Half Yearly Report 

FIRST CLASS METALS PLC

(the "Company" or "FCM")

For the six months ended 30 June 2024

First Class Metals PLC ("First Class Metals" "FCM" or the "Company") the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to present its interim results for the six months ended 30 June 2024.

Interim Management Report

I.   Operational Highlights

In early May FCM announced that field work had been initiated on its projects in Canada, with three exploration teams deployed:

·    Review of the historical core from the Sunbeam Property

·    Reconnaissance trip to the Quinlan claims for access appraisal

·    Preparation for stripping at North Hemlo

Additionally, Prospectair has been retained to undertake a geophysical survey at the newly acquired Kerrs Gold Property.

Marc Sale, CEO commented:

"I am, as ever, enthusiastic with the speed at which FCM has started the field season, all thanks to EGS' (Emerald Geological Services) support. The review of the Sunbeam Property core, the geophysics survey over Kerrs and the preparation for work at Dead Otter herald an exciting field season for First Class"

II.  Corporate and Financial Highlights

Since the beginning of 2024, the Company has undertaken several corporate actions aimed at leveraging its exceptional team and extensive network. FCM is now entering a phase of development that is expected to result in a significant increase in activity across its portfolio of assets.

·    On 22 February the Company successfully completed a private placement through a subscription with an existing high-net-worth shareholder, issuing 3,700,000 ordinary shares at a price of 4.5 pence per share, thereby raising £166,500. This placement was facilitated by an additional share loan from the Company's Executive Chairman, James Knowles, consisting of 3,700,000 shares.

·    On 20 March 2024, the Company received approval for a maximum CAD$200,000 OJEP Grant for work completed on the Zigzag lithium and critical metals property, covering up to 50% of exploration expenditures from 1 April 2023, to 15 February 2024. This grant, which First Class has successfully secured in consecutive years, reflects the Ontario Government's commitment to supporting early exploration for junior companies, and FCM is proud to be the only UK company to receive this non-dilutive funding for the second year running.

·    On 3 April 2024, the Company received a Goods and Services Tax (GST)/Harmonized Sales Tax (HST) credit amounting to CAD$212,780.03 for the year ending 2023. This credit reflects the Company's eligible expenditures and represents an important financial benefit, enhancing cash flow and supporting ongoing operations.

·    On 9 April 2024, discussions commenced with Seventy Ninth Resources Limited ("SNR"), a division of the Seventy Ninth Group Limited ("SNG"), regarding several of FCM's core and non-core assets. This negotiation underscored FCM's business model of acquiring, enhancing, and monetizing its assets. The Company continues to explore potential synergies with SNR to expand their portfolio of natural resources assets.

·    On 13 June 2024, the McKellar and Enable properties were sold to SNG for a combined cash payment of £270,000. Additionally, the Company entered into a £230,000 drawdown facility with SNG over a 12-month period, which will be utilised for general working capital and to advance exploration activities on remaining FCM properties. The loan, drawn in a single tranche, is secured by a debenture over the assets of First Class Metals PLC, carries a 15% coupon, and is structured on an interest-only basis with repayment due on 25 May 2025. Seventy Ninth Resources continues to conduct further due diligence on additional FCM assets, as previously announced on 9 April 2024.

James Knowles, Chairman commented: 

"In the first half of the year, First Class Metals achieved a significant milestone with the successful asset sale to 79th Group, enhancing our financial position and providing resources for future growth. Our recent capital raises through share placements reflect our commitment to advancing our core portfolio and maximising shareholder value. We appreciate shareholders' support as we continue to strengthen our position in the Canadian precious & critical metals exploration sector and work towards achieving our strategic goals. Thank you for being a part of our journey."

III. Post period highlights

In the last three months comprising July to September 2024, FCM has been active both operationally with its exploration projects in Canada as well as on its corporate side. The highlights for this period are:

·    On 8 July 2024, the Company completed the repayment of a share loan from director James Knowles, issuing 9,695,332 new ordinary shares to settle the outstanding position related to two tranches previously loaned to the Company.

·    On 17 July 2024, the Company completed a private placing of 3,035,714 ordinary shares at a price of 2.8 pence per share, raising gross proceeds of £85,000, which represented a 5.6% premium to the mid-market closing price on July 16, 2024. To facilitate this placing, Executive Chairman James Knowles entered into a share lending agreement to loan the required shares to the Company, with the allotment of 5,912,059 new shares from him. No fees or security were associated with this share loan.

·    On 2 August 2024, the Company completed the repayment of shares loaned by Executive Chairman James Knowles, issuing 5,912,059 new ordinary shares to settle the outstanding position related to two tranches previously announced on 17 July 2024.   On the same date the Company also completed a private placing of 9,500,000 shares at a price of 2.7 pence per share, raising gross proceeds of £256,500, with Axis Capital Markets acting as the sole placing agent and subsequently appointed as the Company's new broker.

IV. Financial Review

Funding

At the period end, the Group was funded through equity raises as well as sale of certain properties as stated above. A sum of £435,000 was raised through private placement and sale of properties.

Current Assets

At 30 June 2024, the Group had trade and other receivables of £75,428 (Dec 2023: £290,012, June 2023: £157,632).

Liquidity, cash and cash equivalents

At 30 June 2024, the Group held £83,006 (Dec 2023: £140,802, 30 June 2023: £844,131) of cash and cash equivalents, all of which are denominated in pound sterling.

Going concern

The financial information has been prepared on the basis that the Group will continue as a going concern.

As a junior exploration company, the Directors are aware that the Company must seek funds from the market to meet its investment and exploration plans and to maintain its listing status.

The Group's reliance on a successful fund raising presents a material uncertainty that may cast doubt on the Group's ability to continue to operate as planned and to pay its liabilities as they fall due.

The Company successfully raised £166,500 in the period ended 30 June 2024 through issuing  shares loaned by a director.  Additionally Canadian Tax Refunds of $212,780, the "OJEP" Grant receipt of $200,000 and property sales of £270,000 have been received during the period.

The Directors are aware of the reliance on fund raising within the next 12 months and the material uncertainty this presents but having reviewed the Group's working capital forecasts they believe the Group is well placed to manage its business risks successfully providing the fund raising is successful.

Financial risk review

Group

Principle risks & uncertainties are detailed in the most recent Annual report (page 54) which can be found on the company's website and remain unchanged. This Annual Report can be found at: https://www.firstclassmetalsplc.com/.

This note presents information about the group's exposure to financial risks and the group's management of capital.

Capital risk management

The Group's objectives when managing capital are: (a) To maintain a flexible capital structure which optimizes the cost of capital at acceptable risk; (b) To meet external capital requirements on debt and credit facilities; (c) To ensure adequate capital to support long-term growth strategy; and (d) To provide an adequate return to shareholders. The Group continuously monitors and reviews the capital structure to ensure the objectives are met. Management defines capital as the combination of its indebtedness and equity balances and manages the capital structure within the context of the business strategy, general economic conditions, market conditions in the power industry and the risk characteristics of assets. The Group's objectives in managing capital and the definition of capital remain unchanged throughout the period. External factors, such as the economic environment, have not altered the Group's objectives in managing capital.

Credit risk

The group's definition of credit risk is Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. At present the Group does not have any customers and its risk on cash and bank is mitigated by holding of the funds in an "A" rated bank.

Liquidity risk

The group's definition of liquidity risk is Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The Group manages liquidity risk by maintaining adequate cash balances.

Market risk

The group's definition of market risk is Market risk is the risk that changes in market prices, such as commodity prices, will affect the Group's earnings. The objective of market risk management is to identify both the market risk and the Group's option to mitigate this risk.

A majority of the Group's operating costs will be incurred in US and Canadian dollars, whilst the Group has raised capital in £ Sterling. The Group will incur exploration costs in US and Canadian Dollars, but it has raised capital in £ Sterling. Fluctuations in exchange rates of the US Dollar and Canadian Dollar against £ Sterling may materially affect the Group's translated results of operations. In addition, given the relatively small size of the Group, it may not be able to effectively hedge against risks associated with currency exchange rates at commercially realistic rates. Accordingly, any significant adverse fluctuations in currency rates could have a material adverse effect on the Group's business, financial condition and prospects to a much greater extent than might be expected for a larger enterprise.

Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market rates of interest. As the Group has no significant interest bearing assets or liabilities, the group's operating cash flows are substantially independent of changes in market interest rates. Therefore, the Group is not exposed to significant interest rate risk.

UK Listing Rules

On 29 July 2024, the Listing Rules were replaced by the UK Listing Rules ("UKLR") under which the existing Standard Listing category was replaced by the Equity Shares (transition) category under Chapter 22 of the UKLR.  Consequently, with effect from that date the Company is admitted to Equity Shares (transition) category of the Official List under Chapter 22 of the UKLR and to trading on the London Stock Exchange's Main Market for listed securities.

Statement of Directors' Responsibilities

The Directors are responsible for preparing this report and the financial statements in accordance with applicable United Kingdom law and regulations and UK adopted International Financial Reporting Standards ("IFRS").

Company law requires the Directors to prepare financial statements for each financial period which present fairly the financial position of the Company and the financial performance and cash flows of the Company for that period. In preparing those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• state whether applicable IFRS standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

• provide additional disclosures when compliance with the specific requirements in IFRS standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

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 enable them to ensure that the Company financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual report includes information required by the Listing Rules of the Financial Conduct Authority.

The financial statements are published on the Company's website https://www.firstclassmetalsplc.com/. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

The Directors confirm that to the best of their knowledge the Company financial statements give a true and fair view of the assets, liabilities, financial position of the Company.

Consolidated Income Statement for the Period from 1 January 2024 to 30 June 2024

Consolidated Statement of Financial Position as at 30 June 2024

Consolidated Statement of Changes in Equity for the Period from 1 January 2024 to 30 June 2024

Consolidated Statement of Cash Flows for the Period from 1 January 2024 to 30 June 2024

Notes to the Financial Statements for the Period from 1 January 2024 to 30 June 2024

The Company is a public company limited by share capital, incorporated and domiciled in England and Wales.

The principal activity of the Company was that of a holding company.

The principal activity of the Group was that of the exploration of gold and other semi-precious metals as well as battery metals critical to energy storage and power generation solutions.

The Company's ordinary shares are traded on the London Stock Exchange (LSE) under the ticker symbol FCM.

The address of its registered office is:

Suite 16 Freckleton Business Centre

Freckleton Street

Blackburn

Lancashire BB2 2AL

United Kingdom

These unaudited interim results comprise the Company and its subsidiary, First Class Metals Canada Inc. .

The Company's interim report and accounts for the six months ended 30 June 2024 have been prepared using the recognition and measurement principles of International Accounting Standards in conformity with the requirements of the Companies Act 2006.

These interim financial statements for the six months ended 30 June 2024 should be read in conjunction with the financial statements for the year ended 31 December 2023, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as applied in accordance with the provisions of the Companies Act 2006. The interim report and accounts do not include all the information and disclosures required in the annual financial statements. 

The interim report and accounts have been prepared in accordance with IAS34 (interim financial statements) and on the basis of the accounting policies, presentation and methods of computation as set out in the Company's December 2023 Annual Report and Accounts, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2024 and will be adopted in the 2024 annual financial statements. 

The financial information is presented in Pounds Sterling, rounded to the nearest pound and has been prepared under the historical cost convention.

The interim report and accounts do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. These interim financial statements were approved by the Board of Directors on 28 September 2024. The results for the six months to 30 June 2024 and the comparative results for the six months to 30 June 2023 are unaudited.  The figures for the year ended 31 December 2023 are extracted from the audited statutory accounts of the Company for that period.

Going Concern

The Directors have confirmed their intention to support the Company whilst it is in the process of raising funds to achieve its business plans. The Directors consider that sufficient resources are available to support the Company's operations for the foreseeable future and therefore believe that the going concern basis of preparation is appropriate.

2  Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

There are potentially issuable shares all of which relate to share warrants issued as part of placings in 2022. However, due to the losses for the year the impact of the potential additional shares is anti-dilutive and has therefore not been recognised in the calculation of the fully diluted loss per share. 

The calculation of the basic and diluted earnings per share (EPS) has been based on the loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

Group

Group subsidiaries

Details of the group subsidiaries as at 30 June 2024 are as follows:

* indicates direct investment of the company.

Allotted, called up and fully paid shares

The group's exposure to market and liquidity risks, including maturity analysis, relating to loans and borrowings is disclosed in note 15 "Financial risk review".

In June 2024, the company completed the drawdown facility of £230,000 from the 79^th Grp Limited and this is secured by way of debenture.

Parties are considered to be related if one party has the ability (directly or indirectly) to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

During the period, the Group incurred consultancy and travel expenses in relation to the intangible assets from Specialist Exploration Services (Scotland) Limited, a company controlled by a common director. The services were for £83,234 (Dec 2023: £181,814) of which £Nil (Dec 2023: £7,000) was outstanding at 30 June 2024.

During the year, the Group incurred director's fees for A Williamson through Vrynwy Limited, a company controlled by a common director. The services were for £17,188 (2023: £4,170) of which £2,750 (2023: £Nil) was outstanding at 30 June 2024.

During the year, the director, James Knowles loaned additional 3,700,000 shares with total loaned being 9,695,332 and Ayub Bodi loaned 5,995,331 in the previous year, to be returned on the publication of prospectus or when headroom allows. This has been reflected in the equity reserve. The directors received an 8.25% facility fee on the shares loaned. Ayub Bodi was resigned as director on 2 February 2024.