OreCorp Limited Annual Report 2019

Plain-text annual report

27190 14 April 2020 5:06 pm Proof 6FOR THE YEAR ENDED 31 DECEMBER 2019ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2019ORIOLE RESOURCES PLCANNUAL REPORT STOCK: ORROriole Resources AR 2019.indd 314-Apr-20 5:45:54 PM27190 14 April 2020 5:06 pm Proof 6Oriole Resources PLC is an AIM-quoted exploration company, operating in Africa and Europe, focused on gold and high-value base metals.INVESTMENT CASESTRONG TECHNICAL AND CORPORATE MANAGEMENT TEAM WITH PROVEN TRACK RECORDQUALITY EXPLORATION IN GOLD-ENDOWED TERRANES IN AFRICAACTIVELY SEEKING FURTHER EXPLORATION OPPORTUNITIESJOINT VENTURE PARTNERSHIP ON SENALA GOLD PROJECT IN SENEGAL, REDUCING FINANCIAL EXPOSUREA NUMBER OF INTERESTS AND ROYALTIES IN COMPANIES OPERATING THROUGHOUT AFRICA AND TURKEYORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM Oriole Resources AR 2019.indd 314-Apr-20 5:46:02 PM27190 14 April 2020 5:06 pm Proof 6OPERATIONAL HIGHLIGHTS: °Successfully re-applied for the 472.5 square kilometer (‘km2’) Dalafin land package, under a new licence named Senala, securing up to another 10 years’ tenure in this highly prospective south-eastern corner of Senegal; °Continued exploration success by IAMGOLD Corporation (‘IAMGOLD’) through an extensive drill programme, which has seen it continue to earn-in to the Senala licence. Recent confirmation of the year three programme will see an anticipated 10,000 metres (‘m’) aircore (‘AC’) drilled at the Faré target in the north of the licence; °Extensive exploration work at the Bibemi and Wapouzé licences in Cameroon undertaken, including 12,500m of trenching at Bibemi, delivering best results of up to 9.00m at 3.14 grammes per tonne (‘g/t’) gold(‘Au’); °Application for an extensive 3,500km2 licence package in central Cameroon.FINANCIAL OVERVIEW: °Operating loss of £1.41 million reported for the year to 31 December 2019, a significant reduction compared to a loss of £2.55 million in the prior year. This was driven by increased cost discipline, including a 14% reduction in administration costs; °Loss for the year reduced to £1.66 million, a reduction of 64% when compared to the prior year; °Investment of £0.71 million into Oriole’s exploration projects in Cameroon, as the Group seeks to maximise cash available for exploration purposes; °UK Administration expenses reduced by 22% to £1.03 million.POST YEAR END: °Post year end the Company made the first successful step in its asset realisation programme with the sale of its holding in Tembo Gold Corp (‘Tembo’) for £0.17 million; °Closed a placing of equity to raise £0.24 million; °In response to the current global situation relating to COVID-19, and with Cameroon’s borders closed, limited exploration work is expected in the next three months. Consequently, the Directors and senior management have taken reduced salaries for this period, in order to preserve the Company’s cash reserves in anticipation of the proposed drilling campaign later in the year.CONTENTSCompany Information2Directors3Projects and Investments4Chairman’s statement10Strategic report14Report of the Remuneration Committee25Directors’ report27Independent Auditor’s Report to the members of Oriole Resources PLC29Financial statements:Statement of consolidated comprehensive income33Statement of consolidated financial position34Statement of consolidated changes in equity35Statement of consolidated cash flow36Statement of company financial position37Statement of company changes in equity38Statement of company cash flows39Notes to the financial statements40Notice of AGM62Advisors & offices65HIGHLIGHTSANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR01Oriole Resources AR 2019.indd 114-Apr-20 5:46:05 PM27190 14 April 2020 5:06 pm Proof 6WHO WE AREOriole Resources PLC is an exploration and development company focusing primarily on gold and high-value base metals.The Company is incorporated and domiciled in the UK. The Company’s shares are quoted on the Alternative Investment Market (AIM) of the London Stock Exchange (company number: 05601091).OUR STRATEGYThe Company’s strategy is to develop a portfolio of exploration projects for gold and base metals, and identify potential partners to take them into the advanced exploration and mine development stages. This includes our projects in Cameroon, where we are earning up to a 90% interest in the Bibemi and Wapouzé projects, and our 85%-owned Senala project in Senegal, where IAMGOLD has the option to spend US$8m to acquire 70%.We have interests and royalties in several projects in Turkey and Africa and are actively seeking further exploration opportunities, particularly in West Africa, to consolidate our existing geographic footprint.Oriole is focused on early-stage exploration in Cameroon and the more advanced Senala gold project in Senegal.OBJECTIVES −Continued exploration by IAMGOLD at Senala, with the programme moving northwards to test the more advanced Faré prospect. −Grassroots exploration of district-scale licence package in central Cameroon, covering 3,500km2 of gold-prospective terrane. −Continue earn-in at Bibemi and Wapouzé projects in Cameroon, moving to a maiden drilling programme at Bibemi later in 2020. −Continue with the realisation of value from existing lower-priority projects many of which are in royalty arrangements.ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 02COMPANY INFORMATION02Oriole Resources AR 2019.indd 214-Apr-20 5:46:09 PM27190 14 April 2020 5:06 pm Proof 6DIRECTORS: TIM LIVESEYCHIEF EXECUTIVE OFFICERTim has 28 years’ experience in gold and base metals, with a distinct focus on Africa, Europe and Asia. He has worked at all stages of exploration, development and mining, and has a strong track record of delivery, both at the technical and commercial level within previous positions. Some of his more notable roles to date include exploration manager (Eurasia), Barrick Gold Corp., project director and later CEO of Tethyan Copper Company Pty Ltd (a Joint Venture between Antofagasta Minerals and Barrick Gold Corp, owner of the Reko Diq project in Pakistan), and more recently as COO of TSX.V-listed Reservoir Minerals Inc., which was sold in June 2016 to TSX-listed Nevsun Resources Ltd for US$365 million. Tim joined the company in March 2018.BOB SMEETON CHIEF FINANCIAL OFFICERBob is a member of the Institute of Chartered Accountants in England and Wales. He trained as a chartered accountant with Price Waterhouse, qualifying in 1992, and has a BSc in geography from Durham University. Bob has extensive experience of working for AIM-quoted companies, where he has been heavily involved in turnaround situations, fund raisings and acquisitions. In partnership with three different CEO’s, Bob was instrumental in the turnaround and subsequent growth of AIM-listed Universe Group Plc as Group Finance Director, seeing its market capitalisation increase from £1.5m to £25m during his tenure.Prior to Universe Group, Bob was European Finance Director for OpSec Security Limited, where he was heavily involved in formulating and implementing a very successful reconstruction plan. The restructuring plan stemmed the annual operating losses of £2.5million and moved the Company to a profit situation in the first year of its implementation.DAVID PELHAMNON-EXECUTIVE OFFICERDavid Pelham is a mineral geologist with over 35 years global exploration experience. He has overseen the discovery and early evaluation of multiple deposits, most notably including the +6 Moz Chirano Gold Mine in Ghana, as well as Hummingbird’s 4.2 Moz Dugbe gold deposit in Liberia. David has been a non-executive director to AIM-quoted Cora Gold Ltd since May 2017.JOHN MCGLOINNON-EXECUTIVE CHAIRMANJohn McGloin is a geologist and graduate of Camborne School of Mines. John worked for many years in Africa within the mining industry before moving into consultancy. He joined Arbuthnot Banking Group following four years at Evolution Securities as their mining analyst. He is also the former Head of Mining at Collins Stewart. More recently, John served as the Chairman and Chief Executive Officer of Amara Mining plc until 2016 when it was sold for US$85 m. He is currently a non-executive director to Caledonia Mining Corporation plc and to Perseus Mining Limited.ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR0303Oriole Resources AR 2019.indd 314-Apr-20 5:46:17 PM27190 14 April 2020 5:06 pm Proof 6 °The Senala gold project lies in the highly-endowed Birimian-age Kédougou-Kéniéba gold belt in South-Eastern Senegal; °Oriole owns 85% in a joint-venture with local partner Energy & Mining Corporation S.A.; °Initial Rotary Air Blast and Aircore (‘AC’) drilling identified five geochemical targets at Senala. Follow-up trenching and drilling (reverse circulation (‘RC’) and diamond) programmes identified promising intersections across the licence area, particularly at the Faré and Madina Bafé prospects; °In March 2018, the Company signed a joint-venture agreement with Canadian mid-tier IAMGOLD Corporation, allowing it to earn into 51% of the Senala project by spending US$4m over four years and a further 19% (total 70%) by spending an additional US$4m over the subsequent two years; °To date, IAMGOLD has focused on the Madina Bafé prospect, located within 10 km of its 2.49 Moz Boto gold project and on which it has reported a positive Feasibility Study. The Mine Permit for Boto was granted by the Senegalese Government in January 2020; °In 2018, over 5,000m (AC, RC and diamond) drilling at Madina Bafé identified and confirmed orogenic-style gold mineralisation, with a best diamond intersection of 8m grading 2.56 g/t Au; °During 2019, IAMGOLD completed a further 4,167m AC drilling at Madina Bafé, that identified multiple gold in soil anomalies (>20 ppb Au), as well as 3,200 metres AC drilling at the Saroudia prospect immediately to the north; °In January 2020, Oriole successfully reapplied for a new licence over the Dalafin territory, to be re-named Senala, and with an initial 4 year term, and up to 10 years in total, subject to meeting agreed exploration spend target; °IAMGOLD is now progressing with its Year 3 earn-in and has confirmed that it will move northwards to test the more advanced Faré prospect. An initial programme involving approximately 10,000m of AC drilling is planned to further define and confirm areas of anomalism. A follow up RC drilling programme will be designed contingent on results from the AC drilling. As per the terms of the option agreement, IAMGOLD must spend a further US$1 million during Year 3 to keep the option in good standing.SENALA (renamed from Dalafin in January 2020) (Senegal):ROYALTIES/INVESTMENTSFOCUS PROJECTSSENEGALSenalaCAMEROONBibemi & WapouzéTURKEYAnadolu, Lodos & Bati Toroslar (Karaağac, Muratdere, Hasançelebi & Doğala)EGYPTThani Stratex Resources (Hutite & Anbat-Shakoosh)DJIBOUTIThani Stratex Djibouti (Pandora & Assaleyta)ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 04PROJECTS AND INVESTMENTSOriole Resources AR 2019.indd 414-Apr-20 5:46:17 PM27190 14 April 2020 5:06 pm Proof 6 °Bibemi and Wapouzé are early-stage gold exploration projects, covering highly prospective Neoproterozoic Pan-African greenstone rocks in north-eastern Cameroon; °The Company’s interests in the projects are held 100% by the Company’s local partner BEIG3 through its wholly-owned subsidiary, RMC Cameroon SARL (‘RMC’), formerly held in JV with Reservoir Minerals Corporation; °In June 2018, the Company entered into an option agreement to earn an initial 51% of both projects by funding US$1.56m of exploration over two years. Thereafter, Oriole can earn a further 39% for an additional U$1.56m exploration expenditure, or on the completion of a pre-feasibility study on at least one of the projects, over the subsequent two years; °Over 12,500m trenching during 2019 identified orogenic-type gold mineralisation including a best intersection of 9.00m @ 3.14 g/t Au, with individual veins returning up to 13.70 g/t Au; °A maiden drill campaign is planned in 2020 to test the system at depth and an initial 14 drill holes (for 1,500m) have been pegged; °At the earlier stage Wapouzé project, c.20km to the north east, two phases of soil sampling identified c.13km strike length of gold anomalism within the Bataol Zone. A targeted trenching programme is planned for 2020 to follow-up on the most significant anomalies.BIBEMI AND WAPOUZÉ (Cameroon): ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR05Oriole Resources AR 2019.indd 514-Apr-20 5:46:33 PMORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM PROJECTS AND INVESTMENTS CONTINUED CENTRAL CAMEROON: ° During the year the Company ° BEIG3 and its associate Roxane ° The licence applications have been Minerals Limited will have a collective 10% free-carried interest in each licence within Oriole Cameroon SARL up until the definition of a minimum Measured and Indicated resource of 50,000 oz Au; thereafter, funding will be pro-rata on a contribute or dilute basis; accepted and Company looks forward to providing a further update once the licences are granted. announced that it was expanding its footprint in Cameroon through the application of a further eight licences, covering a contiguous land package of c.3,500km2; ° Under Cameroon’s Mining Code, each company is allowed to hold five exclusive exploration licences of 500km2 each. As such, the Company applied for three through its existing partnership with BEIG3, whereby the Company will earn up to a 90% interest, and the remaining five through a newly-formed 90%-owned local subsidiary, Oriole Cameroon SARL; ROYALTIES & INVESTMENTS THANI STRATEX RESOURCES LTD (‘TSR’) (Egypt): ° In Q4-2019, TSR advised the Company that it had completed a restructuring in order to spin-out its 50%- ownership of Thani Stratex Djibouti Limited (‘TSD’), creating a standalone vehicle that will be funded and managed independently of TSR; ° Anbat: Located within the Hodine licence, Anbat has a maiden Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au within porphyry sills (Announcements dated 6 and 13 December 2017). No work was completed at Anbat during the year. ° TSR is now solely focused on Egypt and the portfolio comprises the following projects: ° Hutite: The Hodine licence also includes the Hutite project which hosts a non-JORC compliant gold resource of 520,000oz. ° As at 31 December 2019, Oriole’s holding in TSR stood at 26.10%. 06 Oriole Resources AR 2019.indd 6 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:35 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR THANI STRATEX DJIBOUTI LTD (‘TSD’) (Djibouti): previously returned 55.4 g/t Au over 1.22m from approximately 32m below surface. anticipated before the end of Q2-2020. Subject to results, extensive surface sampling is planned for Q2-2020. TSD management has reported that successful intersection of the vein system has been achieved in all holes and the Company anticipates first results in Q2-2020. Subject to results, infill and resource definition drilling will follow. Hesdaba: Located 10km northwest of Pandora, a Phase 1 drilling programme comprising 1,800m diamond and 4,000m RC drilling is currently underway to test the c.5km-long epithermal system. The programme is expected to be completed in April, with all results Assaleyta: Located c.16 km to the north of Pandora, low-sulphidation epithermal gold occurs as high-grade veins and disseminated mineralisation in rhyolite domes. Phase 1 drilling in 2017 confirmed sub-surface gold mineralisation of up to 17.40m grading 2.24 g/t Au from surface and 3.16m grading 6.79 g/t Au from 20m. Camp construction and major road and drill access works are planned for Q3-2020, with a 2,000m Phase 2 diamond drilling programme currently scheduled for Q4-2020. ° The Company’s effective interest in TSD at 31 December 2019 was 13.05%, although as the final stages of the deconsolidation were incomplete, TSD remained a 50% subsidiary of TSR at the year end; ° During the year, TSD secured funding from African Minerals Exploration & Development Fund III for development of its assets located in the Afar epithermal province of the Rift Valley; ° Funding is to take place in equal tranches, subject to performance milestones, with a new internal management structure taking over operational control of the projects; ° The first US$2.5 million tranche of the Funding will be focused initially at the Pandora prospect (Oklila Licence), as well as the newly-acquired Hesdaba project, 10 kilometres northwest of Pandora, and Assaleyta: Pandora: The 93 sq km2 Oklila licence, which includes the main Pandora vein, covers an epithermal system that comprises over 10 km strike of outcropping and inferred veins. Further to the initial phases completed between 2017 and 2018 (totalling 5,300m), a Phase 3 diamond drilling programme has been completed in 13 holes for c.1,200m. Drilling has predominantly focused on the Pyrrha vein system where a maiden drill hole TEMBO GOLD (Tanzania): ° At 31 December 2019, Oriole held an 11.66% interest in TSX(V) quoted company Tembo Gold Corp; ° Subsequent to the year end, on 25 February 2020 the Company sold its holding in Tembo for a total net consideration of £172,000. Oriole Resources AR 2019.indd 7 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:36 PM 07 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM PROJECTS AND INVESTMENTS CONTINUED MURATDERE (Turkey): ° Muratdere is a substantial copper- molybdenum-gold porphyry system located west of Ankara. The project has a JORC-compliant Inferred resource of 51 million tonnes, comprising 186,000 tonnes Cu, 204,296oz Au and 3.9million oz Ag, that remains open along strike and at depth; ° According to a previously reported Feasibility Study, an optimised resource of 16 million tonnes will be produced over a sixteen-year mine life, for total metal in concentrate of c.68,000 tonnes copper, c.32,000 ounces gold and c.955,000 ounces silver; (‘Lodos’), a wholly-owned mining investment company of Istabul- listed investment company Pragma Finansal Danışmanlık Ticaret A.Ş. that resulted in the Company’s equity interest in Muratdere being converted to a 1.2% post-tax NSR royalty; ° In November 2019, the Company ° Lodos has submitted an executed share purchase and royalty agreements with its partner Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. Environmental Impact Assessment (‘EIA’) and a decision is awaited. KARAAĞAC GOLD PROJECT (Turkey): ° Located 300 km west-south-west of Ankara, mineralisation at Karaağac is hosted by an outcropping thrust zone and altered limestone. Oriole had previously defined an inferred non-JORC resource of 156,798 oz Au; ° In March 2019, the Company’s partner Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi (‘Anadolu’), 96%-owned by Istanbul-listed ODAŞ Elektrik, confirmed the definition of a JORC-2012 compliant Measured, Indicated and Inferred resource of 348,150 oz Au and 2,832,036 oz Ag (0.2 g/t cut-off); ° Under the terms of the Agreement, definition of this JORC-resource triggered the payment by Anadolu of a US$500,000 success-based fee, which the Company agreed to receive in staged payments of US$25,000 per month for a period of 20 months. To date, Oriole has only received a total of US$75,000 with Anadolu failing to meet the agreed repayment schedule. The Company continues to pursue repayment of the outstanding US$425,000, and full provision has been made against the receivable; ° Oriole retains a 1.5% NSR royalty on any future mineral production from this EIA-stage project. 08 Oriole Resources AR 2019.indd 8 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:38 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR HASANÇELEBI AND DOĞALA PROJECTS (Turkey): ° Hasançelebi is a high-sulphidation epithermal gold-silver project located 500 km southeast of Ankara. Doğala is a grassroots exploration project, located approximately 225 km to the west of Hasançelebi. It is prospective for high-sulphidation gold mineralisation; ° During the year, the Company signed an exploration agreement with Bati Toroslar Madencilik Ltd. Şti. (‘Bati Toroslar’) for the Hasançelebi and Dogala licences which will result in a US$500,000 success-based payment on delivery of a minimum 100,000 oz Measured or Indicated JORC-compliant gold resource (with a 0.3 g/t cut off), defined within the oxide and transition material, at Hasançelebi; ° The Company will also receive a 1.5% NSR royalty on any future precious metals production at the licences, and a 5% NSR on future production of other metals or industrial raw minerals. More detail of the above Oriole projects and investments can be found on the Company’s website: www.orioleresources.com Oriole Resources AR 2019.indd 9 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:39 PM 09 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM CHAIRMAN’S STATEMENT During 2019, the Company has worked To date IAMGOLD has focused on the hard to develop its West Africa portfolio, Madina Bafé prospect, which lies within with significant investment made into 10km of its 2.5 million-ounce Boto the Group’s exploration programmes project. Boto received mine permitting and partnerships. Substantial progress has also been made on our investment and royalty portfolio, with management actively moving to monetise non-core assets in order to fund ongoing exploration activities in Cameroon and thus minimise the Company’s requirement for dilutionary equity funds. in January 2020, positioning it for a development decision and eventual production. As per its fourth quarter 2019 results, it has already announced US$30 million of infrastructure investment. Best results at Madina Bafé to date include 9.60m grading 16.08 g/t Au from 15.10m, 15.00m grading 6.10 g/t Au from 14.00m and 8.00m grading 2.56 g/t Au from 76.00m The Company’s strategy is to develop (Announcements dated 16 July 2014 a portfolio of exploration projects for and 6 February 2018). gold and base metals, and identify potential partners to take them into the advanced exploration and mine development stages. To this end, we regularly review potential new projects and maintain an active dialogue with potential investment and joint-venture partners. OPERATIONS Senala, Senegal In south-eastern Senegal, our 472.5km2 Dalafin licence reached its maximum The Year 3 programme will see exploration move to the more advanced Faré prospect in the north, which showed significant potential during the Group’s own exploration programmes with best results to date of 96.00m grading 1.51 g/t Au and 7.00m grading 86.39 g/t Au (Announcements dated 18 December 2013 and 19 February 2014). An initial programme involving approximately 10,000m of AC drilling is planned to further define and confirm term during the period. However, areas of anomalism. A follow up reverse as a result of the recent progress circulation (‘RC’) drilling programme at the project and our partnerships will be designed contingent on with IAMGOLD and Energy & Mining results from the AC drilling. As a Corporation S.A. (‘EMC’), we were able result of the new licence, new permit to reapply for a new licence, covering (environmental, water and forestry) the same coordinates but now applications are underway to enable renamed Senala. This has provided commencement of the programme security of tenure for up to a further and we look forward to reporting on the 10 years and IAMGOLD continues to results as they become available. invest in the exploration work, under the terms of the earn-in agreement we signed in March 2018. To date IAMGOLD has spent approximately US$1.5 million and earlier this month it confirmed that it will shortly commence Year 3 of the earn-in. As per the terms of the option agreement, IAMGOLD must spend a further US$1 million during Year 3 (to end February 2021) to keep the option in good standing. The proximity of Senala to Boto, and its prime location within the highly gold- endowed Kédougou-Kéniéba inlier represents a significant driver of value for the Group, and securing tenure for up to another 10 years has been an exceptional result. “IAMGOLD’s continued investment at Senala, and its progression towards mine development at Boto, should provide an excellent value creation dynamic throughout 2020.” John McGloin Non-Executive Chairman 10 Oriole Resources AR 2019.indd 10 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:39 PM 27190 14 April 2020 5:06 pm Proof 6Bibemi, Wapouzé and new licences, CameroonIn 2018 we were delighted to announce the completion of an earn-in agreement with Bureau d’Etudes et d’Investigations Géologico-minières, Géotechniques et Géophysiques SARL (‘BEIG3’), a well-established Cameroonian company with strong in-country technical and logistic support, for its two early-stage gold exploration projects, Bibemi and Wapouzé, in northern Cameroon. Through 2019 we have advanced the Bibemi project significantly, having completed 12,500m of trenching that has confirmed two adjacent gold-mineralised corridors, the most robust of which extends over 5.3km and includes best intersections of up to 9.00m at 3.14 g/t Au (Announcement dated 21 May 2019). During the period we have developed a strong geological model at the Bakassi Zone and are planning a drill campaign in 2020 to test the system at depth. To date, drill targets for an initial 1,500m of drilling (over 14 holes) have been pegged. Work at Wapouzé is less advanced, but the two phases of soil sampling identified c.13km strike length of gold anomalism within the eastern Bataol Zone. A targeted trenching programme is planned for 2020 to follow-up on the most significant anomalies.We continue to see great potential in Cameroon becoming the next frontier for gold exploration. The countrywide-survey funded by the World Bank has delivered regional scale geological information, and identified a number of areas of interest which correlated to the views of our own technical team. In addition to our existing Bibemi and Wapouzé licences, we have applied for eight contiguous licences covering 3,500 km2 in central Cameroon. We are discussing funding options with a number of potential partners, with the intention of commencing exploration work as soon as possible once the licences are formally granted. INVESTMENTS AND ROYALTY POSITIONSThe Group has a range of investment and potential royalty positions arising from exploration activities in prior years. We take an active interest in managing these positions, with the ultimate goal of maximising shareholder value. These positions provide a potential source of funding for the Group and are subject to an active and ongoing asset realisation programme. Although the timing and quantum of proceeds from that plan are not easily predictable, the recent disposal of the Company’s 12.27% holding in Tembo for net proceeds of £172k (Announcement dated 25 February 2020) represents the first significant success in that programme. The Company anticipates making a number of further announcements around non-core asset disposals in the coming months. The most significant remaining positions within the Group are set out below.Thani Stratex Resources (‘TSR’)TSR has undergone a significant restructuring that has resulted in the spin-out of its 50%-owned joint venture, Thani Stratex Djibouti. As such, TSR is now exclusively focused on its 100%-owned Hodine licence in Egypt that hosts the Anbat and Hutite projects. At Hutite, former operator Thani Ashanti drilled over 30,000m of RC and diamond drilling between December 2010 and March 2013. On the basis of this work, South Africa-based Quantitative Group estimated an Inferred Resource (non-JORC) of 11,410,000 tonnes grading 1.41 g/t Au for 520,000 in-situ ounces using 0.4 g/t Au cut-off. At Anbat, TSR has previously announced a maiden JORC 2012-compliant Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au within porphyry sills (Announcements dated 6 and 13 December 2017). Limited work has been performed at either project since 2017, and we continue to look for opportunities to maximise value from our 26.1% holding in TSR.ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR11Oriole Resources AR 2019.indd 1114-Apr-20 5:46:47 PMORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM CHAIRMAN’S STATEMENT CONTINUED Thani Stratex D jibouti (‘TSD’) The above restructuring of TSR, Muratdere Our interest in the Muratdere gold The Board’s commitment to maximising the cash available for has resulted in TSD becoming a project in Turkey converted to a 1.2% net exploration work was demonstrated by standalone vehicle that is now funded smelter return royalty during the year the agreement to move to an equity- and managed independently. The (Announcement dated 21 November only remuneration plan in November company is focused on the exploration 2019). Our joint-venture partner, Lodos 2019, and into early 2020. The issue of of epithermal gold projects in Djibouti, Maden Yatırım Sanayii ve Ticaret A.Ş. the options that underpin the plan namely Pandora, Assaleyta and (‘Lodos’), is continuing to develop the will be delayed pending the Company Hesdaba. Results from previous drill Environmental Impact Assessment coming out of a close period, and the campaigns at Pandora in particular (‘EIA’) programme, and we are awaiting necessary shareholder authorities. have demonstrated broad zones of the successful conclusion of this key Salary costs have been accrued until multi-gramme gold mineralisation, phase. such time as the options are issued. with narrower zones of higher-grade mineralisation. Best drilling results to date at Pandora include 35.07m at 1.28 g/t Au and 8.30m at 7.21 g/t Au (Announcement dated 19 April 2018). Hasançelebi and Doğala At two of the Company’s gold projects The successful realisation of our 12.27% stake in Tembo and the £245k in Turkey, Hasançelebi and Doğala, the equity raise early in 2020 will provide Company has signed an exploration funding for continued work on our agreement with Turkish private Cameroonian licences. In the fourth quarter of 2019, company Bati Toroslar Sti (‘Toroslar’), African Minerals Exploration & to replace a similar agreement signed Development (‘AMED’) Fund III the previous year. Due to the need to (TSD’s largest shareholder with a change partners, progress has been 50% stake) committed to funding an slow, but we anticipate a more active exploration programme in Djibouti exploration programme during 2020. (Announcement dated 19 November Oriole will be involved in the exploration 2019). Exploration is currently programme and so its operational underway at the Pandora and Hesdaba overheads in Turkey will be further projects, with further funding to be reduced as costs will be recharged to released in tranches that are subject Toroslar. COVID-19 The Board is monitoring the global health crisis and considering its impact on the position of the Company from an operational and financial perspective, including the measures required to protect our staff. With extreme international travel restrictions in force, and the effects of Covid-19 impacting the Company’s operational areas of Cameroon and Senegal, it is clear that limited exploration work will be possible, at least in Cameroon, to performance milestones. Oriole currently has an 11.80% interest in TSD and maintains a monitoring role in its management, with Tim Livesey to shortly be appointed to the board (Announcement dated 9 March 2020). We look forward to reporting results of the ongoing drilling campaign as they become available. Karaağaç At the Company’s former Karaaǧaç FINANCIAL REVIEW We are pleased to be reporting a considerably reduced loss for the year, until later in the year. Unless advised of £1.66 million (2018: £4.66 million), with otherwise, we anticipate that the significant cost reductions targeted IAMGOLD-drilling campaign in Senegal and achieved, despite an increase in will continue as planned and we will exploration activity. The Group reported continue to drive our asset realisation reduced administrative costs of £1.56 programme, albeit in difficult markets. million, 14% down on the prior year. In the UK and Turkey, the Company has With a significant reduction reported systems in place for all staff to be able last year, the Group has now achieved to work remotely from home. gold project in Turkey, the current a 36% reduction in administrative owner, Anadolu Export Maden Sanayi expenses since 2018 when the new ve Ticaret Limited Şirketi (‘Anadolu’), Board was appointed. With limited exploration work expected over the next three to six months, the Directors and senior management In addition, Research and Development team have decided to go onto reduced credits of £142k were received as cash salaries from April for three months, in in 2019, relating to claims from 2016 to order to conserve cash for the planned 2018. We anticipate a similar success drilling campaign later this year. when we submit our claim for 2019, a year where research and development- related costs were significantly higher as our exploration activities in Cameroon increased. has confirmed an Indicated Resource significantly in excess of the 50,000 ounces of gold necessary to trigger the success-based payment due to Oriole upon meeting that milestone. Currently only US$75k has been received, with US$425k outstanding. We continue to push for full recovery of this debt. 12 Oriole Resources AR 2019.indd 12 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:47 PM 27190 14 April 2020 5:06 pm Proof 6ANNUAL GENERAL MEETING (“AGM”) UPDATEThe Company’s AGM is scheduled for 26 May 2020 at Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD. The Company encourages all shareholders to vote via proxy form in advance of the meeting date and not to attend the meeting in person to minimise the number of individuals present in response to the COVID-19 situation. Guests will not be permitted to attend the meeting. The legal requirements of the AGM will be completed, with no social reception or investor presentation. The Company will adhere to all restrictions and recommendations regarding public meetings, and social distancing measures will be in place.OUTLOOKIn 2020, we look to continue the progress we have made, and to drive shareholder value through the targeted exploration and development of our position in Cameroon. Funding remains difficult for exploration companies in general but with a well-advanced programme of asset realisation and a strong gold price, we believe we can procure the funds we need whilst minimising shareholder dilution and ultimately driving shareholder value. IAMGOLD’s continued investment at Senala, and its progression towards mine development at Boto, should provide an excellent value creation dynamic throughout 2020, whilst we further develop our earlier-stage projects in Cameroon. Cameroon is largely unexplored from a gold and other metals perspective, and we believe that our operational presence over what has been almost two years, gives us first mover advantage for acquiring further prospective ground. The identification of a 3,500 km2 district with proven gold prospectivity has garnered significant interest among the exploration departments of a number of mid-tier mining companies and we look forward to commencing exploration on these licences as soon as possible.On behalf of Oriole’s Board of Directors, I would like to express our appreciation and thanks to all of our employees for their efforts and hard work during the past year.John McGloinNon-Executive Chairman23 March 2020ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR13Oriole Resources AR 2019.indd 1314-Apr-20 5:46:53 PMORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM STRATEGIC REPORT The Directors present their strategic report on the Group for the year ended 31 December 2019. Oriole Resources PLC Company number: 05601091 Registered office: 180 Piccadilly, London, W1J 9HF, UK STRATEGIC MANAGEMENT have delivered successful exploration PRINCIPAL ACTIVITIES The principal activity of the Group is the exploration and development of gold and other high-value base metals projects. STRATEGIC APPROACH The Board’s strategy is to establish the Company as a leading value-adding project-generator in our chosen mineral specialisations and in our geographic areas of operation. We seek to acquire exposure to highly prospective districts, primarily in West Africa, and have developed a first-mover position in Cameroon, an exciting new frontier for gold-exploration. The Board aims to develop a portfolio of projects that cover a range of mineral deposits across multiple jurisdictions, thus mitigating sovereign, technical and operational risks. The Group finances its activities through the monetisation of more advanced projects and through periodic capital raisings. ORGANISATION OVERVIEW The Board of Directors, appointed in 2018, provide extensive experience in the exploration of mineral projects and the operation of public companies. The Board is ably supported by a management team who, for many years, projects across Turkey and Africa. The Board of Directors The Board is responsible for providing strategic direction for the Group, setting objectives and management policies and agreement on performance criteria. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and monthly operation reviews. The current composition of the Board is two Executive Directors and two Non- Executive Directors. The Board believes the composition of the Board provides an appropriate mix to conduct the Group’s affairs at the present time. The Audit Committee The Audit Committee provides a formal review of the effectiveness of the internal control systems, the Group’s financial reports and results announcements, and the external audit process. It comprises John McGloin (Non- Executive Chairman) and David Pelham (Independent Non- Executive Director). The external auditors and Bob Smeeton the Chief Financial Officer attend by invitation when appropriate. No internal control issues were identified during 2019 requiring disclosure. 14 The Remuneration Committee The Remuneration Committee provides a formal and transparent review of the remuneration of the Executive Directors and senior employees and makes recommendations to the Board on individual remuneration packages. This includes the award of non-contractual performance related bonuses and share options. Remuneration packages are designed to reward, motivate, retain and recruit individuals. Bonuses are only paid in recognition of performance. The committee comprises John McGloin (Non- Executive Chairman) and David Pelham (Independent Non- Executive Director). No Director took part in discussions concerning the determination of their own remuneration. BUSINESS ENVIRONMENT The price of gold increased by 19% during the year, from an opening position of US$1,281 per ounce, to US$1,523 per ounce at 31 December 2019. With continued economic uncertainty, we believe gold’s reputation as a safe haven will continue to give upward pressure on its price. In addition, since 2012, exploration budgets and teams have been cut in the major gold producers, and resource pipelines have not been replenished. The need to replenish resources is driving renewed interest in early-stage exploration. The junior exploration sector will benefit from this and we expect to see increased appetite for investment into our sector, once financial markets start to recover from the current Covid-19 related downturn. Exploration Industry Risks: Mineral exploration is speculative in nature, involves many risks and is frequently unsuccessful. Following any discovery, it can take a number of years from the initial phases of drilling and identification of mineralisation until production is possible, during Oriole Resources AR 2019.indd 14 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:53 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR PRINCIPAL RISKS AND UNCERTAINTIES The Group’s operations are exposed to a variety of risks, many of which are outside of the Company’s control. which time the economic feasibility of arising out of foreign governmental production may change. Substantial sovereignty over the areas in which Foreign exchange risks: The Group operates internationally expenditures are required to establish these operations are conducted, as well and is exposed to foreign exchange mineral reserves and to construct as risks of loss due to civil strife, acts of risk arising from various currency mining and processing facilities. war, guerrilla activities and insurrection. exposures, primarily with respect to the As a result of these uncertainties, no assurance can be given that the exploration programmes undertaken by the Group will result in any new commercial mining operations being brought into operation. Government activity, which could include non- renewal of licences, may result in any income receivable by the The Board only conducts operations Turkish Lira, Euro and US Dollar. in those countries with a stable The Group’s exposure to foreign political environment and which have exchange movements is set out in established acceptable mining codes. Note 19 of the Accounts. Risks to The Company adheres to all local laws exchange movements are mitigated and pays heed to local customs. by minimising the amount of funds Financial and liquidity risks: The main financial risks facing the Group being adversely affected. In Group are the availability of adequate particular, changes in the application funding and fluctuations in foreign or interpretation of mining and exchange rates. held overseas. All treasury matters are handled centrally in the UK. All requests for funds from overseas operations are reviewed and authorised by Board members. The Group does not hedge its exposure to foreign currencies exploration laws and/or taxation provisions in the countries in which the Group operates could adversely affect the value of its interests. The Group’s main source of finance is and recognises the profits and losses the monetisation of projects supported resulting from currency fluctuations as where necessary by the issue of share and when they arise. capital. Tight budgetary and financial These risks are mitigated as much as controls are maintained across the possible by building and maintaining Group. The Group only deals with a pipeline of projects at various stages high-quality banks. It does not hold of development, by employing highly derivatives, does not trade in financial experienced and highly trained instruments, does not engage in geologists, both at Board level and hedging arrangements and does not at the operational level and by enter into binding commitments for maintaining good relationships with exploration expenditure. As the Group does not operate within the European Union, the Directors currently anticipate that the impact on the business of the UK’s exit from the European Union will be limited to the effects of potential increased foreign exchange fluctuations. As a result of these fluctuations, it is expected that the reported results of the Group may the Governments of the countries in which we operate. Political risks: All of the Group’s operations are located Tight budgetary and financial controls decline in the short- to medium-term. are maintained across the Group. However, the Directors do not expect The use of interest-bearing deposit there to be any significant lasting accounts is maximised and cash flow impact. in a foreign jurisdiction. As a result, the forecasts are constantly updated and Group is subject to political, economic reviewed by the Board. Liquidity risk: The Group’s liquidity risk is considered and other uncertainties, including but not limited to, changes in policies or the personnel administering them, terrorism, nationalisation, appropriation of property without fair compensation, cancellation or modification of contract rights, foreign exchange restrictions, currency fluctuations, export quotas, royalty and tax increases and other risks The financial exposure of the Group, to be significant as it is a pre-revenue for a number of its exploration projects, business. The Directors regularly review is substantially reduced by partnering the opportunities for asset realisation with third parties in exploration joint and the need for further equity raising. ventures. The Group does not enter into binding commitments for exploration expenditure. Cash forecasts are updated continuously. The financial exposure of the Group is substantially reduced by partnering with third parties in exploration joint ventures. 15 Oriole Resources AR 2019.indd 15 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:54 PM ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM STRATEGIC REPORT CONTINUED BUSINESS PERFORMANCE 2019 OPERATIONS The Group’s main operations are split between active exploration projects and the management of our investment and royalty positions. Active Exploration projects: The primary focus for the Group’s own planned to move to the stand-alone Faré target in the north of the licence. exploration activities is our position in We look forward to reporting on these Cameroon. In 2018 the Group signed an drill results as they become available, earn in agreement with BEIG3 to gain which will add to the already extensive an interest in the Bibemi and Wapouzé results from previous work by the licences in northern Cameroon. Group that delivered best results of Work on the licences has progressed 96.00m grading 1.51 g/t Au and 7.00m throughout 2019, with 12,500m of grading 86.39 g/t Au (Announcements trenching at Bibemi, and two phases of dated 18 December 2013 and 19 soil sampling at Wapouzé. Encouraging February 2014). results have been observed at both licences and further exploration programmes have been planned for 2020. We are currently awaiting confirmation of licence renewal for both Bibemi and Wapouzé. Both applications are moving through the renewal process, with our rights secured by deemed tenure rules. Investment and royalty positions: TSR has recently completed a re- organisation, with its TSD subsidiary hived out to become a standalone company. TSD, which operates the Pandora, Assaleyta and Hesdaba licences in Djibouti, is currently undergoing an active drilling campaign, funded by AMED, the 50% In addition, the Group has applied for main shareholder, and we look forward a district scale package of licences to receiving preliminary results shortly. in central-Cameroon, covering 3,500 km2 of highly prospective ground that has yielded anamolous gold samples during a World Bank-funded, regional- scale stream sediment sampling programme. Exploration activities are being planned, with the licence application process expected to be completed shortly. Oriole currently has a 11.80% interest in TSD and continues to have a 26.10% interest in TSR and its Egyptian assets. At the Company’s former Karaaǧaç gold project in Turkey, Anadolu has confirmed a JORC 2012-compliant Indicated Resource of 156,798oz, which has triggered a success based payment of US$500k to Oriole. We are In 2018, the Group entered an disappointed to report the continued agreement with Canadian-listed failure by Anadolu to meet an agreed gold miner IAMGOLD, for it to earn- repayment schedule for this debt in to the exploration licence at Dalafin in Senegal. This 472 km2 of highly prospective ground, in the but we are continuing to pursue its repayment. Oriole also retains a 1.5% net smelter return royalty on any future middle of the Kédougou-Kéniéba mineral production. inlier, is surrounded by historic and contemporary gold discoveries. As a result of the US$8 million earn-in programme, around US$1.5 million of exploration expenditure has been incurred by IAMGOLD, and further substantial drilling is planned for At the Muratdere Madencilik copper- gold project in northern Turkey, our joint-venture partner, Lodos, exercised its option to convert our sub-10% interest into a 1.2% post-Turkish tax royalty position. 2020, subject to possible operational The other investment assets held by restrictions as a result of Covid-19. the Group during 2019 were holdings Importantly, the Group managed to re-licence the Dalafin land package which, under its new name Senala, now has security of tenure for up to a further 10 years. The earn-in is progressing as scheduled and exploration is now in Tembo and Aforo. Tembo was held to the year end but disposed of in early 2020, for net proceeds of £172k, as part of the Company’s asset realisation strategy. 16 Oriole Resources AR 2019.indd 16 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:46:54 PM 27190 14 April 2020 5:06 pm Proof 6Aforo unfortunately found funding hard to come by and the business closed in 2019, leading to a write off of £227k in these financial statements. Financial Review:The Group’s loss after tax for the year was £1,660k (2018: loss of £4,661k). Administration expenses of £1,556k (2018: £1,806k) were 14% lower than the previous year, building on that years’ 26% reduction from 2017. Work to reduce the cost base is continuing. In addition to the savings, an accrual of £69k for salaries will be released as soon as the Directors Share Option Remuneration plan can be fulfilled by the issue of options.The Group loss after tax was inflated due to an exchange loss of £325k on the translation of the Dalafin (now Senala) asset, which is denominated in Euros. The Group ended the year with a cash balance of £163k, a decrease in the year of £1,124k following £711k investment into the Group’s exploration work in Cameroon. Incoming funds included £522k from successful conclusion of the long-running VAT dispute (Announcement dated 29 April 2019) and £142k from the reclamation of Research and Development tax credits from HMRC. During 2019, the Group commenced an asset realisation programme with the intention of raising incoming cash to fund forthcoming exploration activities whilst minimising share holder dilution. Significant progress has been made, including the disposal of the Tembo holding (Announcement dated 25 February 2020).Future developmentsThe Company advances its exploration projects on the basis of analysing results to date, deciding on the most cost effective techniques for the next stage and raising funds to support those activities as appropriate. In addition, the Company regularly reviews potential new exploration projects at various stages of development, and based within the European and African time-zones.KEY PERFORMANCE INDICATORS The Board monitors the following KPIs on a regular basis: Finance related: °Share price versus its peer group °Funding and cash flow forecasts °Overheads as a percentage of total expenditure Project related: °Exploration activities and results °Metres drilled °Acquisition of new licence areas °Exploration expenditure by project.ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR17Oriole Resources AR 2019.indd 1714-Apr-20 5:46:55 PM27190 14 April 2020 5:06 pm Proof 6SECTION 172(1) STATEMENT Promotion of the Company for the benefit of the members as a whole.The Director’s believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006.The requirements of s172 are for the Directors to: °Consider the likely consequences of any decision in the long term; °Act fairly between the members of the Company; °Maintain a reputation for high standards of business conduct; °Consider the interests of the Company’s employees; °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 Company operates as a gold-exploration business, which is inherently speculative in nature and, without regular income, is largely dependent upon fund-raising for its continued operation. The pre-revenue nature of the business is important to the understanding of the Company by its members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under AIM regulations. The application of the s172 requirements can be demonstrated in relation to the some of the key decisions made during 2019: °Pursuit of an aggressive asset realisation strategy: the choice between raising new funds from equity or from asset disposals was driven by the Board’s belief that the prevailing share price during the year was not reflective of the Company’s value, and so asset realisation provided the best route to enhanced shareholder value for existing members. °Remunerate the Directors with share options in lieu of cash: having decided on an asset realisation plan the Directors also decided that to maximise funds that could be used for exploration activities they would be remunerated in share options instead of cash, for a three-month period commencing 1 November 2019. As well as maximising cash to use operationally, this has the added benefit of more fully aligning the interests of the Directors with those of the members. °Expanding our position in Cameroon: having established our presence in Cameroon, and developed a good working relationship with our partners and suppliers there, the decision to apply for new licences was driven by the Board’s view that the long-term future of mineral exploration in Cameroon is very positive. Inclusion of our existing partner in the new licences was seen as a mutually beneficial decision, having formed strong working relationships with them on the initial licences. As a gold exploration Company operating in West Africa, the Board takes seriously its ethical responsibilities to the communities and environment in which it works. We abide by the local and relevant UK laws on anti-corruption & bribery. Wherever possible, local communities are engaged in the geological operations and support functions required for field operations, providing much needed employment and wider economic benefits to the local communities. In addition, we follow international best practise on environmental aspects of our work. Our goal is to meet or exceed standards, in order to ensure we obtain and maintain our social licence to operate from the communities with which we interact.The interests of our employees are a primary consideration for the Board. An inclusive share-option programme allows them to share in the future success of the Company, personal development opportunities are supported and a health and security support network is in place to assist with any issues that may arise on field expeditions. ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 18STRATEGIC REPORT CONTINUEDOriole Resources AR 2019.indd 1814-Apr-20 5:47:01 PM27190 14 April 2020 5:06 pm Proof 6CORPORATE GOVERNANCE The Chairman of the Board of Directors of Oriole Resources PLC (‘Oriole’ or ‘the Company’ or’ the Group’ or ‘we/our’) has a responsibility to ensure that Oriole has a sound corporate governance policy and an effective Board. The Board has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code in line with the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-quoted companies to adopt and comply with a recognised corporate governance code. The QCA code identifies ten principles to be followed in order for companies to deliver growth in long-term shareholder value, encompassing effective management with regular and timely communication to shareholders. This report follows the structure of those principles and explains how we have applied the guidance as well as disclosing any areas of non-compliance. We will provide annual updates on our compliance with the QCA Corporate Governance Code. The Company notes that it does not comply with the QCA Corporate Governance Code as no Audit Committee Report has been prepared in this Annual Report. The Board has assessed that, having regard to the nature and current stage of development of the Company and its projects, this is not currently required for the Company to maintain its corporate governance and will continue to review this in the future.The sections below set out how the Group applies the ten principles of the QCA code and sets out areas of non-compliance.There have been no significant governance changes during the year.Principle 1: Establish a strategy and business model which promotes long-term value for shareholders The Company is a gold and base metals exploration specialist, with operations in Africa and Turkey. Our goal is to deliver long term value for our shareholders. We aim to do this by identifying good quality grassroots and early-stage exploration projects. Consequently we: °use our expertise to identify those areas with economically feasible deposits; °assess the business environment of the target country and its attractiveness for prospecting and eventual mining operation; °understand existing interests in a licence area in order to ensure we can earn-in to existing interests on terms favourable to our shareholders. Early stage mineral exploration is by its nature speculative and we aim to reduce the risks inherent in the industry by careful application of funds throughout individual projects. We do that by: °Reviewing existing exploration data; °Establishing close in-country partnerships for our projects; °Applying the most appropriate cost-effective exploration techniques in order to determine whether further work, using increasingly expensive exploration techniques, is justified; and °Appreciating the likely realisation routes that will be available to us as the project moves towards development.Principle 2: Seek to understand and meet shareholder needs and expectations The Company is committed to engaging with its shareholders to ensure that its strategy, operational results and financial performance are clearly understood. We engage with our shareholders via roadshows, attending investor conferences and through our regular reporting on the London Stock Exchange. Roadshows are typically timed to follow the release of interim and final results. The Company regularly takes part in investor conferences, both in the UK and internationally. LSE announcements include details of the website, Twitter page and include phone numbers to contact the Company and its professional advisors.PRIVATE SHAREHOLDERS The AGM is the main forum for dialogue with retail shareholders and the Board. The Notice of Meeting is sent to shareholders at least 21 days before the meeting. All Directors attend the AGM and are available to answer questions raised by shareholders. For each vote, the number of proxy votes received for, against and withheld is announced at the meeting. The results of the AGM are announced via the London Stock Exchange. In addition, the Executive Directors regularly attend investor forums specific to the mining industry and engage with shareholders at those events. Investors can contact us via our website (https://www.orioleresources.com) or by email (info@oriolereources.co.uk). Retail shareholders also regularly attend investor evenings held by our brokers or other industry bodies and we publicise our attendance via LSE announcements and Twitter. In addition, our up to date Corporate presentation is made available on our website. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR19Oriole Resources AR 2019.indd 1914-Apr-20 5:47:03 PM27190 14 April 2020 5:06 pm Proof 6INSTITUTIONAL SHAREHOLDERS The Directors actively seek to build a relationship with institutional shareholders. Shareholder relations are managed primarily by the Chief Executive Officer and Chief Financial Officer. The Chief Executive Officer and Chief Financial Officer make presentations to institutional shareholders and analysts throughout the year, mainly in London and Cape Town through events such as Mines and Money and 121 Group. We also have ad-hoc meetings with our shareholders via conference call and email. The Board as a whole is kept informed of the views and concerns of major shareholders by the Chief Executive Officer. Any significant investment reports from analysts are also circulated to the Board. The Non-Executive Chairman and Non-Executive Director are available to meet with major shareholders if required to discuss issues of importance to them and are considered to be Independent from the executive management of the Company. Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long term success. Aside from our shareholders, our most important stakeholder groups are our employees, local partners and those local communities that may be impacted by our exploration activities. The Board is regularly updated on stakeholder issues and their potential impact on our business to enable the Board to understand and consider these issues in decision-making. The Board understands that maintaining the support of all its stakeholders is paramount for the long-term success of the Company.EMPLOYEES We maintain only a small permanent staff across the UK, Africa and Turkey and as such employee engagement with the Executive Directors is frequent with a scheduled weekly team call as well as daily meetings and discussions. We aim to provide an environment which will attract, retain and motivate our team and monitor the effectiveness by regular one-on-one discussions and a recently introduced annual appraisal system. We have recently published a new employee handbook in order to provide a comprehensive document detailing all the policies and procedures covering all aspects of employment with Oriole Resources PLC. Our key value underpinning the Employee Handbook is to treat all employees fairly and equally and to promote ethical behaviour, diversity and non-discrimination.Relevant, cost-effective training courses are available to all employees and are discussed during the bi-annual appraisal process. LOCAL PARTNERS AND COMMUNITIES Our operations provide employment in remote areas of developing countries. Essential to our success is the establishment of close working relationships with local partners. We seek local partners who have a good understanding of the local exploration and mining industry and regulations within their country, and with the capacity and capability to assist with the management and maintenance of the project.We are mindful of our obligations to the local environment and operate to high levels of health and safety in respect of both our local workers and the local community. Employee training focuses on operating safely and considerately in these communities. Engagement with local communities is dependent on jurisdiction and the stage of exploration but is typically by public forum or with local or regional leaders, including site visits and workshops. Social projects in the local communities are dependent on local need and also the stage of exploration/level of project investment. Examples of our previous social projects include drilling new boreholes for drinking water, provision of medical clinics, supply of equipment to a local school and building a new road.As projects move forward, towards potential mining activities, we seek to bring in partners who can credibly make the investments to move towards mine production. In doing so we have regard for their ability and desire to move projects forward, their industry reputation and their commitment to treating the local communities fairly and protecting the environment. We enter agreements that allow us to monitor their activities and have monthly updates on project progress.ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 20STRATEGIC REPORT CONTINUEDOriole Resources AR 2019.indd 2014-Apr-20 5:47:07 PM27190 14 April 2020 5:06 pm Proof 6Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation AUDIT, RISK AND INTERNAL CONTROL: FINANCIAL CONTROLS The Company has an established framework of internal financial controls, the effectiveness of which is regularly reviewed by the Executive Management, the Audit Committee and the Board. The key financial controls are: °The Board is responsible for reviewing and approving overall Company strategy, approving new exploration projects and budgets, and for determining the financial structure of the Company including treasury, tax and dividend policy. Monthly results and variances from plans and forecasts are reported to the Board; °The Audit Committee, comprising the two Non-executive Directors, assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls; °Regular budgeting and forecasting is performed to monitor the Company’s ongoing cash requirements and cash flow forecasts are circulated to the Board on a monthly basis; °Actual results are reported against budget and prior year and are circulated to the Board; °The Company has an investment appraisal system that considers expected costs against a range of potential outcomes arising from the exploration opportunities that we are invited to participate in; °Regular reviews of exploration results are performed as the basis for decisions regarding future expenditure commitment; °Due to the international nature of the business there are, at times, significant foreign exchange rate movement exposures. Cash flow forecasting is done at the ‘required currency’ level and foreign currency balances are maintained to meet expected requirements; and °For exploration projects, we manage the risk of failure to find economic deposits by low cost early stage exploration techniques, with detailed analysis of results. Moving projects to more expensive exploration techniques requires a rigorous review of results data prior to deciding whether to proceed with further work. NON-FINANCIAL CONTROLS The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The principal elements of the Group’s internal control system include: °Close management of the day-to-day activities of the Group by the Executive Directors; °An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-making and rapid implementation while minimising risks; and °Central control over key areas such as capital expenditure authorisation and banking facilities.The Group reviews at least annually the effectiveness of its system of internal control, whilst also having regard to its size and the resources available. As part of the Group’s plans we continue to review a number of non-financial controls covering areas such as regulatory compliance, business integrity, health and safety, and corporate social responsibility. All employees are aware of their obligations under anti-bribery and corruption legislation and detailed information is provided in the Employee Handbook. In addition, whistle-blowing procedures have been established and publicised to all employees.ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR21Oriole Resources AR 2019.indd 2114-Apr-20 5:47:13 PM27190 14 April 2020 5:06 pm Proof 6Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chair The Board comprises the Non-Executive Chairman, two Executive Directors and one Non-Executive Director. All current Directors were appointed during 2018 as part of a full Board refresh. John McGloin serves as Independent Non-Executive Chairman and David Pelham as an independent Non-Executive Director. Both Non-executive Directors have extensive experience in the mining industry, are qualified geologists and have considerable experience of serving on the Board of public companies. Given the current board structure, the Company has not designated a Senior Independent Director.The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Company and industry on the other, to enable it to discharge its duties and responsibilities effectively. All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.The Board aim to meet at least monthly. The agenda is set by the Company Secretary in consultation with the Chairman and CEO. The standard agenda points include: °Review of previous meeting minutes and actions arising there from; °A report by the CEO covering all operational matters; °A report from the CFO covering all financial matters; °Any other business including update of Register of Conflicts.DIRECTORS’ CONFLICT OF INTEREST The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board. A Register of Conflicts is maintained and is a standard agenda item at each Board Meeting. The Board has access to the Company’s nominated adviser, its brokers and its lawyers. The advisers do not typically provide materials for Board meetings except if requested to do so for the purposes of discussing upcoming regulations and other issues. Board meetings are deemed quorate if two Board members are present and providing 7 days’ notice of such meeting has been given and waived by the non-attending Directors.Directors and Officers Liability insurance is maintained for all Directors and key employees.The table below sets out the attendance statistics for all current Board members through 2019:Meetings attendedMeetings held during the yearTim Livesey1010Bob Smeeton1010John McGloin1010David Pelham1010Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, particularly so in the area of gold and base metal exploration and development. Biographies of the Directors are available on the company website, orioleresources.com. All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings by the Company Secretary. Contracts are available for inspection at the Company’s registered office and at the Annual General Meeting (“AGM”). New Directors are selected having regards to the Company’s needs for a balance of operational, industry, legal and financial skills. Experience of the Mining industry and in particular the exploration sector is important but not critical, as is experience of running a public company.All Directors retire by rotation at regular intervals in accordance with the Company’s Articles of Association. APPOINTMENT, REMOVAL AND RE-ELECTION OF DIRECTORSThe Board makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous and transparent procedure for appointments. The Company’s Articles of Association require that one-third of the Directors must stand for re-election by shareholders annually in rotation; that all Directors must stand for re-election at least once every three years; and that any new Directors appointed during the year must stand for re-election at the AGM immediately following their appointment. INDEPENDENT ADVICE All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense from lawyers, the nominated adviser, brokers and other professional advisors that they deem relevant. In addition, the Directors have direct access to the advice and services of the Company Secretary and Chief Financial Officer who, due to the size of the Company, are currently the same individual.ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 22STRATEGIC REPORT CONTINUEDOriole Resources AR 2019.indd 2214-Apr-20 5:47:13 PM27190 14 April 2020 5:06 pm Proof 6Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement During 2018 the Board of Directors was fully refreshed. During 2019 the Board has adopted a policy to evaluate the Board’s performance based on clear and relevant objectives, seeking continuous improvement. The clear and relevant objectives that the Board has identified are as follows: °suitability of experience and input to the Board; °attendance at Board and committee meetings; and °interaction with management in relevant areas of expertise to ensure insightful input into the Company’s business. The Board will review on a regular basis the effectiveness of its performances as a unit, as well as that of its committees and the individual directors, based against the criteria set out above. The board performance review will be carried out internally from time to time, and at least annually. The review should identify development or mentoring needs of individual directors or the wider senior management team. As part of the performance review, the Board will consider whether the membership of the Board should be refreshed. The review will also identify any succession planning issues and put in place processes to provide for succession planning. Principle 8: Promote a culture that is based on ethical values and behaviours The Board aims to lead by example and do what is in the best interests of the Company. We operate in remote and under-developed areas and ensure our employees understand their obligations towards the environment and in respect of anti-bribery and corruption. Details of the Company’s values are set out in the Employee Handbook that was published to all employees during 2018. This document brings together various policies that have been distributed to all employees previously. Regular calls and meetings serve to refresh and re-iterate the Company’s ethical standards as they apply to the operational issues that are discussed on that call. Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the BoardBOARD PROGRAMME The Board aims to meet monthly and as and when required. The Board sets direction for the Company through a formal schedule of matters reserved for its decision. During the year to December 2019 the Board met for ten scheduled meetings. The Board and its Committees receive appropriate and timely information prior to each meeting; a formal agenda is produced for each meeting and Board and Committee papers are distributed by the Company Secretary several days before meetings take place. Any Director may challenge Company proposals and decisions are taken democratically after discussion. Any Director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all Directors. Any specific actions arising from such meetings are agreed by the Board or relevant Committee and are then followed up by the Company’s management. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR23Oriole Resources AR 2019.indd 2314-Apr-20 5:47:19 PM27190 14 April 2020 5:47 pm Proof 6ROLES OF THE BOARD, CHAIRMAN AND CHIEF EXECUTIVE OFFICERThe Board is responsible for the long-term success of the Company. There is a formal schedule of matters reserved to the Board. It is responsible for overall Group strategy; approval of exploration projects; approval of the annual and interim results; annual budgets; dividend policy; and Board structure. It monitors the exposure to key business risks. There is a clear division of responsibility at the head of the Company. The Chairman is responsible for running the business of the Board and for ensuring appropriate strategic focus and direction.The CEO is responsible for proposing the strategic focus to the Board, implementing it once it has been approved and overseeing the management of the Company. The CEO, together with the CFO and other senior employees, is responsible for establishing and enforcing systems and controls, and liaison with external advisors. The CEO has responsibility for communicating with shareholders, assisted by the CFO and other senior employees.All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. The business reports monthly on its headline performance against its agreed budget, and the Board reviews the monthly update on performance and any significant variances are reviewed at each meeting. Senior executives below Board level attend Board meetings when deemed appropriate by the CEO or Chairman, to present business updates. BOARD COMMITTEES The Board is supported by the Audit and Remuneration committees. Each committee has access to such resources, information and advice as it deems necessary, at the cost of the Company, to enable the committee to discharge its duties. The two committees comprise both of the Non-Executive Directors.The Audit Committee provides a formal review of the effectiveness of the internal control systems, the Group’s financial reports and results announcements and the external audit process. The Committee meets twice per year to review the published financial information and to meet with the Auditors. The Remuneration Committee provides a formal and transparent review of the remuneration of the Executive Directors and senior employees and makes recommendations to the Board on individual remuneration packages. The Committee met once during the year.Notable work undertaken during 2019 by the Audit Committee included meeting with the Company’s independent auditor in connection with the audit of the Group financial statements for the year ended 31 December 2018, and it was noted that there were no material matters arising. The Audit Committee has not provided a separate report on its activities.The Remuneration Committee has produced a report on its activities as set out on page 25.Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Company communicates with shareholders through the Annual Report and Accounts, full-year and half-year results announcements, the Annual General Meeting and one-to-one meetings with large existing or potential new shareholders. The Company regularly posts LSE announcements covering operational and corporate matters, such as drilling results and significant changes in ownership positions across historic projects in which it still retains an investment. A range of corporate information (including all Company announcements and a corporate presentation) is also available to shareholders, investors and the public on the Company’s corporate website, www.orioleresources.com and also on its Twitter feed @OrioleResources. The Board receives regular updates on the views of shareholders through briefings and reports from Investor Relations, the CEO, CFO and the Company’s brokers. The Company communicates with institutional investors frequently through briefings with management. In addition, analysts’ notes and brokers’ briefings are reviewed to achieve a wide understanding of investors’ views. This Strategic Report was approved by the Board of Directors on 23 March 2020.Tim LiveseyChief Executive OfficerORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 24STRATEGIC REPORT CONTINUEDOriole Resources AR 2019.indd 2414-Apr-20 5:47:24 PM27190 14 April 2020 5:47 pm Proof 6ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR25REPORT OF THE REMUNERATION COMMITTEE The Remuneration and Nominations committee of the Board is responsible for providing recommendations to the Board on matters including the composition of the Board and competencies of directors, the appointment of directors, the performance of the executive directors and senior management, and making recommendations to the Board on matters relating to their remuneration and terms of employment. The committee will also make recommendations to the Board on proposals for the granting of shares awards and other equity incentives pursuant to any share award scheme or equity incentive scheme in operation from time to time. The remuneration and nominations committee meet at least once a year. The members of the committee are John McGloin (chair of the committee) and David Pelham.The Board recognises that the remuneration of Directors (both executive and non-executive) and senior management is of legitimate concern to shareholders and is committed to following current best practice. The Group operates within a competitive environment and its performance depends upon the individual contributions of the Directors and senior management. Throughout the year, the Company paid remuneration to Directors and senior management in accordance with Contracts for Services (in respect of non-executive directors) and Service Agreements (in respect of officers and senior management). The policy of the Board is to provide remuneration packages designed to attract, motivate and retain personnel of the calibre necessary to maintain the Group’s position and to reward them for enhancing shareholder value and return. It aims to provide sufficient levels of remuneration to do this, but to avoid, paying more than is necessary. Remuneration packages also reflect levels of responsibilities and contain incentives to deliver the Group’s objectives. On 19 March 2019 the Board approved a share option plan, and granted and approved share options over 20,700,000 ordinary shares in the capital of the Company exercisable at 0.37 pence per ordinary share, being the mid-market price on the date of grant. Remuneration paid to the Directors is set out below:Salaries and other short-term benefitsPost employment benefits2019Salary£Accrued salary (see note below)£Taxable benefits£Pension£Share based payments£Total£Tim Livesey 118,75032,2101,1243,18811,808167,080Robert Smeeton 95,00025,768–2,5506,210129,528John McGloin 30,0006,000–––36,000David Pelham 23,3334,667–––28,000Total267,08368,6451,1245,73818,018360,608Salaries and other short-term benefitsTermination benefitsPost employment benefits2018Salary£Taxable benefits£Severance pay£Pension£Share based payments£Total£Peter Addison (resigned 3 September 2018)26,320–9,750––36,070Dr Bob Foster (resigned 1 March 2018)2––24,998–25,000Perry Ashwood (resigned 4 June 2018)53,4631,49267,427–1,145123,527Chris Worcester (resigned 3 September 2018)20,921–7,7504963,43432,601Tim Livesey (appointed 1 March 2018)125,000––2,37511,259138,634Robert Smeeton (appointed 4 June 2018)66,923––1,3382,27670,537John McGloin (appointed 3 September 2018)12,000––––12,000David Pelham (appointed 3 September 2018)9,333––––9,333Total313,9621,49284,92729,20718,114447,702Oriole Resources AR 2019.indd 2514-Apr-20 5:47:25 PM27190 14 April 2020 5:47 pm Proof 6ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 26REPORT OF THE REMUNERATION COMMITTEE CONTINUEDAs announced on 14th November 2019 the Directors agreed to take share options in lieu of salary for the three months to 31 January 2020. These options, which are subject to board, option recipient and shareholder approval (to be sought at the 2020 Annual General Meeting), will be granted, at the nominal value of the Company’s Ordinary Shares, in sufficient quantities, when compared to the prevailing market prices for those three months, to match the value of salary to be foregone. Salary for the two months to 31 December 2019 has been accrued and will be converted to share options at the earliest possible opportunity.Details of share options held by Directors over the ordinary shares of the Company are set out below. The market price of the Company’s shares at the end of the financial year was 0.43p per 0.1p share (2018: 0.36p) and the range of market prices during the year was between 0.25p and 0.65p.DirectorAt 1/1/19GrantedAt 31/12/19Exercise Price (p)Issue DateVesting DateTim Livesey2,000,000–2,000,0000.901/3/181/3/19Tim Livesey2,000,000–2,000,0000.901/3/181/3/20Tim Livesey2,000,000–2,000,0000.901/3/181/3/21Tim Livesey–2,000,0002,000,0000.3719/3/1919/3/20Tim Livesey–2,000,0002,000,0000.3719/3/1919/3/21Tim Livesey–2,000,0002,000,0000.3719/3/1919/3/22Robert Smeeton666,666–666,6660.624/6/184/6/19Robert Smeeton666,667–666,6670.624/6/184/6/20Robert Smeeton666,667–666,6670.624/6/184/6/21Robert Smeeton–2,000,0002,000,0000.3719/3/1919/3/20Robert Smeeton–2,000,0002,000,0000.3719/3/1919/3/21Robert Smeeton–2,000,0002,000,0000.3719/3/1919/3/22In compliance with the Pensions Act 2008 the Company has established a Workplace Pension Scheme for its UK based Directors and employees. The Executive Directors and employees are members of the scheme and contributions are in line with the statutorily prescribed minimum contributions for employees and employers. The Non-Executive Directors have individually elected to opt-out of the Workplace Pension Scheme.Report approved on behalf of the Remuneration Committee on 23 March 2020, byJ McGloinChairman Oriole Resources AR 2019.indd 2614-Apr-20 5:47:31 PM27190 14 April 2020 5:47 pm Proof 6 °state whether the Financial Statements comply with IFRS’s as adopted by the European Union, subject to any material departures disclosed and explained in the Financial Statements; and °prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors confirm that they have complied with the above requirements in preparing the Financial Statements. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The maintenance and integrity of the website is the responsibility of the Directors. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the information contained in the Financial Statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements and other information included in annual reports may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website.SUBSTANTIAL SHAREHOLDINGS As at 24 January 2020, the Company was aware of the following holdings of 3% or more in the Company’s issued share capital:Shareholder Number of shares % of issued share capital Preston Road Limited 53,710,219 7.65 R Welschinger39,875,0005.68Trinvest AB37,050,0005.28Teck Cominco Limited 35,727,487 5.09 Orion Trust26,469,9253.77 ORIOLE RESOURCES PLC Company number: 05601091 The Directors present their report, together with the Financial Statements and auditor’s report, for the year ended 31 December 2019. GENERAL INFORMATION Certain information required by the Companies Act 2006 relating to the information to be provided in the Directors’ Report is set out in the Group Strategic Report and includes: principal activities, future developments, principal risks and uncertainties and events after the end of the reporting period. STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Under that law the Directors have prepared the Group and Parent Company Financial Statements in accordance with International Financial Reporting Standards (IFRS’s) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and Group as at the end of the financial year and of the profit and loss of the Group for that period. In preparing these Financial Statements, the Directors are required to: °select suitable accounting policies and then apply them consistently; °make judgements and accounting estimates that are reasonable and prudent; ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR27DIRECTORS’ REPORTOriole Resources AR 2019.indd 2714-Apr-20 5:47:33 PM27190 14 April 2020 5:47 pm Proof 6DIRECTORS AND THEIR INTERESTS The current Directors are listed on page 3. In compliance with the Company’s Articles of Association, John McGloin, will retire and, being eligible, offer himself for re-election at the forthcoming Annual General MeetingThose Directors serving at the end of the year, or at the date of this report, had beneficial interests in the issued share capital and share options of the Company as follows:As at 31 December 2019As at 31 December 2018Ordinary sharesShare optionsOrdinary sharesShare optionsTim Livesey6,315,36912,000,0004,746,8006,000,000Robert Smeeton3,572,3278,000,0002,000,0002,000,000John McGloin––––David Pelham948,105–––Total10,835,80120,000,0006,746,8008,000,000PROVISION OF INFORMATION TO AUDITOR The Directors who held office at the date of this report confirm that, so far as they are individually aware, there is no relevant audit information of which the Company’s auditors are unaware and the Directors have taken all the 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. GOING CONCERNThe Company raises money for exploration and capital projects as required. There can be no assurance that the Group’s projects will be developed in accordance with the current plans. Future work on these projects, the levels of production and the financial returns arising there from, may be adversely affected by factors (e.g. COVID-19) outside of the control of the Group.Notwithstanding the loss incurred during the year under review, the Directors have a reasonable expectation that the Group will have sufficient access to funds to provide adequate resources to continue in operational existence for the foreseeable future being a period of 12 months from the date of signing of these financial statements. The Group has therefore continued to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on Directors assumptions and conclusions thereon are included in the statement on going concern in note 1 to the Financial Statements.The auditors have made reference to going concern by way of a material uncertainty within their audit report.EVENTS AFTER THE REPORTING PERIOD Subsequent to the Balance Sheet date the following significant events occurred; °The holding in Tembo Gold Corporation, with a year end carrying value of £165k, was sold for £172k; °The successful placing of 70 million shares at 0.35p per share, to raise funds of £245k.AUDITOR PKF Littlejohn LLP has signified its willingness to continue in office as auditor. Approved by the Board on 23 March 2020 and signed on its behalf.R J SmeetonCompany Secretary ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 28DIRECTORS’ REPORT CONTINUEDOriole Resources AR 2019.indd 2814-Apr-20 5:47:34 PM27190 14 April 2020 5:47 pm Proof 6OPINION We have audited the financial statements of Oriole Resources Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2019 which comprise the Statement of Consolidated Comprehensive Income, the Statement of Consolidated and Parent Company Financial Position, the Statement of Consolidated and Parent Company Changes in Equity, the Statement of Consolidated and Parent Company Cash Flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: °the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2019 and of the group’s and parent company’s loss for the year then ended; °the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; °the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and °the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN We draw attention to note 2.1 in the financial statements, which indicates conditions casting doubt on the going concern assumption. The group has incurred a net loss of £1.8m during the year ended 31 December 2019 and, as of that date, the company’s current liabilities exceeded its current assets by £129k. These events or conditions, along with the other matters as set forth in note 2.1 of the annual report indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.OUR APPLICATION OF MATERIALITY Group materiality 2019Group materiality 2018Basis for materiality£230k£250k2.5% of net assetsANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR29INDEPENDENT AUDITOR’S REPORTOriole Resources AR 2019.indd 2914-Apr-20 5:47:38 PM27190 14 April 2020 5:47 pm Proof 6Our calculation of materiality has decreased by £20k as compared to last year. There has been a decrease in net assets due to the loss in the current year, and also a significant decline in asset balances including cash and receivables. We therefore consider the level of materiality set to be appropriate. We consider net assets to be the most significant determinant of the Group’s financial position and performance used by shareholders, with the key financial statement balances being exploration and evaluation assets, investment in associate, and cash levels. The use of net assets also takes into account the group’s historic and current year financial performance which is particularly important given the current low cash levels and concern surrounding going concern status as at the current year end.Whilst materiality for the financial statements as a whole was set at £230k, significant components of the Group were audited to a level of materiality ranging between £137k - £163k. Performance materiality for the Group and components was set at 70% to ensure sufficient coverage of key balances. We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. At the planning stage materiality is used to determine the financial statement areas that are included within the scope of our audit and the extent of sample sizes during the audit.We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of £12k (2018: £12.5k). There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be material.AN OVERVIEW OF THE SCOPE OF OUR AUDIT Our Group audit scope focused on the principal areas of operation being: °West Africa - the Dalafin (now renamed Senala) gold project (Senegal); °East Africa through its investment in the associate, Thani Stratex Resources Limited, the Hodine concession (Egypt) and the Pandora project (Djibouti); °Turkey - the Karaagac gold project and various other royalty arrangements; and °Cameroon - early-stage exploration on Bibemi & Wapouzé projects.Together with the Parent Company and its group consolidation, which was also subject to a full scope audit, these represent the significant components of the group, and include financially significant and risk significant components.The audits of each of these components were principally performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mining exploration entities and publicly listed entities. The Turkish component was audited by a component auditor and the group audit team reviewed and challenged their findings. Although not material to the Group, this component was assessed as risk significant and therefore our review of the component auditor’s work was focussed on Group risks areas including management override, related parties, and compliance with laws & regulations.KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.ORIOLE RESOURCES PLCWWW.ORIOLERESOURCES.COM 30INDEPENDENT AUDITOR’S REPORTCONTINUEDOriole Resources AR 2019.indd 3014-Apr-20 5:47:45 PM27190 14 April 2020 5:47 pm Proof 6Key Audit MatterHow the scope of our audit responded to the key audit matterCapitalisation and impairment of exploration and evaluation expenditure under IFRS 6GROUP & COMPANYThe Group holds exploration and evaluation assets of £7.2m which relate to the Dalafin (renamed Senala) project in Senegal and the Bibemi & Wapouzé projects in Cameroon. This is considered to be a key audit matter as it is the most significant balance in the Group’s financial statements and involves a significant level of judgement to be made by management.There is a further risk that the costs capitalised during the year do not meet the recognition criteria under IFRS 6, and that the carrying value of exploration assets is overstated.Related disclosures are included in Note 4 and Note 12 to the financial statements.Our work included the following: °Reviewing the exploration and evaluation expenditures to assess their eligibility for capitalisation under IFRS 6 by corroborating to source documentation; °Obtaining and reviewing the current exploration licenses to ensure that they remain valid; °Considering the Group’s future plans for each license area and ensuring that activity and expenditure thereto was planned and in line with any minimum spend requirements; °Enquiries of management over the future plans for each license area including obtaining cashflow projections where necessary and corroborating to minimum spend requirements attached to licences; and °Considering the indicators of impairment identified in IFRS 6 to ascertain whether these have been triggered.We draw attention to the fact that the two Cameroon licenses, Bibemi & Wapouzé, are currently in the process of renewal. Failure to obtain the necessary licence renewals may result in an impairment to the carrying value of the intangible assets held.Valuation of investments in associates and subsidiaries (including intercompany receivables)GROUP & COMPANYThere is a risk of material misstatement regarding the recoverability of investments in associates and investments in subsidiaries (including intercompany receivables i.e. the net investment in each subsidiary).The carrying value of investments in associates and net investment in subsidiaries is ultimately dependent on the value of the underlying assets. Many of the underlying assets are exploration projects which are at an early stage of exploration making it difficult to definitively determine their value. Valuations for these sites are therefore based on judgments and estimates made by the Directors, which may lead to a risk of misstatement.Similar considerations apply to the recoverability of loans to group undertakings disclosed as investments.This is considered to be a key audit matter as investments in subsidiaries and associates, along with related intercompany balances, are the most significant balances in the Company’s financial statements and involve a significant level of judgement to be made by management.Related disclosures are included in Note 11 to the financial statements.Our work included the following: °Reviewing management’s impairment considerations and calculations for all investments held and corroborating to supporting source documents where appropriate; °Reviewing work performed in the Thani Stratex Djibouti Limited audit file (also audited by PKF Littlejohn LLP) to gain additional assurance surrounding the valuation of the associate in Thani Stratex Resources Limited; °Reviewing the value of the net investment in subsidiaries against their underlying asset values and corroborating the judgements/estimates used by management to assess the recoverability of investments and intercompany receivables; and °Consideration of the IFRS 6 impairment indicators in relation to the exploration and evaluation assets on which the valuation of investments largely depends.ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019STOCK CODE: ORR31Oriole Resources AR 2019.indd 3114-Apr-20 5:47:48 PMORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM INDEPENDENT AUDITOR’S REPORT CONTINUED OTHER INFORMATION The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material Matters on which we are required to Auditor’s responsibilities for the report by exception In the light of the knowledge and audit of the f inancial statements Our objectives are to obtain reasonable understanding of the group and the assurance about whether the financial parent company and their environment statements as a whole are free from obtained in the course of the audit, material misstatement, whether due to we have not identified material fraud or error, and to issue an auditor’s misstatements in the strategic report or report that includes our opinion. the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: ° adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or 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 ° the parent company financial financial statements. statements are not in agreement with the accounting records and returns; or misstatements, we are required ° certain disclosures of directors’ to determine whether there is a remuneration specified by law are material misstatement in the financial not made; or 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. information and explanations we require for our audit. Responsibilities of directors As explained more fully in the statement of directors’ responsibilities, We have nothing to report in this the directors are responsible for the regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: ° the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ° the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. 32 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 Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Joseph Archer (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 23 March 2020 15 Westferry Circus Canary Wharf London E14 4HD ° we have not received all the forms part of our auditor’s report. Oriole Resources AR 2019.indd 32 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:48 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME Continuing operations Revenue Administration expenses Other profits/(losses) Operating loss Finance income Share of losses of associates Loss on change of ownership interest Loss before income tax Income tax credit/(charge) Loss for the year Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Exchange differences on translating foreign operations Items that may not be subsequently reclassified to profit or loss Change in fair value of equity investments at fair value through other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year Loss for the year attributable to: Owners of the Parent Company Non-controlling interests Loss for the year Total comprehensive income for the year attributable to: Owners of the Parent Company Non-controlling interests Total comprehensive income for the year Earnings per share for losses from continuing operations attributable to the owners of the Company (expressed in pence per share). Year ended 31 December 2019 £’000 Year ended 31 December 2018 £’000 Notes 8 7 14 6 10 24 24 – (1,556) 150 (1,406) 5 (126) (212) (1,739) 79 (1,660) – (1,806) (741) (2,547) 67 (2,042) (98) (4,620) (41) (4,661) 102 134 (240) (138) (167) (33) (1,798) (4,694) (1,554) (106) (1,660) (1,692) (106) (1,798) (4,574) (87) (4,661) (4,607) (87) (4,694) – basic and diluted, continuing operations 21 (0.22) (0.77) The notes on pages 40 to 61 form part of these financial statements. Oriole Resources AR 2019.indd 33 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:48 PM 33 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM STATEMENT OF CONSOLIDATED FINANCIAL POSITION Company number: 05601091 ASSETS Non-Current Assets Property, plant and equipment Intangible assets Investments in equity-accounted associates Financial assets at fair value through other comprehensive income Deferred tax asset Current Assets Trade and other receivables Cash and cash equivalents Total Assets EQUITY Capital and reserves attributable to owners of the Company Share capital Share premium Other reserves Retained earnings Total equity attributable to owners of the Company Non-controlling interest Total equity LIABILITIES Non-Current Liabilities Employee termination benefits Current Liabilities Trade and other payables Total Liabilities Total equity and liabilities As at 31 December 2019 £’000 As at 31 December 2018 £’000 Notes 13 12 14 15 17 16 18 20 20 23 24 25 21 7,244 2,250 165 38 9,718 121 163 284 10,002 4,908 21,253 1,185 27 6,780 2,250 414 111 9,582 783 1,287 2,070 11,652 4,908 21,253 1,701 (17,578) (16,427) 9,768 (209) 9,559 30 413 443 10,002 11,435 (103) 11,332 30 290 320 11,652 The notes on pages 40 to 61 form part of these financial statements. The financial statements were approved and authorised for issue by the Board of Directors on 23 March 2020 and were signed on its behalf by: John McGloin Robert Smeeton Non-executive Chairman Chief Financial Officer 34 Oriole Resources AR 2019.indd 34 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR STATEMENT OF CONSOLIDATED CHANGES IN EQUITY Attributable to owners of the Company Share capital £’000 Share premium £’000 Other reserves (see note 23) £’000 Retained earnings £’000 Balance at 1 January 2018 4,673 20,427 1,683 Loss for the year Other comprehensive income Total comprehensive income for the year Issue of share capital net of expenses Share-based payments Total contributions by and distributions to owners of the Company Balance at 31 December 2018 and 1 January 2019 Loss for the year Other comprehensive income Total comprehensive income for the year Share-based payments Share options expired Total contributions by and distributions to owners of the Company – – – 235 – – – – 826 – 235 826 – – – – – – – – – – – – Balance at 31 December 2019 4,908 21,253 The notes on pages 40 to 61 form part of these financial statements Non- controlling interest £’000 Total equity £’000 (16) (87) – 14,914 (4,661) (33) Total £’000 14,930 (4,574) (33) (11,853) (4,574) – – (33) (33) (4,574) (4,607) (87) (4,694) – 51 51 – – – (1,554) – 1,061 51 1,112 11,435 (1,554) (138) – – – (103) (106) – 1,061 51 1,112 11,332 (1,660) (138) (1,554) (1,692) (106) (1,798) – 403 403 25 – 25 – – – (17,578) 9,768 (209) 25 – 25 9,559 – (138) (138) 25 (403) (378) 1,185 4,908 21,253 1,701 (16,427) Oriole Resources AR 2019.indd 35 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM 35 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM STATEMENT OF CONSOLIDATED CASH FLOWS Cash flow f rom operating activities: Net cash used in operating activities Cash flow f rom investing activities: Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchase of intangible assets Investment in associate company Tax received Loan to third parties Interest received Net cash (used)/generated from investing activities Cash flow f rom f inancing activities: Funds from the issue of shares Funds received from partners Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period The notes on pages 40 to 61 form part of these financial statements Year ended 31 December 2019 £’000 Year ended 31 December 2018 £’000 Notes 27 13 14 10 18 (560) (2,259) (2) – (711) – 142 – 7 (564) – – – (1,124) 1,287 163 (25) 2 (229) (156) – 787 67 446 1,061 – 1,061 (752) 2,039 1,287 36 Oriole Resources AR 2019.indd 36 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR STATEMENT OF COMPANY FINANCIAL POSITION Company number: 05601091 ASSETS Non-Current Assets Property, plant and equipment Intangible assets Financial assets at fair value through other comprehensive income Investments in equity-accounted associates Investment in subsidiaries Current Assets Trade and other receivables Cash and cash equivalents Total assets EQUITY Capital and reserves attributable to owners of the Company Share capital Share premium Other reserves Retained earnings Total equity LIABILITIES Current Liabilities Trade and other payables Total equity and liabilities As at 31 December 2019 £’000 As at 31 December 2018 £’000 Notes 13 12 15 14 11 16 18 20 20 23 25 20 1,018 – 1,458 4,085 6,581 49 130 179 6,760 25 186 227 1,458 3,762 5,658 665 1,243 1,908 7,566 4,908 21,253 149 4,908 21,253 527 (19,884) (19,296) 6,426 7,392 334 334 6,760 174 174 7,566 As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The Parent Company loss for the year was £764,000 (2018: £3,726,000). The notes on pages 40 to 61 form part of these financial statements. The financial statements were approved and authorised for issue by the Board of Directors on 23 March 2020 and were signed on its behalf by: John McGloin Robert Smeeton Non-executive Chairman Chief Financial Officer Oriole Resources AR 2019.indd 37 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM 37 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM STATEMENT OF COMPANY CHANGES IN EQUITY Balance at 1 January 2018 Comprehensive income for the year: – loss for the year Total comprehensive income for the year Issue of share capital net of expenses Share-based payments Total contributions by and distributions to owners of the Company Balance at 31 December 2018 and 1 January 2019 Comprehensive income for the year: – loss for the year – other comprehensive income Total comprehensive income for the year Share based payments Share options expired Total contributions by and distributions to owners of the Company Share capital £’000 Share premium £’000 Other Reserves (see note 23) £’000 Retained earnings £’000 Total equity £’000 4,673 20,427 476 (15,570) 10,006 – – 235 – – – 826 – 235 4,908 826 21,253 – – – 51 51 (3,726) (3,726) – – – 527 (19,296) – – – – – – – – – – – – – – – 25 (403) (378) 149 (764) (227) (991) – 403 403 (3,726) (3,726) 1,061 51 1,112 7,392 (764) (227) (991) 25 – 25 Balance at 31 December 2019 4,908 21,253 The notes on pages 40 to 61 form part of these financial statements (19,884) 6,426 38 Oriole Resources AR 2019.indd 38 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR STATEMENT OF COMPANY CASH FLOWS Cash flow f rom operating activities Net cash used in operating activities Cash flow f rom investing activities: Purchase of property, plant and equipment Investment in intangible assets Funding of subsidiary exploration companies Investment in associated company Tax received Loan repayment from third party Interest received Net cash used in investing activities Cash flow f rom f inancing activities Net proceeds from share issue Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period The notes on pages 40 to 61 form part of these financial statements Year ended 31 December 2019 £’000 Year ended 31 December 2018 £’000 Notes 27 13 14 18 (315) (1,771) (2) (754) (191) – 142 – 7 (798) – – (1,113) 1,243 130 (25) (186) (572) (156) – 821 67 (51) 1,061 1,061 (761) 2,004 1,243 Oriole Resources AR 2019.indd 39 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM 39 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The principal activity of Oriole Resources Plc (‘the Company’) and its subsidiaries (together ‘the Group’) is the exploration and development of precious and high-value base metals. The Company’s shares are quoted on the AIM Market of the London Stock Exchange. The Company is incorporated and domiciled in the UK. The address of its registered office is 180 Piccadilly, London, W1J 9HF. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented. 2.1 Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting The Auditors have made reference to going concern by way of a material uncertainty within their audit report. Changes in Accounting Policies a) New and amended standards adopted by the Group The following IFRs or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2019. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements: Standards/interpretations Application IFRS 16 IFRIC 23 IFRS 9 amendments IAS 28 amendments Leases Uncertainty over tax treatments Prepayment Features with Negative Compensation Long-term Interests in Associates and Joint Ventures Annual Improvements 2015 – 2017 Cycle Standards (IFRS) as adopted by the European Union (EU), IAS 19 amendments Plan Amendment, Curtailment or Settlement IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements were prepared under the historical cost convention as modified by the measurement of certain investments at fair value. Going Concern It is the prime responsibility of the Board to ensure the IFRS 16 has been adopted during the year. The Group only has one lease arrangement in place, and was previously accounting for this under IAS 17 (the previous leasing standard) effectively as a finance lease except without liability discounting on the basis that this had no material impact on the financial statements. The directors have assessed the Company and the Group remains a going concern. At 31 appropriateness of the treatment under the new standard December 2019 the Group had cash and cash equivalents of and confirmed that any differences arising as a result of £163k and no borrowings. Having considered the prepared cashflow forecasts and Group budgets and the progress in the post year-end sales of investment assets and successful fund raise of £245k, the discounting would be insignificant, both to the current year financial statements and to the opening equity position, and so no adjustments have been made to the financial statements. Directors consider that they will have access to adequate However, accounting policies and the lease disclosure resources in the 12 months from the date of the signing note have been updated in order to comply with the new of these financial statements. As a result, they consider it standard. appropriate to continue to adopt the going concern basis in the preparation of the financial statements. There can be no assurance that the asset sales or other means of cash generation will be successful and this may affect the Group’s ability to carry out its work programs as expected. Uncertainty also surrounds the impact that the COVID-19 outbreak will have on the Group and its financial position. Should the Group be unable to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide N/A for further liabilities which might arise and to classify non- current assets as current. The financial statements have been prepared on the going concern basis and do not include the adjustments that would result if the Group was unable to continue as a going concern. 40 b) New and amended standards not yet adopted by the Group Standards/interpretations Application IAS 1 & IAS 8 amendments Definition of Material: IFRS 3 amendments IAS 1 amendments Effective 1 January 2020 Business Combinations: Effective 1 January 2020* Presentation of Financial Statements: Classification of Liabilities as Current or Non- Current: Effective 1 January 2022* Amendments to References to the Conceptual Framework in IFRS Standards * Subject to EU endorsement There are no IFRS’s or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group. Oriole Resources AR 2019.indd 40 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 2.2 Basis of consolidation Oriole Resources PLC was incorporated on 24 October 2005 The Group measures goodwill at the acquisition date as the excess of the fair value of the consideration transferred, plus as Stratex International PLC. On 21 November 2005 the Company acquired the entire issued share capital of Stratex Exploration Ltd by way of a share for share exchange. The transaction was treated as a Group reconstruction and was the recognised amount of any non-controlling interests, less the recognised amount of the identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the accounted for using the merger accounting method. difference is recognised in profit or loss. Subsidiaries are entities controlled by the Group. Control is Where necessary, adjustments are made to the financial achieved when the Group is exposed, or has rights, to variable statements of subsidiaries to bring the accounting returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and policies used into line with those used by other members of the Group. All significant intercompany transactions and balances between group entities are eliminated on only if, the Group has: consolidation. ° Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); ° Exposure, or rights, to variable returns from its involvement with the investee; ° The ability to use its power over the investee to affect its returns. When the Group ceases to consolidate a subsidiary as a result of losing control and the Group retains an interest in the subsidiary and the retained interest is an associate, the Group measures the retained interest at fair value at that date and the fair value is regarded as its cost on initial recognition. The difference between the net assets de-consolidated and the fair value of any retained interest and any proceeds from disposing of a part interest in the subsidiary is included in Generally, there is a presumption that a majority of voting the determination of the gain or loss on disposal. In addition, rights result in control. To support this presumption and when the Group has less than a majority of the voting or the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on similar rights of an investee, the Group considers all relevant the same basis as would be required if that subsidiary had facts and circumstances in assessing whether it has power directly disposed of the related assets or liabilities. over an investee, including: Associates are all entities over which the Group has ° The contractual arrangement with the other vote holders significant influence but not control over the financial and of the investee; operating policies. ° Rights arising from other contractual arrangements; ° The Group’s voting rights and potential voting rights. References to joint venture agreements do not refer to arrangements which meet the definition of joint ventures Consolidation of a subsidiary begins when the Group obtains under IFRS 11 “Joint Arrangements” and therefore these control over the subsidiary and ceases when the Group Financial Statements do not reflect the accounting loses control of the subsidiary. Assets, liabilities, income and treatments required under IFRS 11. expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. The business acquisition method is used to account for the acquisition of subsidiaries. Investments in associates and jointly controlled entities are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The Any contingent consideration is recognised at fair value at cumulative post-acquisition movements are adjusted against the acquisition date. Subsequent changes to the fair value of the carrying amount of the investment. the contingent consideration that is deemed to be an asset or a liability is recognised in accordance with IFRS9 either in profit or loss or as a change in other comprehensive income. The unwinding of the discount on contingent consideration liabilities is recognised as a finance charge within profit or loss. Acquisition related costs are expensed as incurred. When the Group’s share of losses exceeds its interest in an equity-accounted investee the carrying amount of the investment, including any other unsecured receivables, is reduced to zero, and the recognition of further losses is discontinued, unless the Group has incurred obligations or made payments on behalf of the investee. Oriole Resources AR 2019.indd 41 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM 41 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED Unrealised gains on transactions between the Group and (b) Transactions and balances equity–accounted investees are eliminated to the extent of the Group’s interest in the investee. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and Accounting policies of equity–accounted investees have from the translation at year-end exchange rates of monetary been changed where necessary to ensure consistency with assets and liabilities denominated in foreign currencies are the policies adopted by the Group. Dilution gains and losses recognised in profit or loss. arising in investments in equity–accounted investees are recognised in profit or loss. (c) Group companies Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Gains or losses on disposals to non-controlling interests are recorded in equity. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: ° assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position. ° income and expenses in profit or loss for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and associate is included in the determination of the gain or loss ° all resulting exchange differences are recognised in other on disposal. In addition, the Group accounts for all amounts comprehensive income. On consolidation, exchange previously recognised in other comprehensive income in differences arising from the translation of the net relation to that associate on the same basis as would be investment in foreign entities, and of monetary items required if that associate had directly disposed of the related receivable from foreign subsidiaries for which settlement is assets or liabilities. When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. 2.3 Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in sterling, which is the Group’s neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in profit or loss as part of the gain or loss on sale. 2.4 Intangible assets - Exploration and evaluation assets The Group capitalises expenditure in relation to exploration and evaluation of mineral assets when the legal rights are obtained. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, research into the topographical, geological, geochemical and geophysical characteristics of the asset, exploratory drilling, trenching, sampling and activities to research the technical feasibility and commercial viability of extracting a mineral presentation currency. resource. 42 Oriole Resources AR 2019.indd 42 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR Exploration and evaluation assets are not amortised but are assessed for impairment, with an impairment test being required when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating 2.8 Financial instruments (a) Classification The Group classifies its financial assets in the following measurement categories: exploration and evaluation assets to cash generating units, ° those to be measured subsequently at fair value (either which are based on specific projects or geographical areas. through Other Comprehensive Income (‘OCI’) or through Whenever the exploration for and evaluation of mineral profit or loss); and resources does not lead to the discovery of commercially viable quantities of mineral resources or the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to profit or loss. 2.5 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, have been identified as the executive Board of Directors. ° those to be measured at amortised cost. The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). See Note 15 for further details. 2.6 Impairment of non-financial assets The carrying amount of the Group’s non-financial assets (b) Recognition are reviewed at each reporting date to determine whether Purchases and sales of financial assets are recognised on there is any indication of impairment. If any such indication trade date (that is, the date on which the Group commits to exists, then the asset’s recoverable amount is estimated. An purchase or sell the asset). Financial assets are derecognised impairment loss is recognised if the carrying amount of an when the rights to receive cash flows from the financial asset exceeds its recoverable amount. In assessing the carrying values of major exploration assets, the Directors would use cash flow projections for each assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. of the projects where a JORC – compliant resource had (c) Measurement been calculated. The Group currently has no such directly controlled projects. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair Certain of the other exploration projects are at an early stage value through profit or loss (FVPL), transaction costs that of development and no JORC-compliant resource estimate are directly attributable to the acquisition of the financial has been completed. In these cases, the Directors have asset. Transaction costs of financial assets carried at FVPL are assessed the impairment of the projects based on future expensed in profit or loss. exploration plans and estimates of geological and economic data. The Board does not believe that the key assumptions will change so as to cause the carrying values to exceed the recoverable amounts. Debt instruments Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at To date impairment losses recognised have followed the amortised cost. Interest income from these financial assets decision of the Board not to continue exploration and is included in finance income using the effective interest evaluation activity on a particular project licence area where rate method. Any gain or loss arising on derecognition is it is no longer considered an economically viable project recognised directly in profit or loss and presented in other or where the underlying exploration licence has been gains/(losses) together with foreign exchange gains and relinquished. 2.7 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in losses. Impairment losses are presented as a separate line item in the statement of profit or loss. The Group’s financial assets at amortised cost include trade hand, and demand deposits with banks and other financial and other receivables. institutions. Oriole Resources AR 2019.indd 43 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:49 PM 43 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED Equity instruments The Group subsequently measures all equity investments at Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability fair value. Where the Group’s management has elected to settled. Deferred tax is charged or credited in profit or loss, present fair value gains and losses on equity investments in except when it relates to items credited or charged directly OCI, there is no subsequent reclassification of fair value gains to equity, in which case the deferred tax is also dealt with in and losses to profit or loss following the derecognition of the equity. investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. (d) Impairment Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. No liability to UK corporation tax arose on ordinary activities for the current period or prior periods. The Group has losses to be carried forward on which no deferred tax asset is recognised. Deferred tax assets are recognised on tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is The Group assesses, on a forward-looking basis, the expected probable. credit losses associated with its debt instruments carried Current and deferred tax is charged or credited in the profit at amortised cost. The impairment methodology applied or loss, except when it relates to items charged or credited depends on whether there has been a significant increase in directly to equity, in which case the related tax is also dealt credit risk. with in equity. For trade and other receivables due within 12 months the Group applies the simplified approach permitted by IFRS 9. 2.10 Share-based payments The fair value of the services received from employees and Therefore, the Group does not track changes in credit risk, third parties in exchange for the grant of share options but rather recognises a loss allowance based on the financial is recognised as an expense. The fair value of the options asset’s lifetime expected credit losses at each reporting date. granted is calculated using the Black-Scholes pricing model A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably. and is expensed over the vesting period. At each reporting period the Group revises its estimate of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The proceeds The Group considers evidence of impairment for financial received net of any directly attributable transaction costs are assets measured at amortised cost at both a specific asset credited to share capital (nominal value) and share premium and collective level. when the options are exercised. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between 2.11 Share capital Ordinary shares are classified as equity. Incremental costs its carrying amount and the present value of the estimated directly attributable to the issue of new shares or options are future cash flows discounted at the asset’s original effective shown in equity as a deduction from the proceeds. interest rate. Losses are recognised in profit or loss. 2.9 Deferred taxation Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. 2.12 Finance income Finance income comprises bank interest receivable. Interest revenue is recognised using the effective interest method. 2.13 Other income Other income represents income from activities other than normal business operations. Royalty payments, arising from the involvement of exploration partners, are recognised as other income once payment has been received. 44 Oriole Resources AR 2019.indd 44 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 2.14 Post-employment benefits Retirement benefit costs are calculated by applying the Projected Unit Credit Method and the resulting adjustments 3. RISK MANAGEMENT 3.1 Financial risk management The main financial risks facing the Group are the availability are recognised in profit or loss. of adequate funding, movements in interest rates and 2.15 Leases The Group assesses at contract inception, all arrangements to determine whether they are, or contain, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group is not a lessor in any transactions, it is only a lessee. The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. a) Right of use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date when the fluctuations in foreign exchange rates. Constant monitoring of these risks ensures that the Group is protected against any potential adverse effects of such risks so far as it is possible and foreseeable. The Group only deals with high-quality banks. It does not hold derivatives, does not trade in financial instruments and does not engage in hedging arrangements. In keeping with similar sized mineral exploration groups, its continued future operations depend on the ability to raise sufficient working capital. The Group finances itself through the monetisation of exploration assets and the issue of equity share capital and has no borrowings. Management monitors its cash and future funding requirements through the use of on-going cash flow forecasts. All cash, with the exception of that required for immediate working capital requirements, is held on short term deposit. underlying asset is available for use). Right of use assets are The Group’s only exposure to interest rate fluctuations is measured at cost, less any accumulated depreciation and restricted to the rates earned on its short-term deposits. impairment losses, and adjusted for any remeasurement These deposits returned an interest rate of between 0.1% and of lease liabilities. The cost of right-of-use assets includes 1.15% during the past year. the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Computer equipment – 5 years Right of use assets are subject to impairment (see Note 2.6). b) Lease liabilities The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Turkish Lira, Euro and US Dollar, see note 19. Foreign exchange risk arises from future commercial transactions and net investments in foreign operations. The Group does not hedge its exposure to foreign currencies and recognises the profits and losses resulting from currency fluctuations as and when they arise. The Group will continue to make substantial expenditures related to its exploration and development activities. The At the commencement date of the lease, the Group financial exposure of the Group has been substantially recognises lease liabilities measured at the present value of reduced as a result of entering into agreements with third lease payments to be made over the lease term. The lease parties. payments include fixed payments less any lease incentives receivable. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease 3.2 Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, in order to provide returns for shareholders and commencement date because the interest rate implicit in benefits for other stakeholders, and to maintain an optimal the lease is generally not readily determinable. capital structure to reduce the cost of capital. Note that the lease liability recorded in the financial In order to maintain or adjust the capital structure, the statements has not been discounted to present value as any Company may adjust the amount of dividends paid to impact of discounting would be immaterial to the financial shareholders, return capital to shareholders, or issue new statements. shares. Oriole Resources AR 2019.indd 45 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM 45 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED Local taxes The Group is subject to income taxes in numerous jurisdictions. Judgement is required in determining the worldwide provision for such taxes. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will affect the current and deferred income tax assets and liabilities in the period in which such determination is made. A deferred tax asset of £38,000 has been recognised in respect of temporary timing differences relating to the Group’s intangible assets. Should these timing differences not reverse, the Group may need to revise the carrying value of this asset. Provision for bad debts The Group is currently due $425,000 from Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi in respect of a success-based payment of $500,000 that was due on the basis of an exploration partnership with that company. The Directors continue to pursue payment, but have made full provision against the debt in these financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting date, most importantly the carrying values assigned to intangible assets, associates, and financial assets designated as fair value through other comprehensive income. Actual results may vary from the estimates used to produce these financial statements. Exploration asset carrying value The most significant judgement for the Group is the assumption that exploration at the various sites will ultimately lead to a commercial mining operation, which includes the assumption that any licenses held will be renewed as required upon expiry. Failure to do so could lead to the write-off of the intangible assets relating to the particular site (see note 2.4). It should be noted that certain licenses, due for renewal in 2019 are awaiting formal confirmation of renewal, however in these circumstances deemed tenure continues to apply. Thani Stratex Resources carrying value The Directors have given consideration to the carrying value of the 26.10% holding in Thani Stratex Resources Limited (‘TSR’). This associated investment was written down to a carrying value of £2.25m in 2018, During 2019 TSR has initiated a re-organisation of its 50% subsidiary, Thani Stratex Djibouti (‘TSD’) which completed shortly after the year end. TSD has secured significant funding to allow it to progress its projects, and the Group now has a directly held 13.05% stake in TSD. Given the incoming investment into TSD the Directors expect to see value being added to the holding, and with a rising gold price supporting the more advanced stage assets in TSR, in the Directors’ judgment the £2.25m carrying value of TSR has been maintained. £446,000 of the £1.4m impairment provision booked in 2018 has been reversed in 2019 in order to maintain the carrying value of TSR at £2.25m, being the Directors’ best estimate using all information available at this time. 46 Oriole Resources AR 2019.indd 46 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 5. SEGMENT REPORTING The Group’s main exploration operations are located in Turkey, East Africa and West Africa. The Group’s head office is located in the UK and provides corporate and support services to the Group and researches new areas of exploration opportunities. The management structure and the management reports received by the Directors and used to make strategic decisions reflect the split of operations. a) The allocation of assets and liabilities by segment is as follows: At 31 December 2019 Intangible assets Property, plant and equipment Investment in associate companies Cash and other assets Liabilities Inter-segment Net assets Additions to property, plant and equipment At 31 December 2018 Intangible assets Property, plant and equipment Investment in associate companies Cash and other assets Liabilities Inter-segment Net assets Additions to property, plant and equipment Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 – 1 – 80 (98) (2,617) (2,634) – – – 2,250 165 – – 2,415 – 7,244 – – 41 (5) (2,213) 5,067 – – 20 – 201 (340) 4,830 4,711 2 Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 – 1 – 203 (136) (2,422) (2,354) – – – 2,250 187 – – 2,437 – 6,780 1 – 284 (3) (1,967) 5,095 – – 25 – 1,921 (181) 4,389 6,154 25 Group Total £’000 7,244 21 2,250 487 (443) – 9,559 2 Group Total £’000 6,780 27 2,250 2,595 (320) – 11,332 25 The capitalised cost of the principal projects and the additions during the year are as follows: West Africa Senala – Senegal Bibemi/Wapouze – Cameroon Total Intangible assets Capitalised cost Additions in year 2019 £’000 6,225 1,019 7,244 2018 £’000 6,551 229 6,780 2019 £’000 – 792 792 2018 £’000 67 229 296 Oriole Resources AR 2019.indd 47 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM 47 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED b) The allocation of prof its and losses for the year by segment is as follows: 2019 Revenue Administration expenses Depreciation charge Other income/(losses) Share of associate company losses Exchange gains/(losses) Inter-segment charges Income tax Profit/(loss) for year 2018 Revenue Administration expenses Depreciation charge Other income/(losses) Share of associate company losses Exchange gains/(losses) Inter-segment charges Income tax Profit/(loss) for year Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 Group Total £’000 – (373) (1) 149 – (5) (148) (63) (441) – – – 446 (338) – – – 108 – (142) – – – (437) (103) – (682) – – (1,034) (1,549) (6) 5 – (3) 251 142 (7) 600 (338) (445) – 79 (645) (1,660) Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 Group Total £’000 – (281) (1) 120 – (65) (131) (41) – – – (1,430) (2,140) – – – (399) (3,570) – (197) (1) – – 77 (209) – (330) – – (1,324) (1,802) (2) 698 – (74) 340 – (362) 2019 £’000 (212) (4) (612) (2,140) (62) – (41) (4,661) 2018 £’000 (98) 6. LOSS ON CHANGE OF OWNERSHIP INTEREST Loss for the year on change of ownership interest Small changes to the Company’s interest in Thani Stratex Resources Limited during the year have resulted in a loss of £212,000, which has been recognised in the consolidated statement of comprehensive income. 48 Oriole Resources AR 2019.indd 48 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 7. OTHER PROFITS/(LOSSES) Exchange losses Impairment of investments (see note 14) Reversal of impairment (see note 14) VAT provision release Success based payment due (see note 4) Provision against bad debt (see note 4) Other profits Net profit/(loss) for the year 8. EXPENSES BY NATURE Administration expenses comprise: Personnel expenses (see note 9) Legal and professional expenses Amounts paid to the Company’s auditors (see below) Other exploration related expenses Consultant geologists Office costs Travel costs Contract staff fees Depreciation expense Other expenses Total for year During the year the Group obtained the following services from the Company’s auditor: Auditor’s remuneration Fees payable for the audit of parent and consolidated financial statements Fees payable for tax compliance Total for year 2019 £’000 (445) – 446 – 384 (326) 91 150 2019 £’000 994 236 25 – – 82 97 – 8 114 2018 £’000 (62) (1,430) – 631 – – 120 (741) 2018 £’000 870 291 40 224 131 60 49 27 4 110 1,556 1,806 2019 £’000 2018 £’000 25 – 25 35 5 40 49 Oriole Resources AR 2019.indd 49 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED 9. PERSONNEL EXPENSES Wages and salaries Social security costs Share options granted to Directors and employees Employee benefits-in-kind Employee termination benefits Employee pensions Compensation for loss of office Total for year Average number of employees, including Directors Group Company 2018 £’000 683 56 18 1 (5) 32 85 870 13 2019 £’000 529 49 25 1 – 13 – 617 9 2018 £’000 454 56 18 1 – 32 85 646 8 2019 £’000 906 49 25 1 – 13 – 994 14 Employee termination benefits in 2018 relate to Stratex Madencilik Sanayi Ve Ticaret Ltd. Şti and has been calculated using the projected unit credit method. Details of the Directors’ remuneration is shown in the Report of the Remuneration Committee on page 25. 10. INCOME TAX Analysis of income tax expense: Current taxation: UK Corporation tax credit for the year Deferred taxation: Deferred tax charge for the year Total tax on loss for the year 2019 £’000 2018 £’000 142 (63) 79 – (41) (41) The Group does not anticipate a UK corporation tax charge for the year due to the availability of tax losses. The Group did not recognise deferred income tax assets of approximately £1,700,000 (2018: £1,400,000). Reconciliation of tax charge: Loss before tax Current tax credit at 19% (2018: 19%) Effects of: Expenses not deductible for tax purposes Tax losses carried forward – UK Tax losses carried forward – outside UK Origination and reversal of temporary differences Prior year differences (research and development credits claim) Tax credit 2019 £’000 (1,739) 330 142 (286) (186) (63) 142 79 2018 £’000 (4,620) 878 (676) (15) (187) (41) – (41) 50 Oriole Resources AR 2019.indd 50 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:50 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 11. INVESTMENT IN SUBSIDIARIES The cost of shares in subsidiary companies is as follows: Company Cost of investment at 1 January Impairment provision Loans to subsidiary companies At 31 December 2019 £’000 2,699 2018 £’000 2,699 (1,000) (1,000) 1,699 2,386 4,085 1,699 2,063 3,762 During the prior year the Company made a provision for impairment against its investment in Stratex Exploration Limited. There are no significant restrictions in relation to the subsidiaries. Investments in subsidiaries are stated at cost and are as follows: Stratex Exploration Ltd Stratex Gold AG Stratex West Africa Limited Oriole Cameroon SARL Stratex Madencilik Sanayi Ve Ticaret Ltd. Şti Stratex EMC SA Country of incorporation % owned by the Company % owned by subsidiary Nature of Business UK Switzerland UK Cameroon Turkey Senegal 100 100 100 90 – – – – – – 100 85 Holding company Holding company Exploration Exploration Exploration Exploration Stratex Exploration Ltd 180 Piccadilly, London, W1J 9HF, UK Stratex Gold AG St Gallen, Goethestrasse 61, St Gallen, 9008, Switzerland Registered office Stratex West Africa Limited Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD, UK Oriole Cameroon SARL Yaounde-Rue Marie Gocker, Place De L’Intendance, BP 11792 ,Yaounde, Cameroon Stratex Madencilik Sanayi Ve Ticaret Ltd. Sti Çukurambar Mahallesi 1458. Sokak, Elit Aprt. No: 17/6, Ankara, Turkey Stratex EMC SA Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD, UK 12. INTANGIBLE ASSETS The Group’s Intangible assets comprise entirely of exploration assets. Cost Cost at 1 January Exchange movements Transfer from subsidiary company Additions At 31 December Group Company 2019 £’000 6,780 (328) – 792 2018 £’000 6,484 67 – 229 7,244 6,780 2019 £’000 186 – 40 792 1,018 2018 £’000 – – – 186 186 Oriole Resources AR 2019.indd 51 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM 51 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED 13. PROPERTY, PLANT, AND EQUIPMENT Group Motor Vehicles £’000 Field Equipment £’000 Office furniture and equipment £’000 Company Office furniture and equipment £’000 Total £’000 Cost At 1 January 2018 Exchange movements Additions Disposals At 31 December 2018 Exchange movements Additions Disposals At 31 December 2019 Depreciation At 1 January 2018 Exchange movements Additions Disposals At 31 December 2018 Exchange movements Additions Disposals At 31 December 2019 Net Book Value at 1 January 2018 at 31 December 2018 at 31 December 2019 Right of use assets included above 30 19 206 – – – 30 – – – 30 (30) – – – (30) – – – (30) – – – – – – – 19 – – – 19 (19) – – – (19) – – – (19) – – – – (25) 25 (19) 187 – 2 – 189 (198) 25 (4) 17 (160) – (8) – (168) 8 27 21 16 255 (25) 25 (19) 236 – 2 – 238 (247) 25 (4) 17 (209) – (8) – (217) 8 27 21 16 14. INVESTMENT IN EQUITY-ACCOUNTED ASSOCIATES Group Company At 1 January Exchange movements Share of losses Additions Loss on change of ownership interest Provision for impairment Release of impairment provision At 31 December 2019 £’000 2,250 (108) (126) – (212) – 446 2,250 2018 £’000 5,524 140 (2,042) 156 (98) (1,430) – 2,250 2019 £’000 1,458 – – – – – – 1,458 1,458 81 – 25 – 106 – 2 – 108 (79) – (2) – (81) – (7) – (88) 2 25 20 16 2018 £’000 1,302 – – 156 – – – The Company’s shareholding interest in Thani Stratex Resources Limited (“TSRL”) reduced to 26.1% from 29.0% during the course of the year. £446,000 of the impairment provision recognised in 2018 has been reversed in 2019, as the Directors believe the value of the investment has been maintained over the year (see note 4). 52 Oriole Resources AR 2019.indd 52 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR The following entity has been included in the consolidated financial statements using the equity accounting method: Thani Stratex Resources Limited 2019 Value £’000 2,250 % 26.1 Change £’000 – % 29.0 2018 Value £’000 2,250 Change £’000 (3,274) Thani Stratex Resources Limited has a reporting date of 31 December and its registered office is PO Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands. Summarised financial information for investments accounted for using an equity accounting method is shown below. This information reflects the amounts presented in the draft financial statements of the associates (and not Oriole Resources PLC’s share of those amounts) adjusted for differences in accounting policies between the Group and associates: Statement of f inancial position for Thani Stratex Resources Limited As at 31 December Current Assets Cash and equivalents Net current assets/(liabilities) Total current assets Non-current assets Furniture, fittings and equipment Intangible assets Associated companies Total non-current assets Non-current liabilities Net assets Statement of comprehensive income for Thani Stratex Resources Limited As at 31 December Administration expenses Depreciation Other income Exchange gains Loss from continuing operations Income tax expenses Loss after tax for continuing operations Share of associated company loss Total comprehensive income 2019 £’000 2018 £’000 3 (295) (292) 2 14,649 2,274 16,925 (4,143) 12,490 6 (331) (325) 2 14,834 2,322 17,158 (4,132) 12,701 2019 £’000 2018 £’000 (328) (353) – – (6) (334) (8) (342) (115) (457) (1) 4 (1) (351) (1) (352) (121) (473) 53 Oriole Resources AR 2019.indd 53 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED 15. FINANCIAL ASSETS AND LIABILITIES a) Financial Assets Financial assets at amortised cost: Trade and other receivables Deposits and guarantees Cash and cash equivalents Financial assets at fair value through other comprehensive income Total b) Financial Liabilities Financial assets at amortised cost: Trade and other payables Amounts due to related parties and employees Social security and other taxes Leases Accrued expenses Total c) Assets by quality Trade Receivables: Group Company 2019 £’000 110 11 163 165 449 2018 £’000 633 26 1,287 414 2,360 2019 £’000 49 – 130 – 179 2018 £’000 600 – 1,243 227 2,070 Group Company 2019 £’000 2018 £’000 2019 £’000 2018 £’000 94 134 29 15 171 443 87 52 30 17 134 320 89 67 5 15 158 334 87 – 20 17 50 174 Trade receivables includes VAT due from the Turkish government of £Nil (2018: £9,000) and net receivables from exploration partners of £21,000 (2018: £22,000). None of the exploration partners have external credit ratings. Cash and cash equivalents: External ratings of cash at bank and short-term deposits: A Ba, Bb & Bbb Total d) Financial Assets at Fair Value Through Other Comprehensive Income (‘FVOCI’) 2019 £’000 142 21 163 At 1 January Disposals Fair value adjustment At 31 December Equity investments at FVOCI comprise the following individual investments Tembo Gold Corporation – Listed Security Aforo Resources Limited – Unlisted Security At 31 December 54 Group Company 2018 £’000 581 – (167) 414 2019 £’000 227 – (227) – Group Company 2018 £’000 187 227 414 2019 £’000 – – – 2019 £’000 414 (9) (240) 165 2019 £’000 165 – 165 2018 £’000 1,256 31 1,287 2018 £’000 227 – – 227 2018 £’000 – 227 227 Oriole Resources AR 2019.indd 54 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR Financial assets at fair value through other comprehensive income comprise a 11.66% (2018: 12.27%) investment in Tembo Gold Corporation. The 8% investment in Aforo Resources Limited has been written off during the year, following the closure of the company. On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings. During the year the following losses were recognised in profit or loss and other comprehensive income: Losses recognised in other comprehensive income Group 2019 £’000 240 2018 £’000 167 Information about the methods and assumptions used in determining fair value is provided in (f) below. The assets are held in non-sterling currencies but there are no significant exchange rate risks associated with these investments. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category. These are strategic investments and the Group considers this classification to be more relevant. e) Financial Assets at Fair Value Through Prof it and Loss (‘FVPL’) The Group classifies the following financial assets at fair value through profit or loss: 1. Equity instruments for which the entity has not elected to recognise fair value gains and losses through OCI. The Group’s investment in Muratdere Madencilik Sanayi ve Ticaret AS (‘Muratdere’) is held at £Nil (2018: £Nil) following its write down in 2017. Due to the decision in 2017 not to provide further funding for Muratdere, the Company’s interest has reverted to a 1.2% net smelter royalty. f) Fair Value Hierarchy This section explains the judgements and estimates made in determining the fair values of financial instruments that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under Accounting Standards, as set out and explained below: Recurring fair value measurements At 31 December 2019 Financial assets at fair value through other comprehensive income: Canadian listed equity securities Australian unlisted equity securities Total Financial Assets At 31 December 2018 Financial assets at fair value through other comprehensive income: Canadian listed equity securities Australian unlisted equity securities Total Financial Assets Level 1 Level 3 Total 165 – 165 187 – 187 – – – – 227 227 165 – 165 187 227 414 There were no transfers of assets between levels for recurring fair value measurements during the year. The Group has no level 2 financial instruments. Level 1 – the fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are held at level 1. Level 3 – if one or more of the significant valuation inputs is not based on observable market data, the instrument is held at level 3. This is the case for unlisted securities. Oriole Resources AR 2019.indd 55 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM 55 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED Specific valuation techniques used to value financial instruments include: ° The use of quoted market prices either to provide: − Direct market pricing for Level 1 instruments; − Comparative pricing for Level 3 instruments when reviewed against comparable companies at similar stages of asset development. ° Cost of asset development work to date, together with a review of exploration results and a view of market values of similar companies. 16. TRADE AND OTHER RECEIVABLES The fair value of trade and other receivables equate to their carrying values, which also represents the Group’s maximum exposure to credit risk. No collateral is held as security. Receivables from exploration partners Bad debt provision Deposits and guarantees given Loans VAT recoverable Prepayments and other current assets Total Non-current Current Total Group Company 2018 £’000 2019 £’000 2018 £’000 22 – 26 46 611 78 783 – 783 783 6 – – – – 43 49 – 49 49 – – – – 600 65 665 – 665 665 2019 £’000 337 (326) 11 21 – 78 121 – 121 121 $425,000 of a success-based payment due from Anadolu Export Maden Sanayi ve Ticaret A.S. is past due, and has been fully provided against in these financial statements. There were no receivables past due in 2019 (2018: Nil). 17. DEFERRED TAX ASSET AND LIABILITIES Deferred tax assets Temporary timing differences arising on: Intangible assets Employee termination benefits Other Total The movement in the year on the net deferred tax assets is: At 1 January Exchange movements Movement in year At 31 December 56 Group 2019 £’000 2018 £’000 24 14 – 38 2019 £’000 111 (10) (63) 38 Group 95 6 10 111 2018 £’000 198 (46) (41) 111 Oriole Resources AR 2019.indd 56 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:51 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 18. CASH AND CASH EQUIVALENTS Cash at bank and on hand Short-term deposits Total 19. CURRENCY RISK The Group’s exposure to foreign currency is as follows: GBP £’000 Trade and other receivables Cash and cash equivalents Trade and other payables Net exposure Group Company 2019 £’000 163 – 163 2018 £’000 495 792 1,287 2019 £’000 130 – 130 2018 £’000 271 972 1,243 2019 2018 US$ Turkish Lira US$ Turkish Lira – 2 – 2 11 6 (98) (81) – 179 – 179 70 22 (136) (44) The following year end spot rates to sterling have been applied 1.3101 7.676 1.2769 6.7529 A 20% fluctuation in the sterling exchange rate would have affected profit and loss as follows: Strengthening of sterling Weakening of sterling £’000 £’000 £’000 £’000 – – (16) 13 (31) 44 (11) 8 The Group’s exposure to foreign currency at 31 December 2019 was US$ cash deposits and Turkish Lira receivables shown above. 20. SHARE CAPITAL AND SHARE PREMIUM Group and Company At 31 December 2018 and 2019 Number of Ordinary shares issued 701,801,276 Ordinary shares £’000 Deferred shares £’000 Share premium £’000 702 4,206 21,253 Total £’000 26,161 The Ordinary shares have a nominal value of 0.01p and all shares have been fully paid. 21. EARNINGS PER SHARE The calculation of the basic earnings per share is based on the loss attributable to the equity holders of the Company and a weighted average number of Ordinary shares in issue during the year, as follows: Loss attributable to owners of the Company from continuing operations Weighted average number of ordinary shares in issue Basic and diluted loss per share from continued operations (pence per share) 2019 £’000 (1,554) 2018 £’000 (4,574) 701,801,276 592,586,755 (0.22) (0.77) There is no difference between basic and diluted loss per share as the effect on the exercise of the options would be to decrease the earnings per share. At 31 December 2019 there were 32,469,067 (2018: 25,755,144) share options and 13,470,000 (2018: 13,470,000) warrants that could potentially dilute the earnings per share in the future. Deferred shares have no rights to dividends or retained profits and are excluded from the calculation of earnings per share. Oriole Resources AR 2019.indd 57 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM 57 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED 22. SHARE OPTIONS AND WARRANTS Share options The Directors have discretion to grant options to Group employees to subscribe for Ordinary Shares up to a maximum of 10% of the Company’s issued share capital. The Company runs two schemes, one is the Enterprise Management Incentive scheme and the other is the Unapproved Share Option scheme. As at 31 December 2019, the Company had in issue 26,718,000 (2018: 8,678,000) options to Group employees granted under the Enterprise Management Incentive scheme and no (2018: 1,950,000) options to Group employees granted under the unapproved scheme. In addition, there are 5,751,067 (2018: 15,227,144) unexercised options held by past employees. All options vest over one to three years from the grant date and lapse on the tenth anniversary of the grant date. The granting of the share options has been accounted for as equity-settled share-based payment transactions. The total expenses recognised in the loss for the year arising from share-based payments was £25,000 (2018: £ 51,000). The Group has no legal or constructive obligation to repurchase or settle the options in cash. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2019 2018 Group and Company Outstanding at 1 January Expired Cancelled Granted Outstanding at 31 December Exercisable at 31 December Number of options 25,755,144 (11,986,077) (2,000,000) 20,700,000 32,469,067 8,435,734 2.4 17,755,144 3.503 (0.37) 0.37 0.97 2.38 – – 8,000,000 25,755,144 16,843,811 Weighted average exercise price pence Weighted average exercise price pence Number of options The weighted average contractual life of the outstanding options at 31 December 2019 was 8.26 years (2018: 4.7 years). Details of share options outstanding at 31 December 2019 are as follows: Life of option Start date 1 June 2011 Expiry date 1 June 2021 5 December 2014 5 December 2024 4 June 2015 4 June 2025 2 September 2016 2 September 2026 1 March 2018 4 June 2018 19 March 2019 Total options outstanding 1 March 2028 4 June 2028 19 March 2029 Outstanding 31 December 2019 1,026,067 1,859,000 150,000 2,734,000 6,000,000 2,000,000 18,700,000 32,469,067 3.0 – – 0.8 2.4 3.1 Option Price pence 7.0 2.7 1.5 2.0 0.9 0.62 0.37 During the year 20,700,000 share options were issued at a price of 0.37p per option share with a fair value of 0.15p per option share, The fair value for these options has been measured by use of the Black-Scholes pricing model, using a price volatility of 35% and a risk-free interest rate of 3%. The expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous two years. Share Warrants On 13 June 2018 the Company issued 13,470,000 warrants to Turner Pope Investments in connection with the June 2018 share placement. The warrants are exercisable at a price of 0.5p per warrant share any time before 13 June 2021 at which point they lapse. The resultant warrant charge of £32,000 was recognized in full in 2018 and debited to the Share Premium Account. 58 Oriole Resources AR 2019.indd 58 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 23. OTHER RESERVES Group At 1 January 2018 Share based payments Other comprehensive income At 31 December 2018 Share based payments Share options expired Other comprehensive income At 31 December 2019 Company At 1 January 2018 Share based payments Other comprehensive income At 31 December 2018 Share based payments Share option cancelled At 31 December 2019 Merger reserve £’000 (485) – – (485) – – – (485) FVOCI reserve £’000 Share option reserve £’000 Translation reserve £’000 – – (167) (167) – – (240) (407) 476 51 – 527 25 (403) – 149 1,692 – 134 1,826 – – 102 1,928 Share option reserve £’000 476 51 – 527 25 (403) 149 Total £’000 1,683 51 (33) 1,701 25 (403) (138) 1,185 Total £’000 476 51 – 527 25 (403) 149 The Merger reserve arose on consolidation as a result of the merger accounting for the acquisition of the entire issued share capital of Stratex Exploration Limited during 2005 and represents the difference between the nominal value of shares issued for the acquisition and that of the share capital and share premium account of Stratex Exploration Limited. The Group has elected to recognise changes in the fair value of certain investments in equity securities through Other Comprehensive Income, as explained in Note 15 and the accounting policies. These changes are accumulated within the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are recognised. The Share option reserve balance relates to the fair value of outstanding share options measured using the Black-Scholes method. The Translation reserve comprises the exchange differences from translating the net investment in foreign entities and of monetary items receivable from subsidiaries for which settlement is neither planned nor likely in the foreseeable future (see Note 2.3). 24. NON-CONTROLLING INTEREST Effect on equity of transactions with Non-controlling interests: Balance attributable to NCI At 1 January 2018 Losses for the year At 31 December 2018 Losses for the year At 31 December 2019 Stratex EMC SA £’000 (16) (87) (103) (106) (209) Total £’000 (16) (87) (103) (106) (209) 59 Oriole Resources AR 2019.indd 59 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTES TO THE FINANCIAL STATEMENTS CONTINUED The non-controlling interest arises in the 15% holding by a third party in Stratex EMC SA, whose financial statements include the following balances: Stratex EMC SA Intangible assets Other assets Intercompany loans Other creditors Net liabilities Loss for the year Cash flows: Cash flows from operations Cash flows from intercompany funding Net cash flow 25. TRADE AND OTHER PAYABLES Trade payables Amounts due to related parties and employees Social security and other taxes Lease liability Accrued expenses At 31 December 2019 £’000 5,881 991 2018 £’000 6,206 1,037 (8,242) (7,942) (5) (1,375) (720) (149) 150 1 Group Company 2019 £’000 94 104 29 15 171 413 2018 £’000 87 52 30 17 104 290 2019 £’000 89 67 5 15 158 334 (3) (702) (560) (190) 196 6 2018 £’000 87 - 20 17 50 174 All financial liabilities, except those for accrued expenses, are stated where material at amortised cost. 26. LEASES The Group has in place one lease contract for computer equipment used in its operations. The lease has a term of 5 years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. The Group is restricted from assigning and subleasing the leased asset. There are no variable lease payments attached. The right of use asset recognised in respect of this lease has a carrying value of £15,000 (2018: £18,000) and is included within tangible fixed assets. Depreciation of £3,000 (2018: £1,000) has been recorded in the year. The lease liability is included within trade and other payables and has a carrying value of £15,000 (2018: £17,000). Cash payments of £2,000 (2018: £1,000) have been made in payment of the liability during the year. Neither the right of use asset nor the lease liability have been recorded separately on the statement of consolidated or company financial position as the values are not material. Lease liabilities fall payable as follows: Group Company 2019 £’000 3 12 15 2018 £’000 3 14 17 2019 £’000 3 12 15 2018 £’000 3 14 17 Within one year After more than one year At 31 December 60 Oriole Resources AR 2019.indd 60 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR 27. CASH FLOW FROM OPERATING ACTIVITIES Group Company (Loss)/profit before income tax Adjustments for: Issue of share options Depreciation Impairment write-offs on intangible assets Share of losses of associates Increase in Employee termination benefit fund Other (Income) and deductions Interest income on intercompany indebtedness Intercompany management fees Write-off intercompany balances Foreign exchange movements on operating activities Changes in working capital, excluding the effects of exchange differences on consolidation: Trade and other receivables Trade and other payables Cash used in operations 28. RELATED PARTY TRANSACTIONS a) Transactions with non-controlling interests: 2019 £’000 (1,739) 2018 £’000 (4,620) 2019 £’000 (907) 25 8 (446) 338 – (7) – – – 601 646 14 (560) 51 4 1,430 2,141 (5) (67) – – – 46 (639) (600) (2,259) 25 7 – – – (7) (42) (89) – – 616 82 (315) 2018 £’000 (3,726) 51 2 1,000 – – (67) (230) (140) 2,400 85 (661) (485) (1,771) There have been no transactions with non-controlling interests during the year. (2018: £Nil.) b) Parent company and ultimate controlling party: In the opinion of the Directors there is no ultimate controlling party. c) Amounts provided to subsidiaries: During the year the Company provided funds amounting to £323,000 (2018: £571,000) to its subsidiaries and charged its subsidiary companies £90,000 (2018: £140,000) for the provision of management services. The total gross receivable from subsidiaries at 31 December 2019 was £4,875,000 (2018: £4,462,000). d) Transactions with Directors and Key Management Personnel: During the year the Directors were remunerated for services performed on behalf of the Company. Details of this remuneration are included in the Report of the Remuneration Committee. All Directors during the year were remunerated through the UK payroll. There are not considered to be any key management personnel other than Directors. 29. CONTINGENCIES AND CAPITAL COMMITMENTS There are no contingencies or capital commitments at 31 December 2019. 30. PARENT COMPANY STATEMENT OF COMPREHENSIVE INCOME As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the parent company is not presented as part of these financial statements. Oriole Resources AR 2019.indd 61 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM 61 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTICE OF AGM NOTICE IS HEREBY GIVEN that the Annual General Meeting of Oriole Resources Plc (the “Company”) will be held at its offices, Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD on 26 May 2020, at 1:00pm. The business of the meeting will be to consider and, if thought fit, pass the following Resolutions: ORDINARY RESOLUTIONS 1. THAT the Directors’ Report and the Financial Statements SPECIAL RESOLUTIONS 5. THAT, subject to the passing of resolution 4 and in accordance with section 570 of the Act, the Directors be generally empowered to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authority conferred by resolution 4, as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall: of the Company for the year ended 31 December 2019 be a. be limited to the allotment of equity securities up to received and adopted. an aggregate nominal amount of £116,000; and 2. THAT, having retired by rotation in accordance with the b. expire with the authority granted by resolution 4 Company’s Articles of Association, and being eligible, (unless previously revoked, varied or extended by the John McGloin be re-appointed as a Director of the Company. 3. THAT PKF Littlejohn LLP be re-appointed as auditors of the Company, and that the Directors be authorised to determine the auditors’ remuneration. 4. THAT, in addition to the existing authorities, and in accordance with section 551 of the Companies Act 2006 (the “Act”) the Directors be generally and unconditionally authorised to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount of £386,000 provided that: a. this authority shall, unless previously revoked, varied or extended by the Company at a general meeting, expire at the conclusion of the next Annual General Meeting of the Company; and b. that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted and the Directors may allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. Company at a general meeting) at the conclusion of the next Annual General Meeting, save that the Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. 6. THAT, in addition to the authority granted by resolution 5 above, subject to the passing of resolution 4 and in accordance with section 570 of the Act, the Directors be generally empowered to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authority conferred by resolution 4, as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall: a. be limited to the allotment of equity securities up to an aggregate nominal amount of £270,000; and b. expire with the authority granted by resolution 4 (unless previously revoked, varied or extended by the Company at a general meeting) at the conclusion of the next Annual General Meeting, save that the Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. By order of the Board R J Smeeton Company Secretary 23 March 2020 Registered Office 180 Piccadilly London W1J 9HF 62 Oriole Resources AR 2019.indd 62 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR NOTES: Eligibility to attend and vote 1. To be entitled to attend and vote at the Annual General Appointment of proxy using hard copy proxy form 6. The notes to the proxy form explain how to direct your Meeting (and for the purpose of determining the number proxy how to vote on each resolution or withhold their of votes a member may cast), members must be entered vote. To appoint a proxy using the proxy form, the form on the Register of Members of the Company by 1:00pm must be completed and signed and sent or delivered to on 22 May 2020. Appointment of proxies 2. As a member of the Company, you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. 3. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. 4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. 5. If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. the Company’s registrars, Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, to be received by Share Registrars Limited no later than 1.00pm on 22 May 2020. Proxy forms may also be faxed to 01252 719232 or emailed to voting@shareregistrars.uk.com 7. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form. Appointment of proxy by joint members 8. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). Oriole Resources AR 2019.indd 63 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM 63 ORIOLE RESOURCES PLC WWW.ORIOLERESOURCES.COM NOTICE OF AGM Changing proxy instructions 9. To change your proxy instructions simply submit a new Communication 11. Except as provided above, members who have proxy appointment using the methods set out above. general queries about the Meeting should contact Note that the cut-off time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant Share Registrars Limited on 01252 821390 or by email enquiries@shareregistrars.uk.com (no other methods of communication will be accepted). cut-off time will be disregarded. Where you have appointed 12. You may not use any electronic address provided either a proxy using the hard-copy proxy form and would like to in this notice of Annual General Meeting or any related change the instructions using another hard-copy proxy form, documents (including the proxy form) to communicate please contact Share Registrars Limited. If you submit more with the Company for any purposes other than those than one valid proxy appointment, the appointment received expressly stated. last before the latest time for the receipt of proxies will take precedence. Termination of proxy appointments 10. In order to revoke a proxy instruction you will need to Documents available for inspection 13. The following documents will be available for inspection during normal business hours at the Company’s registered office up until the date of the Annual General inform the Company using one of the following methods: Meeting and at the place of the meeting from 11.00am on ° By sending a signed hard copy notice clearly stating 26 May 2020 until the end of the meeting: your intention to revoke your proxy appointment to ° the audited consolidated accounts of the Company for Share Registrars Limited, The Courtyard, 17 West Street, the financial period ended 31 December 2019; Farnham, Surrey GU9 7DR. ° the Register of Directors’ interests in the capital of the ° In the case of a member which is a company, the Company and copies of the service contracts of the revocation notice must be executed under its common Directors of the Company. seal or signed on its behalf by an officer of the company or an attorney for the company. ° Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. In either case, the revocation notice must be received by Share Registrars Limited no later than 1.00pm on 22 May 2020. ° If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated. 64 Oriole Resources AR 2019.indd 64 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:52 PM ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 STOCK CODE: ORR ADVISORS & OFFICES NOMINATED ADVISOR Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU REGISTERED OFFICE 180 Piccadilly London W1J 9HF UK GROUP AUDITORS PKF Littlejohn LLP Statutory Auditor UK EXPLORATION OFFICE Oriole Resources PLC 5 Westferry Circus Canary Wharf London, E14 4HD BROKERS WH Ireland plc 24 Martin Lane London EC4R 0DR GROUP SOLICITORS Edwin Coe LLP 2 Stone Buildings Lincoln’s Inn London, WC2A 3TH BANKERS Lloyds TSB Bank plc High Street Slough Berkshire, SL1 1DH Wessex House Upper Market Street Eastleigh Hampshire, SO50 9FD UK TURKISH OFFICE Stratex Madencilik Sanayi ve Ticaret Ltd. Sti. Çukurambar Mahallesi 1458. Sk. Elit Apt. 1716 Çankaya Ankara Turkey WEST AFRICA OFFICE Stratex EMC SA c/o Energy & Mining Corporation S.A. Sacré Coeur 111/VON No 9231 Dakar BP. 45.409 Senegal Oriole Resources AR 2019.indd 3 27190 14 April 2020 5:47 pm Proof 6 14-Apr-20 5:47:53 PM 65 O R I O L E R E S O U R C E S P L C A N N U A L R E P O R T F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 9 Phone: +44 (0)207 830 9650 Fax: +44 (0)207 830 9651 Email: info@orioleresources.co.uk www.orioleresources.com 180 Piccadilly, London, W1J 9HF Oriole Resources AR 2019.indd 3 27190 14 April 2020 5:06 pm Proof 6 14-Apr-20 5:45:44 PM

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