THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN REGULATION NO. 596/2014 (AS IT FORMS PART OF RETAINED EU LAW AS DEFINED IN THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) AND IS IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 7 OF THAT REGULATION.
30 September 2022
Eurasia Mining plc
("Eurasia" or the "Company")
Interim Results for the six months ended 30 June 2022
Eurasia, the palladium, platinum, rhodium, iridium and gold producing company, today reports its unaudited interim results and operational summary for the six months ended 30 June 2022.
Chairman's Statement
Dear Shareholder,
The first half of 2022 has seen significant progress at our West Kytlim mine, as described in the Operations Update below. Eurasia's plan to install grid power to site to reduce the carbon output associated with overburden stripping, while also reducing operational expenditure and improving efficiency, is advancing well and our electric dragline, which is currently being assembled, is aimed to significantly improve the stripping programme this coming winter.
At Monchetundra the ongoing DFS study for the Loipishnune and West Nittis open pits represents an important reporting milestone for the project's development and is on schedule for submission before the end of 2022.
Since February the conflict in Ukraine has affected all international commerce to some extent. The effect on our operations, including funding group subsidiary companies has been minimal to date. We took the decision to stockpile ore from West Kytlim at the beginning of the mining season due to our strong cash position, volatility in the market currently, and in anticipation of higher realisable sales revenue in the future. As such, despite producing 167 kg of PGM concentrate (113kg for full year 2021), we have made no commercial sales of platinum in the period, instead opting to retain this PGM concentrate, which has a net realisable value of c.£3 million for refining at a later date. The value ascribed to this concentrate is for the platinum content only and does not include any other PGMs or gold.
Our cash balance remains robust, with more than £3 million and US$6.6 million at the time of writing in the Group's sterling and US$ denominated bank accounts respectively. Due to volatility in exchange rates in funding subsidiaries through inter-company loans, a net gain of £6.1 million was reported for the period. The Company's cash reserves are held in USD and GBP accounts outside of Russia and therefore not directly exposed to Ruble foreign exchange gains or losses against other major hard currencies.
Following the Company's Annual Results announcement of 29 June 2022, Eurasia's directors have maintained a regular dialogue with the Company's legal advisers regarding the potential impact of any UK or EU sanctions. The Company remains satisfied that neither of its current activities at the West Kytlim Mine or on the Kola Peninsula are prohibited under UK or EU sanctions rules. Furthermore, the Group does not engage and has not engaged with any sanctioned persons, entities or agencies.
To date there has been no significant impact on the Group's activities as a result of the ongoing updates to the UK and EU sanctions legislation. Sanctions introduced by the Russian Federal government have also not affected the Group. The Group continues to closely monitor all regulatory requirements and changes to the laws, rules and regulations, taking steps whenever necessary to ensure compliance with new legislation.
With regards to the proposed sale of our Russian assets, as previously announced, our M&A team is focusing on BRICS counterparties, and discussions are ongoing with predominantly Russian, Indian and Chinese non-sanctioned counterparties. Whereas progress has been made with certain parties, at present there can be no guarantee that the Company will enter into a legally binding sale and purchase agreement with any of the interested parties. We expect potential buyers to remain anonymous until the Company is in a position to execute a legally binding agreement and further updates regarding the sale process will be made as appropriate.
In terms of the future development of Eurasia Mining PLC, we continue to look at expanding the business in various ways, including the development of hydrogen projects internationally coupled with new mining opportunities in investment friendly jurisdictions. The Company is also committed to the continued development of Monchetundra as well as NKT (Eurasia's project, a Tier-1 scale Nickel mine formerly operated by Norilsk Nickel) and continuing to mine at West Kytlim.
The Company's Board has decades of experience in mineral project identification and the management of complex engineering projects during the development phase, such as the three pits at West Kytlim (Malaya Sosnovka, Klyuchiki and Bolshaya Sosnovka) which were successfully brought into production by Eurasia's technical team. James Nieuwenhuys, our CEO launched a number of mines, including as COO of Polyus (the world's largest gold company in terms of reserves and resources) as well as Managing Director of SNC-Lavalin and Bateman (large EPC companies).
We again thank our shareholders for their continued support.
Christian Schaffalitzky
Chairman of Eurasia Mining Plc
James Nieuwenhuys, Chief Executive Officer of the Company, commented;
"We continue to advance our plans at both operations in the Urals and Kola Peninsula, adding value to both projects while pursuing a potential sale of assets as previously announced. Despite significant geopolitical tensions the operating environment within Russia itself has not changed materially with respect to our operations there. The Board will take a view on the best opportunity to refine to saleable metals at a later date, meanwhile production is ongoing at the time of writing, and we look forward to updating on our electric power and dragline projects, both expected to contribute to the winter 2022/23 stripping programme."
Consent for release
Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the purposes of the reporting of these results.
For further information, please contact:
Eurasia Mining Plc
Christian Schaffalitzky/ Keith Byrne
+44 (0)207 932 0418
SP Angel Corporate Finance LLP (Nomad and Joint Broker)
Jeff Keating / David Hignell / Adam Cowl
+44 (0)20 3470 0470
Optiva Securities (Joint Broker)
Christian Dennis
Tel: +44 (0) 20 3137 1902
Operations update
West Kytlim
Eurasia's mine at West Kytlim commenced production on schedule this season, with all three process plants in operation, due in large part to the careful management of the winter stripping operation which precedes the mining season. Major projects including the installation of an electric dragline and a power line to site have progressed well through the summer months. All 286 posts on the power lines route to site have been installed and the line itself is currently being pulled through. Electric infrastructure at site, including the high voltage sub-station constructing and commissioning and six separate electrical hook ups, have been installed.
The work plan for the 2023 season envisages mining of the western bank of the Tylai River. A detailed design for a small bridge has been prepared at an estimated material cost of £231k. Work on this temporary construction, designed to be moveable to another site as required, will commence in October 2022.
Lost time injury frequency rate ("LTIFR") remains at zero. A full-time labour safety engineer, appointed earlier in this season has now introduced all required protocols.
Year to date operational highlights
· Power line and e-dragline construction projects on course for completion later in this season.
· LTIFR remains at zero for the 2022 season.
· Three process plants operational throughout the mining season processing Kluchiki and Bolshaya Sosnovka ores.
· Typil exploration license drilling results show prospective ore bodies at this exploration permit west of the main West Kytlim mine permit.
· A total of 434,000 cubic meters PGM bearing gravels washed at three sites to 31 August 2022.
· A total of 167 kg raw platinum (113kg for full year 2021) has been produced year to date and has been transported to a secure location in Ekaterinburg for later refining.
West Kytlim is an ESG focussed mine site, as such it is the Company's intention to keep the mine's environmental impact to a minimum:
· Cooperation Agreement signed in July 2022 with the Karpinsk Municipal Administration on social and economic development in the town of Kytlim.
· Limited use of reinforced concrete and asphalt. Mine buildings built mostly of timber milled on site.
· Open pits remediated when 'mined out', with recovery within 5 to 10 years post mining.
· Modern machinery powered by renewable generated electricity utilised where possible.
Our plans to transition from predominantly diesel-based stripping to renewable generated electric powered stripping are nearing completion. The board recognises the potential to remove the operational Green House Gas emissions associated with this stage of the mining process as valuable in improving the projects' environmental credits.
Typil license
An exploration programme for the 24.5km2 Typil exploration license, directly adjacent to the operating mine was approved in early 2021 allowing geological mapping, using soil and stream sediment sampling on both banks of the Kosva River to commence in August 2021.
468.1m (75 holes) were drilled on 7 lines in the northeast portion of the Licence area and in areas where tree felling was not required. Key highlights from the programme, with a drilling density commensurate with Russian standard C2 Reserves are provided as follows;
· At the confluence of the Typil and Kosva rivers, a potential ore body of 20m wide and 0.8m thick at an average grade of 235 mg/m3 raw platinum is contoured in Quaternary sediments.
· At the eastern bank of the Typil River a potential ore body 0.8m thick with an inferred width of 80m at an average grade of 192 mg/m3 raw platinum is contoured in pre-Quaternary (Neogene) sediments.
· On Line 24, in Quaternary sediments of the Typil eastern bank, a 110m wide and not less than 0.6 m thick layer is identified with an average grade of 284mg/m3 (sample grades up to 860 mg/m3).
· On the eastern bank of the Typilez Creek, two lodes with potentially economic platinum grades are identified. At a placer width of 160m and average thickness of 1.3m, the average grade reported is 261 mg/m3. At a width of 80m and average thickness of 0.9m, the average grade increases to 310 mg/m3 (sample grades up to 1,524 mg/m3).
· Numerous other platinum bearing intervals were identified in the drill programme for follow up in the next stage of drilling while several other prospective areas including the Typilez, Mulychevka and Kyria River areas remain understudied.
These results are presented in a table in Appendix I below. The Typil exploration report was provided by Michael Sukhov, Chief Geologist at Kosvinsky Kamen.
Monchetundra, Monchetundra Flanks and other Kola projects
The Definitive Feasibility Study for the Monchetundra (West Nittis and Loipishnune) open pits is well advanced and on schedule for completion this year. Details of this report will be provided when a response is received from the relevant authorities. The Company has previously released a report commissioned by Wardell Armstrong International covering the adjacent NKT deposit, a deposit which the Company has title to through its Monchetundra Flanks license. Reporting on other Kola deposits, including Nyud and Moroshkovoe will be provided when Eurasia holds title to the relevant licenses. Operational highlights include:
· Monchetundra Definitive Feasibility Study being progressed for completion by the end of 2022.
· Metallurgical testwork reports now available for compilation into the larger DFS report. New metallurgical study by SGS, Mekhanobr-St Petersburg, LIMS and Gipronickel (Norilsk Nickel's engineering arm) suggests grades, recoveries and flowsheet unchanged from the 2016 feasibility study.
· Rock mechanics studies and Hydro/Geotech drilling now complete for West Nittis and Loipishnune open pits.
· Recalculation of Monchetundra project resources and pit outlines, reflecting metal price movement since the feasibility study, for submission as a necessary component of the DFS.
· Work continues on assessment of the NKT Project, contained within Eurasia's 80% Flanks exploration license adjacent the Monchetundra (West Nittis and Loipishnune) mining license, as a standalone project or as a project combined with Monchetundra deposits.
Appendix I: Representative Typil exploration license drilling results:
| Drill line no | Drill hole no |
| From | To | Length (m) | Width (m) | Sediments | Raw Pt* mg/m3 |
| Sample Drill hole intervals | | | | | | | ||
| 21 | C-21-11 | | 4.5 | 5.3 | 0.8 | 20 | Quaternary | 235 |
| 25 | C-25-94 | | 7.0 | 7.8 | 0.8 | 80 | Neogene | 192 |
| Provisional placer deposits contoured at C2 drilling density | | | | | | | ||
| 24 | Drill holes 2-14 | | 3.8* | 7.3* | 0.6*** | 110 | Quaternary | 284 |
| 40 | 15-27 | | 10.5* | 13.6** | 1.3*** | 160 | Quaternary | 261 |
| may be restated, at a higher cut-off grade as; | | | | | ||||
| 40 | 23-27 | | 10.5* | 13.6** | 0.9*** | 80 | Quaternary | 310 |
Note: * minimal depth; ** maximum depth; *** average length
The mineral measured at the West Kytlim mine is referred to as Raw Platinum which is comprised of Platinum, Iridium, Palladium, Rhodium and Gold.
Drilling density for the programme is that of Russian standard C1 and C2 as defined in Russian industry mineral reporting nomenclature. All drilling to date at a drilling diameter of 20cm.
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2022
| | Note | 6 months to | 12 months to | 6 months to |
|
| | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | (unaudited) | (audited) | (unaudited) |
| | | £ | £ | £ |
| | | | | |
| Sales | 4 | 101,836 | 2,331,225 | 425,965 |
| Cost of sales | | (36,197) | (2,584,680) | (665,448) |
| Gross profit/(loss) |
| 65,639 | (253,455) | (239,483) |
|
| | | | |
| Administrative costs | | (1,257,924) | (2,717,765) | (1,197,899) |
| Investment income | | 10,070 | 1,394 | 511 |
| Finance costs | | (49,717) | (103,445) | (53,144) |
| Other gains | 5 | 6,108,902 | - | 24,093 |
| Other losses | 5 | (1,024,892) | (65,250) | - |
| | | | | |
| Profit/(loss) before tax | | 3,852,078 | (3,138,521) | (1,465,922) |
| | | | | |
| Income tax expense | | | - | - |
| | | | | |
| Profit/(loss) for the period |
| 3,852,078 | (3,138,521) | (1,465,922) |
|
| | | | |
| Other comprehensive (loss)/income: |
| | | |
| Items that will not be reclassified subsequently to |
| | | |
| NCI share of foreign exchange differences on translation of foreign operations | | 405,694 | 36,855 | 1,293 |
| Items that will be reclassified subsequently to |
| | | |
| Parents share of foreign exchange differences on translation | | 945,695 | (58,679) | 4,116 |
| | | | | |
| Other comprehensive income/(loss) for the period, net of tax | 1,295,040 | 1,351,389 | 5,409 | |
|
| | | | |
| Total comprehensive income/(loss) for the period | | 5,203,467 | (3,160,345) | (1,460,513) |
|
| | | | |
| Profit/(loss) for the period attributable to: |
| | | |
| Equity holders of the parent | | 2,556,416 | (2,910,479) | (1,351,127) |
| Non-controlling interest | | 1,295,662 | (228,042) | (114,795) |
| | | 3,852,078 | (3,138,521) | (1,465,922) |
|
| | | | |
| Total comprehensive income/(loss) for the period attributable to: |
| | | |
| Equity holders of the parent | | 3,502,111 | (2,969,158) | (1,347,011) |
| Non-controlling interest | | 1,701,356 | (191,187) | (113,502) |
| | | 5,203,467 | (3,160,345) | (1,460,513) |
|
| | | | |
| Basic and diluted profit/(loss) (pence per share) | | 0.09 | (0.10) | (0.05) |
Condensed consolidated statement of financial position
As at 30 June 2022
| | Note | At 30 June | At 31 December | At 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | (unaudited) | (audited) | (unaudited) |
| | | £ | £ | £ |
| ASSETS |
| | | |
| Non-current assets |
| | | |
| Property, plant and equipment | 6 | 12,634,691 | 5,061,743 | 4,578,844 |
| Assets in the course of construction | | 1,329,132 | 640,423 | 124,303 |
| Intangible assets | 7 | 3,146,073 | 1,389,029 | 792,425 |
| Investment to potential share in joint venture | 8 | 584,591 | 367,464 | 368,447 |
| | |
|
|
|
| Total non-current assets | | 17,694,487 | 7,458,659 | 5,864,019 |
|
| | | | |
| Current assets |
| | | |
| Inventories | 9 | 2,135,082 | 38,673 | 360,630 |
| Trade and other receivables | 10 | 4,124,692 | 1,681,864 | 450,659 |
| Current tax assets | | 10,371 | 5,334 | 5,348 |
| Cash and bank balances | | 13,559,308 | 22,009,507 | 16,067,991 |
| | | | | |
| Total current assets | | 19,829,453 | 23,735,378 | 16,884,628 |
|
| | | | |
| Total assets | | 37,523,940 | 31,194,037 | 22,748,647 |
|
| | | | |
| EQUITY |
| | | |
| Capital and reserves |
| | | |
| Issued capital | 11 | 61,187,111 | 61,187,111 | 51,080,629 |
| Reserves | 12 | 4,868,386 | 3,922,691 | 3,985,486 |
| Accumulated losses | | (30,558,116) | (33,114,532) | (31,555,180) |
| | | | | |
| Equity attributable to equity holders of the parent |
| 35,497,381 | 31,995,270 | 23,510,935 |
| Non-controlling interest | | (248,693) | (1,950,049) | (1,872,364) |
| | | | | |
| Total equity | | 35,248,688 | 30,045,221 | 21,638,571 |
|
| | | | |
| LIABILITIES |
| | | |
| Non-current liabilities |
| | | |
| Lease liabilities | 14 | 431,973 | 307,136 | 405,494 |
| Provisions | 16 | 470,029 | 143,268 | 99,422 |
| | | | | |
| Total non-current liabilities | | 902,002 | 450,404 | 504,916 |
|
| | | | |
| Current liabilities |
| | | |
| Borrowings | 13 | 50,833 | 31,953 | 32,038 |
| Lease liabilities | 14 | 211,397 | 122,407 | 113,059 |
| Trade and other payables | 15 | 1,111,020 | 486,558 | 443,943 |
| Provisions | 16 | - | 57,494 | 16,120 |
| | | | | |
| Total current liabilities | | 1,373,250 | 698,412 | 605,160 |
| | |
|
|
|
| Total liabilities | | 2,275,252 | 1,148,816 | 1,110,076 |
| | |
|
|
|
| Total equity and liabilities | | 37,523,940 | 31,194,037 | 22,748,647 |
Condensed statement of changes in equity
For the six months ended 30 June 2021
| | | Attributable to owners of the parent |
| | | |||||
| | Note | Share | Share premium | Deferred shares | Other reserves | Foreign currency translation reserve | Accumulated losses | Total attributable to owners of parent | Non-controlling interest | Total equity |
|
| | £ | £ | £ | £ | £ | £ | £ | £ | £ |
| | | | | | | | | | | |
| Balance at 1 January 2021 |
| 2,758,702 | 28,028,671 | 7,025,483 | 3,924,026 | 57,344 | (30,204,053) | 11,590,173 | (1,758,862) | 9,831,311 |
|
| | | | | | | | | | |
| Issue of ordinary share capital for cash | | 53,307 | 14,072,982 | - | - | - | - | 14,126,289 | - | 14,126,289 |
| Share issue cost | | - | (858,516) | - | - | - | - | (858,516) | - | (858,516) |
| Transaction with owners | | 53,307 | 13,214,466 | - | - | - | - | 13,267,773 | - | 13,267,773 |
|
| | | | | | | | | | |
| Loss for the period | | - | - | - | - | - | (1,351,127) | (1,351,127) | (114,795) | (1,465,922) |
|
| | | | | | | | | | |
| Other comprehensive loss |
| | | | | | | | | |
| Exchange differences on translation | | - | - | - | - | 4,116 | - | 4,116 | 1,293 | 5,409 |
| Total comprehensive income |
| - | - | - | - | 4,116 | (1,351,127) | (1,347,011) | (113,502) | (1,460,513) |
|
|
| 2,812,009 | 41,243,137 | 7,025,483 | 3,924,026 | 61,460 | (31,555,180) | 23,510,935 | (1,872,364) | 21,638,571 |
|
| | | | | | | | | | |
Condensed statement of changes in equity
For the six months ended 30 June 2022
| | | Attributable to owners of the parent |
| | | |||||
| | Note | Share | Share premium | Deferred shares | Other reserves | Foreign currency translation reserve | Accumulated losses | Total attributable to owners of parent | Non-controlling interest | Total equity |
|
| | £ | £ | £ | £ | £ | £ | £ | £ | £ |
| | | | | | | | | | | |
| Balance at 1 January 2022 |
| 2,853,560 | 51,308,068 | 7,025,483 | 3,924,026 | (1,335) | (33,114,532) | 31,995,270 | (1,950,049) | 30,045,221 |
|
| | | | | | | | | | |
| Transaction with owners | | - | - | - | - | - | - | - | - | - |
|
| | | | | | | | | | |
| Loss for the period | | - | - | - | - | - | 2,556,416 | 2,556,416 | 1,295,662 | 3,852,078 |
|
| | | | | | | | | | |
| Other comprehensive loss |
| | | | | | | | | |
| Exchange differences on translation | | - | - | - | - | 945,695 | - | 945,695 | 405,694 | 1,351,389 |
| Total comprehensive income |
| - | - | - | - | 945,695 | 2,556,416 | 3,502,111 | 1,701,356 | 5,203,467 |
|
|
| 2,853,560 | 51,308,068 | 7,025,483 | 3,924,026 | 944,360 | (30,558,116) | 35,497,381 | (248,693) | 35,248,688 |
Condensed consolidated statement of cash flows
for the six months ended 30 June 2022
| | | 6 months to | 12 months to | 6 months to |
|
| | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | (unaudited) | (audited) | (unaudited) |
| | | £ | £ | £ |
| Cash flows from operating activities |
| | | |
| | | | | |
| Profit/(loss) for the period | | 3,852,078 | (3,138,521) | (1,465,922) |
| Adjustments for: | | | | |
| Depreciation and amortisation of non-current assets | | 1,194,452 | 422,752 | 289,850 |
| - Asset value write off to cost of sales | | - | 149,882 | |
| (Loss)/gain on sale or disposal of property, plant and equipment | | (4,219) | - | - |
| Finance costs recognised in profit or loss | | 49,717 | 103,445 | 53,144 |
| Investment revenue recognised in profit or loss | | (10,070) | (1,394) | (511) |
| Loss on impairment of financial assets | | | | |
| Loss on impairment of inventory | | 1,024,892 | | |
| Rehabilitation cost recognised in profit or loss | | 90,096 | 145,785 | 61,643 |
| Net foreign exchange (profit)/loss | | (6,104,683) | 65,250 | (24,093) |
| | | 92,263 | (2,252,801) | (1,085,889) |
| Movements in working capital |
| | | |
| Increase in inventories | | (3,098,450) | (24,862) | (346,782) |
| Increase in trade and other receivables | | (1,614,762) | (1,395,059) | (163,307) |
| Increase in trade and other payables | | 508,844 | 197,729 | 155,217 |
| Cash used in operations | | (4,112,105) | (3,474,993) | (1,440,761) |
|
| | | | |
| Net cash used in operating activities | | (4,112,105) | (3,474,993) | (1,440,761) |
|
| | | | |
| Cash flows from investing activities |
| | | |
| Interest received | | 10,070 | 1,394 | 511 |
| Investment to acquire interest in joint venture | | - | (367,465) | (368,447) |
| Payments for property, plant and equipment | | (6,221,805) | (1,910,033) | (629,005) |
| Payments for other intangible assets | | (910,258) | (682,419) | (92,774) |
| Proceeds from disposal of property, plant and equipment | | 4,219 | - | - |
| Net cash used in investing activities | | (7,117,774) | (2,958,523) | (1,089,715) |
| Cash flows from financing activities |
| | | |
| Proceeds from issues of equity shares | | - | 24,929,694 | 14,126,289 |
| Payment for share issue costs | | - | (1,555,439) | (858,516) |
| Repayment of lease liability | | (24,757) | (101,674) | (13,971) |
| Interest paid | | (41,449) | (101,048) | (51,966) |
| Net cash (used in)/generated by financing activities | | (66,206) | 23,171,533 | 13,201,836 |
|
| | | | |
| Net (decrease)/increase in cash and cash equivalents | | (11,296,085) | 16,738,017 | 10,671,360 |
| Effects of exchange rate changes on the balance of | | 2,845,886 | (132,611) | (7,470) |
| | | | | |
| Cash and cash equivalents at the beginning of period | | 22,009,507 | 5,404,101 | 5,404,101 |
| | | | | |
| Cash and cash equivalents at the end of the period |
| 13,559,308 | 22,009,507 | 16,067,991 |
Selected notes to the condensed consolidated financial statements
for the six months ended 30 June 2022
1. General information
Eurasia Mining plc (the "Company") is a public limited company incorporated and domiciled in Great Britain with its registered office at International House, 42 Cromwell Road, London SW7 4EF, United Kingdom and principal place of business at Clubhouse Bank, 1 Angel Court, EC2R 7HJ. The Company's shares are listed on AIM, a market of the London Stock Exchange. The principal activities of the Company and its subsidiaries (the "Group") are related to the exploration for and development of platinum group metals, gold and other minerals in Russia.
The financial information set out in these condensed interim consolidated financial statements (the "Interim Financial Statements") do not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2021, prepared under International Financial Reporting Standards (the "IFRS"), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified. The report did not contain a statement under Section 498(2) of the Companies Act 2006.
2. Basis of preparation
The Group prepares consolidated financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. These condensed consolidated interim financial statements for the period ended 30 June 2022 have been prepared by applying the recognition and measurement provisions of IFRS and the accounting policies adopted in the audited accounts for the year ended 31 December 2021.
These Interim Financial Statements have been prepared under the historical cost convention.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.
The Interim Financial Statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.
3. Accounting policies
The Interim Financial Statements have been prepared in accordance with the accounting policies adopted in the Group's last annual financial statements for the year ended 31 December 2021.
4. Sales
| | | 6 months to | 12 months to | 6 months to |
|
| | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Sale of platinum and other metals | | 52,037 | 2,331,225 | 425,965 |
| Rental income | | 49,799 | - | - |
| | | | | |
|
| | 101,836 | 2,331,225 | 425,965 |
|
| ||||
There has been no commercial sale of platinum in H12022. Raw platinum concentrate from the West Kytlim mining operation is currently being stockpiled at a secure location in Ekaterinburg for refining at more favourable Platinum and other PGM prices at a later date. Revenue generated in the first six months of 2022 is from the price adjustment due to timing between point of sale of other metals in 2021 and settlement date in early 2022 (£52,037), as well as income from rental of mining equipment to a mine site contractor (£49,799).
5. Other gains and losses
| | | 6 months to | 12 months to | 6 months to |
|
| | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Gains |
| | | |
| Gain on disposal of property, plant and equipment | | 4,219 | - | - |
| Net foreign exchange gain * | | 6,104,683 | - | 24,093 |
|
|
| 6,108,902 | - | 24,093 |
| Losses |
| | | |
| Impairment of inventory ** | | (1,024,892) | - | - |
| Net foreign exchange loss | | - | (65,250) | (429,171) |
|
|
| (1,024,892) | (65,250) | (429,171) |
| | | | | |
|
| | 5,084,010 | (65,250) | (405,078) |
* Significant exchange gain is a result of revaluation of monetary items expressed in Russian Rubles ('RUB') which strengthens from GBP/RUB 101.18 at 1 January 2022 to GBP/RUB 63.6 at 31 June 2022.
** Impairment of inventory - revaluation of stockpiled platinum concentrate to net realisable value using platinum price and RUB/USD exchange rate prevailing at 30 June 2022.
6. Property, plant and equipment
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Net book value at the beginning of period | | 5,061,743 | 4,295,908 | 4,295,908 |
| Additions | | 5,911,509 | 1,298,813 | 533,983 |
| Written off to cost of sales | | - | (149,882) | - |
| Depreciation | | (1,194,452) | (422,752) | (289,850) |
| Exchange differences | | 2,855,891 | 39,656 | 38,803 |
| | | | | |
| Net book value at the end of period | | 12,634,691 | 5,061,743 | 4,578,844 |
7. Intangible assets
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Net book value at the beginning of period | | 1,389,029 | 696,504 | 696,504 |
| Additions | | 910,258 | 682,420 | 92,774 |
| Exchange differences | | 846,786 | 10,105 | 3,147 |
| | | | | |
| Net book value at the end of period | | 3,146,073 | 1,389,029 | 792,425 |
Intangible assets represent capitalised costs associated with Group's exploration, evaluation and development of mineral resources.
8. Investment to potential share in joint venture
Investments to potential share in joint venture represents an investment made in March 2021 to enter into a joint venture and acquire, in stages, 75% interests in new assets on Kola peninsula leveraging agreements in place with both Rosgeo and the Far East and Arctic Region Development Corporation. ('ERDC', see RNS dated 6 December 2021). It is intended that these assets would be held in new joint venture companies to be developed at the Company's option. By 31 December 2021 The Company had invested RUB37,180,000 (£367,464 at the then prevailing RUB/GBP exchange rate). No further investments have been made in the reporting period, and the amount is carried to 30 June 2022 as RUB37,180,000 (£584,591).
9. Inventory
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | | | |
| Platinum concentrate | | 1,753,532 | - | - |
| Other inventory | | 381,550 | 38,673 | 360,630 |
|
| |
|
|
|
|
| | 2,135,082 | 38,673 | 360,630 |
Stockpiled platinum concentrate has been revalued to net realisable value using platinum price and RUB/USD exchange rate prevailing at 30 June 2022.
10. Trade and other receivables
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | | | |
| Trade receivables | | 78,520 | 480,588 | 495 |
| Advances made | | 1,759,183 | 520,385 | |
| Prepayments | | 36,681 | 140,335 | 22,707 |
| VAT receivable | | 2,123,355 | 359,290 | 324,261 |
| Other receivables | | 126,953 | 181,266 | 103,196 |
|
| |
|
|
|
|
| | 4,124,692 | 1,681,864 | 450,659 |
The fair value of trade and other receivables is not materially different to the carrying values presented. None of the receivables are provided as security or past due.
11. Share capital
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | | | |
| Issued ordinary shares with a nominal value of 0.1p: |
| | | |
| | | | | |
| Number | | 2,853,559,995 | 2,853,559,995 | 2,724,774,624 |
| Nominal value (£) | | 2,853,560 | 2,853,560 | 2,724,775 |
| | | | | |
| Fully paid ordinary shares carry one vote per share and carry the right to dividends. | | | ||
| | | | | |
| Issued deferred shares with a nominal value of 4.9 p: |
| | | |
| Number | | 143,377,203 | 143,377,203 | 143,377,203 |
| Nominal value (£) | | 7,025,483 | 7,025,483 | 7,025,483 |
Deferred shares have the following rights and restrictions attached to them:
- they do not entitle the holders to receive any dividends and distributions;
- they do not entitle the holders to receive notice or to attend or vote at General Meetings of the Company;
- on return of capital on a winding up the holders of the deferred shares are only entitled to receive the amount paid up on such shares after the holders of the ordinary shares have received the sum of 0.1p for each ordinary share held by them and do not have any other right to participate in the assets of the Company.
There had been no change in the issued share capital during the reporting period
| Ordinary shares |
| Number of shares | Share | Share |
| | | | £ | £ |
| Balance at 1 January 2022 | | 2,853,559,995 | 2,853,560 | 51,308,068 |
|
|
|
|
|
|
| Balance at 30 June 2022 |
| 2,853,559,995 | 2,853,560 | 51,308,068 |
|
| | |
|
|
| Deferred shares |
| Number of deferred shares | Deferred share | |
| | | | £ | |
| Balance at 1 January and 30 June 2022 |
| 143,377,203 | 7,025,483 | |
12. Reserves
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Capital redemption reserve | | 3,539,906 | 3,539,906 | 3,539,906 |
| Foreign currency translation reserve | | 944,360 | (1,335) | 61,460 |
| Equity-based payment reserve | | 384,120 | 384,120 | 384,120 |
| | | | | |
| | | 4,868,386 | 3,922,691 | 3,985,486 |
The capital redemption reserve was created as a result of a share capital restructuring in earlier years. There is no policy of regular transactions affecting the capital redemption reserve.
The foreign currency translation reserve represents exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into GBP.
The equity-based payments reserve represents a reserve arisen on (i) the grant of share options to employees under the employee share option plan and (ii) on issue of warrants under terms of professional service agreements.
13. Borrowings
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Current |
| | | |
| Unsecured loan | | 50,833 | 31,953 | 32,038 |
| |
| | | |
|
| | 50,833 | 31,953 | 32,038 |
In 2017 the Group entered into unsecured loan facility to borrow up to 57 million Russian Rubles ('RUB') at 14% per annum, from Region Metal, the then contractor and the West Kytlim mine operator. The Group had drawn RUB 4.18 million and repaid RUB 0.9 million by 31 December 2021. As the contractor's arrangements had been discontinued the Group has no intention to utilise any more funds from this facility. The loan was due for repayment in 2021 but the Group received a court order not to repay the loan due to ongoing court arbitrage between the lender and its creditors.
The Group is not a party of this arbitrage and/or not linked to any party.
No borrowing costs were capitalised in 2022 and 2021.
14. Lease liabilities
The Group leases certain of its plant and equipment. The average remaining lease term is 3 years (2021: 4 years). . The Group has option to purchase the equipment for a nominal amount at the maturity of the finance lease. The Group's obligation under finance leases are secured by the lessor's title to the leased assets.
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 21.9% to 23.5% per annum.
| Minimum lease payments |
| 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Less than one year | | 315,252 | 200,633 | 203,647 |
| Between one and five years | | 496,817 | 377,027 | 511,819 |
| More than five years | | - | - | - |
| | | 812,069 | 577,660 | 715,466 |
| Less future finance charges | | (168,699) | (148,117) | (196,913) |
| | | | | |
| Present value of minimum lease payments | | 643,370 | 429,543 | 518,553 |
|
| | | | |
| Present value of minimum lease payments |
| 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Less than one year | | 211,397 | 122,407 | 113,059 |
| Between one and five years | | 431,973 | 307,136 | 405,494 |
| More than five years | | - | - | - |
| | | | | |
| Present value of minimum lease payments | | 643,370 | 429,543 | 518,553 |
15. Trade and other payables
|
| | | | |
|
|
| | | |
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | | | |
| Trade payables | | 615,115 | 210,665 | 232,746 |
| Accruals | | 56,826 | 161,035 | 23,051 |
| Social security and other taxes | | 167,392 | 18,751 | 44,594 |
| Other payables | | 271,687 | 96,107 | 143,552 |
|
| |
|
|
|
|
| | 1,111,020 | 486,558 | 443,943 |
The fair value of trade and other payables is not materially different to the carrying values presented. The above listed payables were all unsecured.
16. Provision
| | | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| Long term provision: | | | | |
| Environment rehabilitation | | 470,029 | 143,268 | 99,422 |
| Short term provision: | | | | |
| Environment rehabilitation | | - | 57,494 | 16,120 |
| | | | | |
| | | 470,029 | 200,762 | 115,542 |
|
| | | | |
| Movement in provision |
| Six months to | 12 months to | Six months to |
|
| | 30 June | 31 December | 30 June |
|
| | 2022 | 2021 | 2021 |
|
| | £ | £ | £ |
| At 1 January | | 200,762 | 52,137 | 52,137 |
| Recognised in the period | | 79,541 | 138,020 | 60,292 |
| Utilised in the period | | - | - | - |
| Reduction resulting from re-measurement or settlement without cost | 10,555 | 7,487 | - | |
| Unwinding of discount and effect of changes in the discount rate | 8,268 | 2,397 | 1,178 | |
| Exchange difference | | 170,903 | 721 | 1,935 |
|
|
|
|
|
|
| At the end of the period |
| 470,029 | 200,762 | 115,542 |
Provision is made for the cost of restoration and environmental rehabilitation of the land disturbed by the West Kytlim mining operations, based on the estimated future costs using information available at the reporting date.
The provision is discounted using a risk-free discount rate of from 8.65% to 8.70% (2021: 3.87% to 5.08%) depending on the commitment terms, attributed to the Russian Federal Bonds.
Provision is estimated based on the sub-areas within general West Kytlim mining licence the company has carried down its operations on by the end of the reporting period. Timing is stipulated by the forestry permits issued at the pre-mining stage for each of sub-areas. Actual costs in respect of the long-term provision recognised in 2022 will be incurred within 2023-2025.
17. Commitments
At the time of the award of the Monchetundra mining license a royalty payment was calculated by the Russian Federal Reserves Commission. 20% of this payment was paid in December of 2018 and the remaining 80%, or RUB 16.68 million (approximately £262,000) to be paid by November 2023.
During 2020 the Group entered into several lease agreements to lease mining plant and equipment. As at 30 June 2022 the average lease term was 3 years and present value of minimum lease payments £643,370 (30 June 2021: £518,553).
18. Contingent liabilities
In 2021 the Company had invested RUB 37,180,000 (£584,591 at a prevailing exchange rate at 30 June 2022) in respect of the Nyud-Moroshkovoe and other potential licenses and projects as per the agreements in place with Rosgeo and ERDC.
Further investments are at the Company's discretion. The Nyud-Moroshkovoe project is being used by the Company as the template for the remaining assets, which will only be evaluated after the successful conclusion of the Nyud-Moroshkovoe project.
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