M&FI
Mineral & Financial Investments Limited
Annual Report and Financial Statements
for the year ended 30 June 2021
Full Year Highlights
for the year ended 30 June 2021
• Audited year-end Net Asset Value £6,438,000 up 17.6%, from £5,474,000 for the same period last year
• Net Asset Value Per Share (“NAVPS”) fully diluted (FD) 18.22p, up 17.5%, from 15.5p in FY 2020
• NAVPS FD has increased at compound annual growth rate (CAGR) of 26.8% since 30 June 2017
• Net Asset Value has increased at CAGR of 27.4% since 30 June 2017
•
Investment Portfolio now totals £5,822,000 up 9.5% during past 12 months, from £5,315,000.
• NAVPS performance exceeds that of the FTSE 350 Mining and Goldman Sachs Commodity Indices since
2017 (Fig. 1).
NET ASSET VALUE
30 June
2017
30 June
2018
30 June
2019
30 June
2020
June 30
2021
Net Asset Value (‘000)
£2,443
£2,623
£5,114
£5,474
£6,438
Fully diluted NAV per share
7.05p
7.49p
14.50p
15.50p
18.22p
M&FI NAVPS vs. FTSE 350 Mining Index & GSCI1
Indexed Performance (Fig. 1)
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
CAGR
(%)
27.4%
26.8%
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
Dec 31, 2016
30-Jun-17
30-Jun-18
30-Jun-19
30-Jun-20
30-Jun-21
MAFL NAV INDEX (Dec 31, 2016) RHS
MAFL NAVPS Index (Dec 31, 2016) LHS
Baker Steel Resource Trust NAV Index (Dec 31, 2016) LHS
FTSE 350 Mining Index (Dec 31/2016) LHS
Goldman Sachs Commodity Index (Dec 31 2016) LHS
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
1 Source: Bloomberg LLC
1
Mineral & Financial Investments Limited
CONTENTS
REPORTS2
Company Information
Chairman’s Statement
Chief Executive’s Report
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
4
11
13
15
20
22
27
28
29
30
31
2 No comment or fact stated in these reports should be taken or interpreted as investment advice.
2
Mineral & Financial Investments Limited
COMPANY INFORMATION
DIRECTORS:
REGISTERED OFFICE:
COMPANY NUMBER:
SECRETARY:
NOMINATED ADVISER:
JOINT BROKERS:
REGISTRARS:
SOLICITORS:
AUDITORS:
Mark T Brown, Chairman
Jacques Vaillancourt, President & CEO
James Lesser
Sean Keenan
One Nexus Way
Camana Bay
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 2021
Dear shareholders,
In this, my first Statement to you as Chairman of M&FI, I would like to thank the board and management for
the work, cooperation and results achieved during a challenging year. Mineral & Financial Investments Limited
(“M&FI”) is an active investing company working to provide our shareholders with significant returns by
leveraging our in-house expertise to provide investment capital to finance modern, responsible mining
companies and exploration projects globally. We focus on global metals market trends to take advantage of
changes in metal markets and only invest in favourable jurisdictions with proven management teams. We will
seek to provide financing and act as a good partner in exchange for meaningful ownership levels in public or
private companies, and board representation or active oversight, if needed and appropriate. We will provide
advisory services to add value when possible and will be willing to make follow-on investments in the investee
companies if milestones are achieved. The full details of our Investing Policy are set out in the Directors’ Report.
During the twelve-month fiscal period ending 30 June 2021 the Company generated net trading income of
£1,362,000 which translated into a net profit of £964,000 or 2.72p Fully Diluted (FD) per share for the period.
At the period end of 30 June 2021, the Company’s Net Asset Value (NAV) was £6,438,000, an increase of 17.6%
from the 30 June 2020, NAV of £5,474,000. The Net Asset Value per Share – fully diluted (NAVPS-FD) as of 30
June 2021 was 18.22p up from the 15.5p NAVPS FD achieved in the previous fiscal period. Since 30 June 2016,
the Company’s NAV has increased on average by 43% annually. We continue to be effectively debt free, with
working capital of £6.5M.
I believe M&FI’s investment performance during this extraordinary and challenging year was satisfying in
absolute terms, but also in relative terms. We continue to outperform the relevant internal Key Performance
Indicators that we measure our performance against. Since 30 June 2017 the NAV per share of M&FI has grown
at compound annual growth rate (CAGR) of 26.8% per year. The FTSE 350 Mining Index has grown by a CAGR
of 10.9% during the comparable period, while the Goldman Sachs Commodity Index appreciated by a CAGR of
9.5% for the comparable period. We believe that the next 12 months will be no less challenging; we believe
that we are well positioned for the upcoming year and will do all within our abilities to meet our internal
expectations, and those of our shareholders.
M&FI Portfolio Performance (Fig. 2)
£7,000,000
£6,000,000
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£-
£3,685,698
£3,909,713
£1,063,734
£224,384
2019
£1,405,594
£274,646
2020
£4,230,332
£1,711,929
£854,729
2021
£746,030
£983,557
£273,519
2017
£776,856
£1,319,177
£422,307
2018
Cash
Tactical
Strategic
M&FI continues to seek suitable strategic investment opportunities that we believe will generate above
average returns while adhering to our standards of diligence. We thank you for your support and we will
continue to work diligently, thoroughly and with prudence to advance your company’s assets.
Mark T. Brown, CA CPA
Chairman
20 December 2021
4
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
FINANCIAL AND OPERATIONAL REPORT
The Company generated gross profit of £1,362,000 during the fiscal year, an increase of 87.6% from the previous
financial year’s gross profit of £726,000. The operating profit for the full year, ending 30 June 2021 was £1,021,000,
an increase of 152% over the previous full year operating profit of £405,000. The full year net income was £964,000,
an increase of 173% from the previous full year’s profit of £353,000. M&FI’s NAV per share increased 17.4% year over
year to 18.22p. The overall cash and investment portfolios increased by 19.4% year over year to £6,680,000.
We believe the key to creating shareholder value for Mineral & Financial Investments is, as with any investment
company is to generate positive investment returns and maintain low operating costs. More specifically operating
costs which grow at a slower rate than the accretion in the Net Asset Value. Our full year total administrative costs
totalled £341,000, a 7.9% increase over the previous year’s costs of £321,000 which further aided in improving our
results.
The world is recovering from the unexpected and difficult challenges resulting from the global pandemic caused by the
spread of the Covid 19 virus. Global economic output declined by 3.1% (Fig. 3), as measured by the International
Monetary Fund (IMF). In the IMF’s most recent global economic analysis1, Global Output for 2021 is estimated to have
grown by 5.9%, which is forecasted to be followed in 2022 by a further output increase of +4.9%. We believe the
recovery has been propelled by both fiscal and monetary intervention by most governments globally, acting as both a
mitigant to the economic damage of the pandemic, and secondarily as a propellant as we exit the lockdowns imposed
around the world. Inflationary pressures were initially expected to be contained due to diminished economic activity.
However, due to the afore-mentioned stimulus and global supply-chain bottlenecks, we have noted inflationary
pressures increasing significantly. The IMF’s forecast estimates that global inflation should increase from 3.2% in 2020
to 4.3% (+34%) in 2021. We anticipate the largest rise in inflation will be in Advanced Economies, which benefitted
from more fiscal and monetary stimulus, seeing inflation quadrupling from 0.7% to 2.8% in 2021.
IMF – WORLD ECONOMIC OUTLOOK3 (Fig. 3)
October 2021
World Output
Advanced Economies
Emerging Markets and Developing Economies
World Consumer Prices
Advanced Economies
Emerging Markets and Developing Economies
2016
3.3%
1.8%
4.5%
2.7%
0.7%
4.3%
2017
3.8%
2.5%
4.7%
3.2%
1.7%
4.4%
2018
2019
2020 2021 (E) 2022 (F)
3.6%
2.3%
4.5%
3.6%
2.0%
4.9%
2.8%
1.7%
3.7%
3.5%
1.4%
5.1%
-3.1%
-4.5%
-2.1%
3.2%
0.7%
5.1%
5.9%
5.2%
6.4%
4.3%
2.8%
5.5%
4.9%
4.5%
5.1%
3.8%
2.3%
4.9%
The growth in supply of US dollars, as measured by the US Federal Reserve Bank, is M1 up from US$4.0T, as of January
2020, to the Fed’s latest revelation of M1 reaching US$20.0T – is a 400% increase in 20 month. At the same time, for
a few years prior to the pandemic we believe the natural resource sectors had experienced years of constrained access
to capital markets, resulting in diminished levels of exploration to satisfy future demand. The combination of these
two macro-factors along with positive economic growth will, we believe, be positive for commodity pricing in 2021
and 2022. Moreover, we believe that inflation will be longer lasting than is inferred and that precious metals should
benefit disproportionately from this economic setting.
Indices - July 1, 2020 to June 30, 2021
Standard & Poor 500
Nikkei 225
Euro Stoxx 50
Shanghai Shenzhen CSI 300
Hang Seng
FTSE 100
GLOBAL STOCK INDEX PERFORMANCE1 (Fig. 4)
2020
3,106.7
22,288.1
3,234.1
4,163.9
24,301.6
6,169.7
2021
4,291.8
28,791.5
4,064.3
5,224.0
28,994.1
7,037.5
% Ch.
38.1%
29.2%
25.7%
25.5%
19.3%
14.1%
3 International Monetary Fund, “World Economic Outlook: Recovery During a Pandemic”, October 7, 2021
5
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
We believe the Fiscal and Monetary responses by most “advanced economy” governments have created fertile ground
for equity markets to advance this year. We note that key equity markets (Fig. 4) benefited from strong positive
advances in the period that coincides with our fiscal year. The strongest market gains were experienced by the S&P
500 rising by 38.1%, while the FTSE 100 was up 14.1% during the same 12-month period.
Market valuations are, both absolutely and relatively, high by historical measures, as can be seen in (Fig. 5). The Shiller
S&P 500 index, as composed by Prof. Robert Schiller of Yale University. The Schiller Index shows that the S&P 500’s
Index current level for Price/Earnings (P/E) is 39.7x as at the day of writing this statement, a level reached only once
more
before since 1870, in the run up to the 1999-2000 market peak. This valuation is implicitly assuming a flawless exit
from the 2-year economic life-support offered by governments around the world.
S&P 500 Historical Prices
S&P 500 Dividend Yield
10 Year Treasury Rate
S&P 500 Earnings
S&P 500 PE Ratio
multpl
Shiller PE Ratio
SCHILLER S&P 500 P/E INDEX4 (Fig 5)
Chart Table FAQ
World commodity price performances during our fiscal year was positive (Fig. 6) for all but one of the commodities
Share
that we follow: Uranium (-1.5%). All other commodities have had positive price performance during the period.
However, the notable laggard amongst the performances has been gold. We have committed to an overweight
position in precious metals, particularly gold. We remain committed to the belief that metals, and more specifically
precious metals will outperform overall equity markets in the upcoming period.
Current Shiller PE Ratio: 39.67 +0.09 (0.23%)
4:00 PM EST, Wed Nov 24
16.89
Mean:
Median: 15.86
Min:
4.78 (Dec 1920)
PRICE PERFORMANCE FOR VARIOUS COMMODITIES1 (US$, Fig 6)
44.19 (Dec 1999)
earnings from the previous 10 years, known as the Cyclically
Max:
METALS
Gold
Silver
Platinum
Palladium
Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10 —
Rhodium
FAQ.
Copper
Nickel
Aluminum
Zinc
Lead
Uranium
30/06/18
30/06/20
Shiller PE ratio for the S&P 500.
$1,255
$1,782
$17.85
$16.20
Price earnings ratio is based on average inflation-adjusted
$804
$853
$1,835
$945
$5,800
$2,080
$6,013
$6,525
$12,748
$14,740
Data courtesy of Robert Shiller from his book, Irrational
$1,594
$2,238
Exuberance.
$2,057
$3,089
$1,786
$2,436
$72,312
$59,730
30/06/19
$1,389
$15.30
$837
$1,535
$3,150
$5,969
$12,670
$1,779
$2,575
$1,913
$54,454
See also
S&P 500 PE Ratio
S&P 500 Price to Sales Ratio
S&P 500 Earnings Yield
30/06/21
$1,835
$26.19
$1,065
$2,709
$18,200
$9,319
$18,254
$2,504
$2,951
$2,289
30/11/21
$1,788
$22.92
$51
$1,707
$12,850
$9,652
$20,284
$2,641
$3,351
$2,343
$71,209 $101,964
% Ch.
30/6/20 to 30/6/21
3.0%
46.7%
32.5%
47.6%
213.8%
55.0%
43.2%
57.1%
43.5%
28.2%
-1.5%
S&P 500 Price to Book Value
4 Shiller P/E ratio for the S&P 500.Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the
Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10
Inflation Adjusted S&P 500
S&P 500 Earnings
Information is provided ‘as is’ and solely for informational purposes, not for trading purposes or advice, and may be delayed.
You should sign up for our mailing list here.
Copyright © 2021
contact@multpl.com
6
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
INVESTMENT PORTFOLIOS
The performance of various indices, commodities and share prices appear to have been strong during our fiscal year
ending June 30, 2021. We note that the mining indices appear to have generated strong gains during this period. We
believe that this performance is somewhat misleading, as it is our belief that markets were still mostly depressed in
June 2020, and most appreciated sharply from the Q1-Q2 lows. However, some of these indices, as at our 30 June
2021 year-end were still below the pre-COVID levels. For example, the FTSE 350 Mining Index is up 25.4% June 2020
to June 2021, however, if we measure its performance as of 1 January 2020 (i.e., prior to the COVID related market
correction) to 30 June 2021, the FTSE 350 Mining Index was up 2.34%, while the Company’s NAV rose from 15.19p
to 18.22p (+20.0%) during the comparable period.
The commodity markets performed very similarly to most equity markets – declining sharply from Mid-February
2020 to Mid-March 20201. During this 5-week period the S&P 500 declined from 3,382 to 2300 (-32%)1. Since that
March low the S&P 500 has risen 105%1. The FTSE 100 Index, in contrast, remains 6.9% below where it was in mid-
February 20201. M&FI’s performance during this period compares very favourably to the FTSE 100, outperforming
the FTSE 100 by 26.9% during the 1 January 2020 to 30 June 2021, period.
It is our belief that commodity price performances (Fig. 6) were consistent with the overall performance of equity
markets, inasmuch that the best performing metal commodities during the 12 and 18-month periods were the base
metals our belief is that any economic recovery will lead us promptly to levels of economic prosperity that exceeded
our levels prior to the “COVID-Crash”. The best performing metal from 30 June 2020, is Rhodium (+214%), which we
note also remains below its pre-covid highs, while the worst performance was Uranium (-1.5%), and closely followed
by gold (+3.0%). We believe that the inflationary pressures caused by the greatest increase in US money supply in
history, along with the fiscal stimuli in most advanced economies, coupled with the supply-chain bottlenecks caused
by the COVID related shutdowns and slow-downs will, in our opinion, not be “transitory”. We also believe that equity
markets appear to have broadly concluded that the economic impact of COVID will be over soon and that the impact
of the pandemic will also be “transitory”. We hope that COVID 19 is near its end, but we believe its effects will be
with us for a long time to come as we believe it has caused not only short-term changes to our behaviour, but longer-
term structural changes in economic activity. Equity markets, as mentioned earlier, are trading at a higher valuation
to their net earnings (fig. 5). If our belief is correct and inflation is more durable than expected, we believe valuations
will come under pressure. We note that the valuation of many of the senior gold producers we own have, by our
own internal calculations, valuations and/or yields that are below their historical averages and that of the overall
markets. We do not believe that an increased inflationary environment will be as easily subdued as pundits are
proposing and that we will be well served by being overweighted in precious metal investments in addition to our
other investments.
CASH
Our liquidity as measured by our cash holdings as of 30 June 2021, was £855,000, up 211.2% from last year (Fig.2).
The increase was due to the receipt of US$1.0M from Ascendant on June 22, 2021. Our intention is to keep our cash
and tactical portfolio’s combined value to be between 25% and 60%. They currently represent 38% of our total NAV,
which is within our internal targets. As this mining cycle evolves our objective is to maintain a higher cash & Tactical
Portfolio holding, so we are well placed to avail ourselves of investment opportunities further along in the economic
and market cycles.
TACTICAL PORTFOLIO
The Tactical Portfolio gained 21.8% year over year (Fig. 2). Amongst the equity portfolio the following investments
are noteworthy.
UBS Gold ETF (CHF): Our investments in precious metal bullion peaked at 5.2% of our portfolio values. We reduced
our bullion, and gold equity holdings as gold exceeded $2000/oz in August 2020. Gold prices performed well in 2020-
21, reaching an all- time high spot price of $2,075/oz during the global economic uncertainties. We believe this was
due to concerns primarily resulting from the impact of the spread of Covid-19, reductions in short- and long-term
7
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
interest rates and large-scale fiscal stimulus measures in major economies, a weakening of the trade-weighted US
dollar, and a search for safe-haven assets. We understand that investor demand from gold was exceptionally strong in
2020, with the World Gold Council (WGC) reporting that collective ETF gold holdings grew by a record 877 tonnes
during the year and reached an all-time high of approximately 3,752 tonnes in the fourth quarter of 2020. COMEX net
long positions also reached all-time highs during 2020, a significant reversal of sentiment from the net short position
that existed in late 20185.
While we understand there was strong appetite for gold from the investment community, overall demand for gold in
ounce terms fell in 20205, as the global pandemic and rising prices that reached all-time highs in US dollars, as well as
in many non-US currencies, including in Euro, Pound sterling, Japanese yen, Indian rupee, and Chinese yuan, reduced
both consumer demand for jewellery and net purchases by central banks5. Global jewellery demand was down 34%
versus 2019, with China and India – responsible for over half of jewellery demand – down 35% and 42%, respectively5.
Gold demand for electronics and other industrial uses fell by 7% in 2020 as the spread of Covid-19 reduced
manufacturing activity and demand for electronics5. Central bank purchases of gold slowed in 2020 after 2018 and
2019 represented the two highest years of net purchases in the last 50 years5. The WGC reports that central banks still
added 273 tonnes to their reserves during 2020, even after experiencing a quarter of negative net accumulation in Q3
20204. Some Central Banks looked to their holdings of gold as a source of liquidity in difficult economic times because
of the global pandemic – with their ability to do so providing a strong statement as to why gold is a valuable reserve
asset4. Russia suspended its purchases of gold in March 2020, taking a significant buyer out of the market during the
remainder of the year5. Overall, though, central banks have now been net purchasers of gold for 11 straight years as
they look to gold as a source of reserve diversification5.
Overall supply of gold in 2020 decreased by 4%, the first annual decline since 2017, mainly attributable to a 4%
reduction5 in global mine production tempered by a modest rise in recycled gold and net de-hedging by producers5.
Global mine production fell for the second straight year in 2020, further confirming that the mining industry may have
reached peak gold production for the foreseeable future5. Gold production recovered in the first half of 2021 but
remains 1.6%5 below production levels achieved in the 12 months leading up to Q1-2020, the start of the pandemic.
The supply of recycled gold, which is historically positively correlated with the gold price, only increased by 1% in 2020
despite record high gold prices and remains down 2% in Q2-20215 as the pandemic likely limited the ability of potential
sellers to access the market.
Barrick Gold Corp.: Barrick Gold is the second largest gold producer in the world, the result of the merger of Barrick
Gold and Randgold Exploration. Barrick represents 2.7% of our investment portfolios. The merged company is led by
Barrick’s CEO, Mark Bristow, formerly Randgold’s CEO. The Company acquired our initial investment in Barrick in
response to the merger with Randgold, causing a technical sell-off as it relinquished its primary listing on the FTSE.
This meant that it was no longer eligible to be held by European/UK funds, which we believed resulted in some
temporary selling pressure. Since 31 December 2018, Barrick has increased its cash holding to >US$5.2B, a 330%
increase in cash holdings. Simultaneously, Barrick has reduced its debt-to-equity ratio from 0.61:1.0 to 0.16:1.0.
Barrick has solidly re-focused on profits rather than scale. We believe that Barrick will be a “go-to” gold stock when
the broader markets become more attentive to the gold sector. Barrick has historically traded at valuations that were
higher than the overall markets, and now trades at a Price/Earnings ratio which is 41% below that of the S&P 500 and
offers a yield that is 47% higher than the yield of the S&P 500 Index.
Cerrado Gold: We initiated our investment in common shares of Cerrado Gold in 2019 when it was a private
exploration company, and it currently represents 6.3% of our investment portfolio. It is now a gold producer with an
Argentinian mine (Mineiras Don Nicolas (MDN)) and expects to produce 50,000 oz of gold in the current year. During
the year Cerrado published a Preliminary Economic Assessment (PEA) on its Brazilian exploration project, Monte do
Carmo (MDC). Monte do Carmo’s PEA indicates an after tax NPV@5% of US$617M along with an IRR of 94.8% based
on an All in Sustaining Cost (AISC) over the Life of Mine (LOM) of US$612/Oz of Gold. Further details of this are set
out in the Cerrado’s announcement dated August 23, 2021. The overall resource base of MDC has expanded to an
Indicated Resource of 541,000/oz, and an Inferred resource of 780,000/oz. (i.e., Total resource to date of
1,321,000/oz); MDN, which is in production, and La Calandria (nearby Don Nicolas) has expansion potential, and has
a Measured and Indicated Resource of 566,609/oz and inferred of 399,709 oz. The total resource (Measured,
5 World Gold Council – Gold Demand Trends Annual Reviews, 2019, 2020 and Q2-2021
8
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
Indicated & Inferred) for Cerrado has grown from 813,000 oz in 2019 to 2,232,701 oz of gold, a 175% increase in 2
yrs. We believe that Cerrado will continue to expand the resource base and succeed in getting MDC into production
by 2025, by which time Cerrado could be producing as much as 215,000/oz to 285,0006/oz of gold p/year.
Northern Star Resources Limited: Northern Star is an A$11.0B Australian Gold producer. Our investment in Northern
Star represents 1.82% of our investment portfolios. Northern Star has buys established mines within what it terms
“Production Centres”. Northern Star has three Production Centres: Kalgoorlie, Yandal, both in Australia and Pogo in
Alaska. Their Production Centres are meant to use capital more efficiently and to operate with greater efficiencies of
scale. The company’s guidance is towards increasing its production from the current 1.48M oz to achieving production
of 2.0M oz of gold per year by 2026
Equinox Gold: Equinox Gold is a Canadian mining company with a market cap of US$2.2B, 30.3M oz of M&I gold
resources and has been executing a strategy of consolidating single mine producing companies. Guidance from
Equinox suggests gold production of 600,000 oz. will be achieved in 2021. Equinox now produces from seven operating
gold mines and plans to increase production by advancing a pipeline of growth projects. This investment represents
1.75% of our investment portfolio. This company is delivering on its growth and diversification strategy, growing from
a single-asset developer to a multi-mine producer and is advancing toward its vision of producing one million ounces
of gold annually.
Fresnillo Plc: Fresnillo is a £6.7B Mexican mining company listed in London (as well as on Mexican and US stock
exchanges) and is the largest silver producer in the world. Fresnillo trades at 14.5x p/e and offers a 2.65% yield. We
acquired our shares after an earnings disappointment and have added to our investment since 30 June 2021. The
Juanicipio Mine, of which Fresnillo owns 56%, is entering into production in Q4 2021. We believe that Fresnillo is
undervalued and will benefit from the completion of Juanicipio which should lead to a revaluation of its shares.
Pretium Resources Inc: Pretium Resources is a Canadian Gold Producer with a single very high grade mine called
Brucejack, located in British Columbia. Our investment in Pretium, as at our 2021-year end, represented 1.1% of our
investment portfolios. Newcrest has since announced its intention to acquire Pretium at a 23% purchase premium
after our year-end. The features which Newcrest explain motivated it to acquire Pretium are similar to those which
attracted M&FI to invest in Pretium: The Brucejack Mine is a high-grade gold mine, in production, in a safe jurisdiction
(British Columbia (BC), Canada) with state-of-the-art operations and environmental features (i.e., no-tailings dam)
with, what we believe are, relatively simple logistics (i.e., near roads and a port as well as being connected to the
power grid). Pretium’s production guidance for 2021 is production of 325,000 to 365,000oz of gold at an All-In
Sustaining Cost (AISC) of $1,060/oz to $1,190/oz
STRATEGIC PORTFOLIO
The Strategic portfolio was up to £4.11M, or a 5.1% year on year increase (Fig. 2) as of 30 June 2021. The Portfolio
performance was however impacted by the additional provision of £120,000 taken on CAP Energy Plc. This provision
reduced the portfolio’s performance by 3.1%.
Redcorp Empreedimentos Mineiros Lda.: The Company owns 100% of TH Crestgate GmbH, which in turn owns 75%
of Redcorp Empreedimentos Mineiros Lda. (Redcorp). Redcorp is a Portuguese company whose main asset is the
Lagoa Salgada Project. In 2018 we entered into a sale and earn-in option agreement with Canadian listed company,
Ascendant Resources. Ascendant can earn into 80% ownership of the Lagoa Salgada Project by completing US$9.0M
of exploration work on the project, completing a Feasibility Study and completing its payments commitments to
M&FI. Based on the Earn-in Agreement we have with Ascendant, by June 22, 2022, Ascendant is expected to have
earned into 50% ownership of Redcorp. During this upcoming calendar year of 2022, we expect to receive two
further cash payments from Ascendant totalling US$3.5M as part of their earn-in to a net interest of 80% into the
Lagoa Salgada Project. The value of our investment in Redcorp is based on the conservatively discounted value of
the expected payments to be received from Ascendant in accordance with the 2018 agreement and the residual
interest in Redcorp. The value of the residual interest in Redcorp is based on the discounted value of Ascendant’s
historical and estimated future investment for it to reach 80% ownership of the project. On this basis, Redcorp
6 Cerrado’s publicly stated production guidance as of November 2021
9
Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
represents 48% of our NAV. The project has advanced from an initial resource of approximately 4.4Mt with Zinc
Equivalent grade of 6.0% when, our now wholly owned subsidiary, TH Crestgate GmbH acquired Redcorp, to today
– where it is a project led by Redcorp and Ascendant with a resource totalling 27.5Mt with a ~7% Zinc Equivalent
grade. After the end of the period under review, Redcorp and Ascendant secured a mine development permit
agreement from the Portuguese government. In addition, on November 8, 2021, Redcorp and Ascendant also
completed a second PEA indicating that the Lagoa Salgada Project has, based on 100% ownership, a pre-tax NPV@8%
of US$341.6M resulting in a pre-tax IRR of 68.2%, with a 1.3-year pre-tax payback based on its planned 14-year life
of mine (see announcement dated November 8, 2021).
Golden Sun Resources: The Company made its initial investment in Golden Sun Resources (GSR) in 2019 by acquiring
convertible notes of GSR. The Company have made two small follow-on investments in Notes with identical terms.
As of the date of writing, these GSR notes represent a 4.7% net ownership in Golden Sun, which by the time the
notes mature should represent approximatively 7.5% net ownership of Golden Sun. Golden Sun currently represents
7.5% of our investment portfolios. The GSR notes will mature on 30 April 2024. Interest is chargeable and accrues at
the rate of 20% per annum, calculated monthly in arrears on the outstanding Loan Amount and will become payable
upon maturity, or the notes and interest can be converted into GSR shares at US$1.25 p/s. Golden Sun has brought
the Bellavista project back into production. Its business plan is to expand the project in small, financially self-
sustaining phases. The next phase is to progress from pilot plant leach pad production to a 400 Tonnes per day
Carbon in Leach (CIL) plant. The next phase, if successful, could result in production exceeding 30,000/oz of gold per
year. Additionally, Golden Sun has applied for and secured several other Costa Rican exploration project licenses
from the government. Most of these licenses are former production or exploration projects with historical resources
that were re-possessed by the government when the owners failed to meet their commitments. We understand that
Golden Sun has evolved to become a respected mining company by the Costa Rican Government. We also
understand that this has been achieved by the company exhibiting market leading Environmental and Social
practices. Golden Sun has progressed a little more slowly than we had hoped but has not deviated from the plan
upon which we invested. We continue to believe this is a distinctive investment opportunity that should, over the
next 24 months, be an attractive IPO listing and/or partner or acquisition target for a larger mining company seeking
a significant foothold in a stable and advanced economy in Central America.
Ascendant Resources: The Company owns 2.2M shares in Ascendant Resources, a Toronto Stock Exchange listed
company. Ascendant’s focus is the Lagoa Salgada Project. Ascendant owns 25% of Redcorp, which owns 85% of the
Lagoa Salgada Project. Ascendant is subject to an earn-in option on M&FI’s 75% owned Redcorp Empreedimentos
Mineiros Lda. LDA and its Lagoa Salgada Polymetallic project located on Iberian Pyrite Belt in South Central Portugal.
The shares of Ascendant have performed well during the Company’s fiscal year, rising 28.7% and now represent
5.8% of our portfolio investments. Ascendant has achieved important operational milestones during the fiscal
period. During the twelve months ended 30 June 2021 Ascendant has completed two financings allowing it to
progress the Lagoa Salgada Project to where it currently stands. In 2021 it plans to drill 15,000m to support the
completion of a definitive Feasibility Plan in late 2022. We continue to maintain our positive outlook for zinc prices
and believe that Ascendant’s higher leverage to an improvement in the price of zinc should have a positive impact
on its share price.
Ideon Technologies: M&FI made its initial investment in 2019 and has since made a follow-on investment in 2021.
Our initial investment was made at CA$0.37, and in its second, oversubscribed financing Ideon’s capital raise was
completed at CA$1.00 per share. Ideon now represents 3.7% of our portfolio values. We are advised that this
company is within a quarter or two from reaching break-even financial results (although there can be no guarantee).
Ideon Technologies Inc. is Canadian based company which we believe is a pioneer in the application of cosmic-ray
muon tomography. Ideon’s discovery platform provides x-ray-like visibility up to 1 km beneath the Earth’s surface,
much like medical tomography images the interior of the body using x-rays. Using proprietary detectors, imaging
systems, inversion technologies, and artificial intelligence, it maps the intensity of cosmic-ray muons underground
and constructs detailed 3D density profiles of subsurface anomalies. Ideon’s discovery platform can identify and
image anomalies such as mineral and metal deposits, air voids, caves, and other structures with density properties
that contrast with the surrounding earth. The potential result is a new exploration paradigm that could result in a
90% reduction in core drilling, while increasing exploration certainty by 95% in the geological settings suited by
10 Mineral & Financial Investments Limited
CHIEF EXECUTIVE’S REPORT
for the year ended 30 June 2021
tomography. Whilst still at an early stage, the environmental impact from such a technological change would be
meaningful.
Cap Energy PLC: CAP is an offshore oil and gas exploration company focused on West Africa. We are advised that
the management and largest shareholders of CAP are ultra-high net worth businesspeople with deep and wide-
ranging contacts in the various countries in West Africa and the energy industry. CAP is making slower progress than
we would have expected after buying out its partners on its three offshore oil exploration projects. Additionally,
Covid 19 issues have significantly slowed CAP’s progress at finding financial partners. During the fiscal year M&FI
proposed two separate financing terms to CAP’s management, both were declined. CAP has chosen to approach its
shareholders to complete a financing at 50p. We reduced our carrying value by 37.5% or £120,000. Our investment
in CAP currently represents 2.9% of our NAV. CAP is the controlling shareholder and the operator of three
exploration blocks: 1. Djiféré Block, offshore Senegal, which CAP now holds a 90% interest in the project; 2. Block 5B
licence, located offshore Guinea-Bissau, of which CAP owns 85.5%, and; 3. Block 1, also offshore Guinea Bissau,
which CAP now owns 76% of the licence. The most prospective licence is “Block 5B”- It is in deep water, but the 3D
seismic analysis suggests that it is structurally analogous to the neighbouring SNE oil field which was the largest oil
discovery in 2014 and is currently producing. We continue to closely monitor CAP’s progress.
Jacques Vaillancourt, CFA
President, CEO & Director
20 December 2021
11 Mineral & Financial Investments Limited
STRATEGIC REPORT
for the year ended 30 June 2021
The Directors present their Strategic Report for the Company (Mineral & Financial Investments Ltd) and its subsidiary
companies, together the “Group”, for the year ended 30 June 2021.
RESULTS
The Group made a profit after taxation for the year ended 30 June 2021 of £964,000 (2020: £353,000). The Directors
do not propose a dividend (2020: £nil).
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
A review of the business in the period and of future developments is set out in the Chief Executive’s Report, which
should be read as part of the Strategic Report.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
COMPANY STATISTICS
Net asset value
Net asset value – fully diluted per share
Closing share price
Share price (discount)/premium to net asset value –
fully diluted
Market capitalisation
30 June
2021
£6,438,000
18.2p
11.5p
(37%)
£4,041,000
30 June
2020
£5,474,000
15.5p
6.8p
(56%)
£2,389,000
Change %
+18%
+17%
+69%
-
+69%
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 18 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
12 Mineral & Financial Investments Limited
STRATEGIC REPORT
for the year ended 30 June 2021
the investment strategy previously approved by shareholders which has resulted in a significant improvement in
financial performance over the last 5 years.
GOING CONCERN
The Group has prepared cash forecasts to December 2022 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
Sean Keenan
Director
20 December 2021
13 Mineral & Financial Investments Limited
DIRECTORS’ REPORT
for the year ended 30 June 2021
The Directors present their annual report together with the audited financial statements for the year ended 30 June
2021.
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 (2020: £Nil)
STREAMLINED ENERGY AND CARBON REPORTING
The Directors confirm that Mineral & Financial Investments Limited and its subsidiaries are exempt from the
Streamlined Energy and Carbon Reporting requirements by virtue of being a low energy user, and have consumed
less than 40MwH during the year
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.
Mark T Brown (appointed 10 February 2021)
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.
14 Mineral & Financial Investments Limited
DIRECTORS’ REPORT
for the year ended 30 June 2021
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 10 December 2021 were as follows:
Mount Everest Finance SA*
Lynchwood Nominees Limited
Barry Reynolds
P Howells
T Darvall
Alasdair Coulson
Charles Cozens
Ordinary shares of
1p each
number
6,664,000
3,472,000
2,987,500
1,661,548
1,410,920
1,159,841
1,092,252
Percentage
of capital
%
19.0%
9.9%
8.5%
4.7%
4.0%
3.3%
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
Sean Keenan
Director
20 December 2021
15 Mineral & Financial Investments Limited
CORPORATE GOVERNANCE REPORT
for the year ended 30 June 2021
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
Mark T Brown.
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 Mark T Brown and Sean Keenan.
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
Mark T Brown.
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).
16 Mineral & Financial Investments Limited
CORPORATE GOVERNANCE REPORT
for the year ended 30 June 2021
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 and also on the website.
The key challenges in their execution are outlined in the Risk Management Objectives and Policies section (Note 18)
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.
17 Mineral & Financial Investments Limited
CORPORATE GOVERNANCE REPORT
for the year ended 30 June 2021
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 18 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 a Non-Executive Director and Chairman (Mark T Brown), Chief Executive Officer (Jacques
Vaillancourt), a Non-Executive Director (Jamie Lesser) and Non-Executive Director (Sean Keenan). Mark T Brown and
Sean Keenan are the independent directors 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 the first page of the Corporate Governance Report. 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 Non-Executive Directors 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.
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.
18 Mineral & Financial Investments Limited
CORPORATE GOVERNANCE REPORT
for the year ended 30 June 2021
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 of the Non-Executive directors
was appointed in 2018 and the Non-Executive Chairman was appointed in 2021.
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.
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.
19 Mineral & Financial Investments Limited
CORPORATE GOVERNANCE REPORT
for the year ended 30 June 2021
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.
20 Mineral & Financial Investments Limited
REPORT ON REMUNERATION
for the year ended 30 June 2021
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:
Mark T Brown
Jacques Vaillancourt
James Lesser
Sean Keenan
Year ended 30 June 2021
Salary
and fees
£'000
10
34
13
10
67
Pension
£’000
Total
£'000
-
-
-
-
-
10
34
13
10
67
Year ended 30 June 2020
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 2021, or for the year ended
30 June 2020.
BENEFITS IN KIND
The Directors did not receive any benefits in kind, either in the year ended 30 June 2021, or for the year ended 30 June
2020.
BONUSES
There were no bonuses payable either for the year ended 30 June 2021, or for the year ended 30 June 2020.
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.
21 Mineral & Financial Investments Limited
REPORT ON REMUNERATION
for the year ended 30 June 2021
SHARE OPTION INCENTIVES
Directors held options as follows. Further details of options are disclosed in note 14.
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
20 December 2021
22 Mineral & Financial Investments Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED
for the year ended 30 June 2021
OPINION
We have audited the financial statements of Mineral & Financial Investments Ltd (the 'Group') for the year ended 30
June 2021 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 2021 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.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement. The components of the Group were
evaluated by the Group audit team based on a measure of materiality, considering each component as a percentage
of the Group’s gross assets, which allowed the Group audit team to assess the significance of each component and
determine the planned audit response.
For those components that were evaluated as significant components, either a full scope or specified audit approach
was determined based on their relative materiality to the Group and our assessment of the audit risk. For significant
components requiring a full scope approach, we evaluated controls by performing walkthroughs over the financial
reporting systems identified as part of our risk assessment, reviewed the accounts production process and addressed
critical accounting matters. We then undertook substantive testing on significant transactions and material account
balances.
In order to address the audit risks identified during our planning procedures, we performed a full scope audit of the
Parent Company and subsidiary companies. All work was carried out by the Group audit team.
23 Mineral & Financial Investments Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED
for the year ended 30 June 2021
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.
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.
24 Mineral & Financial Investments Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED
for the year ended 30 June 2021
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 £114,854 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.
OTHER INFORMATION
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and 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 in the Directors’ Report 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
25 Mineral & Financial Investments Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED
for the year ended 30 June 2021
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
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.
EXPLANATION AS TO WHAT EXTEND THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud, through designing and implementing appropriate responses to those assessed
risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the
primary responsibility for the prevention and detection of fraud rests with both management and those charged with
governance of the Company.
Our approach was as follows:
• We obtained an understanding of the legal and regulatory requirements applicable to the Group and considered
that the most significant are the international accounting standards as adopted by the EU, the rules of the Alternative
Investment Market, and relevant legislation;
•We obtained an understanding of how the Group complies with these requirements by discussions with
management and those charged with governance;
•We assessed the risk of material misstatement of the financial statements, including the risk of material
misstatement due to fraud and how it might occur, by holding discussions with management and those charged with
governance;
•We inquired of management and those charged with governance as to any known instances of non-compliance or
suspected non-compliance with laws and regulations; and
•Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-
compliance with laws and regulations. This included making enquiries of management and those charged with
governance and obtaining additional corroborative evidence as required.
26 Mineral & Financial Investments Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MINERAL & FINANCIAL INVESTMENTS LIMITED
for the year ended 30 June 2021
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion.
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 20 December 2021
27 Mineral & Financial Investments Limited
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME for the year ended 30 June 2021
Investment income
Fee revenue
Net gains 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 2021
£’000
Year ended
30 June 2020
£’000
Notes
96
3
1,244
19
1,362
(341)
(24)
997
(33)
3
5
6
3
-
497
226
726
(321)
(24)
381
(28)
Profit for the year from continuing operations and total
comprehensive income, attributable to owners of the Company
964
353
Profit per share attributable to owners of the Company during
the year from continuing and total operations:
7
Pence
Basic (pence per share)
Fully diluted (pence per share)
2.7
2.7
Pence
1.0
1.0
The accompanying notes form an integral part of these financial statements
28 Mineral & Financial Investments Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2021
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
Notes
8
10
11
12
2021
£’000
5,822
27
855
6,704
163
10
173
2020
£’000
5,315
81
275
5,671
127
10
137
6,531
5,534
13
(93)
(60)
15
15
16
17
6,438
5,474
3,096
5,892
6
23
15,736
(18,315)
3,096
5,892
6
23
15,736
(19,279)
6,438
5,474
The financial statements were approved by the Board and authorised for issue on 20 December 2021
Mark T. Brown
Chairman
29 Mineral & Financial Investments Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2021
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 2019
3,095
5,886
23
Total comprehensive
income for the year
Share issues
-
1
-
6
At 30 June 2020
3,096
5,892
Total comprehensive
income for the year
-
-
At 30 June 2021
3,096
5,892
-
-
23
-
23
6
-
-
6
-
15,736
(19,632)
5,114
-
-
353
353
-
7
15,736
(19,279)
5,474
-
964
964
6
15,736
(18,315)
6,438
The accompanying notes form an integral part of these financial statements
30 Mineral & Financial Investments Limited
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2021
Year ended
30 June 2021
£’000
Year ended
30 June 2020
£’000
Notes
OPERATING ACTIVITIES
Profit before taxation
Adjustments for:
Profit on disposal of trading investments
Fair value gain 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
997
(1,244)
(19)
-
(96)
-
(362)
54
36
(272)
(2,269)
3,116
-
-
5
852
-
-
580
275
855
381
(497)
(226)
-
(3)
(10)
(355)
(3)
39
(319)
(1,279)
1,639
-
-
3
363
7
7
51
224
275
The accompanying notes form an integral part of these financial statements
31 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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 subsidiaries have 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.
32 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
GOING CONCERN
The Directors have prepared cash flow forecasts through to 31 December 2022 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. The company determines the fair value of quoted financial instruments using quoted prices in active
markets for identical assets or liabilities (level 1). Where practicable the Company determines the fair value of
the 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
The Group adopted the following new and amended relevant IFRS in the year
IAS 1
Presentation of financial statements – amendments regarding the definition of materiality
Accounting policies, changes in accounting estimates and errors – amendments regarding the
IAS 8
definition of materiality
The adoption of these accounting standards did not have any effect on the Group’s statement of comprehensive
income, statement of financial position or equity.
A number of accounting standards issued but not yet effective have not been early adopted. None of these are
expected to have a significant effect on the Group’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.
33 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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.
34 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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 8. 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.
35 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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.
36 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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
2021
£’000
2020
£’000
67
19
31
42
124
24
39
19
365
59
18
31
45
107
24
43
18
345
37 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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
2021
£’000
86
86
2020
£’000
77
77
Details of Directors’ employee benefits expense are included in the Report on Remuneration.
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
Foreign currency exchange differences
6
INCOME TAX EXPENSE
Deferred tax charge relating to unrealised gains on investments
Other tax payable
2021
£’000
2020
£’000
67
67
59
59
2021
£’000
(24)
(24)
2021
£’000
33
-
33
2020
£’000
(24)
(24)
2020
£’000
18
10
28
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% (2020: 14.6%)
Less abatement in respect of long term investment holdings
Unrelieved tax losses
Total tax
2021
£’000
1,004
146
(131)
18
33
2020
£’000
381
56
(50)
22
28
38 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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
Cost of investment purchases
Proceeds of investment disposals
Profit on disposal of investments
Fair value adjustment
Accrued interest on loan notes
30 June – Investments at fair value
Categorised as:
Level 1 - Quoted investments
Level 3 - Unquoted investments
2021
£’000
964
2021
2020
£’000
353
2020
35,135,395 35,080,784
35,204,897 35,146,295
2.7
2.7
1.0
1.0
2021
£’000
5,315
2,269
(3,116)
1.244
19
91
5,822
1,712
4,110
5,822
2020
£’000
4,952
1,279
(1,639)
497
226
-
5,315
1,001
4,314
5,315
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.
39 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
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
Reclassified to Level 1
Purchases
Disposals
Fair value adjustment
Carried forward
2021
£’000
4,314
(404)
207
-
(7)
4,110
2020
£’000
3,835
-
122
(16)
373
4,314
Level 3 valuation techniques used by the Group are explained on page 32 (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 and 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. M&FI has granted Ascendant conditional options that would
enable Ascendant to have a net 80% interest in the Project if the company is unsuccessful in re-acquiring EDM’s
interest within a still to be determined period after the completion of the Feasibility Study.
40 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
9
SUBSIDIARY COMPANIES
The Group’s subsidiary companies are as follows:
Name
TH Crestgate GmbH
Principal
activity
Investment
company
M&FI Services Ltd
Service company
Country of incorporation
and principal
place of business
Steinengraben 18
4051 Basel, Switzerland
5 Bath Road, London,
United Kingdom, W4 1LL
Proportion of ownership
interest and voting rights
held by the Group
100%
100%
On 5 February 2021 M&FI Services Ltd was incorporated and became a subsidiary of the Company
All intergroup transactions and balances are eliminated on consolidation.
10
TRADE AND OTHER RECEIVABLES
Other receivables
Prepayments
Total
2021
£’000
9
18
27
2020
£’000
69
12
81
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 2021 and 2020 there were no trade and other receivables past due.
11
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued charges
Total
2021
£’000
36
82
45
163
2020
£’000
18
70
39
127
The fair value of trade and other payables is considered by the Directors not to be materially different to
carrying amounts.
12
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
2021
£’000
10
2020
£’000
10
The Directors estimate the fair value of the liability component of the loan notes at 30 June 2021 to be
approximately £10,000 (2020: £10,000)
41 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
13
DEFERRED TAX PROVISION
As at 1 July
Provision relating to unrealised gains on investments
As at 30 June
14
SHARE OPTIONS
2021
£’000
60
33
93
2020
£’000
42
18
60
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
Share price at date of grant
31 January 2017
5.50p
Exercise price per share
No. of options
Risk free rate
Expected volatility
Life of option
Calculated fair value per share
7.50p
600,000
1.0%
50%
5 years
1.9245p
The share-based payment charge for the year was £Nil (2020: £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
2021
Weighted average
exercise price
(pence)
Number
2020
Weighted average
exercise price
(pence)
Number
330,000
-
-
-
330,000
7.50
-
-
-
7.50
490,000
-
(160,000)
-
330,000
7.50
-
-
-
7.50
42 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
15
SHARE CAPITAL
AUTHORISED
At 30 June 2020 and 30 June 2021
Ordinary shares of 1p each
Deferred shares of 24p each
ISSUED AND FULLY PAID
At 30 June 2020 and 30 June 2021:
Ordinary shares of 1p each
Deferred shares of 24p each
Number of
shares
Nominal
Value
£’000
Share
premium
£’000
160,000,000
35,000,000
35,135,395
11,435,062
1,600
8,400
10,000
351
2,745
3,096
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.
16
LOAN NOTE EQUITY RESERVE
Equity component of convertible loan notes at 1 July
Equity component of convertible loan notes at 30 June
17
SHARE OPTION RESERVE
Brought forward at 1 July
Share based payment charge
Carried forward at 30 June
2021
£’000
6
6
2021
£’000
23
-
23
2020
£’000
6
6
2020
£’000
23
-
23
43 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
18
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 £583,000 (2020: £516,000).
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
2021
£’000
4,512
1,537
48
122
2020
£’000
4,423
615
94
-
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
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
Swiss franc
5% increase in exchange rate against GBP
5% decrease in exchange rate against GBP
Australian Dollar 5% increase in exchange rate against GBP
5% decrease in exchange rate against GBP
2021
£’000
226
(226)
77
(77)
2
(2)
6
(6)
2020
£’000
221
(221)
31
(31)
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:
44 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
18
RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Cash and cash equivalents
Other receivables
2021
£’000
855
9
864
2020
£’000
275
69
344
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.
19
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
2021
£’000
855
9
5,822
6,686
2020
£’000
275
69
5,315
5,659
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
2021
£’000
10
118
128
2020
£’000
10
88
98
45 Mineral & Financial Investments Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
20
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments at 30 June 2021 or 30 June 2020.
21
POST YEAR END EVENTS
There have been no material post year end events.
22
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.
23
ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate controlling party.
1.1