65/lb and to a 2020 nadir of US$0.82/lb. The decline was partly caused by the economic impact of Coronavirus. Ascendant’s El Mochito mine in Honduras was an unhedged lead and zinc producer with a declining break-even cost of around US$1.08/lb which they sold, allowing them to focus on the Lagoa Salgada project which is subject to an earn-in agreement with M&FI. To date, ASND have met all of their operational and financial commitments which are part of the earn-in agreement. Barrick Gold: Our largest listed gold investment is Barrick Gold (ABX), it has appreciated by 109.5% since our purchase of the position. Barrick is the second largest gold producer in the world, after Newmont. ABX produces 5.5M oz, has proven and probable reserves of 71M oz of Gold. ABX stated objective is to be the most valuable gold company in the world. We believe that under the leadership of the CEO Mark Bristow it has a very good chance of succeeding in this mission. The ABX position was established shortly after ABX announced the acquisition by way of a share exchange of Randgold. The opportunity lay in the fact that Barrick needed some costs controls and was not going to list the shares of the combined company on the LSE, Randgold was a FTSE 100 company. Cerrado Gold: We initiated an investment in common shares of Cerrado Gold in 2019 and made a follow-on investment in 2020. During the period it acquired 100% of the Minera Don Nicolas (MDN) mine located on a 272,598-hectare (ha) concession on the prolific gold producing area known as Deseado Massif Argentina’s in Santa Cruz state. MDN is targeted to produce 50,000 oz of gold with a current resource of 968,501 oz of gold. MDN’s epithermal deposit is located between AngloGold’s 8.6M oz Cerro Vanguardia mine and Yamana’s 1.3M oz Cerro Morro project. Cerrado’s lead exploration project is Monte do Carmo, located in Toncantin State in Brazil. Gold was originally discovered in the Monte do Carmo (MDC) area during the 17th century by the Portuguese. The Serra Alta deposit is the main focus of the exploration of the project. The 52,213ha MDC project has a maiden resource of 813,000 oz@ 1.8g/t. The initial PEA on the Maiden Resource indicates a Net Present Value (NPV) of US$432M, using a 5% discount rate and an assumed gold price of US$1,550/oz. In June 2020 Cerrado announced a financing at US$0.80. Additionally, it has initiated a reverse takeover of a publicly listed entity on the TSX called BB1 Acquisitions Corp., which is expected to be completed in November 2020, with the key result being that Cerrado will become a publicly listed gold company. Golden Sun Resources: We invested in Golden Sun by acquiring a secured convertible loan note of Golden Sun. The notes mature on 3 April 2024. Interest shall be charged at the rate of 20% per annum, calculated monthly in arrears, and accrue on the outstanding Loan Amount and shall become payable upon maturity. We made a follow- on investment in identically featured convertible notes during the past fiscal year. Golden Sun has brought the Bella Vista project, located in Costa Rica, back into production. It is now cash flow positive and steadily making operational progress, from 2 leach pads, it now has 3 pads in production. It is now diligently working towards installing Carbon in Leach (CIL) capacity which will increase recoveries to the ~90% range. The progress is gauged to Golden Sun’s self-financing abilities to ensure minimal dilution. Our investment rationale is that if, and when the mine achieves production near 40,000 to 50,000oz of gold per year it will be a very attractive acquisition for a gold company seeking production from a stable jurisdiction in Central or South America. 8 Mineral & Financial Investments Limited STRATEGIC REPORT for the year ended 30 June 2020 The Directors present their Strategic Report for the Company (Mineral & Financial Investments Ltd) and its subsidiary, TH Crestgate GmbH, together the “Group”, for the year ended 30 June 2020. RESULTS The Group made a profit after taxation for the year ended 30 June 2020 of £353,000 (2019: £2,491,000). The Directors do not propose a dividend (2019: £nil). BUSINESS REVIEW AND FUTURE DEVELOPMENTS A review of the business in the period and of future developments is set out in the Operating Report and Investment Review, which should be read as part of the Strategic Report. KEY PERFORMANCE INDICATORS The key performance indicators are set out below: COMPANY STATISTICS 30 June 2020 30 June 2019 Change % Net asset value £5,474,000 £5,114,000 Net asset value – fully diluted per share Closing share price Share price (discount)/premium to net asset value – fully diluted 15.5p 6.8p (56%) 14.5p 8.3p (43%) Market capitalisation £2,380,000 £2,908,000 +7% +7% -18%  -18% PRINCIPAL RISKS AND UNCERTAINTIES The key risk facing shareholders is that the value of the investments falls and that future returns to shareholders are therefore lower than they could have been. The current Covid-19 situation will continue to be monitored and is expected to evolve over time. The rapid development and fluidity of the situation makes it difficult to predict its ultimate impact at this stage. However, due to the nature of the Group's activities, the impact on the Group has been minimal and most of its investee companies are looking to expand their activities. Management will, however, continue to assess the impact of Covid-19 on the Group. Details of the financial risk management objectives and policies are provided in Note 17 to the financial statements. PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE While M&FI is incorporated in the Cayman Islands and therefore does not have to comply with the UK Companies Act, the Company considers the disclosures within the Annual Report to be consistent with the requirement for UK incorporated companies to include a Section 172 Statement which requires 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 Foster the Company’s relationships with suppliers, customers and others and Consider the impact of the Company’s operations on the community and the environment. The Directors believe that during the year they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole and have adhered to the requirements set out above that are applicable to the Company given its scope of operations. For example, the Company does not have any employees other than the directors, so considering employee interests is not relevant. However, the Company has been focused on implementing the investment strategy previously approved by shareholders which has resulted in a significant improvement in financial performance over the last 5 years. 9 Mineral & Financial Investments Limited STRATEGIC REPORT for the year ended 30 June 2020 GOING CONCERN The Group has prepared cash forecasts to December 2021 which assume no significant investment activity is undertaken unless sufficient funding is in place to undertake the investment activity and the forecasts demonstrate that the Group is able to meet its obligations as they fall due. The Directors have also considered the impact of Covid- 19 and have concluded that, given the cash reserves in place and the level of the Group’s ongoing costs, there are no material factors which are likely to affect the ability of the Group to continue as a going concern. Accordingly, the Directors believe that as at the date of this report it is appropriate to continue to adopt the going concern basis in preparing the financial statements. For and on behalf of the Board Jacques Vaillancourt, CFA Director 27 November 2020 10 Mineral & Financial Investments Limited DIRECTORS’ REPORT for the year ended 30 June 2020 The Directors present their annual report together with the audited financial statements for the year ended 30 June 2020. PRINCIPAL ACTIVITY AND INVESTING POLICY During the year the Company continued to act as an investment company. The following Investing Policy was adopted at a General Meeting held 28 November 2013: “The Company’s Investing Policy is to invest in the natural resources sector through investments in companies or other assets, which it considers to represent good value and offer scope for significant returns to Shareholders over the long term. In particular, the Company will focus on providing new capital for mining companies that require finance for their projects. Investments will be made in the securities of quoted and unquoted companies and their assets, units in open-ended investment companies, exchange traded funds, physical commodities, derivatives, and other hybrid securities. As the Company’s assets grow the intention is to diversify company, geographic, and commodity risks. The Company will have a blend of passive and active investments and, if and when appropriate, it may seek to gain control of an investee company. Returns to shareholders are expected to be by way of growth in the value of the Company’s Ordinary Shares. The Company may also from time to time make market purchases to buy in the Company’s Ordinary Shares if the Directors consider this to be in the interests of shareholders as a whole. The Company will publish a quarterly update on its Net Asset Value (“NAV”). Mineral & Financial Investments Ltd.’s investment policy is focused on the metals and mining industry. The Company’s strategy is to invest, finance, and advise metals and mining companies through “Strategic” investments. The Company’s capital, when not deployed in strategic investments, will be captured and deployed in its “Tactical” portfolio. CHARITABLE AND POLITICAL DONATIONS No charitable or political donations were made during the year (2019: £Nil) POST YEAR END EVENTS There have been no material post year-end events. DIRECTORS The Directors of the Company during the year and subsequently are set out below. Jacques Vaillancourt James Lesser Sean Keenan There is a qualifying third-party indemnity provision in force for the benefit of the Directors and Officers of the Company. 11 Mineral & Financial Investments Limited DIRECTORS’ REPORT for the year ended 30 June 2020 SUBSTANTIAL SHAREHOLDINGS The only interests in excess of 3% of the issued share capital of the Company which have been notified to the Company as at 15 November 2020 were as follows: Mount Everest Finance SA* Lynchwood Nominees Limited P Howells T Darvall I & G Fuhrmann Charles Cozens Ordinary shares of 1p each number 6,664,000 3,472,000 1,661,548 1,410,920 1,315,000 1,092,252 Percentage of capital % 19.0% 9.9% 4.7% 4.0% 3.7% 3.1% *Jacques Vaillancourt is the sole shareholder of Mount Everest Finance SA DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS The Company was incorporated as a corporation in the Cayman Islands, which does not prescribe the adoption of any particular accounting framework, however the Directors are required under the AIM rules of the London Stock Exchange to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") The Directors are responsible for the preparation of the Group’s financial statements, which give a true and fair view of the state of affairs of the Group and of the profit, or loss of the Group for the period. In preparing the financial statements, the directors are required to:     select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; state whether IFRSs as adopted by the European Union 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 Company will continue in business. The Directors are responsible for keeping adequate accounting records, for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the Directors are aware at the time this report was approved:   there is no relevant audit information of which the Group'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 auditors are aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information held on the Company's website. AUDITORS The auditors Shipleys LLP have indicated their willingness to continue in office and a resolution that they be reappointed will be proposed at the Annual General Meeting. For and on behalf of the Board Jacques Vaillancourt, CFA Director 27 November 2020 12 Mineral & Financial Investments Limited CORPORATE GOVERNANCE REPORT for the year ended 30 June 2020 The requirements of the combined code of corporate governance are not mandatory for companies traded on AIM. However, the Directors recognise the importance of sound corporate governance and have adopted corporate governance principles that the Directors consider are appropriate for a company of its size. BOARD OF DIRECTORS The Board of Directors is responsible for the Group’s system of corporate governance. It comprises an executive chairman, an executive chief operating officer and one other non-executive director. The Chairman of the Board is Jacques Vaillancourt. The Board met regularly throughout the year. It has a schedule of matters referred to it for decision, which includes strategy and future developments, allocation of financial resources, investments, annual and interim results, and risk management. INTERNAL CONTROL The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investment and the Company’s assets and for reviewing its effectiveness. The system of internal financial control is designed to provide reasonable, but not absolute, assurance against material misstatement or loss. ANTI-CORRUPTION AND BRIBERY POLICY The Company has adopted an anti-corruption and bribery policy which applies to the Directors. It generally sets out their responsibilities in observing and upholding a zero-tolerance position on bribery and corruption in all the jurisdictions in which the Company operates as well as providing guidance on how to recognise and deal with bribery and corruption issues and the potential consequences. The Company expects all employees, suppliers, contractors and consultants to conduct their day-to-day business activities in a fair, honest and ethical manner, be aware of and refer to this policy in all of their business activities worldwide and to conduct business on the Company’s behalf in compliance with it. AUDIT COMMITTEE The Audit Committee meets twice per year and has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. The committee monitors the integrity of the financial statements of the Company, quarterly NAV updates and any other formal announcement relating to its financial performance. It receives and reviews reports from the Company’s management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Committee is also responsible for keeping under review the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditors. The members of the Audit Committee are Sean Keenan and James Lesser. REMUNERATION COMMITTEE The Remuneration Committee meets at least once per year to exercise independent judgement on remuneration policies, practices and incentives. The committee is created to manage risk, capital and liquidity, whilst overseeing objectives, performance and compensation of the Board Chairman, Executive Directors and Senior Management, ensuring that they are fairly rewarded (which extends to all aspects of remuneration) for their individual contribution to the overall performance of the Company. The members of the Remuneration Committee are Sean Keenan and James Lesser. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE Changes to the AIM Rules on 30 March 2018 required AIM companies to apply a recognised corporate governance code. The corporate governance framework which the Company operates, including board leadership and effectiveness, board remuneration, and internal control is based upon practices which the Board believes are proportional to the size, risks, complexity and operations of the business and is reflective of the group’s values. Of the two widely recognised formal codes, we have therefore decided to adopt the Quoted Companies Alliance’s (“QCA”) Corporate Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the new requirements of AIM Rule 26). 13 Mineral & Financial Investments Limited CORPORATE GOVERNANCE REPORT for the year ended 30 June 2020 The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances, and below we provide an explanation of the approach taken in relation to each. The following paragraphs set out the Company’s compliance with the ten principles of the QCA Code and reasons for any non-compliance. 1. Establish a strategy and business model which promote long-term value for shareholders M&FI is an investment company whose purpose is to create value for its shareholders by investing in, financing, and advising resource companies with a particular emphasis on mining companies. The Company runs two portfolios; the Tactical Portfolio for more liquid investments in which short and medium-term value can be achieved and the Strategic Portfolio for longer-term investments. Details of the strategy of each investment portfolio are in the Tactical and Strategic portfolio pages of the Our Business section of the Company’s website. The Principal Activity and Investing Policy is set out in the Directors’ Report on page 10 and also on the website. The key challenges in their execution are outlined in the Risk Management Objectives and Policies section (Note 17) of this Annual Report. 2. Seek to understand and meet shareholder needs and expectations M&FI seeks to share this vision and details of the implementation of its strategy through internal dialogue with employees as well as external communications to keep shareholders informed. The Company publishes all relevant material, according to QCA definitions, in the Investment Centre on its website. This includes annual and interim reports, quarterly net asset value updates, shareholder circulars and details of Shareholder Meetings. The Board is sensitive to all of its shareholders and commits to maintain a regular dialogue to communicate strategy, progress and to understand the needs of shareholders. Contact details are listed in the Corporate Directory and Officers & Directors pages on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board. The Board believes these publications in the investor section of the website play an important part in presenting all shareholders with an assessment of the Company’s position and prospects. The Board encourages shareholders to attend its Annual General Meeting where they can meet and question the Directors and express ideas or concerns. In addition, the Directors will undertake presentations and roadshows to institutional investors as appropriate. Since the Company has a predominantly retail shareholder base, the website allows both prospective and actual shareholders to contact the Directors directly, register for automated news alerts for both regulatory and non- regulatory news, and shareholder communication is answered, where possible or appropriate, by Directors or the Company’s Nominated Advisor and co-broker, WH Ireland or the Company’s co-broker, Novum Securities. At present the Directors believe they have a good understanding of the needs and expectations of all elements of the company’s shareholder base. Feedback from shareholders to date has been positive. 3. Take into account wider stakeholder and social responsibilities and their implications for long-term success The Board recognises the need to take account of the needs of society and the environment and maintain high ethical standards. As an investment company and not an operating company the Directors identify its shareholders as its primary stakeholders. The Board recognises that the long-term success of the Company is reliant upon the efforts of its employees, advisers and regulators and additionally expects the highest standards of governance from its portfolio companies. The Company therefore maintains a regular dialogue with both its internal and external stakeholders as well as its investments. Policies to protect regular two-way dialogue with shareholders are outlined in Principle 2 of this Code. The Board takes a collective responsibility to report on regulatory matters and works closely with its advisers to ensure it operates in conformity with its listing regulations. Directors meet weekly to monitor all key stakeholder relationships. The Board understands the Company has a responsibility to consider, where practicable, the social, environmental and economic impact of its investments. The Directors are aware of the responsibilities of investee companies to the communities and environments within which they operate, and as a shareholder, expects the highest standards of governance. Good community relations and environmental sensitivity are essential to success in the resources sector and an integral part of investment decisions and advice provided by M&FI. Feedback from shareholders, advisers and employees remains positive. 14 Mineral & Financial Investments Limited CORPORATE GOVERNANCE REPORT for the year ended 30 June 2020 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation The Company’s Audit Committee and Remuneration Committee meet regularly since 2018. The Company also receives regular feedback from its external auditors on the state of its internal controls. As an investment company M&FI constantly seeks to balance the various risks it undertakes with an acceptable return. In executing the company’s strategy, management will typically confront a range of day-to-day challenges associated with key markets, portfolio and projects risks and other uncertainties. The identification and management of these risks can be found in the Risk Management Objectives and Policies section in Note 17 of the Notes to these Financial Statements. They include market price risk, foreign exchange risk, credit risk, liquidity risk and capital risk management. Company management hold a daily meeting to assess and monitor all risks on a continuous basis drawing on press releases and news flow from companies and jurisdictions in which M&FI have an interest and will seek to deploy mitigation steps to manage these risks as they manifest themselves. Further, the Directors meet weekly, via conference call to review activities and opportunities with which the company is engaged. 5. Maintain the board as a well-functioning, balanced team led by the chair The Board is responsible for creating value for shareholders by formulating, reviewing and approving and monitoring the implementation of the Group’s strategy, budgets, investment and acquisition policies and corporate actions. The Board ensures that management meets plans and performance targets and is also responsible for the oversight of the governance of the company, being the systems and procedures in place by which it is directed and controlled. The Board comprises an Executive Director and Chairman (Jacques Vaillancourt), an Executive Director and Chief Operating Office (Jamie Lesser) and a Non-Executive Director (Sean Keenan). Sean Keenan is the independent director of the Company. Appointments continue subject to re-election by shareholders at the AGM. A description of the roles of the Directors and their biographies are included within the Officers & Directors page of the website. All key investment decisions are subject to Board approval. The Company has appointed Audit and Remuneration committees, whose membership and responsibilities are set out on page 12. The Company does not have a formally established Nominations Committee and matters that would be dealt with it are considered by the Board as a whole. Whilst the Company is guided by the provisions of the Code in respect of the independence of directors, it gives regard to the overall effectiveness and independence of the contribution made by directors to the Board in considering their independence. The Chief Operating Officer and Non-Executive Director are both considered to be part-time, and are required to provide their services on a timely basis. Board meetings are held at least four times a year and a full record of attendance is shown. The Board also considers that the Directors have specific expertise and experience, materially enhancing knowledge and judgement to the overall performance of the Board. The Company has a policy of appointing independent directors who can provide an independent view of the company’s activities and is committed to adding an additional Director to split the role of CEO and Chairman in accordance with guidance. 6. Ensure that, between them, the directors have the necessary up-to-date experience, skills and capabilities Directors who have been appointed to the Company have been chosen because of the experience and skills they offer and maintain, by virtue of their continued involvement in the sector and other part time roles. The structure of the Board and full biographical details of all Directors are included within the Officers & Directors page of the Group’s website. Based on the M&A experience of Jacques Vaillancourt, the investment experience of Jamie Lesser and the geological expertise of Sean Keenan, the Directors are confident the Board has the right mix of skills to develop strategies for the benefit of shareholders. The Chairman, in conjunction with the Board, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors receive updates from the Board and various external advisers on a number of regulatory and corporate governance matters. As secretary to the Board, Miles Nicholson, Chartered Accountant, provides financial control and book keeping services, advises the board, manages day to day administration and liaises with Auditors for the publication of company accounts. 15 Mineral & Financial Investments Limited CORPORATE GOVERNANCE REPORT for the year ended 30 June 2020 7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement With a small team the Board and Directors enjoy a natural on-going evaluation of performance which includes daily communication. The Company therefore undertakes continuous natural monitoring of personal and corporate performance using agreed key performance indicators and detailed financial reports. Responsibility for assessing and monitoring the performance of the executive directors lies with the Chairman and the independent non-executive directors. The Board also considers the need for the periodic refreshing of its membership. One new Executive director was appointed in 2018 and the company intends to appoint an additional Non-Executive Director. 8. Promote a corporate culture that is based on ethical values and behaviours The Board recognises that a corporate culture based on sound ethical values and behaviours is an asset and provides competitive advantages. The Group has a strong ethical culture, which is promoted by the actions of the Board and Directors. An open culture is encouraged within the Group, with regular communications regarding progress and feedback is regularly sought. Through the daily and weekly meetings, the Board and Directors hold each other to account to ensure standards are maintained and ethical values and behaviours are recognised and respected. The Board will be fostering the framework needed for the delivery of excellence in all business decisions and actions so as to exceed the principles and industrywide standards of practice. Board performance reviews and individual director reviews ensure ethical values and behaviours are recognised, respected and maintained. 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board As an investment company M&FI seeks to keep costs low and preserve shareholder value. As such the Company, given its size, maintains the minimum number of directors and officers required to manage a portfolio of investments, within the requirements of company law and regulation. It is intended that the office of Chief Executive and Chairman will be held by different directors and the Company is taking active steps to separate the roles. The Chairman’s primary role is through his leadership to ensure that the Board and individual Directors are able to operate efficiently by setting the agenda, style and tone of Board discussions to promote constructive debate and effective decision making. As Chief Executive, Jacques Vaillancourt has led the management team which meets daily and is primarily responsible for the implementation of the Board’s policies and strategies, effective communication with shareholders, ensuring that all Board members develop an understanding of investors and for managing the activities of the Audit and Remuneration Committees. The Board has a formal agenda of items for consideration but is responsible for creating value for shareholders by formulating, reviewing and approving and monitoring the implementation of the Company’s strategy, budgets, investment and acquisition policies and corporate actions. The Board ensures management meet plans and performance targets and is also responsible for the oversight of the governance of the company, being the systems and procedures in place by which it is directed and controlled. At this stage in the Company’s growth, the Board believes the governance framework is sufficient. 16 Mineral & Financial Investments Limited CORPORATE GOVERNANCE REPORT for the year ended 30 June 2020 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Board is committed to maintaining good communication and having constructive dialogue with all of its stakeholders, providing them with access to clear and transparent information to enable them to come to informed decisions about the Company. The Company’s Investment Centre section on the website provides all required regulatory information as well as shareholder communications and additional information shareholders may find helpful including: Share Services, information on Board Members, Advisors and Significant Shareholdings, a historical list of the Company’s Announcements, its Financial Calendar, Corporate Governance information, the Company’s publications including historic Annual Reports and Notices of Annual General Meetings, together with Share Price information and interactive Charting facilities to assist shareholders analyse performance. The website is regularly updated and users can register to be alerted when announcements or details of presentations and events are posted onto the website. The Board holds regular meetings and regards the annual general meeting as a good opportunity to communicate directly with shareholders via an open question and answer session. The Company encourages two-way communication with both its institutional and private investors and endeavours to respond quickly to all queries received. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board. Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system and displayed on the Group’s website with suitable explanations of any actions undertaken as a result of any significant votes against resolutions. Information on the work of the various Board Committees and other relevant information are included in the Group’s Annual Report. Reference to the appropriate section in the annual report will be made here upon publication. 17 Mineral & Financial Investments Limited REPORT ON REMUNERATION for the year ended 30 June 2020 DIRECTORS' REMUNERATION The Board recognises that Directors' remuneration is of legitimate concern to the shareholders and it is committed to following current best practice. The Company operates within a competitive environment and its performance depends on the effective contributions of the Directors and employees who are compensated accordingly. DIRECTORS' REMUNERATION The remuneration of the Directors was as follows: Jacques Vaillancourt James Lesser Sean Keenan Year ended 30 June 2020 Salary and fees £'000 25 24 10 59 Pension £’000 Total £'000     25 24 10 59 Year ended 30 June 2019 Salary and fees £'000 Pension £'000 Total £’000 25 24 10 59     25 24 10 59 PENSIONS No pension contributions were paid in respect of the directors for the year ended 30 June 2020, or for the year ended 30 June 2019. BENEFITS IN KIND The Directors did not receive any benefits in kind, either in the year ended 30 June 2020, or for the year ended 30 June 2019. BONUSES There were no bonuses payable either for the year ended 30 June 2020, or for the year ended 30 June 2019. DIRECTORS’ INTERESTS IN THE COMPANY’S SHARES The interests of the Directors, their immediate families, and persons connected with them in the issued share capital of the Company (all of which are beneficial) are set out below. Jacques Vaillancourt* James Lesser Ordinary shares of 1p each number 6,664,000 223,880 Percentage of capital 19.0% 0.6% *Jacques Vaillancourt’s shareholding is held by Mount Everest Finance SA, a company in which he has a 100% beneficial holding. 18 Mineral & Financial Investments Limited REPORT ON REMUNERATION for the year ended 30 June 2020 SHARE OPTION INCENTIVES Directors held options as follows. Further details of options are disclosed in note 13. At beginning of period Granted in period Exercised in period Lapsed in period Jacques Vaillancourt Sean Keenan 230,000 100,000       At end of period 230,000 100,000 Average Exercise price 7.50p 7.50p For and on behalf of the Board Sean Keenan Director 27 November 2020 19 Mineral & Financial Investments Limited INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED for the year ended 30 June 2020 OPINION We have audited the financial statements of Mineral & Financial Investments Ltd (the 'Group') for the year ended 30 June 2020 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and related notes including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. In our opinion:    the financial statements give a true and fair view of the state of the Group's affairs as at 30 June 2020 and of the Group's profit for the year then ended; the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the financial statements have been prepared in accordance with the requirements of relevant legislation. 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. THE IMPACT OF MACRO-ECONOMIC UNCERTAINTIES ON OUR AUDIT Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company's future prospects and performance. Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the company's future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company associated with these particular events. CONCLUSIONS RELATING TO GOING CONCERN We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:   the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 20 Mineral & Financial Investments Limited INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED for the year ended 30 June 2020 OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. Risk How the scope of our audit responded to the risk Management override of controls Journals can be posted that significantly alter the Financial Statements Going Concern There is a risk that the company may hold insufficient working capital to allow it to meet its financial obligations as they fall due thus giving rise to a going concern risk. Fraud in Revenue Recognition There is a risk that revenue is materially understated due to fraud. We examined journals posted around the year end, specifically focusing on areas which are more easily manipulated such as accruals, prepayments, bank reconciliations and tax. Existing cash reserves have been evidenced and future cashflow forecasts have been reviewed to ensure sufficient cash headroom exists for a period of at least one year from the date of approving these financial statements. Income was tested on a sample basis for completeness and we concluded that no evidence of fraud or other understatement was identified. Accounting Estimates Potential risk of inappropriate accounting estimates giving rise to misstatement in the accounts. We have considered the basis of the accounting estimates applied when preparing the financial statements and considered the responses to audit questions with professional scepticism. Risk of material misstatement within related party transactions There related party is transactions are potentially incomplete or materially misstated. that risk the Correspondence and accounting records were reviewed for evidence of material related party transactions and it is considered that all relevant items have been disclosed. Disclosures There is a risk of incorrect or incomplete disclosures in the financial statements. The financial statements have been reviewed and checks have been undertaken to ensure all material disclosure requirements have been met. Our audit procedures relating to these matters were designed in the context of our audit of the Financial Statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the Financial Statements is not modified with respect to any of the risks described above, and we do not express an opinion on these individual matters. OUR APPLICATION OF MATERIALITY We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning and in the scope of our audit work and in evaluating the results of our work. We determine materiality for the Group to be £84,000 and this financial benchmark, which has been used throughout the audit, was determined by way of a standard formula being applied to key financial results and balances presented in the Financial Statements. Where considered relevant the materiality is adjusted to suit the specific area risk profile of the Group. 21 Mineral & Financial Investments Limited INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED for the year ended 30 June 2020 OTHER INFORMATION The Directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Directors’ Report but does not include the financial statements and our Report of the Auditors thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. OPINION ON OTHER MATTERS In our opinion, based on the work undertaken in the course of the audit:   the information given in the Group 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 Group 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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which relevant legislation requires us to report to you if, in our opinion:  adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or  the financial statements are not in agreement with the accounting records and returns; or  certain disclosures of Directors' remuneration specified by law are not made; or  we have not received all the information and explanations we require for our audit. RESPONSIBILITIES OF DIRECTORS As explained more fully in the Statement of Directors' Responsibilities set out on page 11 the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. OUR 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 a Report of the Auditors 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 22 Mineral & Financial Investments Limited INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED for the year ended 30 June 2020 are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. USE OF OUR REPORT This report is made solely to the Company's members, as a body, in accordance with relevant legislation. 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 a Report of the Auditor 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. Joseph Kinton (Senior Statutory Auditor) For and on behalf of Shipleys LLP Chartered Accountants and Statutory Auditors 10 Orange Street Haymarket London WC2H 7DQ Date 27 November 2020 23 Mineral & Financial Investments Limited CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2020 Investment income Fee revenue Net gains/(losses) on disposal of investments Net change in fair value of investments Operating expenses Other gains and losses Profit before taxation Taxation expense Year ended 30 June 2020 £’000 Year ended 30 June 2019 £’000 Notes 3  497 226 726 (321) (24) 381 (28) 28 212 405 2,009 2,654 (280) 161 2,535 (44) 3 5 6 Profit for the year from continuing operations and total comprehensive income, attributable to owners of the Company 353 2,491 Profit per share attributable to owners of the Company during the year from continuing and total operations: 7 Pence Pence Basic (pence per share) Fully diluted (pence per share) 1.0 1.0 7.1 7.1 The accompanying notes form an integral part of these financial statements 24 Mineral & Financial Investments Limited CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2020 Notes 8 9 10 11 14 14 16 CURRENT ASSETS Financial assets held at fair value through profit or loss Trade and other receivables Cash and cash equivalents CURRENT LIABILITIES Trade and other payables Convertible unsecured loan notes NET CURRENT ASSETS NON-CURRENT LIABILITIES Deferred tax provision NET ASSETS EQUITY Share capital Share premium Loan note equity reserve Share option reserve Capital reserve Retained earnings Equity attributable to owners of the Company and total equity 2020 £’000 5,315 81 275 5,671 127 10 137 2019 £’000 4,952 78 224 5,254 88 10 98 5,534 5,156 (60) (42) 5,474 5,114 3,096 5,892 6 23 15,736 (19,279) 3,095 5,886 6 23 15,736 (19,632) 5,474 5,114 The financial statements were approved by the Board and authorised for issue on 27 November 2020 Jacques Vaillancourt Director 25 Mineral & Financial Investments Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2020 Share capital £'000 Share premium £'000 Share option reserve £'000 Loan note reserve £'000 Capital reserve £'000 Accumulated losses £'000 Total equity £'000 At 1 July 2018 3,095 5,886 Total comprehensive income for the year   At 30 June 2019 3,095 5,886 Total comprehensive income for the year Share issues  1  6 23  23   6  6   15,736 (22,123) 2,623  2,491 2,491 15,736 (19,632) 5,114   353  353 7 At 30 June 2020 3,096 5,892 23 6 15,736 (19,279) 5,474 The accompanying notes form an integral part of these financial statements 26 Mineral & Financial Investments Limited CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2020 Year ended 30 June 2020 £’000 Year ended 30 June 2019 £’000 Notes OPERATING ACTIVITIES Profit before taxation Adjustments for: (Profit)/loss on disposal of trading investments Fair value (gain)/loss on trading investments Other gains and losses Investment income Tax paid Operating cash flow before working capital changes (Increase) in trade and other receivables Increase in trade and other payables Net cash outflow from operating activities INVESTING ACTIVITIES Purchase of financial assets Disposal of financial assets Acquisition of subsidiary Cash balance of subsidiary acquired Investment income Net cash inflow/(outflow) from investing activities FINANCING ACTIVITIES Proceeds of share issues Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents as at 1 July Cash and cash equivalents as at 30 June 381 (497) (226)  (3) (10) (355) (3) 39 (319) (1,279) 1,639   3 363 7 7 51 224 275 2,535 (405) (2,009) (178) (28) (2) (87) (58) 7 (138) (865) 587 (97) 287 28 (60)   (198) 422 224 The accompanying notes form an integral part of these financial statements 27 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 1 GENERAL INFORMATION The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted International Financial Reporting Standards as adopted by the European Union (IFRSs). The Company's shares are listed on the AIM market of the London Stock Exchange. The Company is exempt from the requirement to prepare and file audited financial statements under Cayman Islands law so the Group consolidated financial statements have been prepared without the inclusion of parent company information. The Company is an investment company, mainly investing in natural resources, minerals, metals, and oil and gas projects. The registered office of the Company is as detailed in the Company Information on page 2. These financial statements are prepared in pounds sterling which is the Company’s functional and presentational currency and rounded to the nearest £’000. 2 PRINCIPAL ACCOUNTING POLICIES BASIS OF PREPARATION The financial statements have been prepared under the historical cost convention, and in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the European Union, and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations. All accounting standards and interpretations issued by the International Accounting Standards Board and IFRIC effective for the periods covered by these financial statements have been applied. The principal accounting policies of the Company are set out below, and have been consistently applied to all periods. BASIS OF CONSOLIDATION The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The subsidiary has a reporting date of 30 June. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the non-controlling interests in excess of the minority’s interest in the subsidiary’s equity are recorded as a debit to non-controlling interest regardless of whether there is an obligation in the part of the holders of non-controlling interests for losses. 28 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 GOING CONCERN The Directors have prepared cash flow forecasts through to 31 December 2021 which assumes no significant investment activity is undertaken unless sufficient funding is in place to undertake the investment activity. The expenses of the Group's continuing operations are minimal and the cash flow forecasts demonstrate that the Group is able to meet its obligations as they fall due. The directors have also considered the impact of Covid-19 and have concluded that there are no material factors which are likely to affect the ability of the Group to continue as a going concern, as a result of the cash reserves in place and given the Group’s ongoing costs. On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Group’s financial statements. KEY ESTIMATES AND ASSUMPTIONS Estimates and assumptions used in preparing the financial statements are reviewed on an on-going basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these estimates and assumptions form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources: SHARE BASED PAYMENTS The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of comprehensive income requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company’s share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards. FAIR VALUE OF FINANCIAL INSTRUMENTS The Group holds investments that have been designated as held at fair value through profit or loss on initial recognition. Where practicable the Company determines the fair value of these financial instruments that are not quoted (Level 3) using the most recent bid price at which a transaction has been carried out. These techniques are significantly affected by certain key assumptions, such as market liquidity. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the Company’s financial statements. INVESTMENT INCOME Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income on an ex-dividend basis. Interest on fixed interest debt securities, designated at fair value through profit or loss, is recognised using the effective interest rate method. 29 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 2 PRINCIPAL ACCOUNTING POLICIES (continued) TAXATION Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement. Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity. FINANCIAL ASSETS The Group's financial assets comprise investments held for trading, cash and cash equivalents and loans and receivables, and are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. FINANCIAL ASSET INVESTMENTS CLASSIFICATION OF FINANCIAL ASSETS The Group holds financial assets including equities and debt securities. On the initial recognition, the Group classifies financial assets as measured at amortised cost or fair value through profit or loss(“FVTPL”). A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:   It is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specific dates to cash flows that are Solely Payments of Principal and Interest (SPPI). All other financial assets of the Group are measured at FVTPL. 30 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 2 PRINCIPAL ACCOUNTING POLICIES (CONTINUED) BUSINESS MODEL ASSESSMENT In making an assessment of the objective of the business model in which a financial asset is held, the Company considers all of the relevant information on how the business is managed, including:     the documented investment strategy and the execution of this strategy in practice. This includes whether the investment strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realised cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the Company’s management; the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how the investment advisor is compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cashflows collected IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective of the entity’s business model is not based on management’s intentions with respect to an individual instrument, but rather determined at a higher level of aggregation. The assessment needs to reflect the way that an entity manages its business. The company has determined that it has two business models.  Held-to-collect business model: this includes cash and cash equivalents, balances due from brokers and other receivables. These financial assets are held to collect contractual cash flows.  Other Business model: this includes structured finance products, equity investments, investments in unlisted private equities and derivatives. These financial assets are managed and their performance is evaluated, on a fair value basis with frequent sales taking place in respect to equity holdings. VALUATION OF FINANCIAL ASSET INVESTMENTS Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. The valuations in respect of unquoted investments (Level 3 financial assets) are explained in note 9. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as “Net gains/(losses) on investments”. Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. LOANS AND RECEIVABLES Loans and receivable from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method. A provision for impairment is made when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. Impaired debts are derecognised when they are assessed as uncollectible. 31 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 2 PRINCIPAL ACCOUNTING POLICIES (continued) EQUITY An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium. The share option reserve represents the cumulative cost of share based payments. The loan note reserve represents the value of the equity component of the nominal value of the loan notes issued. The capital reserve represents amounts arising in connection with reverse acquisitions. Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income. FINANCIAL LIABILITIES Financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method. The Group's financial liabilities comprise convertible loan notes, and trade and other payables. The fair value of the liability portion of the convertible loan notes is determined using a market interest rate for an equivalent non-convertible loan note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the loan notes. The remainder of the proceeds is allocated to the conversion option, which is recognised and included in shareholders’ equity, net of tax effects. Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments. SHARE BASED PAYMENTS The Group operates equity settled share based remuneration plans for the remuneration of its employees. All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Share based payments are ultimately recognised as an expense in the income statement with a corresponding credit to retained earnings in equity, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost recognized in prior periods if fewer share options ultimately are exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount that otherwise would have been recognised for services received over the remainder of the vesting period is recognised immediately within profit or loss. 32 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 2 PRINCIPAL ACCOUNTING POLICIES (continued) FOREIGN CURRENCIES The Directors consider Sterling to be the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Sterling, which is the Company’s functional and presentation currency. Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value was determined. SEGMENTAL REPORTING A segment is a distinguishable component of the Group's activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available. As the chief operating decision maker reviews financial information for and makes decisions about the Group's investment activities as a whole, the directors have identified a single operating segment, that of holding and trading in investments in natural resources, minerals, metals, and oil and gas projects. The directors consider that it would not be appropriate to disclose any geographical analysis of the Group’s investments. 3 OPERATING PROFIT Profit from operations is arrived at after charging: Directors fees Other salary costs Registrars fees Corporate adviser and broking fees Other professional fees Foreign exchange differences Other administrative expenses Fees payable to the Group’s auditor: For the audit of the Group’s consolidated financial statements 2020 £’000 2019 £’000 59 18 31 45 107 24 43 18 345 59 14 30 23 75 17 61 18 297 33 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 4 EMPLOYEE REMUNERATION The expense recognised for employee benefits is analysed below; the Group has no employees other than the directors of the parent company and its subsidiary; average number of employees, including executive directors, 2 (2019, 2): Wages and salaries 2020 £’000 77 77 2019 £’000 73 73 Details of Directors’ employee benefits expense are included in the Report on Remuneration on page 15. Remuneration for key management of the Company, including amounts paid to Directors of the Company, is as follows: Short-term employee benefits 5 OTHER GAINS AND LOSSES Gain on acquisition of subsidiary Foreign currency exchange differences 6 INCOME TAX EXPENSE Deferred tax charge relating to unrealised gains on investments Other tax payable 2020 £’000 2019 £’000 59 59 59 59 2020 £’000  (24) (24) 2020 £’000 18 10 28 2019 £’000 178 (17) 161 2019 £’000 42 2 44 The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to the results of the Consolidated entities as follows: Profit before tax from continuing operations Profit before tax multiplied by rate of federal and cantonal tax in Switzerland of 14.6% (2019: N/A) Less abatement in respect of long term investment holdings Unrelieved tax losses Total tax 2020 £’000 381 56 (50) 22 28 2019 £’000 2,535 370 (333) 7 44 34 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 7 EARNINGS PER SHARE The basic and diluted earnings per share are calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year. Profit attributable to owners of the Company - Continuing and total operations Weighted average number of shares for calculating basic earnings per share Weighted average number of shares for calculating fully diluted earnings per share Earnings per share from continuing and total operations - Basic (pence per share) - Fully diluted (pence per share) 8 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS 1 July – Investments at fair value Investments held by subsidiary on acquisition Reclassified to subsidiary undertaking Cost of investment purchases Proceeds of investment disposals Profit/(loss) on disposal of investments Fair value adjustment 30 June – Investments at fair value Categorised as: Level 1 - Quoted investments Level 3 - Unquoted investments 2020 £’000 353 2020 2019 £’000 2,491 2019 35,080,784 35,037,895 35,146,295 35,064,391 1.0 1.0 7.1 7.1 2020 £’000 4,952   1,279 (1,639) 497 226 5,315 1,001 4,314 5,315 2019 £’000 2,269 142 (151) 865 (587) 405 2,009 4,952 1,117 3,835 4,952 The Group has adopted fair value measurements using the IFRS 7 fair value hierarchy Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows: Level 1 – valued using quoted prices in active markets for identical assets Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1. Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market criteria. 35 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 8 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS (continued) LEVEL 3 investments Reconciliation of Level 3 fair value measurement of investments Brought forward Investments held by subsidiary on acquisition Reclassified to subsidiary undertaking Purchases Disposals Fair value adjustment Carried forward 2020 £’000 3,835   122 (16) 373 4,314 2019 £’000 927 14 (150) 350  2,694 3,835 Level 3 valuation techniques used by the Group are explained on page 26 (Fair value of financial instruments) The Group’s largest Level 3 investment is Redcorp Empreendimentos Mineiros LDA (“Redcorp”). REDCORP EMPREENDIMENTOS MINEIROS LDA Redcorp is a Portuguese company whose main asset is the Lagoa Salgada Project, which has resources of zinc, lead and copper. In June 2018, TH Crestgate entered into an agreement with Ascendant Resources Inc (“Ascendant”) under which Ascendant initially acquired 25% of the equity in Redcorp for a consideration of US$2.45 million, composed of US$1.65 million in Ascendant shares and US$800,000 in cash. The second part of the Agreement is an Earn-in Option under which Ascendant has the right to earn a further effective 25% interest via staged payments and funding obligations as outlined below: Ascendant is required to spend a minimum of US$9.0 million directly on the Lagoa Salgada Project within 48 months of the closing date, to fund exploration drilling, metallurgical test work, economic studies and other customary activities for exploration and development, and to make stage payments totalling US$3.5 million to TH Crestgate according to the following schedule or earlier: 22 Dec 2018 22 Jun 2019 22 Dec 2019 22 Jun 2020 US$250,000 US$250,000 US$500,000 US$500,000 (amended to 5 monthly payments of $100,000, June to October plus an additional payment of $100,000 in November 2020) 22 Jun 2021 22 Jun 2022 US$1,000,000 US$1,000,000 Under the last part of the agreement Ascendant can acquire an additional 30% taking its total interest to 80% by the payment of US$2,500,000 on or before 22 Dec 2022. To date the payments due by Ascendant under the agreement have been paid on time and the Group’s investment in Redcorp has been valued on a discounted cash flow basis of the remaining payments due under the agreement plus an additional amount for the discounted value of the Group’s residual investment in the project. Redcorp currently owns 85% of the Lagoa Salgada project. Redcorp signed an agreement in June 2017 with Empresa Desenvolvimento Mineiro SA (EDM), a Portuguese State-owned company to re-purchase the remaining 15% of the project resulting in a 100% ownership of the project. The 2017 agreement was subject to the Portuguese Secretary of State’s approval which has not yet been received. Redcorp and Mineral & Financial continue to explore ways and means to complete the purchase. 36 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 9 TRADE AND OTHER RECEIVABLES Other receivables Prepayments Total 2020 £’000 69 12 81 2019 £’000 66 12 78 The fair value of trade and other receivables is considered by the Directors not to be materially different to the carrying amounts. At the balance sheet date in 2020 and 2019 there were no trade and other receivables past due. 10 TRADE AND OTHER PAYABLES Trade payables Other payables Accrued charges Total 2020 £’000 18 70 39 127 2019 £’000 19 24 45 88 The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts. 11 CONVERTIBLE UNSECURED LOAN NOTES The outstanding convertible loan notes are zero coupon, unsecured and unless previously purchased or converted they are redeemable at their principal amount at any time on or after 31 December 2014. The net proceeds from the issue of the loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Company as follows: Liability component at beginning and end of period 2020 £’000 10 2019 £’000 10 The Directors estimate the fair value of the liability component of the loan notes at 30 June 2020 to be approximately £10,000 (2019: £10,000) 37 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 12 DEFERRED TAX PROVISION As at 1 July Provision relating to unrealised gains on investments As at 30 June 2020 £’000 42 18 60 2019 £’000  42 42 13 SHARE OPTIONS On 31 January 2017 the Company granted 600,000 options to directors and employees, exercisable at 7.50p per share. At the year end all these options had vested and are exercisable at any time prior to the fifth anniversary of the date of grant. The fair value of the options granted during the year was determined using the Black-Scholes pricing model. The significant inputs to the model in respect of the options were as follows: Date of grant 31 January 2017 Share price at date of grant Exercise price per share No. of options Risk free rate Expected volatility Life of option Calculated fair value per share 5.50p 7.50p 600,000 1.0% 50% 5 years 1.9245p The share-based payment charge for the year was £Nil (2019: £Nil). The share options movements and their weighted average exercise price are as follows: Outstanding at 1 July Granted Exercised Lapsed Outstanding at 30 June 2020 Weighted average exercise price 2019 Weighted average exercise price Number 490,000  (160,000)  330,000 (pence) Number (pence) 7.50   7.50 7.50 805,000   (315,000) 490,000 7.65   7.89 7.50 38 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 14 SHARE CAPITAL Number of shares Nominal Value £’000 Share premium £’000 AUTHORISED At 30 June 2019 and 30 June 2020 Ordinary shares of 1p each Deferred shares of 24p each ISSUED AND FULLY PAID At 30 June 2018 and 30 June 2019: Ordinary shares of 1p each Deferred shares of 24p each 160,000,000 35,000,000 35,037,895 11,435,062 Ordinary shares issued in period to 30 June 2020 97,500 At 30 June 2020: Ordinary shares of 1p each Deferred shares of 24p each 35,135,395 11,435,062 1,600 8,400 10,000 350 2,745 3,095 1 351 2,745 3,096 5,886 6 5,892 The ordinary shares carry no rights to fixed income, but entitle the holders to participate in dividends and vote at Annual and General meetings of the Company. The restricted rights of the deferred shares are such that they have no economic value. On 21 January 2020, options over 160,000 ordinary shares were exercised at 7.50p per share. As a result 97,500 new ordinary shares were issued and a further 62,500 shares held in treasury were issued in settlement. 15 SHARE OPTION RESERVE Brought forward at 1 July Share based payment charge Carried forward at 30 June 16 LOAN NOTE EQUITY RESERVE Equity component of convertible loan notes at 1 July Equity component of convertible loan notes at 30 June 2020 £’000 23  23 2020 £’000 6 6 2019 £’000 23  23 2019 £’000 6 6 39 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 17 RISK MANAGEMENT OBJECTIVES AND POLICIES The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company’s risk management is coordinated by the board of directors, and focuses on actively securing the Company’s short to medium term cash flows by minimising the exposure to financial markets. MARKET PRICE RISK The Company’s exposure to market price risk mainly arises from potential movements in the fair value of its investments. The Company manages this price risk within its long-term investment strategy to manage a diversified exposure to the market. If each of the Company’s equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Company’s net asset value and statement of comprehensive income increasing or decreasing by £516,000 ( 2019: £491,000). FOREIGN CURRENCY RISK The Group holds investments and cash balances denominated in foreign currencies and investments quoted on overseas exchanges; consequently, exposures to exchange rate fluctuations arise. The Group does not hedge its foreign currency exposure and its liabilities in foreign currencies are limited to the trade payables of TH Crestgate which are not material. The carrying amounts of the Group’s foreign currency denominated monetary assets at the reporting date are as follows: US Dollar Canadian Dollar Swiss franc Australian Dollar 2020 £’000 4,423 615 94  2019 £’000 3,525 700 98 1 FOREIGN CURRENCY SENSITIVITY ANALYSIS The Group is mainly exposed to the US Dollar and the Canadian Dollar in respect of investments which are either denominated in or valued in terms of those currencies. The following table details the Group’s sensitivity to a 5 per cent increase and decrease in pounds sterling against the US Dollar, Canadian Dollar and Swiss franc. The Group’s exposure to the Australian Dollar and the Euro are not considered material. US Dollar Canadian Dollar Swiss franc 5% increase in exchange rate against GBP 5% decrease in exchange rate against GBP 5% increase in exchange rate against GBP 5% decrease in exchange rate against GBP 5% increase in exchange rate against GBP 5% decrease in exchange rate against GBP 2020 £’000 221 (221) 31 (31) 5 (5) 2019 £’000 176 (176) 35 (35) 5 (5) CREDIT RISK The Company's financial instruments, which are exposed to credit risk, are considered to be mainly cash and cash equivalents and the Company’s receivables are not material. The credit risk for cash and cash equivalents is not considered material since the counterparties are reputable banks. The Company's exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below: 40 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 17 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Cash and cash equivalents Other receivables 2020 £’000 275 69 344 2019 £’000 224 66 290 No impairment provision was required against other receivables which are secured and not past due. LIQUIDITY RISK Liquidity risk is managed by means of ensuring sufficient cash and cash equivalents are held to meet the Company’s payment obligations arising from administrative expenses. CAPITAL RISK MANAGEMENT The Company's objectives when managing capital are:    to safeguard the Company’s ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders; to support the Company’s growth; and to provide capital for the purpose of strengthening the Company’s risk management capability. The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. 18 FINANCIAL INSTRUMENTS FINANCIAL ASSETS BY CATEGORY The IFRS 9 categories of financial assets included in the balance sheet and the headings in which they are included are as follows: Financial assets: Cash and cash equivalents Loans and receivables Investments held at fair value through profit and loss 2020 £’000 275 69 5,315 5,659 2019 £’000 224 66 4,911 5,201 FINANCIAL LIABILITIES BY CATEGORY The IFRS 9 categories of financial liability included in the balance sheet and the headings in which they are included are as follows: Financial liabilities at amortised cost: Convertible unsecured loan notes Trade and other payables 2020 £’000 10 88 98 2019 £’000 10 43 53 41 Mineral & Financial Investments Limited NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2020 19 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS There were no contingent liabilities or capital commitments at 30 June 2020 or 30 June 2019. 20 POST YEAR END EVENTS There have been no material post year end events. 21 RELATED PARTY TRANSACTIONS Key management personnel, as defined by IAS 24 ‘Related Party Disclosures’ have been identified as the Board of Directors, as the controls operated by the Group ensure that all key decisions are reserved for the Board of Directors. Details of the directors’ remuneration and the options granted to directors are disclosed in the remuneration report on page 17. 22 ULTIMATE CONTROLLING PARTY The Directors do not consider there to be a single ultimate controlling party. 

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