OreCorp Limited Annual Report 2020

Plain-text annual report

30293 27 April 2021 1:39 pm PFPANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020ORIOLE RESOURCES PLCFor the year ended 31 December 2020ANNUAL REPORT STOCK: ORROriole Resources AR2020.indd 3Oriole Resources AR2020.indd 327/04/2021 13:39:2927/04/2021 13:39:2930293 27 April 2021 1:39 pm V3WWW.ORIOLERESOURCES.COM Oriole 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 opportunitiesA number of interests and royalties in companies operating throughout Africa and TurkeyJoint venture partnership on Senala gold project in Senegal, reducing financial exposureOriole Resources PLCStock Code: ORRorioleresources.comOriole Resources AR2020.indd 3Oriole Resources AR2020.indd 327/04/2021 13:39:3327/04/2021 13:39:3330293 27 April 2021 1:39 pm PFPANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 202001Operational Highlights: °Maiden drilling programme underway at the Bibemi licence in Cameroon for a planned 3,080 meters of diamond drilling in 28 holes; °Continued exploration by IAMGOLD Corporation (‘IAMGOLD’) through the completion of a 6,901m aircore (‘AC’) programme, drilled at the Faré prospect in the north of the licence, as part of its continued earn-in to the Senala licence. The work has confirmed and enhanced the scale of the gold-in-soil anomalism at Faré; °Award of an extensive 3,592km2 licence package in central Cameroon.Financial Overview: °Operating loss of £0.34m reported for the year to 31 December 2020; a significant reduction compared to a loss of £1.41m in the prior year; °Loss for the year after tax reduced to £0.32m, a reduction of 81% when compared to the prior year; °Fund raises totalling £2.37m as the Group successfully fully-fund the next stage of work in Cameroon; °UK Administration expenses reduced by 16% to £0.87m.Post Year End: °£678k of cash received from warrant exercises subsequent to the year end.ContentsCOMPANY INFORMATION2Directors3Environmental Social Governance4Projects and Investments5Chairman’s statement11STRATEGIC REPORT17Report of the Remuneration Committee28Directors’ report30Independent Auditor’s Report to the members of Oriole Resources PLC32FINANCIAL STATEMENTSStatement of consolidated comprehensive income37Statement of consolidated financial position38Statement of consolidated changes in equity39Statement of consolidated cash flows40Statement of Company financial position41Statement of Company changes in equity42Statement of Company cash flows43Notes to the financial statements44Notice of AGM68Advisors & offices71HighlightsBusiness OverviewStrategic ReportFinancialsOriole Resources AR2020.indd 1Oriole Resources AR2020.indd 127/04/2021 13:39:3527/04/2021 13:39:35Oriole Resources PLC Stock Code: ORR orioleresources.com Company information Oriole is focused on early-stage gold exploration in Cameroon and the more advanced Senala gold project in Senegal. Who we are Oriole 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 listed on the Alternative Investment Market (AIM) of the London Stock Exchange (company number: 05601091). Our strategy The Company’s strategy is to develop a portfolio of exploration projects for gold and base metals, and to 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 earn-in to a 70% equity position. 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. Objectives Delivery of a maiden drilling programme at Bibemi in Cameroon through Q1 and Q2 2021. 01 02 Continued exploration by IAMGOLD at Senala, with reverse circulation and diamond drilling programmes at the more advanced Faré and Madina Bafé prospects. 03 Grassroots exploration of district-scale licence package in central Cameroon, covering 3,592km2 of gold- prospective terrane. 04 Continue with the realisation of value from existing lower- priority projects, many of which are in royalty arrangements. 02 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 2 Oriole Resources AR2020.indd 2 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:36 27/04/2021 13:39:36 Directors Business Overview Strategic Report Financials John McGloin Non-Executive Chairman John 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$85m. He is currently a non-executive director to Caledonia Mining Corporation plc and to Perseus Mining Limited. Tim Livesey Chief Executive Officer Tim has over 30 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 Limited (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$365m. Tim joined the company in March 2018. Bob Smeeton Chief Financial Officer Bob is a member of the Institute of Chartered Accountants in England and Wales. He trained as a chartered accountant with Price Waterhouse. 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. David Pelham Non-Executive Director David 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 3 Oriole Resources AR2020.indd 3 30293 27 April 2021 1:39 pm PFP 03 03 27/04/2021 13:39:37 27/04/2021 13:39:37 Oriole Resources PLC Stock Code: ORR orioleresources.com Environmental Social Governance Senegal The stable democratic republic of Senegal is considered Cameroon With a government focused on developing its mining a low security risk to operate within and recent updates industry, Cameroon is an underexplored country with to the Mining Code have created a transparent legislation significant potential for mineral resource definition. This is focused on promoting foreign investment with a robust underpinned by a new modern mining code, based upon social engagement framework. In addition to these positive the Finnish Mining Code, and a US$30m World Bank-funded, political, legislative and security factors, highly prospective country-wide prospecting programme that is currently being rocks can be found in the southeast of the country, a part of undertaken by the French and Finnish Geological Surveys. the world renowned for significant gold endowment within Birimian-aged greenstone belts related to the West African Craton. The country is highly prospective for a range of commodities but in particular for the discovery of orogenic-type gold mineralisation, being centred on Pan African and Neo- Oriole’s 85 per cent owned Senala licence area is located Proterozoic greenstone belts associated with the Central within this highly prospective region, known as the Kedougo- African Shear Zone (CASZ), a crustal scale suture zone and Kenieba Inlier (KKI), which spans the Senegal-Mali border. mobile belt between the Congo Craton and the Saharan The KKI is structurally complex with two regional scale shear Metacraton. Although no resources have been defined within zones, multiple related second and third order structures Cameroon, the regional geology shares many characteristics and hosts deep seated crustal structures that have enabled with other world class orogenic districts, including the sustained periods of fluid flow, necessary prerequisites Birimian-aged greenstone belts within the West African for the formation of large orogenic gold deposits. The KKI Craton. hosts several world class orogenic gold deposits including: Sadiola, Loulo-Gounkoto complex, Fekola, Sabodala-Massawa complex, Mako and Boto. The underexplored nature of the CASZ, and Cameroon in general, has enabled Oriole to enter the country with a ‘first mover advantage’ and, in partnership with Cameroon-based The occurrence of these world class deposits means that the KKI is considered a hotspot for gold exploration and industry consolidation. Active modern exploration has been on-going technical and logistics company BEIG3, it is now operating a licence package of almost 4,000km2. Partnering with BEIG3 has enabled the Company to develop its ‘social licence to since the 1970s which has led to the establishment of a operate’ within Cameroon and to continue its commitment competent technical workforce and a modern mining code to ESG best practice. BEIG3 has been crucial in organising that is supportive of foreign investment. Oriole’s local partner and implementing Oriole’s maiden drilling programme Energy & Mining Corporation S.A. (EMC), a 15 per cent owner at Bibemi, with the majority of the workforce, including of Senala, provides administrative support for the Company graduate-level, technical and non-technical roles, having and helps it achieve its social and corporate governance been sourced locally. As with all its projects, the Company (ESG) goals. Through the option agreement with IAMGOLD, also favours using in-country suppliers wherever possible, to the Company provides annual contributions to the country’s support development of the local economy. Social Mining Programme, a fund dedicated to benefiting local communities and an integral part of the Senegalese Mining Code. 04 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 4 Oriole Resources AR2020.indd 4 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:38 27/04/2021 13:39:38 30293 27 April 2021 1:39 pm PFPANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 202005 °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 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; °The first two years of IAMGOLD’s earn-in was focused on AC, RC and diamond drilling at the southernmost Madina Bafé and Saroudia prospects, located within 10km and 20km, respectively, 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 and IAMGOLD is currently undertaking US$60m of pre-development expenditure ahead of a mining decision; °In January 2020, Oriole successfully reapplied for a new licence over the Dalafin territory, to be re-named Senala, with an initial 4 year term, and up to 10 years in total, subject to meeting agreed exploration spend targets; °During 2020, IAMGOLD commenced Year 3 of its earn-in and completed a 6,091m AC drilling programme. Results re-confirmed the potential of Faré as a standalone mineable target, endorsing and enhancing the results yielded from the Company’s previous soil sampling campaigns; °Unfortunately IAMGOLD did not complete its year 3 expenditure and work programme commitments, however we have agreed to roll-forward the shortfall and a planned 5,000m RC and 1,000m diamond drilling programme will commence shortly. °The Year 4 commitment will bring IAMGOLD’s total investment in the project to US$4m by 28 February 2022.Focus projectsRoyalties/investmentsSenala (renamed from Dalafin in January 2020) Senegal:Planned year 4 drill programmes at FaréSenala licence geology with prospectsProjects and investmentsSENEGALSenalaCAMEROONBibemi, Wapouzé & Central CameroonTURKEY - Anadolu, Lodos & Bati Toroslar (Karaağac, Muratdere, Hasançelebi & Doğala)01EGYPT - Thani Stratex Resources (Hutite & Anbat-Shakoosh)02DJIBOUTI - Thani Stratex Djibouti (Pandora, Hesdaba, Aesdaba & Assaleyta)03Business OverviewStrategic ReportFinancialsOriole Resources AR2020.indd 5Oriole Resources AR2020.indd 527/04/2021 13:39:4127/04/2021 13:39:4130293 27 April 2021 1:39 pm V3WWW.ORIOLERESOURCES.COM 06 °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, Reservoir Minerals 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; °During the year, renewals were received for Bibemi and Wapouzé licences for a third and second two-year term respectively; °Surface exploration to date has identified four key prospects – Bakassi Zone 1, Bakassi Zone 2, Lawa West and Lawa East – over an 8.3km strike length. Best results to date include up to 135.40 g/t Au from selective rock-chip sampling and 9m @ 3.14 g/t Au from trenching; °A maiden drilling programme is currently underway for a planned 3,080m for 28 holes and will focus on testing the depth extension of mineralisation identified at the four main prospects. First results are anticipated by the end of Q1; °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; °Pilot trenching and detailed mapping has recently been completed at Wapouzé to test gold-in-soil anomalies identified from previous soil campaigns. Subject to results of this trenching programme it is possible that the diamond drilling rig could be moved to Wapouzé upon completion of the drilling program at Bibemi; °The Company has exceeded its initial expenditure commitment of US$1.56m to secure a 51% ownership of the holding company for Bibemi and Wapouzé (Reservoir Minerals Cameroon SARL) and is currently working through the legal formalities to complete that process. With the maiden drilling programme currently underway, the Company is on track to exceed its 90% earn-in target, being a further US$1.56m of expenditure.Bibemi and WapouzéCameroon: Projects and investments continuedBest results of surface sampling at Bakassi zoneOriole Resources PLCStock Code: ORRorioleresources.comOriole Resources AR2020.indd 6Oriole Resources AR2020.indd 627/04/2021 13:39:4927/04/2021 13:39:49Projects and investments continued Business Overview Strategic Report Financials Central Cameroon ° During the year the Company announced that it had ° BEIG3 will have a 10% free-carried interest in each of the expanded its footprint in Cameroon with the confirmation Reservoir Minerals Cameroon SARL licences under the same terms as above, with Oriole having the remaining beneficial interest; ° All licences have an initial exploration term of three years and are renewable three times for a term of two years each; ° An initial remote sensing study across the entire licence package has interpreted that seven of the eight licences cover predominantly Paleo-Proterozoic and Pan-African (Neo-Proterozoic) terranes, both of which are prospective for orogenic gold. It also interpreted that the TBSZ passes through at least six licences; ° An initial 12 priority gold targets have been identified and will be given particular attention during the Company’s upcoming regional-scale mapping and stream sediment sampling programme, planned for Q2-2021. of a further eight licences, covering a contiguous land package of c.3,592km2. Five of these licences (Tenekou, Niambaran, Pokor, Ndom and Mbe) are held directly by our 90% subsidiary, Oriole Cameroon SARL, with the other three (Mana, Dogon and Sanga) held by Reservoir Minerals Cameroon SARL, under the same earn-in agreement that controls ownership of Bibemi and Wapouzé; ° The licences were applied for in 2019, following an in-house, country-wide prospectivity analysis that deemed the district as having significant potential to host orogenic- type gold mineralisation. This assessment was made on the basis of host-rock geology, structural location – targeting the regional Tcholliré-Banyo shear zone (TBSZ) which is a major splay off the larger scale Central African Shear Zone; ° The TBSZ and its associated shears, thrusts and faults are, according to academic literature, thought to be one of the significant structural controls for gold and other mineralisation in the region. ° BEIG3 and its associate Roxane Minerals Limited will have a collective 10% free-carried interest in each of the Oriole Cameroon SARL licences 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; ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 7 Oriole Resources AR2020.indd 7 30293 27 April 2021 1:39 pm PFP 07 27/04/2021 13:39:53 27/04/2021 13:39:53 Oriole Resources PLC Stock Code: ORR orioleresources.com Projects and investments continued Reviewing drill core at Bibemi ROYALTIES & INVESTMENTS Thani Stratex Resources Ltd (‘TSR’) (Egypt): ° In late 2019, TSR advised the Company that it had Hutite: The mineralised system is hosted by a melange of ultramafic/mafic rocks, representing one of the many completed a restructuring in order to spin-out its 50%- suture zones between tectonic terranes in the eastern ownership of Thani Stratex Djibouti Limited (‘TSD’), desert of Egypt and as seen all over the Arabian Nubian creating a standalone vehicle that will be funded and Shield. Although TSR has not completed any work at this managed independently of TSR; ° As a result, TSR became solely focused on the Hodine licence in Egypt that hosts the Anbat-Shakoosh and Hutite projects: Anbat-Shakoosh: TSR completed a total 18 holes diamond drilling for 3,976.80m between October 2016 and July 2017, which led to a revised geological model for a near-surface, project since acquiring it in 2014, 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 0.40 g/t Au cut-off. flat-lying zone of gold-mineralisation on the eastern side of ° In March 2021, TSR signed a Binding Heads of Terms with an identified mineralised intrusion. Reported intersections private investment company Red Sea Resources (RSR) with confirmed the continuity of broad zones of mineralisation respect to earning up to an 85% interest in Hodine in return defined by historic drilling, as well as narrower high-grade for paying all outstanding fees and charges and making intervals of up to 227 g/t Au over 1.25m. In December 2017, staged expenditure commitments totalling US$2.2m; TSR announced a maiden JORC 2012-compliant Inferred Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au1 within porphyry sills (announcements dated 6 and 13 December 2017), although the geometry of these sills is yet to be fully resolved. Potential upside has also been ° RSR currently holds a 7% interest in the holding company for Hodine, with TSR holding the remaining 93%. In the event that TSR’s position is diluted below 10%, its holding shall be converted to a 1.5% net smelter return (‘NSR’) royalty on future gold production from the licence. This highlighted within the granodiorite, where an Exploration would equate to a 0.37% NSR royalty for Oriole; Target has been disclosed. No work was completed at Anbat during the year. ° As at 31 December 2020, Oriole’s holding in TSR stood at 24.92%. 08 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 8 Oriole Resources AR2020.indd 8 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:54 27/04/2021 13:39:54 Business Overview Strategic Report Financials drilling phases, with the best intersections yielded at the north-western end of main Pandora prospect and at the south-eastern end of Pyrrha prospect. Best results (recalculated by the Company using a 0.3 g/t Au cut-off) included 16.86m grading 1.42 g/t Au from 13.00m, including 6.63m at 2.68 g/t Au. Hesdaba: Located 10km northwest of Pandora, TSD has completed detailed mapping that has identified veins over a combined strike of 16km. During the year, a Phase 1 drilling programme comprising 1,931m of diamond drilling (in 14 holes) and 1,529m of RC drilling (in 15 holes) was completed to test the epithermal system at depth across three primary targets: Maranzana, Caravan and Red Horns. Results for an initial 478 core samples and 1,129 RC samples (inclusive of QAQC) have confirmed significant mineralisation at all three targets, with best results achieved from Red Horns, including 15.00m grading 4.08 g/t Au. Further results from the programme are still pending. Assaleyta: Located c.16km to the north of Pandora, low-sulphidation epithermal gold occurs as high-grade veins and disseminated mineralisation in rhyolite domes. Phase one drilling in 2017 confirmed sub-surface gold mineralisation of up to 17.40m grading 2.24 g/t Au from Thani Stratex Djibouti Ltd (‘TSD’) (Djibouti): ° In late 2019, TSD became a standalone vehicle and is now being funded and operated by its largest shareholder African Minerals Exploration & Development Fund III (AMED); ° AMED is committed to the development of TSR’s assets in surface and 3.16m grading 6.79 g/t Au from 20m. During Djibouti and is funding a substantial three-year exploration the year, work at Assaleyta mostly comprised camp and programme. Funding is taking place in equal tranches, road construction as well as drill access works for a planned subject to performance milestones.; 2,000m Phase 2 diamond drilling programme that is yet to ° Funding to date has been focused at the following three commence. main projects within the Afar epithermal province of the ° In March 2020, Tim Livesey was appointed to the TSD East African Rift Valley: board as Oriole’s representative; Pandora: The 93km2 Oklila licence, which includes the main ° As at 31 December 2020, Oriole’s holding in TSD stood at Pandora vein, covers an epithermal system that comprises over 11.80%. 10 km strike of outcropping and inferred veins. Further to the initial phases completed between 2017 and 2018 (totalling 5,300m), a Phase three diamond drilling programme was completed in Q1-2020 for 1,242m in 13 holes. Results supported those yielded from the previous Muratdere (Turkey): ° Muratdere is a substantial copper-molybdenum-gold ° In November 2019, the Company executed share purchase and royalty agreements with its partner Lodos Maden porphyry system located west of Ankara with significant Yatırım Sanayii ve Ticaret A.Ş. (‘Lodos’), a wholly-owned silver, molybdenum and rhenium credits. The project mining investment company of Istabul-listed investment has a JORC-compliant Inferred resource of 51 million company Pragma Finansal Danışmanlık Ticaret A.Ş. that tonnes, comprising 186,000 tonnes Cu, 204,296oz Au resulted in the Company’s equity interest in Muratdere and 3.9 million oz Ag, that remains open along strike and being converted to a 1.2% post-tax NSR royalty; at depth; ° Lodos has submitted an updated Environmental Impact ° According to a previously reported Feasibility Study, Assessment (‘EIA’) and a decision is expected in 2021; an optimised resource of 16 million tonnes will be thereafter, completion of construction is anticipated within processed over a sixteen-year mine life, for total metal in 18-24 months. concentrate of c.68,000 tonnes copper, c.32,000 ounces gold and c.955,000 ounces silver (announcement dated 11 March 2015); ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 9 Oriole Resources AR2020.indd 9 30293 27 April 2021 1:39 pm PFP 09 27/04/2021 13:39:55 27/04/2021 13:39:55 Oriole Resources PLC Stock Code: ORR orioleresources.com Projects and investments continued Karaağac Gold project (Turkey): ° Karaağac is located 300km west-south-west of Ankara, mineralisation is hosted by an outcropping thrust zone and altered limestone and has 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) (announcement dated 11 March 2019);. ° Under the terms of the Agreement, definition of this JORC- resource triggered the payment by Anadolu of a US$500k success-based fee, which the Company agreed to receive in staged payments of US$25k per month for a period of 20 months. US$75k of this was received in 2019 but the balance remains outstanding and the Company has commenced legal proceedings in order to secure recovery of this debt. With monthly installments now overdue, the whole US$425k is now payable ° Despite this non-payment, Anadolu was contractually entitled to exercise their right of first refusal on the remaining 1.5% NSR royalty position when an offer for this was received from a third party. Consequently, the Company received US$50k from Anadolu (announcement dated 17 August 2020) with a further US$250k due when the project moves towards mine building. Hasançelebi and Doğala projects (Turkey): ° Hasançelebi is a high-sulphidation epithermal gold-silver project located 500km SE of Ankara. Doğala is a grassroots exploration project, located approximately 225km to the west of Hasançelebi. It is prospective for high-sulphidation gold mineralisation; ° In 2019, the Company’s wholly-owned subsidiary, Stratex Madencilik Sanayi ve Ticaret Limited Şirketi (‘Stratex Madencilik’), signed an exploration agreement with Toroslar Madencilik Ltd. Şti. (‘Bati Toroslar’) for the Hasançelebi and Dogala licences which will result in a US$500k success-based payment on delivery of a minimum 100,000 oz indicated and inferred JORC- compliant indicated or measured gold resource (with a 0.3 g/t Au cut off), defined within the oxide and transition zones, at Hasançelebi and the completion of an Environmental Impact Assessment (Announcement dated 29 October 2019); ° Drilling was on-going through the latter part of 2020 and into 2021 and our Turkish team are engaged as consultants on the programme. Completion of the drilling phase will allow resource calculation to proceed and news on this is anticipated during 2021; ° During the year, Toroslar exercised its right to acquire our 1.5% royalty on Hasançelebi and Doğala for an initial cash payment of US$30k, with a further US$220k due once the project moves to the mine-development stage. More detail of the above Oriole projects and investments can be found on the Company’s website: www.orioleresources.com 10 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 10 Oriole Resources AR2020.indd 10 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:55 27/04/2021 13:39:55 Chairman’s statement Business Overview Strategic Report Financials “2020 will be remembered as the year of the Covid-19 pandemic, with all businesses impacted to some degree by the unprecedented events arising from this. I am pleased to report that the Company proved largely resilient to the impacts of the pandemic, and whilst certain exploration activities did get delayed, the Company advanced its strategic objectives in Cameroon, saw IAMGOLD continue its investment in Senegal and moved forward on realising value from some of its legacy assets.” John McGloin Non-Executive Chairman Our initial reaction to the near-global lockdown of March 2020 was to protect the business and move into a cash conservation mode as markets across the world faced great uncertainty. This strategy is reflected in the financial information presented herein, with further reductions in costs adding to the substantial savings that had already been made prior to the pandemic. Two small fund raises early in the year protected the business and enabled us to start planning for our maiden drilling programme in Cameroon with as much certainty as possible considering the turbulent times. Operations Senala, Senegal Despite Covid-19, work on our 472.5km2 Senala licence in Senegal continued, largely due to the availability of drill- rigs in-country. From late Q2 2020, IAMGOLD was able to commence its planned Year 3 programme and completed a total of 6,901m Air Core (‘AC’) drilling during the period, covering the majority of the 6.4km strike of anomalous mineralisation. The AC results (announcement dated 11 March 2021) re-confirmed the potential of Faré as a standalone surface mineable target, endorsing and enhancing the For a junior explorer, active exploration and results drives results yielded from the Company’s previous soil sampling shareholder value and so we feel we are extremely well campaigns. placed as we start 2021 with active drilling campaigns at our core projects in Cameroon and Senegal as well as at our investment projects in Djibouti and Turkey, and very shortly in Egypt. Now with a robust gold price, a significantly improved share price and a strong cash position, we will look back on 2020 as a year of significant progress in the development of the Company, providing the foundation blocks to support our growth. Despite the underspend on the Year 3 commitment of US$172k, IAMGOLD remains enthusiastic about the earn- in and is planning to push ahead with Year 4, which will comprise follow up Reverse Circulation (‘RC’) and Diamond Drilling (‘DD’) programmes at Faré as well as more drilling at the southernmost Madina Bafé target (announcement dated 23 March 2021). The Year 4 commitment will bring ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 11 Oriole Resources AR2020.indd 11 30293 27 April 2021 1:39 pm PFP 11 27/04/2021 13:39:56 27/04/2021 13:39:56 Oriole Resources PLC Stock Code: ORR orioleresources.com Chairman’s statement continued IAMGOLD’s total investment in the project to US$4m by 28 Exploration at Wapouzé is less advanced but two phases of February 2022, which will require an additional c.US$1.7m of soil sampling have previously identified c.13km strike length expenditure over the next 11 months. of gold anomalism within the eastern Bataol Zone. A limited The proximity of Senala to IAMGOLD’s mine-development trenching programme was completed early in 2021. project at Boto, and its prime location within the highly gold- Under the terms of the earn-in agreement with our well- endowed Kédougou-Kéniéba inlier, represents a significant established local partner, Bureau d’Etudes et d’Investigations driver of value for the Group, as do the results from other Géologico-minières, Géotechniques et Géophysiques exploration companies operating in this area. We look SARL (‘BEIG3’), our investment is progressing well, and will forward to a very active Year 4 and sharing the results of that accelerate as the drilling campaign moves ahead. We have work. Bibemi, Wapouzé and new licences, Cameroon As a precautionary reaction to Covid-19, Cameroon closed its borders in March 2020 and so our in-country work during the first half of 2020 was limited to the Q1 mapping campaign at Bibemi (announcement dated 11 May 2020). Following the seasonal rains (late June to early October) we already passed the US$1.56m earn in target to secure 51% ownership of the holding company for Bibemi and Wapouzé (Reservoir Minerals Cameroon SARL), and are currently working through the legal formalities to complete that process. With the maiden drilling programme currently underway, the Company is on track to exceed its 90% earn-in target, through a further US$1.56m of expenditure. finalised plans for our maiden drilling campaign at Bibemi Alongside Bibemi and Wapouzé, we were delighted to in northern Cameroon, securing a minimum 3,000m drilling receive confirmation of eight licence awards in central contract with Capital Ltd. The necessary equipment for that Cameroon (announcement dated 3 February 2021). Five of programme was mobilised towards the end of the year and, these licences are held directly by our 90%-owned subsidiary, despite some delays in response to the Covid 19-related Oriole Cameroon SARL, with the other three held by Reservoir global shipping crisis, drilling commenced in Q1 2021. Minerals Cameroon SARL, under the same earn-in agreement The total planned programme now stands at 28 holes for 3,080m and will focus on testing the depth extension of surface gold mineralisation identified at four main prospects - Bakassi Zone 1, Bakassi Zone 2, Lawa West and Lawa East - that occur within an 8.3-kilometre-long system. Based on the surface exploration to date, we believe we have developed a strong initial geological model and this drilling will test and refine that model. First results are anticipated by the end of Q1 2021. that controls ownership of Bibemi and Wapouzé. A remote sensing study has already been completed, identifying an initial 12 priority gold targets, and the team has undertaken a reconnaissance visit to complete initial ground-truthing of those targets and to inform the local authorities of the Company’s upcoming work programmes (announcement dated 18 February 2021). The initial phase of exploration work will include a package-wide regional stream sediment sampling programme, the orientation study for which is currently underway, that we anticipate commencing in Q2. 12 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 12 Oriole Resources AR2020.indd 12 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:56 27/04/2021 13:39:56 Business Overview Strategic Report Financials We continue to see great potential in Cameroon as a new frontier for gold exploration, and note increased interest from Thani Stratex Resources (‘TSR’) TSR underwent a restructuring at the end of 2019 with the wider exploration community, with a number of new the spin-out of its 50%-owned joint venture, Thani Stratex licences applied for by our peers. We remain confident that Djibouti. As such, TSR became exclusively focused on its our first mover position has enabled us to secure what we (then 100%-owned) Hodine licence in Egypt that hosts the consider to be the most prospective ground and welcome Anbat and Hutite projects. At Hutite, former operator Thani the increased interest. The more active companies there are Ashanti drilled over 30,000m of RC and diamond drilling in a country, the easier and cheaper it becomes to secure between December 2010 and March 2013. On the basis of this drill rigs, specialist equipment and to provide the appropriate work, South Africa-based Quantitative Group estimated an training for local staff, increasing the speed and economy of Inferred Resource (non-JORC) of 11,410,000 tonnes grading operations. Investments and Royalty positions The 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. During the year, the Group realised its 12.27% holding in Tembo for net proceeds of £172k (announcement dated 25 February 2020), and received US$80k from the initial proceeds on the sale of two royalty positions. The remaining positions provide a potential source of funding for the Group and are subject to an ongoing asset realisation programme, whilst recognising that a number of these projects are progressing at a good pace, providing the opportunity to enhance shareholder value. The most significant remaining positions within the Group are set out below. 1.41 grammes per tonne (‘g/t’) gold (‘Au’) for 520,000 in-situ ounces using 0.40 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). TSR was unable to fund significant work at either project in the last few years, but the recently signed agreement with Red Sea Resources Limited (‘RSR’; announcement dated 16 March 2021) provides an opportunity for this project to move forward. Under the terms of the agreement, RSR has paid all outstanding liabilities on the licence and will make staged payments of US$2.2m to earn a total 85% interest in the project, with the parties contributing or diluting thereafter. If, at any time, TSR’s shareholding in the licence holding company (currently 93%) falls below 10%, its interest shall be converted to a 1.5% net smelter return (‘NSR’) royalty on future gold production. Based on our 24.92% shareholding in TSR, this would equate to a 0.37% NSR royalty to Oriole, something that we would not have been entitled to under the previous joint venture terms with TSR. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 13 Oriole Resources AR2020.indd 13 30293 27 April 2021 1:39 pm PFP 13 27/04/2021 13:39:56 27/04/2021 13:39:56 Oriole Resources PLC Stock Code: ORR orioleresources.com Chairman’s statement continued We await details of the work programme from RSR but anticipate that drilling will commence during 2021. Extension Muratdere Our interest in the Muratdere gold project in Turkey of the already identified resources will provide an impetus converted to a 1.2% NSR royalty during 2019 (announcement to mine building and we look forward to news flow in that dated 21 November 2019). Our joint-venture partner, Lodos regard. In order to monitor developments, Tim Livesey has Maden Yatırım Sanayii ve Ticaret A.Ş. (‘Lodos’), has submitted accepted a seat on the Board of the joint-venture vehicle. its Environmental Impact Assessment (‘EIA’) report and we Thani Stratex Djibouti (‘TSD’) TSD became a standalone vehicle in late 2019 and is now funded and managed independently from TSR. The company is focused on the exploration of epithermal gold projects in Djibouti, namely Pandora, Assaleyta and Hesdaba. Active drilling campaigns continued throughout 2020 and into 2021, and consequently our initial holding has been diluted down to 10.61% (announcement dated 23 March 2021). are awaiting the successful conclusion of this key phase. Our royalty attracted significant interest from a number of groups during the year. However with a 27% rise in the copper price during 2020, and anticipated progress towards authorisation of the mine building phase, we are pleased to have retained this asset within our portfolio. Karaağaç At the Company’s former Karaaǧaç gold project in Turkey, However, with African Minerals Exploration & Development the current owner, Anadolu Export Maden Sanayi ve Ticaret Fund III (‘AMED Fund III’, TSD’s largest shareholder) Limited Şirketi (‘Anadolu’), confirmed an Indicated Resource committed to funding and managing a substantial three- significantly in excess of the 50,000 ounces of gold necessary year exploration programme in Djibouti (announcement to trigger the US$500k success-based payment due to Oriole dated 19 November 2019) we believe the value being added upon meeting that milestone. US$75k of this was received outweighs the impact of dilution. AMED Fund III is now in 2019, but the balance remains outstanding and we have managing and funding substantial exploration campaigns at commenced legal proceedings in order to secure recovery of the three main projects, Pandora, Assaleyta and Hesdaba. this debt. At Pandora, a Phase 3 drilling programme was completed Despite this non-payment, Anadolu was contractually for 1,242m. Results from the 13-hole programme supported entitled to exercise its right of first refusal on the remaining those yielded from the previous drilling phases, with the 1.5% NSR royalty position when we received an offer for best intersections yielded at the north-western end of main this from a third party. Consequently, we received US$50k Pandora prospect and at the south-eastern end of the Pyrrha from Anadolu (announcement dated 17 August 2020) with prospect. Best results included 16.86m grading 1.42 g/t Au a further US$250k due when the project moves towards from 13.00m and 6.80m grading 2.19 g/t Au from 23.58m, mine building. We monitor progress on this project carefully meanwhile, at Hesdaba, a Phase 1 drilling programme and retain the right to re-instate the royalty position should comprising 2,242m of diamond drilling (17 holes) and 3,413m Anadolu default on this second payment. of RC drilling (33 holes) was also completed to test the epithermal system at depth across three primary targets: Maranzana, Caravan and Red Horns. Initial results have confirmed significant mineralisation at all three prospects, with best results achieved from Red Horns, including 15.00m grading 4.08 g/t Au (announcements dated 22 December 2020 and 23 March 2021). The remaining results from the programme are anticipated in Q2-2021. Hasançelebi and Doğala At the Hasançelebi and Doğala gold projects in Turkey, the Company signed an exploration agreement with Turkish private company Bati Toroslar Sti (‘Toroslar’) in 2019. In addition to exploration expenditure commitments of US$1.38m, the agreement provides for the payment of a US$500k success-based fee upon successful definition of a minimum 100,000 oz Au JORC-compliant resource and Work at Assaleyta mostly comprised camp and road completion of the Environmental Impact Assessment. construction as well as drill access works for a planned Phase Drilling has been on-going through the latter part of 2 diamond drilling programme. In Q1-2021, that programme 2020 and into 2021 and our Turkish team are engaged as was completed for 687.80m diamond drilling in three holes consultants on the programme. Completion of the drilling and 2,508m RC drilling in 22 holes. Results for 1,558 diamond phase will allow resource calculation to proceed and we look core and RC chip samples (inclusive of QAQC) are anticipated forward to news on this during 2021. in Q2. In addition, in 2020 and following a third party offer, Tim Livesey has been appointed to the TSD board Toroslar exercised its right to acquire our 1.5% royalty on (announcement dated 9 March 2020) and the encouraging Hasançelebi and Doğala for an initial cash payment of results to date provide the Board with confidence in the US$30k, with a further US$220k due once the project moves carrying value of this asset (£784k at the 2020 year-end). to mine-building (announcement dated 30 July 2020). We would expect this, and the US$500k success-based fee, to potentially become payable in 2022. 14 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 14 Oriole Resources AR2020.indd 14 30293 27 April 2021 1:39 pm V3 27/04/2021 13:39:56 27/04/2021 13:39:56 Business Overview Strategic Report Financials Financial Review We are pleased to be reporting a considerably reduced loss for the year of £0.32m (2019: £1.66m), aided by a £317k foreign exchange gain on our Senala asset, but also by significant cost-saving measures that have reduced administrative overheads by 35%, as well as the continued successful growth of the Turkish consultancy business. Excluding the foreign exchange gain, an operating loss of just £645k for an active AIM-quoted exploration company is a real achievement and reflects the Board’s determination to focus available funds on its exploration programmes. Whilst Covid-19 restrictions limited activity in the early part of the year, the focus on being drill-ready for when restrictions finally lifted meant that, at the turn of the year, we were on the ground in Cameroon preparing for the arrival of a drill rig. With a significant fund raise completed in October 2020, along with funds from asset realisations and Research and Development tax credits of £165k, the Group closed the year with £1.75m of cash. As a result of a rising share price, a further £678k of cash has been received from warrant exercises in early 2021. The Group’s plans for the current exploration season in Cameroon are fully-funded, and with potentially another £1.47m to come from warrant exercises, the Company’s financial position is looking strong to support significant work planned throughout 2021. The Board’s commitment to maximising the cash available for exploration work was demonstrated by the agreement to convert four-months of salary into share options (announcement dated 20 August 2020) and members of the Board also participated in the Company’s fundraise at the end of the year (announcement dated 7 October 2020). In addition, work continues to realise value from our legacy assets, with progress made with the sales of two of the Turkish royalty assets and the disposal of the 12.27% stake in Tembo. Covid-19 Covid-19 was a significant global challenge in 2020 and remains so going into 2021. Whilst the UK is showing encouraging signs of recovery, with the easing of restrictions enabled by the mass vaccination programme, we are an international business operating largely in Africa, where vaccine programmes will, sadly, inevitably lag behind their Western counterparts. Whilst Cameroon and Senegal are currently open for business, and our drill-camp in northern Cameroon is isolated from any significant population, there is undoubtedly uncertainty around how the pandemic may impact operations in the future. Whilst we do not anticipate any operational issues currently, we continue to monitor the situation closely, and put the health and safety of our employees and contractors first. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 15 Oriole Resources AR2020.indd 15 30293 27 April 2021 1:39 pm PFP 15 27/04/2021 13:39:58 27/04/2021 13:39:58 30293 27 April 2021 1:39 pm V3WWW.ORIOLERESOURCES.COM 16Annual General Meeting (“AGM”) Update The Company’s AGM is scheduled for 23 June 2021 at Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD. Whilst we currently plan that this will be an open meeting, the Company encourages all shareholders to vote via proxy form in advance of the meeting date, although attendance will be permitted, subject to any delay on reducing lockdown restrictions in the United Kingdom. The Company shall inform shareholders via regulatory announcement if the meeting needs to revert to being a closed meeting. OutlookThe Company’s strategy is to develop a portfolio of exploration projects for gold and base metals and to identify potential partners to take them into the advanced exploration and mine development stages. Our Senala licence in Senegal and our Bibemi, Wapouzé and Central Licence package in Cameroon, provide us with exposure to various stages of the exploration cycle, and we also have a number of valuable legacy positions that can help us to generate cash for our exploration activities.In 2021, we expect news across five drill programmes, as well as the generation of targets across our 3,592 km2 Central Cameroon licence package. With cash in the bank, and further cash potentially coming in from warrant exercises and the legacy asset realisation programme, the near-term exploration programme is fully-funded. We continue to look for further opportunities that we believe would add shareholder value.Though 2020 was a very challenging year for companies everywhere, we have come through it stronger, thanks to the exceptional support from our employees. 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, sacrifices and hard work during the past year.John McGloinNon-Executive Chairman23 March 2021Oriole Resources PLCStock Code: ORRorioleresources.comOriole Resources AR2020.indd 16Oriole Resources AR2020.indd 1627/04/2021 13:40:0027/04/2021 13:40:0030293 27 April 2021 1:39 pm PFP17ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020The Directors present their strategic report on the Group for the year ended 31 December 2020. Strategic ReportPrincipal Activities The principal activity of the Group is the exploration and development of gold and other high-value base metals projects.Strategic approachThe 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. Oriole Resources PLC Company number: 05601091 Registered office: 180 Piccadilly, London, W1J 9HF, UK 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 that, for many years, has delivered successful exploration projects across Turkey and Africa.The Board of DirectorsThe 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 CommitteeThe 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 2020 requiring disclosure.Business OverviewStrategic ReportFinancialsOriole Resources AR2020.indd 17Oriole Resources AR2020.indd 1727/04/2021 13:40:0227/04/2021 13:40:02Oriole Resources PLC Stock Code: ORR orioleresources.com Strategic Report continued The Remuneration Committee The Remuneration Committee provides a formal These risks are mitigated as much as possible by building and maintaining a pipeline of projects at various stages of and transparent review of the remuneration of the development, by employing highly experienced and highly Executive Directors and senior employees and makes trained geologists, both at Board level and at the operational recommendations to the Board on individual remuneration level and by maintaining good relationships with the packages. This includes the award of non-contractual Governments of the countries in which we operate. 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. Political risks: All of the Group’s operations are located in a foreign jurisdiction. As a result, the Group is subject to political, economic and other uncertainties, including but not limited The committee comprises John McGloin (Non- Executive to, changes in policies or the personnel administering them, Chairman) and David Pelham (Independent Non- Executive terrorism, nationalisation, appropriation of property without Director). No Director took part in discussions concerning the fair compensation, cancellation or modification of contract determination of their own remuneration. Business environment The price of gold increased by 24% during the year, from an opening position of US$1,523 per ounce, to US$1,894 per ounce at 31 December 2020. With continued economic uncertainty, we believe gold’s reputation as a safe haven will continue to give upward pressure on its price. In addition, the low global levels of exploration work, and consequently low levels of new resource definition, over the last decade has meant resource pipelines have not been replenished. The need to replenish resources, and the strength of the gold price, is driving renewed investment into early-stage exploration. 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. 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 rights, foreign exchange restrictions, currency fluctuations, export quotas, royalty and tax increases and other risks arising out of foreign governmental sovereignty over the areas in which these operations are conducted, as well as risks of loss due to civil strife, acts of war, guerrilla activities and insurrection. The Board only conducts operations in those countries with a stable political environment and which have established acceptable mining codes. The Company adheres to all local laws and pays heed to local customs. Financial and liquidity risks: The main financial risks facing the Group are the availability of adequate funding and fluctuations in foreign exchange rates. The Group’s main source of finance is the monetisation of projects supported where necessary by the issue of share capital. Tight budgetary and financial controls are maintained across the Group. The Group only deals with high-quality banks. It does not hold derivatives, does not trade in financial instruments, does not engage in hedging arrangements and does not enter into binding commitments for exploration expenditure. is possible, during which time the economic feasibility The use of interest-bearing deposit accounts is maximised of production may change. Substantial expenditures are and cash flow forecasts are constantly updated and reviewed required to establish mineral reserves and to construct by the Board. mining and processing facilities. 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 Group being adversely affected. In particular, changes in the application or interpretation of mining and exploration laws and/or taxation provisions in the countries in which the Group operates could adversely affect the value of its interests. 18 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 18 Oriole Resources AR2020.indd 18 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:02 27/04/2021 13:40:02 Business Overview Strategic Report Financials Foreign exchange risks: The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro and US Dollar. and congestion at major dock facilities. These shipping challenges ultimately delayed the arrival of the drill rig from an initially expected Q4 2020, into Q1 2021. This short term inconvenience is now resolved. The Group’s exposure to foreign exchange movements is set out in Note 19 of the Accounts. Risks to exchange movements are mitigated by minimising the amount of funds 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 and recognises the profits and losses resulting from currency fluctuations as and In March 2020, as an immediate response to the developing pandemic, the Board and management team took substantial pay cuts in order to preserve funds in uncertain times. Our employees, professional advisors and other suppliers supported us in these cost savings measures, and the Board would like to thank all those that gave the Company their support during those uncertain and unprecedented times. when they arise. 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. This may mean exploration costs rise, as the Group primarily operates in West Africa, where currencies are typically linked to the Euro. However, the Directors do not expect there to be any significant lasting impact. Liquidity risk: The Group’s liquidity risk is considered to be significant as it is a pre-revenue business. The Directors regularly review the opportunities for asset realisation and the need for further equity raising. 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. Business performance 2020 Operations The Group’s main operations are split between active exploration projects and the management of our investment and royalty positions. Impact of Covid-19 The global pandemic of 2020 had an impact on the Group’s operations, mainly in respect of its exploration operations in Cameroon. For much of Spring and Summer 2020, Cameroon’s borders were shut and we could not get access We continue to monitor the impact of Covid-19 but believe the impact on our operations in 2021 will not be significant. Active Exploration projects: The primary focus for the Group’s own exploration activities is our position in Cameroon. In 2018 the Group signed an earn in agreement with BEIG3 to gain an interest in the Bibemi and Wapouzé licences in northern Cameroon. Work on the licences in 2019 and early 2020 provided encouraging results at both licences and further exploration programmes are now underway, including a maiden 3,080m drilling programme at Bibemi. Trenching at Wapouzé has been completed with the intention of defining drill targets once results of that work are available. We received confirmation of licence renewals for both Bibemi and Wapouzé during the year, giving us the confidence to proceed with our exploration plans. In 2018, we signed an agreement with the owner of the licences, BEIG3, that enabled the Group to earn into a 51% equity position on completion of US$1.56m of expenditure, and up to 90% equity position following the completion of a further US$1.56m of expenditure. We have reached the first milestone and are in the process of formalising the ownership position. In addition, in 2019 the Group applied for a district-scale package of licences in central-Cameroon, covering 3,592km2 of highly prospective ground that had been identified by the Group as part of a prospectivity review in the summer of that year, based on historic data and our knowledge of the key structural features that define Cameroon’s geology. The licence grants were received in February 2021 and we are now commencing our initial exploration activities. to our licence areas. As these restrictions were eased in In 2018, the Group entered an agreement with Canadian- Autumn, we were able to complete the mapping work we had been progressing in early 2020 in advance of a drilling programme. We are now fully operational in Cameroon. listed gold miner IAMGOLD, for it to earn-in to the exploration licence at Dalafin in Senegal. This 472km2 of highly prospective ground, in the middle of the Kédougou-Kéniéba The other main impact on the business was the related impact that the Covid-19 crisis had on the global shipping industry, that suffered from a crisis of logistics with ships unable to dock, containers in the wrong places inlier, is surrounded by historic and contemporary gold discoveries. Early in 2020, 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. After meeting its Year 1 and Year 2 commitments, IAMGOLD, as ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 19 Oriole Resources AR2020.indd 19 30293 27 April 2021 1:39 pm PFP 19 27/04/2021 13:40:02 27/04/2021 13:40:02 Oriole Resources PLC Stock Code: ORR orioleresources.com Strategic Report continued a result of delays due to Covid-19, failed to meet its Year 3 commitment with a shortfall on its expenditure commitment Financial Review: The Group’s loss after tax for the year was £320k (2019: loss of and planned work programme. Nevertheless, an extensive £1,660k). AC programme was completed that confirmed significant anomalism at the Faré prospect, and IAMGOLD has confirmed its intention to proceed with Year 4 of the earn-in. The scope of the Year 4 work programmes has been agreed and the Company is comfortable that IAMGOLD will catch up the underspend and meet its 51% option expenditure requirement. Investment and royalty positions: The Company has a long history of gold and base metal exploration success and this history has left it with a valuable portfolio of legacy assets throughout East Africa and Turkey, which are the subject of an on-going asset realisation programme. The management team actively manage these assets, including taking up Board positions where possible in order to assist with value maximisation. During the year the Company disposed of its interest in Tembo Corporation Inc, for £172k (announcement dated 25 February 2020) and concluded two agreements in respect of royalty positions in Turkey. The two Turkish royalties were sold in similar deals, with a total of US$80k cash already received and US$470k to become payable as the underlying projects move into their construction phases. At the Company’s former Karaaǧaç gold project in Turkey, we continue to pursue payment of US$425k owed to us by the operator, Anadolu Export. We have now exhausted attempts to negotiate settlement and are moving towards a court date. We remain confident in the strength of our case. We are also awaiting news of a US$1m debt owed by a former partner in Turkey, who defaulted on tax payments they should have made. Progress on this is held up by a preceding case involving this bad debtor but we anticipate this moving forward during 2021. Whilst this significant reduction in the loss for the year was partly driven by an unrealised foreign exchange gain of £317k, compared to a £445k exchange loss in the prior year, the rest of the decrease, some £578k, was driven by further reductions in costs and increases in the profitability of the consultancy business built up by our Turkish team. Administration expenses of £1,018k (2019: £1,556k) were 35% lower than the previous year, with a mixture of cost saving measures implemented as a response to the business uncertainty arising from the Covid-19 pandemic. Salaries and professional fees were reduced and accrued salaries from 2019 were, as planned, relinquished by the Directors in exchange for a share option scheme, effectively amounting to a direct investment of four months of salary by each member of the Board. In Turkey, the consultancy business established by the Turkish team in 2019 managed to prosper despite local lockdowns being in place for much of the year. Net profits of £162k were generated and, importantly, the cash flow was used to settle outstanding historic employment liabilities for that team. The continued reduction in net cost was bolstered by £317k of foreign exchange gains arising on the Senala asset in Senegal, which is denominated in Euros. In addition, further research and development tax credits, totalling £165k, were received during the year. Consequently the Group loss after tax was reduced by 81% to £320k. The Group ended the year with a cash balance of £1,751k, an increase in the year of £1,588k. With the exploration programme in Cameroon suspended early in 2020 due to a Covid-19 lockdown, the Group focused on getting ready for the drill programme that is currently underway At the Muratdere Madencilik copper-gold project in northern at Bibemi. Two small fund raises early in the year enabled Turkey, where we hold a 1.2% post-Turkish tax royalty position the Group to push ahead with drill contract negotiations, our joint-venture partner, Lodos, has continued to work which were concluded in September, and the raise in towards obtaining approval for its EIA on a 16 million tonne October 2020 brought in £1,869k of additional funding for optimised copper mine proposal. During the prior year, TSR 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 majority shareholder, and we have received encouraging results from this investment throughout the year. Oriole currently has a 10.61% interest in TSD and has a 24.92% interest in TSR for its projects in Egypt. the drill programme. The Group also continued with its asset realisation programme, with the sale of two Turkish royalties bringing in US$80k cash and a further US$470k to follow as the projects progress. The disposal of our holding in Tembo delivered further proceeds of £172k. 20 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 20 Oriole Resources AR2020.indd 20 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:03 27/04/2021 13:40:03 Business Overview Strategic Report Financials Future developments The 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 KPI’s 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. Section 172(1) Statement - Promotion of the Company for the benef it of the members as a whole The Board of Director’s believe they (‘the Directors’ or ‘we/ our’) 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: The Company operates as a gold-exploration business, which is inherently speculative in nature and, without regular income, is dependent upon fund-raising for its continued operation. The pre-revenue nature of the business is important to the understanding of the Company by its members, employees and suppliers, and the Directors are as transparent about the cash position and funding requirements as is allowed under the regulations for quoted companies and of the AIM Market. The application of the s172 requirements can be demonstrated in relation to some of the key decisions made during 2020: ° Fundraising to support drilling at Bibemi, Cameroon: the Board determined that the results of our extensive trenching work at Bibemi support an exploration drilling programme. This will add a third dimension to the excellent on-surface results, and move the project firmly towards resource definition. Whilst mindful of difficult market conditions, the Board nevertheless determined that the value to be generated by drilling would outweigh the dilutionary impact of an equity raise, and an equity raise was in the interests of shareholders. Consequently a £1.8m equity raise was executed in Autumn 2020 in order to ensure we could perform significant project advancement in the 2020/21 dry season in Cameroon. ° Pursuit of an aggressive asset realisation strategy: the Board continue to believe an asset realisation strategy is in the best interests of shareholders, in order to provide funds for exploration work on our primary projects. Realisations of the holding in Tembo Gold Corp and of certain Turkish royalties have contributed to the Company’s cash resources ° Consider the likely consequences of any decision in the during 2020 and this will continue to be an important part 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, of the Group’s funding and value creation strategy. ° Remunerate the Directors with share options in lieu of cash: During the year the Directors confirmed the conversion of four months accrued salary into a share option package, in order to retain cash in the Company, and to fully align the interests of Directors with those of the ° Foster the Company’s relationships with suppliers, shareholders. customers and others, and ° Consider the impact of the Company’s operations on the community and the environment. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 21 Oriole Resources AR2020.indd 21 30293 27 April 2021 1:39 pm PFP 21 27/04/2021 13:40:03 27/04/2021 13:40:03 Oriole Resources PLC Stock Code: ORR orioleresources.com Strategic Report continued 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 Principle 1: Establish a strategy and business model which promotes long-term value for shareholders The Company is a gold and base metals exploration by the local and relevant UK laws on anti-corruption & specialist, with operations in Africa and Turkey. Our goal is to bribery. Wherever possible, local communities are engaged deliver long term value for our shareholders. We aim to do in the geological operations and support functions required this by identifying good quality grassroots and early-stage for field operations, providing much needed employment exploration projects. Consequently we: 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. Corporate 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. The QCA code identifies ten principles to be followed in order for companies to deliver growth in long-term shareholder value, ° 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. encompassing effective management with regular and timely communication to shareholders. This report follows the structure of those principles and explains how we have Principle 2: Seek to understand and meet shareholder needs and expectations The Company is committed to engaging with its applied the guidance as well as disclosing any areas of non- shareholders to ensure that its strategy, operational results 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, it is not currently required for the Audit Committee to produce such a report 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. and financial performance are clearly understood. We aim to engage with our shareholders via roadshows, attending investor conferences and through our regular reporting on the London Stock Exchange. In 2020, due to the Covid-19 restrictions, roadshows and investor conferences could not happen in their traditional format. Instead, we moved our engagement with shareholders on-line, running a number of seminars providing the opportunity for presentations followed by question and answer sessions. These seminars remain available for later viewing, and have proven an effective way of engaging with shareholders and potential investors. LSE announcements include details of the website, Twitter page and phone numbers to contact the Company and its professional advisors. 22 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 22 Oriole Resources AR2020.indd 22 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:03 27/04/2021 13:40:03 Business Overview Strategic Report Financials Private shareholders Employees The AGM is the main forum for dialogue with retail We maintain only a small permanent staff across the UK, shareholders and the Board. The Notice of Meeting is Africa and Turkey and as such, employee engagement with sent to shareholders at least 21 days before the meeting. the Executive Directors is frequent with a scheduled weekly During 2020, the AGM, and an additional General Meeting, team call as well as daily conference calls and discussions. were conducted remotely in line with UK Government We aim to provide an environment which will attract, retain guidance. Question and answer sessions were scheduled and motivate our team and monitor the effectiveness by for a week before the meetings, in order to let Shareholders regular one-on-one discussions and a recently introduced ask questions in advance of submitting proxy votes. For annual appraisal system. We have an employee handbook in each vote, the number of proxy votes received for, against order to provide a comprehensive document detailing all the and withheld is announced at the meeting. The results of policies and procedures covering all aspects of employment the AGM are announced via the London Stock Exchange. with Oriole Resources PLC. Our key value underpinning Investors can contact us via our website (https://www. the Employee Handbook is to treat all employees fairly and orioleresources.com) or by email (info@oriolereources.co.uk). equally and to promote ethical behaviour, diversity and non- Retail shareholders also regularly attend our seminar discrimination. presentations and we publicise our attendance via LSE Relevant, cost-effective training courses are available to all announcements and Twitter. In addition, our up to date employees and are discussed during the annual appraisal Corporate presentation is made available on our website. process. Institutional shareholders Local partners and communities The Directors actively seek to build a relationship with Our operations provide employment in remote areas institutional shareholders. Shareholder relations are of developing countries. Essential to our success is managed primarily by the Chief Executive Officer and the establishment of close working relationships with Chief Financial Officer. The Chief Executive Officer and local partners. We seek local partners who have a good Chief Financial Officer make presentations to institutional understanding of the local exploration and mining shareholders and analysts throughout the year, mainly in industry and regulations within their country, and with the London and Cape Town through events such as Mines and capacity and capability to assist with the management and Money and 121 Group. We also have ad-hoc meetings with maintenance of the project. 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. 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 23 Oriole Resources AR2020.indd 23 30293 27 April 2021 1:39 pm PFP 23 27/04/2021 13:40:03 27/04/2021 13:40:03 Oriole Resources PLC Stock Code: ORR orioleresources.com Strategic Report continued Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation 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: Audit, risk and internal control ° Close management of the day-to-day activities of the 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 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. projects and budgets, and for determining the financial The Group reviews at least annually the effectiveness of structure of the Company including treasury, tax and its system of internal control, whilst also having regard to dividend policy. Monthly results and variances from plans its size and the resources available. As part of the Group’s 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; 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. Principle 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 ° Due to the international nature of the business there are, Independent Director. 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 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 Company has issued options to all Directors including the Non-Executive Directors under a Director share option remuneration plan (the ‘Plan’), enacted to maximise funds available for exploration by conserving cash, by granting options in lieu of contractual salary payments for a limited term during 2019 and 2020. In this regard, options are preferable to the issue of full-paid shares, as the tax deferral that options provide allows more cash conservation in the Company. The grant of options to the non-executive directors is not considered to be part of any incentive plan nor to impair their independence. 24 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 24 Oriole Resources AR2020.indd 24 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:03 27/04/2021 13:40:03 Business Overview Strategic Report Financials 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 therefrom; ° A report by the CEO covering all operational matters; ° A report from the CFO covering all financial matters; Principle 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 ° Any other business including update of Register of receive regular and timely information on the Group’s 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 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. In accordance with the Company’s Articles of Association, only the Non-executive Directors are subject to the discussing upcoming regulations and other issues. requirement to retire by rotation. 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. During most of 2020, Board Meetings were held remotely using video conference facilities, and supplemented by regular update calls. Appointment, removal and re-election of Directors The 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 Non-executive Directors must stand for re-election by Directors and Officers Liability insurance is maintained for all shareholders annually in rotation and that any new Directors Directors and key employees. The table below sets out the attendance statistics for all current Board members through 2020: Tim Livesey Bob Smeeton John McGloin David Pelham Meetings attended Meetings held during the year 8 8 8 8 8 8 8 8 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 25 Oriole Resources AR2020.indd 25 30293 27 April 2021 1:39 pm PFP 25 27/04/2021 13:40:03 27/04/2021 13:40:03 Oriole Resources PLC Stock Code: ORR orioleresources.com Strategic Report continued Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement During 2018 the Board of Directors was fully refreshed. schedule of matters reserved for its decision. During the year to December 2020 the Board met, largely via video- conference, for eight scheduled meetings. The Board and its Committees receive appropriate and timely information During 2019 the Board adopted a policy to evaluate the prior to each meeting; a formal agenda is produced for each Board’s performance based on clear and relevant objectives, meeting and Board and Committee papers are distributed seeking continuous improvement. The clear and relevant by the Company Secretary several days before meetings objectives that the Board has identified are as follows: take place. Any Director may challenge Company proposals ° 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, but was not considered appropriate in 2020 given the wider issues affecting the Company and global economy. 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 Board 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. Roles of the Board, Chairman and Chief Executive Officer The 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, are 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. Doing 2020, the business reported on a quarterly basis on its headline performance against its agreed budget, and the Board reviews the 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 Board programme business updates. The Board aims to meet approximately monthly and as and when required, and has regular update calls. The Board sets direction for the Company through a formal 26 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 26 Oriole Resources AR2020.indd 26 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:03 27/04/2021 13:40:03 Business Overview Strategic Report Financials 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 2021. Tim Livesey Chief Executive Officer 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 2020 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 2019, 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 28. 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 AGM and one-to-one meetings with large existing or potential new shareholders. The Company regularly posts regulatory announcements ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 27 Oriole Resources AR2020.indd 27 30293 27 April 2021 1:39 pm PFP 27 27/04/2021 13:40:03 27/04/2021 13:40:03 Oriole Resources PLC Stock Code: ORR orioleresources.com Report of the Remuneration Committee The Remuneration and Nominations committee of the The Group operates within a competitive environment and Board is responsible for providing recommendations to its performance depends upon the individual contributions the Board on matters including the composition of the of the Directors and senior management. Throughout the Board and competencies of directors, the appointment of year, the Company paid remuneration to Directors and senior directors, the performance of the executive directors and management in accordance with Contracts for Services (in senior management, and making recommendations to the respect of non-executive directors) and Service Agreements Board on matters relating to their remuneration and terms of (in respect of officers and senior management), except as employment. disclosed below: The committee will also make recommendations to the ° As announced on 14 November 2019 the Directors agreed Board on proposals for the granting of shares awards and to take share options in lieu of salary for the three months other equity incentives pursuant to any share award scheme to 31 January 2020. This period was extended to for a or equity incentive scheme in operation from time to time. further month. These options, were granted at the nominal The remuneration and nominations committee meet at value of the Company’s Ordinary Shares, in sufficient least once a year. The members of the committee are John quantities, when compared to the prevailing market McGloin (chair of the committee) and David Pelham. prices for those four months, to match the value of salary 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. 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. foregone. Salary for the two months to 31 December 2019 was accrued, and this accrual has been released in 2020. ° For various periods throughout 2020 all the directors and senior management team of the Company voluntarily took reduced salary as a response to the global uncertainty arising from the Covid-19 pandemic. In recognition of this, on 22 December 2020 the Board approved a share option plan, and granted and approved share options over 16,350,000 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: 2020 Tim Livesey Robert Smeeton John McGloin David Pelham Total 2019 Tim Livesey Robert Smeeton John McGloin David Pelham Total Salaries and other short-term benefits Post employment benefits Salary £ 101,250 85,000 27,600 21,464 235,314 Taxable benefits £ 2,752 - - - Pension £ 3,038 2,550 - - Share based payments £ 49,101 39,516 11,496 8,771 Total £ 156,141 127,066 39,096 30,235 2,752 5,588 108,884 352,538 Salaries and other short-term benefits Post employment benefits Salary £ 118,750 95,000 30,000 23,333 267,083 Accrued salary* £ 32,210 25,768 6,000 4,667 68,645 Taxable benefits £ 1,124 - - - Pension £ 3,188 2,550 - - Share based payments £ 11,808 6,210 - - Total £ 167,080 129,528 36,000 28,000 1,124 5,738 18,018 360,608 * As noted above, as at 31 December 2109 2 months of salary and pension had been accrued but not paid pending conversion into a share option award. Of the accrued salary £57,395 was converted to share options during 2020. 28 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 28 Oriole Resources AR2020.indd 28 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:04 27/04/2021 13:40:04 Business Overview Strategic Report Financials 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 (2019: 0.43p) and the range of market prices during the year was between 0.20p and 0.63p. Director Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Tim Livesey Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton Robert Smeeton John McGloin David Pelham At 1/1/20 Granted At 31/12/20 Exercise Price (p) Issue Date Vesting Date 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 - - - - 666,666 666,667 666,667 2,000,000 2,000,000 2,000,000 - - - - - - 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 17,979,940 17,979,940 2,000,000 2,000,000 2,000,000 - - - - - - - - - - - - 14,383,952 2,000,000 2,000,000 2,000,000 4,230,574 3,290,446 2,000,000 2,000,000 2,000,000 666,666 666,667 666,667 2,000,000 2,000,000 2,000,000 14,383,952 2,000,000 2,000,000 2,000,000 4,230,574 3,290,446 0.90 0.90 0.90 0.37 0.37 0.37 0.01 0.37 0.37 0.37 0.62 0.62 0.62 0.37 0.37 0.37 0.01 0.37 0.37 0.37 0.01 0.01 1/3/18 1/3/18 1/3/18 19/3/19 19/3/19 19/3/19 19/8/20 22/12/20 22/12/20 22/12/20 4/6/18 4/6/18 4/6/18 19/3/19 19/3/19 19/3/19 19/8/20 22/12/20 22/12/20 22/12/20 19/8/20 19/8/20 1/3/19 1/3/20 1/3/21 19/3/20 19/3/21 19/3/22 19/8/20 1/1/21 1/1/22 1/1/23 4/6/19 4/6/20 4/6/21 19/3/20 19/3/21 19/3/22 19/8/20 1/1/21 1/1/22 1/1/23 19/8/20 19/8/20 Three of the Directors participated in the fund raise that completed on 27 October 2020, and as a consequence received warrants to purchase ordinary shares on the same terms as the other investors in that fund raise. Details of these warrants are set out in the table below: Director Tim Livesey Robert Smeeton John McGloin At 1/1/20 - - - Granted 735,294 735,294 735,294 735,294 2,205,882 2,205,882 At 31/12/20 Exercise Price (p) Issue Date Vesting Date 0.68 0.68 0.68 27/10/20 27/10/20 27/10/20 27/10/20 27/10/20 27/10/20 In 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 2021, by J McGloin Chairman ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 29 Oriole Resources AR2020.indd 29 30293 27 April 2021 1:39 pm PFP 29 27/04/2021 13:40:04 27/04/2021 13:40:04 Oriole Resources PLC Stock Code: ORR orioleresources.com Directors’ Report Oriole Resources PLC Company number: 05601091 The Directors confirm that they have complied with the above requirements in preparing the Financial Statements. The Directors present their report, together with the Financial Statements and auditor’s report, for the year ended 31 December 2020. General Information Certain information required by the Companies Act 2006 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 relating to the information to be provided in the Directors’ also responsible for safeguarding the assets of the Company Report is set out in the Group Strategic Report and includes: and Group and hence for taking reasonable steps for the principal activities, future developments, principal risks prevention and detection of fraud and other irregularities. 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 accounting standards in conformity with the Companies Act 2006 and, as regards the Parent Company Financial Statements, as applied in accordance with the Companies Act 2006. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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 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 15 January 2021, the Company was aware of the following holdings of 3% or more in the Company’s issued share capital: Number of shares % of issued share capital Statements, the Directors are required to: Shareholder ° select suitable accounting policies and then apply them Preston Road Limited 53,710,219 3.68 consistently; ° make judgements and accounting estimates that are reasonable and prudent; ° state whether the Financial Statements comply with international accounting standards in conformity with the Companies Act 2006, 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 Group and Company will continue in business. 30 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 30 Oriole Resources AR2020.indd 30 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:04 27/04/2021 13:40:04 Business Overview Strategic Report Financials Directors and their interests The current Directors are listed on page 3. In compliance with the Company’s Articles of Association, David Pelham, will retire and, being eligible, offer himself for re- election at the forthcoming Annual General Meeting. Those 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: Tim Livesey Robert Smeeton John McGloin David Pelham Total As at 31 December 2020 As at 31 December 2019 Ordinary shares Share warrants Share options Ordinary shares Share options 7,785,857 5,042,915 4,411,765 948,105 735,294 735,294 2,205,882 - 35,979,940 28,383,952 4,230,574 3,290,446 6,315,369 3,572,327 - 948,105 12,000,000 8,000,000 - - 18,188,642 3,676,470 71,884,912 10,835,801 20,000,000 On 22 January 2021 John McGloin, Tim Livesey and Robert Smeeton exercised their share warrant holdings in full and were consequently issued 2,205,882, 735,294 and 735,294 Ordinary shares in the Company. Provision 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 Events after the Reporting Period The following significant events have occurred subsequent to the year end: ° Exercise of 99,875,259 share warrants, providing funds to the Company of £678k, between 21 January and the date of this report. Auditor PKF Littlejohn LLP has signified its willingness to continue in office as auditor. relevant audit information and to establish that the auditors Approved by the Board on 23 March 2021 and signed on its behalf. R J Smeeton Company Secretary are aware of that information. Going Concern The 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 therefrom, 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 31 Oriole Resources AR2020.indd 31 30293 27 April 2021 1:39 pm PFP 31 27/04/2021 13:40:04 27/04/2021 13:40:04 Oriole Resources PLC Stock Code: ORR orioleresources.com Independent Auditor’s Report to the members of Oriole Resources Plc Opinion We have audited the financial statements of Oriole Basis for opinion We conducted our audit in accordance with International Resources Plc (the ‘parent company’) and its subsidiaries Standards on Auditing (UK) (ISAs (UK)) and applicable law. (the ‘group’) for the year ended 31 December 2020 which Our responsibilities under those standards are further comprise the Statement of Consolidated Comprehensive described in the Auditor’s responsibilities for the audit Income, the Statement of Consolidated and Parent Company of the financial statements section of our report. We Financial Position, the Statement of Consolidated and Parent are independent of the group and parent company in Company Changes in Equity, the Statement of Consolidated accordance with the ethical requirements that are relevant to and Parent Company Cash Flows and the notes to the our audit of the financial statements in the UK, including the financial statements, including a summary of significant FRC’s Ethical Standard as applied to listed entities, and we accounting policies. The financial reporting framework that have fulfilled our other ethical responsibilities in accordance has been applied in their preparation is applicable law and with these requirements. We believe that the audit evidence international accounting standards in conformity with the we have obtained is sufficient and appropriate to provide a requirements of the Companies Act 2006 and as regards basis for our opinion. the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: ° the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2020 and of the group’s and parent company’s loss for the year then ended; ° the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; ° the parent company financial statements have been properly prepared in accordance with international Conclusions relating to going concern In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included obtaining management’s assessment of going concern and associated cash flow forecasts for 12 months from the date of approval of the financial statements. We have reviewed the inputs to the cash flow forecast for reasonableness, compared to historic financial information, and stress-tested where appropriate. accounting standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; and Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast ° the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. significant doubt on the group’s or parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 32 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 32 Oriole Resources AR2020.indd 32 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:05 27/04/2021 13:40:05 Business Overview Strategic Report Financials Our approach to the audit Our group audit scope focused on the principal areas of Our application of materiality Group materiality 2020 Group materiality 2019 Basis for materiality operation being: £320k £230k 2.5% of net assets The calculated level of materiality has increased as compared to last year. There has been an increase in net assets which is mainly attributable to the cash balance at 31 December 2020 due to placings in the year and various cost saving schemes, as well as additional exploration expenditure being incurred at the group’s projects. 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. Whilst materiality for the financial statements as a whole was set at £320k, significant components of the group were audited to a level of materiality ranging between £120k - £210k. 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 £16k (2019: £12k). There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be material. ° West Africa - the Senala gold project (Senegal); ° East Africa through its investment in associate, Thani Stratex Resources Limited, and equity investment in Thani Stratex Djibouti, the Hodine concession (Egypt) and the Pandora project (Djibouti); and ° Cameroon - 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 significant components was performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mineral 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 significant to the group, this component was assessed as risk significant and therefore our review of the component auditor’s work was focussed on group risk areas including management override, related parties, and compliance with laws and regulations. Our work scope included audit procedures to address the key audit matters, being the capitalisation and impairment of exploration and evaluation expenditure, and the valuation of investments and intercompany receivables. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 33 Oriole Resources AR2020.indd 33 30293 27 April 2021 1:39 pm PFP 33 27/04/2021 13:40:05 27/04/2021 13:40:05 Oriole Resources PLC Stock Code: ORR orioleresources.com Independent Auditor’s Report continued to the members of Oriole Resources Plc Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our scope addressed this matter Capitalisation and impairment of exploration and Our work included the following: evaluation expenditure under IFRS 6 GROUP & COMPANY There is a risk that the carrying values of the group’s exploration assets are not fully recoverable and should be impaired in line with IFRS 6. ° Substantive testing of a sample of exploration and evaluation expenditures to assess their eligibility for capitalisation under IFRS 6 by corroborating to original source documentation; ° Obtaining copies of exploration licences and relevant agreements relating to project partnerships and reviewing key terms to ensure The group is engaged in various exploration compliance; projects, predominantly in Cameroon and Senegal (through Stratex EMC). The Directors use their judgement to assess whether the projects require an impairment and therefore this gives rise to a significant risk. ° Making enquiries of management regarding future plans for each project including obtaining cashflow projections where necessary and corroborating to minimum spend requirements attached to licences, where appropriate; ° Considering whether there are indications of impairment on a This risk also relates to the appropriate project by project basis in accordance with IFRS 6; and capitalisation of exploration costs in accordance with IFRS 6. ° Reviewing management’s impairment paper in respect of the carrying value of intangible assets and providing challenge, Related disclosures are included in Note 4 and Note corroborating any key assumptions used. 12 to the financial statements. We consider Management’s assessment of impairment is reasonable in concluding no impairment is required to be recognised at year-end. Valuation of investments in associates and Our work included the following: ° Reviewing the value of investment balances against the value of the underlying assets, including reference to work performed in respect of the carrying value of exploration expenditure in accordance with IFRS 6; ° Obtaining evidence of ownership for all investments held within the group; and ° Reviewing management’s impairment paper in respect of the recoverability of investment balances (including intragroup receivables at the parent level) and provide appropriate challenge, corroborating any key assumptions used. We consider Management’s assessment of impairment, expected credit losses and recoverability is reasonable. subsidiaries (including intercompany receivables) GROUP & COMPANY There is a risk of material misstatement regarding the recoverability of investments in associates, subsidiaries (including intercompany receivables i.e. the net investment in each subsidiary) and other equity investments. The carrying value of investments 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 leads to a risk of misstatement. Similar considerations apply to the recoverability of loans to group undertakings disclosed as investments. Related disclosures are included in Note 4 and Note 11 to the financial statements. 34 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 34 Oriole Resources AR2020.indd 34 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:05 27/04/2021 13:40:05 Business Overview Strategic Report Financials Other information The other information comprises the information included in the annual report, other than the financial statements and 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: our auditor’s report thereon. The directors are responsible for ° adequate accounting records have not been kept by the the other information contained within the annual report. parent company, or returns adequate for our audit have Our opinion on the group and parent company financial not been received from branches not visited by us; or statements does not cover the other information and, except ° the parent company financial statements are not in to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that agreement with the accounting records and returns; or ° certain disclosures of directors’ remuneration specified by law are not made; or ° we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true there is a material misstatement of this other information, we and fair view, and for such internal control as the directors are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: 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 ° the information given in the strategic report and the to going concern and using the going concern basis of directors’ report for the financial year for which the accounting unless the directors either intend to liquidate the financial statements are prepared is consistent with the group or the parent company or to cease operations, or have financial statements; and no realistic alternative but to do so. ° the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. group and the parent company and their environment Reasonable assurance is a high level of assurance but is not obtained in the course of the audit, we have not identified a guarantee that an audit conducted in accordance with material misstatements in the strategic report or the ISAs (UK) will always detect a material misstatement when directors’ report. it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 35 Oriole Resources AR2020.indd 35 30293 27 April 2021 1:39 pm PFP 35 27/04/2021 13:40:05 27/04/2021 13:40:05 Oriole Resources PLC Stock Code: ORR orioleresources.com Independent Auditor’s Report continued to the members of Oriole Resources Plc ° We obtained an understanding of the group and parent Because of the inherent limitations of an audit, there is company and the sector in which they operate to identify a risk that we will not detect all irregularities, including laws and regulations that could reasonably be expected those leading to a material misstatement in the financial to have a direct effect on the financial statements. We statements or non-compliance with regulation. This risk obtained our understanding in this regard through increases the more that compliance with a law or regulation detailed discussions with management about and is removed from the events and transactions reflected in potential instances of non compliance with laws and the financial statements, as we will be less likely to become regulations both in the UK and in overseas subsidiaries. We aware of instances of non-compliance. The risk is also greater also selected a specific audit team based on experience regarding irregularities occurring due to fraud rather than with auditing entities within this industry of a similar size. error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 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. David Thompson (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 23 March 2021 15 Westferry Circus Canary Wharf London E14 4HD ° We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from: − Companies Act 2006 − AIM Rules − Local industry regulations in Senegal and Cameroon − Local tax and employment law ° We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to: − Making enquiries of management − A review of Board minutes − A review of legal ledger accounts − A review of RNS announcements − A review of component auditor’s work surrounding local laws and regulations in Turkey ° We also identified the risks of material misstatement of the financial statements due to fraud. Aside from the non-rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify any significant fraud risks. ° As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: testing over all journals on a risk based approach to identify any unusual transactions that could be indicative of fraud; reviewing accounting estimates for evidence of bias; evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and reviewing transactions through the bank statements to identify potentially large or unusual transactions that do not appear to be in line with our understanding of business operations. 36 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 36 Oriole Resources AR2020.indd 36 30293 27 April 2021 1:39 pm V2 27/04/2021 13:40:05 27/04/2021 13:40:05 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 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 Business Overview Strategic Report Financials Year ended 31 December 2020 £’000 Year ended 31 December 2019 £’000 Notes 8 7 14 6 10 24 – (1,018) 682 (336) – (69) (63) (468) 148 (320) – (1,556) 150 (1,406) 5 (126) (212) (1,739) 79 (1,660) (50) 102 – (50) (370) (278) (42) (320) (328) (42) (370) (240) (138) (1,798) (1,554) (106) (1,660) (1,692) (106) (1,798) Earnings per share for losses from continuing operations attributable to the owners of the Company (expressed in pence per share). - basic and diluted 21 (0.03) (0.22) The notes on pages 44 to 67 form part of these financial statements ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 37 Oriole Resources AR2020.indd 37 30293 27 April 2021 1:39 pm PFP 37 27/04/2021 13:40:05 27/04/2021 13:40:05 Oriole Resources PLC Stock Code: ORR 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 Trade and other receivables 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 2020 £’000 As at 31 December 2019 £’000 Notes 13 12 14 15 16 17 16 18 20 20 23 24 25 61 7,771 1,449 395 389 14 21 7,244 2,250 165 – 38 10,079 9,718 139 1,751 1,890 11,969 5,667 22,862 1,591 (18,187) 11,933 (251) 11,682 3 284 287 121 163 284 10,002 4,908 21,253 1,185 (17,578) 9,768 (209) 9,559 30 413 443 11,969 10,002 The notes on pages 44 to 67 form part of these financial statements The financial statements were approved and authorised for issue by the Board of Directors on 23 March 2021 and were signed on its behalf by: John McGloin Non-Executive Chairman Robert Smeeton Chief Financial Officer 38 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 38 Oriole Resources AR2020.indd 38 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:06 27/04/2021 13:40:06 Statement of consolidated changes in equity Business Overview Strategic Report Financials 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 2019 4,908 21,253 1,701 (16,427) 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 Balance at 31 December 2019 and 1 January 2020 Loss for the year Other comprehensive income Total comprehensive income for the year Issue of share capital net of expenses Share-based payments Share options expired Total contributions by and distributions to owners of the Company Transfer between reserves – – – – – – – – – – – – – – – – – – 759 1,609 – – 759 – – – 1,609 – (378) 403 4,908 21,253 1,185 (17,578) 9,768 (278) – (278) (50) (1,554) (1,692) (106) (1,798) (1,554) – – 403 Non- controlling interest £’000 Total equity £’000 (103) (106) – 11,332 (1,660) (138) Total £’000 11,435 (1,554) (138) 25 – 25 – – – 25 – 25 (209) (42) – 9,559 (320) (50) (278) (328) (42) (370) – – 76 76 (407) 2,368 125 – 2,493 – – – – – – 2,368 125 – 2,493 – (18,187) 11,933 (251) 11,682 – (138) (138) 25 (403) – (50) (50) – 125 (76) 49 407 1,591 Balance at 31 December 2020 5,667 22,862 The share capital account includes the nominal value of all ordinary shares issued by the Company, as well as the nominal amount of the deferred shares created as part of the 2018 capital re-organisation. The share premium account includes the amounts received over and above the nominal value of each share upon issue of such shares, net of any expenses of that issue. Other reserves are described in note 23. Retained earnings comprises the retained profits and losses arising on the Group’s activities since inception. Non-controlling interests relates to the 15% holding of our local partner in the Group’s activities in Senegal. The notes on pages 44 to 67 form part of these financial statements ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 39 Oriole Resources AR2020.indd 39 30293 27 April 2021 1:39 pm PFP 39 27/04/2021 13:40:06 27/04/2021 13:40:06 Oriole Resources PLC Stock Code: ORR orioleresources.com Statement of consolidated cash flows Cash flow from operating activities: Net cash used in operating activities Cash flow from investing activities: Purchase of property, plant and equipment Proceeds from disposal of financial asset Purchase of intangible assets Tax received Interest received Net cash generated/(used) from investing activities Cash flow from financing activities: Funds from the issue of shares Net cash generated from financing activities Net increase/(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 44 to 67 form part of these financial statements Year ended 31 December 2020 £’000 Year ended 31 December 2019 £’000 Notes 27 13 10 18 (927) (560) (46) 172 (144) 165 – 147 2,368 2,368 1,588 163 1,751 (2) – (711) 142 7 (564) – – (1,124) 1,287 163 40 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 40 Oriole Resources AR2020.indd 40 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:06 27/04/2021 13:40:06 Statement of Company financial position Business Overview Strategic Report Financials 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 Trade and other receivables 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 2020 £’000 As at 31 December 2019 £’000 Notes 13 12 15 14 11 16 16 18 20 20 23 25 60 1,202 395 657 3,302 389 6,005 38 1,714 1,752 7,757 20 1,018 – 1,458 4,085 – 6,581 49 130 179 6,760 5,667 22,862 198 (21,187) 7,540 4,908 21,253 149 (19,884) 6,426 217 217 7,757 334 334 6,760 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 £1,379,000 (2019: £764,000). The notes on pages 44 to 67 form part of these financial statements. The financial statements were approved and authorised for issue by the Board of Directors on 23 March 2021 and were signed on its behalf by: John McGloin Non-Executive Chairman Robert Smeeton Chief Financial Officer ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 41 Oriole Resources AR2020.indd 41 30293 27 April 2021 1:39 pm PFP 41 27/04/2021 13:40:06 27/04/2021 13:40:06 Oriole Resources PLC Stock Code: ORR orioleresources.com Statement of Company changes in equity Balance at 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 – – – – – – – – – – – – Balance at 31 December 2019 and 1 January 2020 4,908 21,253 Loss for the year Other comprehensive income Total comprehensive income for the year – – – – – – Issue of share capital net of expenses 759 1,609 Share based payments Share options expired Total contributions by and distributions to owners of the Company Balance at 31 December 2020 – – – – 759 5,667 1,609 22,862 Information in respect of the Company’s reserves is set out on page 39. The notes on pages 44 to 67 form part of these financial statements. Share capital £’000 4,908 Share premium £’000 21,253 Other Reserves (see note 23) £’000 Retained earnings £’000 527 (19,296) Total equity £’000 7,392 (764) (227) (991) 25 – 25 6,426 (1,379) – (1,379) 2,368 125 – 2,493 7,540 – – – 25 (403) (378) 149 – – – – 125 (76) 49 198 (764) (227) (991) – 403 403 (19,884) (1,379) – (1,379) – – 76 76 (21,187) 42 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 42 Oriole Resources AR2020.indd 42 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:06 27/04/2021 13:40:06 Statement of Company cash flows Business Overview Strategic Report Financials Cash flow from operating activities Net cash used in operating activities Cash flow from investing activities Purchase of property, plant and equipment Investment in intangible assets Funding of subsidiary exploration companies Tax received Interest received Net cash generated from/(used in) investing activities Cash flow from financing activities Net proceeds from share issue Net cash generated from financing activities Net increase/(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 44 to 67 form part of these financial statements. Year ended 31 December 2020 £’000 Year ended 31 December 2019 £’000 Notes 27 13 18 (885) (315) (46) (144) 126 165 – 101 2,368 2,368 1,584 130 1,714 (2) (754) (191) 142 7 (798) – – (1,113) 1,243 130 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 43 Oriole Resources AR2020.indd 43 30293 27 April 2021 1:39 pm PFP 43 27/04/2021 13:40:06 27/04/2021 13:40:06 Oriole Resources PLC Stock Code: ORR 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 signif icant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These 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 2020. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements: Standards / interpretations IAS 1 & IAS 8 amendments Application Definition of Material IFRS 3 amendments Business Combinations Amendments to IFRS 9, IAS 39 and IFRS 17 Interest Rate Benchmark Reform policies have been consistently applied to all the years N/A presented. Amendments to References to the Conceptual Framework in IFRS Standards b) New and amended standards not yet adopted by 2.1 Basis of preparation These financial statements have been prepared in accordance with international accounting standards in conformity with the Companies Act 2006. The financial statements were prepared under the historical cost the Group Standards / interpretations convention as modified by the measurement of certain IAS 1 amendments investments at fair value. Going Concern Application Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current – Deferral of Effective Date: Effective 1 January 2023 It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 31 December 2020 the Group had cash and cash equivalents of £1,751k and no borrowings. IFRS 3 amendments Business Combinations – Reference to the Conceptual Framework: Effective 1 January 2022* IAS 16 amendments Property, Plant and Equipment: Effective 1 January 2022* Having considered the prepared cashflow forecasts and Group budgets, and the funds received so far this year (£678k) and also potentially receivable (£1.468m) from share IAS 37 amendments Provisions, Contingent Liabilities and Contingent Assets: Effective 1 January 2022* warrant exercises in 2021, the Directors consider that they will N/A have access to adequate resources in the 12 months from the date of the signing of these financial statements. As a result, Annual Improvements to IFRS Standards 2018-2020 Cycle: Effective 1 January 2022* they consider it appropriate to continue to adopt the going There are no IFRS’s or IFRIC interpretations that are not yet concern basis in the preparation of the financial statements. effective that would be expected to have a material impact There can be no assurance that the cash received from warrant exercises will match the Board’s expectations, and this may affect the Group’s ability to carry out its work programs as expected. Should the Group and Company 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 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 and Company were unable to continue as a going concern. 44 on the Company or Group. 2.2 Basis of consolidation Oriole Resources PLC was incorporated on 24 October 2005 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 accounted for using the merger accounting method. WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 44 Oriole Resources AR2020.indd 44 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:07 27/04/2021 13:40:07 Business Overview Strategic Report Financials Subsidiaries are entities controlled by the Group. Control Where necessary, adjustments are made to the financial is achieved when the Group is exposed, or has rights, to statements of subsidiaries to bring the accounting variable returns from its involvement with the investee and policies used into line with those used by other members has the ability to affect those returns through its power over of the Group. All significant intercompany transactions the investee. Specifically, the Group controls an investee if, and balances between group entities are eliminated and only if, the Group has: on consolidation. ° Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); 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, ° Exposure, or rights, to variable returns from its involvement the Group measures the retained interest at fair value at with the investee; ° The ability to use its power over the investee to affect its returns. Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: ° The contractual arrangement with the other vote holders of the investee; 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 the determination of the gain or loss on disposal. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that subsidiary had directly disposed of the related assets or liabilities. Associates are all entities over which the Group has significant influence but not control over the financial and ° Rights arising from other contractual arrangements; operating policies. ° The Group’s voting rights and potential voting rights. References to joint venture agreements do not refer to Consolidation of a subsidiary begins when the Group obtains arrangements which meet the definition of joint ventures control over the subsidiary and ceases when the Group under IFRS 11 “Joint Arrangements” and therefore these loses control of the subsidiary. Assets, liabilities, income and Financial Statements do not reflect the accounting expenses of a subsidiary acquired or disposed of during the treatments required under IFRS 11. 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 Any contingent consideration is recognised at fair value at in reserves is recognised in other comprehensive income. the acquisition date. Subsequent changes to the fair value of The cumulative post-acquisition movements are adjusted the contingent consideration that is deemed to be an asset against the carrying amount of the investment. 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. 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 Acquisition related costs are expensed as incurred. made payments on behalf of the investee. The Group measures goodwill at the acquisition date as the Unrealised gains on transactions between the Group and excess of the fair value of the consideration transferred, plus equity–accounted investees are eliminated to the extent of the recognised amount of any non-controlling interests, less the Group’s interest in the investee. Unrealised losses are also the recognised amount of the identifiable assets acquired eliminated unless the transaction provides evidence of an and liabilities assumed. If this consideration is lower than impairment of the asset transferred. the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 45 Oriole Resources AR2020.indd 45 30293 27 April 2021 1:39 pm PFP 45 27/04/2021 13:40:07 27/04/2021 13:40:07 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued Accounting policies of equity–accounted investees have (c) Group companies been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in equity–accounted investees are recognised in profit or loss. 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 Transactions with non-controlling interests that do not result currency as follows: in loss of control are accounted for as equity transactions. ° assets and liabilities for each statement of financial Gains or losses on disposals to non-controlling interests are position presented are translated at the closing rate at the recorded in equity. date of that statement of financial position. 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 ° 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 initial recognition. The difference between the carrying ° all resulting exchange differences are recognised in other amount of the associate at the date the equity method was comprehensive income. On consolidation, exchange discontinued, and the fair value of any retained interest differences arising from the translation of the net and any proceeds from disposing of a part interest in the investment in foreign entities, and of monetary items associate is included in the determination of the gain or loss receivable from foreign subsidiaries for which settlement on disposal. In addition, the Group accounts for all amounts is neither planned nor likely to occur in the foreseeable previously recognised in other comprehensive income in future are taken to other comprehensive income. When a relation to that associate on the same basis as would be foreign operation is sold, exchange differences that were required if that associate had directly disposed of the related recorded in equity are recognised in profit or loss as part of assets or liabilities. the gain or loss on sale. 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 2.4 Intangible assets - Exploration and evaluation assets The Group capitalises expenditure in relation to exploration the gain or loss that had previously been recognised in and evaluation of mineral assets when the legal rights are other comprehensive income relating to that reduction in obtained. Expenditure included in the initial measurement of ownership interest if that gain or loss would be reclassified to exploration and evaluation assets and which are classified as profit or loss on the disposal of the related assets or liabilities. intangible assets relate to the acquisition of rights to explore, 2.3 Foreign currency translation (a) Functional and presentation currency research into the topographical, geological, geochemical and geophysical characteristics of the asset, exploratory drilling, trenching, sampling and activities to research the technical Items included in the financial statements of each of the feasibility and commercial viability of extracting a mineral Group’s entities are measured using the currency of the resource. primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in sterling, which is the Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. 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 exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. Whenever the exploration for and evaluation of mineral 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. 46 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 46 Oriole Resources AR2020.indd 46 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:07 27/04/2021 13:40:07 Business Overview Strategic Report Financials 2.5 Segment reporting Operating segments are reported in a manner consistent For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments with the internal reporting provided to the chief operating in equity instruments that are not held for trading, this will decision makers. The chief operating decision makers, depend on whether the Group has made an irrevocable who are responsible for allocating resources and assessing election at the time of initial recognition to account for the performance of the operating segments, have been equity investment at fair value through other comprehensive identified as the executive Board of Directors. 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 are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. (b) Recognition Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of In assessing the carrying values of major exploration assets, ownership. the Directors would use cash flow projections for each of the projects where a JORC – compliant resource had been calculated. The Group currently has no such directly controlled projects. Certain of the other exploration projects are at an early stage of development and no JORC-compliant resource estimate has been completed. In these cases, the Directors have assessed the impairment of the projects based on future (c) Measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. exploration plans and estimates of geological and economic Debt instruments data. The Board does not believe that the key assumptions will change so as to cause the carrying values to exceed the recoverable amounts. To date impairment losses recognised have followed the decision of the Board not to continue exploration and evaluation activity on a particular project licence area where it is no longer considered an economically viable project or where the underlying exploration licence has been relinquished. 2.7 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in 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 amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and 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. 2.8 Financial instruments (a) Classification The Group classifies its financial assets in the following measurement categories: ° those to be measured subsequently at fair value (either through Other Comprehensive Income (‘OCI’) or through profit or loss); and ° those to be measured at amortised cost. Equity instruments The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the 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 The classification depends on the Group’s business model for in other gains/(losses) in the statement of profit or loss as managing the financial assets and the contractual terms of applicable. Impairment losses (and reversal of impairment the cash flows. losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 47 Oriole Resources AR2020.indd 47 30293 27 April 2021 1:39 pm PFP 47 27/04/2021 13:40:07 27/04/2021 13:40:07 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued (d) Impairment The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables due within 12 months the Group applies the simplified approach permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but rather recognises a loss allowance based on the financial asset’s lifetime expected credit losses at each reporting date. 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. The Group considers evidence of impairment for financial assets measured at amortised cost at both a specific asset and collective level. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective 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. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability settled. Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. 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 probable. Current and deferred tax is charged or credited in the profit or loss, except when it relates to items charged or credited directly to equity, in which case the related tax is also dealt with in equity. 2.10 Share-based payments The fair value of the services received from employees and third parties in exchange for the grant of share options is recognised as an expense. The fair value of the options granted is calculated using the Black-Scholes pricing model 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 received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. 2.11 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. 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. 2.14 Post-employment benefits Retirement benefit costs are calculated by applying the Projected Unit Credit Method and the resulting adjustments are recognised in profit or loss. 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. 48 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 48 Oriole Resources AR2020.indd 48 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:07 27/04/2021 13:40:07 Business Overview Strategic Report Financials 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 underlying asset is available for use). Right of use assets are The Group’s only exposure to interest rate fluctuations is restricted to the rates earned on its short-term deposits. These deposits returned an interest rate of between 0.1% and 1.15% during the past year. measured at cost, less any accumulated depreciation and The Group operates internationally and is exposed to foreign impairment losses, and adjusted for any remeasurement exchange risk arising from various currency exposures, of lease liabilities. The cost of right-of-use assets includes primarily with respect to the Turkish Lira, Euro and US the amount of lease liabilities recognised, initial direct Dollar, see note 19. Foreign exchange risk arises from future costs incurred, and lease payments made at or before the commercial transactions and net investments in foreign commencement date less any lease incentives received. operations. The Group does not hedge its exposure to foreign Right of use assets are depreciated on a straight-line basis currencies and recognises the profits and losses resulting over the shorter of the lease term and the estimated useful from currency fluctuations as and when they arise. 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 At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease 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 commencement date because the interest rate implicit in the lease is generally not readily determinable. The Group will continue to make substantial expenditures related to its exploration and development activities. The financial exposure of the Group has been substantially reduced as a result of entering into agreements with third parties. 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 benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, or issue Note that the lease liability recorded in the financial new shares. statements has not been discounted to present value as any impact of discounting would be immaterial to the financial statements. 3. Risk management 3.1 Financial risk management The main financial risks facing the Group are the availability of adequate funding, movements in interest rates and 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 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 and foreseeable. The Group only deals with high-quality financial statements. 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. 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. 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). ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 49 Oriole Resources AR2020.indd 49 30293 27 April 2021 1:39 pm PFP 49 27/04/2021 13:40:07 27/04/2021 13:40:07 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued Thani Stratex Resources carrying value Local taxes The Directors have given consideration to the carrying value The Group is subject to income taxes in numerous of the 24.92% holding in Thani Stratex Resources Limited jurisdictions. Judgement is required in determining the (‘TSR’). This associated investment was written down to a worldwide provision for such taxes. The Group recognises carrying value of £2.25m in 2018. During 2019 TSR initiated a liabilities for anticipated tax issues based on estimates of re-organisation of its 50% subsidiary, Thani Stratex Djibouti whether additional taxes will be due. Where the final tax (‘TSD’) which completed shortly after the year end. TSD outcome of these matters is different from the amounts has secured significant funding to allow it to progress its that were initially recorded, such differences will affect the projects, and the Group now has a directly held 10.61% stake current and deferred income tax assets and liabilities in the in TSD. The deconsolidation of TSD has given TSR a revised book value of £1.45m and in the Directors’ judgment this value is recoverable. Subsequent to the year-end, TSR signed an earn-in agreement with Red Sea Resources Limited, who are to spend approximately $2.4m to advance the current resources on the licence (JORC Inferred Resource of 209,000 ounces of gold at Anbat and a non-JORC Inferred Resource of 520,000 ounces of gold at Hutite). Whilst this will lead to dilution, the Directors believe the proposed investment will enhance the value of the Group’s shareholding. The carrying value has therefore been maintained, with £203,000 of the £1.4m impairment provision booked in 2018 reversed in 2020 in order to maintain the carrying value of TSR at £1.45m, being the Directors’ best estimate using all information available at this time. period in which such determination is made. A deferred tax asset of £14,000 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. 50 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 50 Oriole Resources AR2020.indd 50 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:08 27/04/2021 13:40:08 Business Overview Strategic Report Financials 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 2020 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 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 Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 – 1 – 58 (47) (3,264) (3,252) – – – 1,449 784 – – 2,233 – 7,771 46 – 95 (19) (2,354) 5,539 47 – 14 – 1,751 (221) 5,618 7,162 – 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 Group Total £’000 7,771 61 1,449 2,688 (287) – 11,682 47 Group Total £’000 7,244 21 2,250 487 (443) – 9,559 2 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 2020 £’000 6,568 1,203 7,771 2019 £’000 6,225 1,019 7,244 2020 £’000 – 184 184 2019 £’000 – 792 792 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 51 Oriole Resources AR2020.indd 51 30293 27 April 2021 1:39 pm PFP 51 27/04/2021 13:40:08 27/04/2021 13:40:08 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued b) The allocation of profits and losses for the year by segment is as follows: 2020 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 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 Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 – (62) – 162 – (11) – (17) 72 – – – 203 (132) (71) – – – – (87) – – – 470 (218) – 165 – (861) (8) – – (71) 218 165 (557) Exploration Turkey £’000 East Africa £’000 West Africa £’000 UK support & other £’000 Group Total £’000 – (1,010) (8) 365 (132) 317 – 148 (320) 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) 2020 £’000 (63) 2019 £’000 (212) 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 £63,000, which has been recognised in the consolidated statement of comprehensive income. 7. Other prof its/(losses) Exchange gains/(losses) Reversal of impairment (see note 14) Success based payment due (see note 4) Provision against bad debt (see note 4) Other profits Net other profit for the year 2020 £’000 317 203 – – 162 682 2019 £’000 (445) 446 384 (326) 91 150 52 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 52 Oriole Resources AR2020.indd 52 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:08 27/04/2021 13:40:08 Business Overview Strategic Report Financials 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) Office costs Travel costs 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 Total for year 9. Personnel expenses 2020 £’000 752 255 25 57 39 8 (118) 1,018 2020 £’000 25 25 Wages and salaries Social security costs Share options granted to Directors and employees Employee benefits-in-kind Employee pensions Total for year Average number of employees, including Directors Group Company 2020 £’000 569 49 125 1 8 752 13 2019 £’000 906 49 25 1 13 994 14 2020 £’000 322 49 125 1 8 505 8 Details of the Directors’ remuneration is shown in the Report of the Remuneration Committee on page 28. 2019 £’000 994 236 25 82 97 8 114 1,556 2019 £’000 25 25 2019 £’000 529 49 25 1 13 617 9 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 2020 £’000 2019 £’000 165 142 (17) 148 (63) 79 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 £1,800,000 (2019: £1,700,000). ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 53 Oriole Resources AR2020.indd 53 30293 27 April 2021 1:39 pm PFP 53 27/04/2021 13:40:08 27/04/2021 13:40:08 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued Reconciliation of tax charge: Loss before tax Current tax credit at 19% (2019: 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 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 2020 £’000 (468) 89 25 (167) (14) 50 165 148 2019 £’000 (1,739) 330 142 (286) (186) (63) 142 79 2020 £’000 2,699 2019 £’000 2,699 (1,000) (1,000) 1,699 1,603 3,302 1,699 2,386 4,085 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: Country of incorporation % owned by the Company % owned by subsidiary Nature of Business Stratex Exploration Ltd Stratex Gold AG Stratex West Africa Limited Oriole Cameroon SARL UK Switzerland UK Cameroon Stratex Madencilik Sanayi Ve Ticaret Ltd. Sti Turkey Stratex EMC SA 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 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 Elit Aprt. No: 17/6 06510 Çankaya, Ankara/Turkey Stratex EMC SA Wessex House, Upper Market Street, Eastleigh, Hampshire, SO50 9FD, UK 54 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 54 Oriole Resources AR2020.indd 54 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:08 27/04/2021 13:40:08 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 13. Property, plant, and equipment Cost At 1 January 2019 Exchange movements Additions Disposals At 31 December 2019 Exchange movements Additions Disposals At 31 December 2020 Depreciation At 1 January 2019 Exchange movements Additions Disposals At 31 December 2019 Exchange movements Additions Disposals At 31 December 2020 Net Book Value at 1 January 2019 at 31 December 2019 at 31 December 2020 Right of use assets included above Business Overview Strategic Report Financials Group Company 2020 £’000 7,244 343 – 184 7,771 2019 £’000 6,780 (328) – 792 7,244 2020 £’000 1,018 – – 184 1,202 Group Motor Vehicles £’000 Field Equipment £’000 Office furniture and equipment £’000 2019 £’000 186 – 40 792 1,018 Total £’000 30 – – – 30 – – – 30 19 – – – 19 – 47 – 66 187 236 – 2 – 189 – – – 189 – 2 – 238 – 47 – 285 (30) (19) (160) (209) – – – – – – – (8) – – (8) – (30) (19) (168) (217) – – – – – – – (7) – – (7) – (30) (19) (175) (224) – – – – – – 47 – 27 21 14 10 27 21 61 10 55 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 55 Oriole Resources AR2020.indd 55 30293 27 April 2021 1:39 pm PFP 27/04/2021 13:40:09 27/04/2021 13:40:09 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued Cost At 1 January 2019 Exchange movements Additions Disposals At 31 December 2019 Exchange movements Additions Disposals At 31 December 2020 Depreciation At 1 January 2019 Exchange movements Additions Disposals At 31 December 2019 Exchange movements Additions Disposals At 31 December 2020 Net Book Value at 1 January 2019 at 31 December 2019 at 31 December 2020 Right of use assets included above Company Motor Vehicles £’000 Field Equipment £’000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – 47 – 47 – – – – – – – – – – – 47 – Office furniture and equipment £’000 Total £’000 106 106 – 2 – 108 – – – 108 (81) – (7) – (88) – (7) – (95) 25 20 13 10 – 2 – 108 – 47 – 155 (81) – (7) – (88) – (7) – (95) 25 20 60 10 56 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 56 Oriole Resources AR2020.indd 56 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:09 27/04/2021 13:40:09 Business Overview Strategic Report Financials 14. Investment in equity-accounted associates At 1 January Exchange movements Share of losses Transfer to other financial assets Loss on change of ownership interest Release of impairment provision At 31 December Group Company 2020 £’000 2,250 (71) (69) (801) (63) 203 2019 £’000 2,250 (108) (126) – (212) 446 2020 £’000 1,458 – – (801) – – 2019 £’000 1,458 – – – – – 1,449 2,250 657 1,458 The Company’s shareholding interest in Thani Stratex Resources Limited (“TSRL”) reduced to 24.9% from 26.1% during the course of the year. £203,000 of the impairment provision recognised in 2018 has been reversed in 2020, as the Directors believe the value of the investment has been maintained over the year (see note 4). The following entity has been included in the consolidated financial statements using the equity accounting method: Thani Stratex Resources Limited 2020 Value £’000 1,449 % 24.9 Change £’000 – % 26.1 2019 Value £’000 2,250 Change £’000 – 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 financial 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 2020 £’000 2019 £’000 1 (283) (282) 1 14,102 – 14,103 (4,088) 9,733 3 (295) (292) 2 14,649 2,274 16,925 (4,143) 12,490 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 57 Oriole Resources AR2020.indd 57 30293 27 April 2021 1:39 pm PFP 57 27/04/2021 13:40:09 27/04/2021 13:40:09 2020 £’000 2019 £’000 (267) (328) (1) – (1) (269) – (269) – (269) – – (6) (334) (8) (342) (115) (457) 2019 £’000 49 – 130 – – 179 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued 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 15. Financial Assets and Liabilities a) Financial Assets Financial assets at amortised cost: Trade and other receivables Deposits and guarantees Cash and cash equivalents Loan note receivable Financial assets at fair value through other comprehensive income Total b) Financial Liabilities Group Company 2020 £’000 132 7 1,751 389 395 2,674 2019 £’000 110 11 163 – 165 449 2020 £’000 38 – 1,714 389 395 2,536 Financial liabilities at amortised cost: Trade creditors Amounts due to related parties and employees Social security and other taxes Leases Accrued expenses Total c) Assets by quality Trade Receivables: Group Company 2020 £’000 2019 £’000 2020 £’000 2019 £’000 87 29 62 12 97 287 94 134 29 15 171 443 65 – 48 12 92 217 89 67 5 15 158 334 Trade receivables includes net receivables from exploration partners of £7,000 (2019: £21,000). None of the exploration partners have external credit ratings. 58 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 58 Oriole Resources AR2020.indd 58 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:09 27/04/2021 13:40:09 Business Overview Strategic Report Financials 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’) 2020 £’000 1,714 37 1,751 At 1 January Transfer from equity-accounted associates Disposals Fair value adjustment At 31 December Equity investments at FVOCI comprise the following individual investments: Tembo Gold Corporation – Listed Security Thani Stratex Djibouti – Unlisted Equity Security At 31 December Group Company 2020 £’000 165 395 (165) – 395 2019 £’000 414 – (9) (240) 165 2020 £’000 – 395 – – 395 Group Company 2020 £’000 – 395 395 2019 £’000 165 – 165 2020 £’000 – 395 395 2019 £’000 142 21 163 2019 £’000 227 – – (227) – 2019 £’000 – – – 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 2020 £’000 – 2019 £’000 240 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 Profit 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 (2019: £Nil) in the consolidated financial statements following its write down in 2017. During the year this investment was transferred from a subsidiary company into the Company at an internal valuation of £747,000. In accordance with IFRS9 full provision has been made against this balance in the Company’s financial statements. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 59 Oriole Resources AR2020.indd 59 30293 27 April 2021 1:39 pm PFP 59 27/04/2021 13:40:09 27/04/2021 13:40:09 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued 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 2020 Financial assets at fair value through other comprehensive income: Djibouti unlisted equity securities Total Financial Assets At 31 December 2019 Financial assets at fair value through other comprehensive income: Canadian listed equity securities Total Financial Assets Level 1 £’000 Level 3 £’000 Total £’000 – – 165 165 395 395 – – 395 395 165 165 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. 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. 60 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 60 Oriole Resources AR2020.indd 60 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:09 27/04/2021 13:40:09 Business Overview Strategic Report Financials 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 Loan note (see below) Prepayments and other current assets Total Non-current Current Total Group Company 2020 £’000 333 (326) 7 91 389 34 528 389 139 528 2019 £’000 337 (326) 11 21 – 78 121 – 121 121 2020 £’000 2019 £’000 – – – – 389 38 427 389 38 427 6 – – – – 43 49 – 49 49 The loan note for $530,806 is interest-free and is repayable by Thanii Stratex Djibouti Limited in accordance with a loan note instrument dated 14 November 2019. $425,000 of a success-based payment due from Anadolu Export Maden Sanayi ve Ticaret A.S. is past due, and has been fully provided against in these, and the prior year, financial statements. 17. Deferred tax asset and liabilities Group Deferred tax assets Temporary timing differences arising on: Intangible assets Employee termination benefits Total The movement in the year on the net deferred tax assets is: At 1 January Exchange movements Movement in year At 31 December 2020 £’000 2019 £’000 12 2 14 2020 £’000 38 (7) (17) 14 24 14 38 2019 £’000 111 (10) (63) 38 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 61 Oriole Resources AR2020.indd 61 30293 27 April 2021 1:39 pm PFP 61 27/04/2021 13:40:10 27/04/2021 13:40:10 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued 18. Cash and cash equivalents Cash at bank and on hand Short-term deposits Total 19. Currency risk The Group’s exposure to foreign currency is as follows: Group Company 2020 £’000 1,751 – 1,751 2019 £’000 163 – 163 2020 £’000 1,714 – 1,714 2019 £’000 130 – 130 GBP £’000 US$ Euro Turkish Lira US$ Turkish Lira 2020 2019 Trade and other receivables Cash and cash equivalents Trade and other payables Net exposure The following year end spot rates to sterling have been applied A 20% fluctuation in the sterling exchange rate would have affected profit and loss as follows: Strengthening of sterling* Weakening of sterling* 389 459 – 848 – 441 (19) 422 74 12 (47) 39 – 2 – 2 11 6 (98) (81) 1.365 1.118 10.1243 1.3101 7.676 £’000 £’000 £’000 £’000 £’000 – – – – (3) 3 – – (16) 13 * Dollar and Euro amounts shown above were acquired specifically to fund the foreign currency elements of capital expenditure and as such fluctuations would have no impact on profit and loss. 20. Share capital and share premium Group and Company At 1 January 2020 Issued during the year Expenses of share issue At 31 December 2020 Number of Ordinary shares issued 701,801,276 759,353,921 – 1,461,155,197 Ordinary shares £’000 702 759 – 1,461 Deferred shares £’000 4,206 – – Share premium £’000 21,253 1,773 (164) Total £’000 26,161 2,532 (164) 4,206 22,862 28,529 During the year the company issued shares upon three occasions: ° On 12 March 2020 the Company issued 70,000,000 Ordinary 0.1p shares at a price of 0.35p per share, and 34,999,987 warrants providing the right to acquire new Ordinary 0.1p shares at a price of 0.60p per share; ° On 14 July 2020 the Company issued 139,833,333 Ordinary 0.1p shares at a price of 0.30p per share; and ° On 29 October 2020 the Company issued 549,520,588 Ordinary 0.1p shares at a price of 0.34p per share. Connected to this latter raise the Company also issued 274,760,292 warrants providing the right to acquire new Ordinary 0.1p shares at a price of 0.68p per share. The Ordinary shares have a nominal value of 0.1p and all shares have been fully paid. At the 2018 as part of a capital re-organisation, 467,311,276 deferred shares were created, each with a nominal value of 0.9p. The Deferred Shares have no right to vote, attend or speak at general meetings of the Company and have no right to receive any dividend or other distribution and have only limited rights to participate in any return of capital on a winding-up or liquidation of the Company, which will be of no material value. 62 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 62 Oriole Resources AR2020.indd 62 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:10 27/04/2021 13:40:10 Business Overview Strategic Report Financials 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) 2020 £’000 (278) 2019 £’000 (1,554) 917,570,302 701,801,276 (0.03) (0.22) 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 2020 there were 83,192,912 (2019: 32,469,067) share options and 323,230,279 (2019: 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 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 2020, the Company had in issue 79,042,912 (2019: 26,718,000) options to Group employees granted under the Enterprise Management Incentive scheme and 3,650,000 (2019: none) options to Group employees granted under the unapproved scheme. In addition, there are 500,000 (2019: 5,751,067) 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, except for the 39,884,912 options granted to Directors during the year, in lieu of salary, which vested immediately. 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 £125,000 (2019: £25,000). 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: Group and Company Outstanding at 1 January Issued Expired Cancelled Outstanding at 31 December Exercisable at 31 December 2020 2019 Weighted average exercise price pence 0.97 0.18 3.17 Number of options 25,755,144 20,700,000 (11,986,077) (0.81) (2,000,000) 0.31 0.26 32,469,067 8,435,734 Number of options 32,469,067 56,234,912 (5,251,067) (260,000) 83,192,912 51,842,912 Weighted average exercise price pence 2.40 0.37 3.50 (0.37) 0.97 2.38 The weighted average contractual life of the outstanding options at 31 December 2020 was 8.94 years (2019: 8.26 years). ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 63 Oriole Resources AR2020.indd 63 30293 27 April 2021 1:39 pm PFP 63 27/04/2021 13:40:10 27/04/2021 13:40:10 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued Details of share options outstanding at 31 December 2020 are as follows: Life of option Start date 1 June 2011 5 December 2014 4 June 2015 2 September 2016 1 March 2018 4 June 2018 19 March 2019 19 August 2020 Expiry date 1 June 2021 5 December 2024 4 June 2025 2 September 2026 1 March 2028 4 June 2028 19 March 2029 19 August 2030 22 December 2020 22 December 2030 Total options outstanding Outstanding 31 December 2020 Option Price pence 50,000 60,000 150,000 198,000 6,000,000 2,000,000 18,500,000 39,884,912 16,350,000 83,192,912 7.00 2.70 1.50 2.00 0.90 0.62 0.37 0.10 0.37 During the year 39,884,912 share options were issued at a price of 0.10p per option share with a fair value of 0.27p per option share and 16,350,000 share options were issued at a price of 0.37p per option share with a fair value of 0.06p 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 Life of warrant Start date 13 June 2018 3 June 2020 Expiry date 13 June 2021 3 June 2022 29 October 2020 29 October 2022* Total warrants outstanding Outstanding 31 December 2020 13,470,000 34,999,987 274,760,292 323,230,279 Warrant Price pence 0.50 0.70 0.68 * The Company have the right to force exercise of those warrants in the event the 10-day volume weighted average share price exceeds 1.02 pence at any time. 64 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 64 Oriole Resources AR2020.indd 64 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:10 27/04/2021 13:40:10 Merger reserve £’000 (485) – – – (485) – – – – (485) FVOCI reserve £’000 Share option reserve £’000 (167) – – (240) (407) – – – 407 – 527 25 (403) – 149 125 (76) – – 198 Business Overview Strategic Report Financials Translation reserve £’000 1,826 – – 102 1,928 – – (50) – 1,878 Share option reserve £’000 527 25 (403) 149 125 (76) 198 Total £’000 1,701 25 (403) (138) 1,185 125 (76) (50) 407 1,591 Total £’000 527 25 (403) 149 125 (76) 198 23. Other reserves Group At 1 January 2019 Share based payments Share options expired Other comprehensive income At 31 December 2019 Share based payments Share options expired Other comprehensive income Transfer to retained earnings At 31 December 2020 Company At 1 January 2019 Share based payments Share options expired At 31 December 2019 Share based payments Share options expired At 31 December 2020 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). ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 65 Oriole Resources AR2020.indd 65 30293 27 April 2021 1:39 pm PFP 65 27/04/2021 13:40:10 27/04/2021 13:40:10 Oriole Resources PLC Stock Code: ORR orioleresources.com Notes to the financial statements continued 24. Non-controlling interest Effect on equity of transactions with Non-controlling interests: Balance attributable to NCI At 1 January 2019 Losses for the year At 31 December 2019 Losses for the year At 31 December 2020 Stratex EMC SA £’000 (103) (106) (209) (42) (251) Total £’000 (103) (106) (209) (42) (251) 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 Profit/(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 2020 £’000 6,223 1,030 (8,416) (19) (1,182) 265 (183) 174 (9) Group Company 2020 £’000 87 26 62 12 97 284 2019 £’000 2020 £’000 94 104 29 15 171 413 65 – 48 12 92 217 2019 £’000 5,881 991 (8,242) (5) (1,375) (720) (149) 150 1 2019 £’000 89 67 5 15 158 334 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 £10,000 (2019: £15,000) and is included within tangible fixed assets. Depreciation of £3,000 (2019: £3,000) has been recorded in the year. The lease liability is included within trade and other payables and has a carrying value of £12,000 (2019: £15,000). Cash payments of £3,000 (2019: £2,000) 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. 66 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 66 Oriole Resources AR2020.indd 66 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:10 27/04/2021 13:40:10 Business Overview Strategic Report Financials 27. Cash flow f rom operating activities Loss before income tax Adjustments for: Issue of share options Depreciation Impairment of FAFVPL Impairment write-offs on intangible assets Share of losses of associates Other Income and deductions Interest income on intercompany indebtedness Intercompany management fees 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: Group Company 2020 £’000 (468) 125 8 – (203) 203 – – – (428) 44 (208) (927) 2019 £’000 (1,739) 2020 £’000 (1,543) 2019 £’000 (907) 25 8 – (446) 338 (7) – – 601 646 14 (560) 125 7 747 – – – (21) (69) 15 11 (157) (885) 25 7 – – – (7) (42) (89) – 616 82 (315) There have been no transactions with parties with non-controlling interests during the year. (2019: £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 £101,000 (2019: £323,000) to its subsidiaries and charged its subsidiary companies £70,000 (2019: £90,000) for the provision of management services. The total gross receivable from subsidiaries at 31 December 2020 was £4,832,000 (2019: £4,875,000). The Company received £165,000 of funding from one of its subsidiaries and acquired a royalty asset from the same subsidiary for £747,000 of intercompany debt. 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 2020. 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 67 Oriole Resources AR2020.indd 67 30293 27 April 2021 1:39 pm PFP 67 27/04/2021 13:40:11 27/04/2021 13:40:11 Oriole Resources PLC Stock Code: ORR orioleresources.com Notice of Annual General Meeting 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 23 June 2021, at 11:00am. 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 of the Company for the year ended 31 December 2020 be received and adopted. 2. THAT, having retired by rotation in accordance with the Company’s Articles of Association, and being eligible, David Pelham 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 £470,000 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. 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: a. be limited to the allotment of equity securities up to an aggregate nominal amount of £235,000; 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. 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 £235,000; 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 2021 Registered Office 180 Piccadilly London W1J 9HF 68 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 68 Oriole Resources AR2020.indd 68 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:11 27/04/2021 13:40:11 Business Overview Strategic Report Financials Notes: Eligibility to attend and vote 1. To be entitled to attend and vote at the Annual General Meeting (and for the purpose of determining the number of votes a member may cast), members must be entered on the Register of Members of the Company by 11:00am on 21 June 2021. Appointment of proxies 2. As a member of the Company, you are entitled to appoint Appointment of proxy using hard copy proxy form 6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using the proxy form, the form must be completed and signed and sent or delivered to 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 11.00am on 21 June 2021. Proxy forms may also be faxed to 01252 719232 or emailed to voting@shareregistrars. a proxy to exercise all or any of your rights to attend, uk.com 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. 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 3. A proxy does not need to be a member of the Company authority under which the proxy form is signed (or a but must attend the Meeting to represent you. Details of duly certified copy of such power or authority) must be how to appoint the Chairman of the Meeting or another included with the proxy form. 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. 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 4. You may appoint more than one proxy provided each the names of the joint holders appear in the Company’s proxy is appointed to exercise rights attached to different register of members in respect of the joint holding (the shares. You may not appoint more than one proxy to first-named being the most senior). 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. ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 69 Oriole Resources AR2020.indd 69 30293 27 April 2021 1:39 pm PFP 69 27/04/2021 13:40:11 27/04/2021 13:40:11 Oriole Resources PLC Stock Code: ORR orioleresources.com Notice of Annual General Meeting continued 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 Share Registrars Limited on 01252 821390 or by email enquiries@shareregistrars.uk.com (no other methods of communication will be accepted). received after the relevant cut-off time will be 12. You may not use any electronic address provided either disregarded. Where you have appointed a proxy using in this notice of Annual General Meeting or any related the hard-copy proxy form and would like to change the documents (including the proxy form) to communicate instructions using another hard-copy proxy form, please with the Company for any purposes other than those contact Share Registrars Limited. If you submit more expressly stated. than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. Documents available for inspection 13. The following documents will be available for inspection during normal business hours at the Company’s Termination of proxy appointments 10. In order to revoke a proxy instruction you will need to registered office up until the date of the Annual General Meeting and at the place of the meeting from 11.00am on inform the Company using one of the following methods: 23 June 2021 until the end of the meeting: ° By sending a signed hard copy notice clearly stating ° the audited consolidated accounts of the Company for your intention to revoke your proxy appointment to the financial period ended 31 December 2020; Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR. ° the Register of Directors’ interests in the capital of the Company and copies of the service contracts of the ° In the case of a member which is a company, the Directors of the Company. revocation notice 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 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 11.00am on 21 June 2021. ° 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. 70 WWW.ORIOLERESOURCES.COM Oriole Resources AR2020.indd 70 Oriole Resources AR2020.indd 70 30293 27 April 2021 1:39 pm V3 27/04/2021 13:40:11 27/04/2021 13:40:11 Business Overview Strategic Report Financials Advisors & offices Nominated advisor Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Registered Off ice 180 Piccadilly London W1J 9HF UK Group Auditors PKF Littlejohn LLP Statutory Auditor UK Exploration Off ice Oriole Resources PLC 15 Westferry Circus Canary Wharf London E14 4HD Brokers Shard Capital Partners LLP 23rd Floor 20 Fenchurch Street London EC3M 3BY Wessex House Upper Market Street Eastleigh Hampshire, SO50 9FD Turkish Off ice Stratex Madencilik Sanayi ve Ticaret Ltd. Sti. Çukurambar Mahallesi 1458. Sk. Elit Apt. 1716 Çankaya Ankara Turkey Group Solicitors Edwin Coe LLP West Af rica Off ice Stratex EMC SA 2 Stone Buildings Lincoln’s Inn c/o Energy & Mining Corporation S.A. London, WC2A 3TH Bankers Lloyds TSB Bank plc High Street Slough Berkshire, SL1 1DH Sacré Coeur 111/VON No 9231 Dakar BP. 45.409 Senegal www.orioleresources.com ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2020 Oriole Resources AR2020.indd 71 Oriole Resources AR2020.indd 71 30293 27 April 2021 1:39 pm PFP 71 27/04/2021 13:40:11 27/04/2021 13:40:11 30293 27 April 2021 1:39 pm PFPANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020ORIOLE RESOURCES PLCPhone: +44 (0)207 830 9650 Fax: +44 (0)207 830 9651 Email: info@orioleresources.co.uk www.orioleresources.com 180 Piccadilly, London, W1J 9HFOriole Resources AR2020.indd 3Oriole Resources AR2020.indd 327/04/2021 13:39:2727/04/2021 13:39:27

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