Half-year Report

26 February 2021

Conroy Gold and Natural Resources plc

(“Conroy” or “the Company”)

Half-yearly results for the six months ended 30 November 2020

Conroy (AIM: CGNR), the Irish-based resource company exploring and developing gold projects in Ireland and Finland, is pleased to announce its results for the six months ended 30 November 2020.  Details of these can be found below and a full copy of the Statement can be viewed on the Company’s website.

Highlights:

• Excellent results were reported from the Company’s exploration programme including:

• New gold discoveries made in the Glenish Licence area

• New geological structures outlined over the Cargalisgorran area of the Clay Lake gold target

• £1,255,333 raised in the period

Post period end-highlights:

• Letter of Intent signed between Demir Export A.S.  and Conroy for Joint Venture

• Demir Export to expend in work commitments (except Demir Export in-house costs, Operator fees and Minimum Regulatory Work Commitments) of €4.5 million to earn-in 25% option in the project in first phase of earn-in period

• Demir Export to expend in work commitments (except Demir Export in-house costs, Operator fees and Minimum Regulatory Work Commitments) of an additional €4.5 million to earn an additional 15% option in second phase of earn-in period, again in the project

• Expenditure by Demir Export of additional funds to reach construction-ready status to earn-in additional 17.5% Option in Phase 3 of a given development thus increasing Demir Export’s holding to a total of 57.5% in that development

•  At construction-ready status at Clontibret and /or other developments, Conroy Gold to retain 42.5%  interest with various options including a “Carry Loan” on capital expenditure to commercial production whilst still retaining 25% interest
• Under the terms of the letter of intent, Demir Export to make cash payment of €1 million to Conroy Gold on final approval of the definitive agreement
•  Discussions with Anglo Asian Mining plc were ended immediately on signing of LOI

Professor Richard Conroy, Chairman, commented:  

“My colleagues and I look forward very much to working with the Demir Export team on the joint venture partnership-Project Inis, and building the foundations for a long term, successful relationship. The comprehensive nature of this Letter of Intent should facilitate us progressing through the next stage of the transaction.

Demir Export has the mining expertise and the financial resources not only to bring the Clontibret gold deposit to construction ready status and into operation as a mine, but also to advance the significant gold potential of the other licences along the gold trend to the same status.”

For further information please contact :

Conroy Gold and Natural Resources plc	Tel: [phone]
Professor Richard Conroy, Chairman
Allenby Capital Limited (Nomad)	Tel: [phone]
Nick Athanas/Nick Harriss
Brandon Hill Capital Limited (Joint Broker)	Tel: [phone]
Jonathan Evans
First Equity Limited (Joint Broker)	Tel: [phone]
Jason Robertson
Lothbury Financial Services	Tel: [phone]
Michael Padley
Hall Communications	Tel : [phone]
Don Hall

Visit the website at: www.conroygold.com

Chairman’s Statement

I have great pleasure in presenting the Company’s Half-Yearly Report for the six-month period ended 30 November 2020.  The period has been one of very successful progress.

During the period an approach was received from Demir Export A.S. (“Demir Export”) proposing a joint venture partnership with the Company on an earn-in basis over the twelve licences which the Company holds in the Longford-Down Massif. This approach lead to, on 25 February 2021, a Letter of Intent (“LOI”) being signed with Demir Export and Conroy terminating the previous joint venture discussions with Anglo Asian Mining plc (“AAZ”).

The terms of the joint venture proposal from Demir Export were considered by the Board to be superior in many ways to the terms which were being offered by AAZ, details of which were announced by Conroy on 21 July 2020. As such, the Board unanimously resolved to accept and sign the LOI from Demir Export and to terminate discussions with AAZ. Immediately on signing the LOI the Company informed AAZ that the discussions with AAZ were terminated.

Demir Export is a long-established mining company with interests in iron, coal, gold and base metals, including zinc and copper, in Turkey (Demir is the Turkish for iron), and has a strong in-house technical team with mining and exploration expertise. It brings over 60 years of mine operating experience to bear on the project and places a strong emphasis on the adoption of international environmental, and health and safety management standards.

Demir Export belongs to the Koç family who also own the largest industrial conglomerate in Turkey, a Fortune Global 500 Company and Turkey’s leading investment holding company.

Joint Venture Project with Demir Export

The primary focus of the Demir Export joint venture project, named Project Inis, is the development of the gold deposit in the Clontibret licence to construction-ready status and bringing it into operation as a gold mine. The parties further aim is to have the other licences given the same status one after the other, hence providing a foundation for a long-term relationship between the parties.

The parties will carry on discussions for the transaction on an exclusive basis and it is acknowledged by both Conroy Gold and Demir Export that time shall be of the essence in finalising a definitive agreement between the parties.

Key Terms of the proposed Joint Venture

The LOI sets out the key commercial terms and conditions that Conroy Gold and Demir Export have negotiated and agreed on in relation to Project Inis. The document addresses in detail the key terms and proposed structure of the earn-in together with setting out the respective responsibilities of the parties in relation to operatorship and the functions of the Joint Management Committee. Investment by Demir Export will be directly into special purpose companies holding each licence or group of licences.

Demir Export will make a cash payment of €1 million to the Company upon final approval of the Definitive Agreement in recognition of the prior work carried out in relation to the project. 

The Earn-in Period will be divided into three phases:

Phase 1: expenditure by Demir Export of €4.5 million (except Demir Export in-house costs, Operator fees and Minimum Regulatory Work Commitments) will earn a 25% interest in the project.

Phase 2: expenditure by Demir Export of an additional  €4.5 million (except Demir Export in-house costs, Operator fees and Minimum Regulatory Work Commitments) will earn an additional 15% in the project.

Phase 3: expenditure by Demir Export of the additional funds required to reach declaration of construction-ready status (i.e. a bankable feasibility study or equivalent) - for Clontibret and/or other mine developments will earn an additional 17.5% interest thus increasing Demir Export’s holding to a total of 57.5% in the development(s).

Conroy Gold, after construction ready status is achieved, may either retain its 42.5% interest in Clontibret and /or other mine developments by participating pro rata in the expenditures for mine construction, or avail itself of a number of options including diluting its interest or being carried for the expenditures through to commercial production with a “Carry Loan” for a 25% interest with pay back on 50%  or greater portion of the net profits due to Conroy Gold within a maximum payback period of six years.

It is envisaged that initially the Licences in Project Inis may be divided into three Licence Groups, namely the Clontibret Licence, the Northern Ireland Licences, and the remaining nine licences in the Republic of Ireland, with separate jointly owned companies, the Joint Venture Companies, owning the Licences or Licence Groups.

A Joint Management Committee (“JMC”) will be set up to oversee, plan and execute the various plans, in the work programme of Project Inis. The JMC will be comprised of four members, two from each party, but with a Demir Export representative having a casting vote, with appropriate minority protection rights for Conroy Gold. It is anticipated that Conroy Gold will be appointed as Operator for an initial two-year period after which the matter of operatorship will be reviewed.

The proposed Demir Export joint venture remains subject to, inter alia, the completion of due diligence and the entering into of definitive documentation including the final joint venture agreement. In addition, the proposed joint venture, should it proceed on the basis anticipated under the LOI, will be subject to the Company seeking shareholder approval as it would be classified as a fundamental change of business pursuant to Rule 15 of the AIM Rules for Companies. For the avoidance of doubt, Conroy Gold would, on completion, continue to be classified as an operating company and not a cash shell pursuant to AIM Rule 15. Furthermore, the proposed joint venture will be subject to any other relevant Stock Exchange requirements, and to government or any other regulatory approvals. As such there can be no guarantee that the proposed joint venture will complete nor as to the final terms or timing of the Demir Export JV however that it is agreed between the parties that the terms of the LOI will form the basis for the definitive agreement.

Exploration Results

Excellent results were reported from the Company’s exploration programme during the period on its prospecting licences in the Longford-Down Massif in Ireland.

New gold discoveries were made in the Company’s Glenish Licence area and new geological structures outlined from a geophysical survey over the Cargalisgorran area of the Company’s Clay Lake gold target in Northern Ireland.

COVID-19

The onset of the COVID-19 pandemic impacted on Company activities in the last quarter of the financial year.  In accordance with the Irish Governments COVID-19 related public health measures and public health advice staff worked remotely.

Since the outbreak of the COVID-19 pandemic, the Company has taken necessary measures in accordance with Government guidelines to protect the health, safety and wellbeing of its employees, contractors and partners in Ireland and Finland. COVID-19 continues to limit field and laboratory work given the restrictions on operations and movement. However other work continues in relation to the Company’s exploration and development programme.

Directors and executives took a 50% reduction in fees and salaries during the 6-month period under review while technical and field staff took a 25% reduction in salaries for the period June to October 2020.

New Director

Howard Bird, an internationally experienced geoscientist with over thirty years’ experience in mining exploration and development joined the Board of the Company in July 2020. I would like to welcome Howard to the Board. He has already made significant contributions to many aspects of the Company’s activities.

Finance

The loss after taxation for the half year ended 30 November 2020 amounted to €703,294 (six-month period ended 30 November 2019: loss of €278,008). The increased loss was due mainly to a non-cash charge of €395,097 in respect of the fair value of warrants issued in both July and August 2020. The majority of these warrants were issued alongside the fundraising which the Company carried out in August 2020. 

During the period under review the Company raised a total of £1,255,333 of which £800,000 related to a fundraising in August 2020 and a further £455,333 was raised following the exercise of warrants during the period between July 2020 and November 2020.  These funds were used to advance the Company’s gold exploration licences and also for general working capital purposes.

As of 30 November 2020, the Company’s net assets amounted to €18,696,306 (30 November 2019: €17,595,318). Cash and cash equivalents were €503,879 as of 30 November 2020.

Directors and Staff

I would like to thank my fellow directors, staff and consultants for their support and dedication, which has enabled the continued success of the Company.

Outlook

I look forward to the Company continuing the excellent progress which it has made during the half-year and to a very positive and active further six months.

Yours faithfully,

___________________________

Professor Richard Conroy

Chairman

26 February 2021

Condensed consolidated income statement and condensed consolidated statement of comprehensive income

for the six-month period ended 30 November 2020

Condensed consolidated income statement
	Note	Six month period ended 30 November 2020 (Unaudited) €		Six month period ended 30 November 2019 (Unaudited) €				Year ended 31 May 2020 (Audited) €
Continuing operations
Operating expenses		(703,298)		(278,008)				(677,380)
Finance income – interest		4		-				-
Loss before taxation		(703,294)		(278,008)				(677,380)
Income tax expense		-		-				-
Loss for the financial period/year		(703,294)		(278,008)				(677,380)
Loss per share
Basic and diluted loss per ordinary share	2	(€0.0240)		(€0.0117)				(€0.0278)

Condensed consolidated statement of comprehensive income

		Six month period ended 30 November 2020 (Unaudited) €		Six month period ended 30 November 2019 (Unaudited) €		Year ended 31 May 2020 (Audited) €
Loss for the financial period/year		(703,294)		(278,008)		(677,380)
Income/expense recognised in other comprehensive income		-		-		-
Total comprehensive expense for the financial period/year		(703,294)		(278,008)		(677,380)

Condensed consolidated statement of financial position as at 30 November 2020

	Note	30 November 2020 (Unaudited)		30 November 2019 (Unaudited)		Year ended 31 May 2020 (Audited)
		€		€		€
Assets
Non-current assets
Intangible assets	4	22,525,305		22,077,517		22,330,743
Property, plant and equipment		10,416		10,406		10,692
Total non-current assets		22,535,721		22,087,923		22,341,435
Current assets
Cash and cash equivalents		503,879		95,361		117,270
Other receivables		229,608		74,565		89,948
Total current assets		733,487		169,926		207,218
Total assets		23,269,208		22,257,849		22,548,653
Equity
Capital and reserves
Called up share capital		32,260		23,693		26,214
Called up deferred share capital		10,504,431		10,504,431		10,504,431
Share premium		14,472,322		12,727,194		13,084,647
Capital conversion reserve fund		30,617		30,617		30,617
Share based payments reserve		919,893		477,393		574,875
Other reserve		8,333		-		8,333
Retained losses		(7,271,550)		(6,168,010)		(6,583,802)
Total equity		18,696,306		17,595,318		17,645,315
Liabilities
Non-current liabilities
Convertible loan	5	367,941		350,000		357,802
Directors’ and former Directors’ loans	6	-		649,832		-
Total non-current liabilities		367,941		999,832		357,802
Current liabilities
Trade and other payables: amounts falling due within one year		3,627,554		3,662,669		3,885,704
Related party loans		577,407		-		659,832
Total current liabilities		4,204,961		3,662,669		4,545,536
Total liabilities		4,572,902		4,662,531		4,903,338
Total equity and liabilities		23,269,208		22,257,849		22,548,653

Condensed consolidated statement of cash flows

for the six-month period ended 30 November 2020

	Six month period ended 30 November 2020 (Unaudited) €		Six month period ended 30 November 2019 (Unaudited) €		Year ended 31 May 2020 (Audited) €
Cash flows from operating activities
Loss for the financial period/year	(703,294)		(278,008)		(667,380)
Adjustments for:
Depreciation	942		941		1,884
Share based payment	395,097		-		97,482
Interest expense	10,139		-		16,135
(Increase)/decrease in other receivables	(139,659)		31,616		16,233
(Decrease)/increase in trade and other payables	(188,688)		150,994		339,762
Net cash outflow from operating activities	(625,463)		(94,457)		(205,884)
Cash flows from investing activities
Investment in exploration and evaluation	(194,562)		(305,472)		(558,698)
Purchase of property plant and equipment	(667)		-		(1,229)
Net cash used in investing activities	(195,229)		(305,472)		(559,927)
Cash flows from financing activities
Issue of share capital	1,393,721		-		359,974
Share issue cost	(34,533)		-		(16,420)
Advance from convertible loan	-		350,000		350,000
Advances from/(repayments to) Directors and former Directors	(82,425)		98,000		(40,818)
Advances from/(repayments to) Karelian Diamond Resources P.L.C.	(69,462)		(30,009)		45,046
Advances from related parties	-		-		108,000
Net cash provided by financing activities	1,207,301		417,991		805,782
Increase/(decrease) in cash and cash equivalents	386,609		18,062		(39,971)
Cash and cash equivalents at beginning of financial period/year	117,270		77,299		77,299
Cash and cash equivalents at end of financial period/year	503,879		95,361		117,270

Condensed consolidated statement of changes in equity

for the six-month period ended 30 November 2020

	Share capital	Share premium	Capital conversion reserve fund	Share- based payment reserve	Other reserve	Retained deficit	Total equity
	€	€	€	€	€	€	€
Balance at 1 June 2020	10,530,645	13,084,647	30,617	574,875	8,333	(6,583,802)	17,645,315
Share issue	6,046	1,387,675	-	-	-	-	1,393,721
Share issue costs	-	-	-	-	-	(34,533)	(34,533)
Share based payments	-	-	-	395,097	-	-	395,097
Transfer from share-based payment reserve to retained deficit	-	-	-	(50,079)	-	50,079	-
Loss for the financial year	-	-	-	-	-	(703,294)	(703,294)
Balance at 30 November 2020	10,536,691	14,472,322	30,617	919,893	8,333	(7,271,550)	18,696,306
Balance at 1 June 2019	10,528,124	12,727,194	30,617	751,293	-	(6,163,902)	17,873,326
Transfer from share-based payment reserve to retained losses	-	-	-	(273,900)	-	273,900	-
Loss for the financial period	-	-	-	-	-	(278,008)	(278,008)
Balance at 30 November 2019	10,528,124	12,727,194	30,617	477,393	-	(6,168,010)	17,595,318

Share capital

The share capital comprises the nominal value share capital issued for cash and non-cash consideration. The share capital also comprises deferred share capital. The deferred share capital arose through the restructuring of share capital which was approved at General Meetings held on 26 February 2015 and 14 December 2015.

Authorised share capital:

The authorised share capital at 30 November 2020 comprised 11,995,569,058 ordinary shares of €0.001 each, 306,779,844 deferred shares of €0.02 each, and 437,320,727 deferred shares of €0.00999 each (€22,500,000), (30 November 2019: 11,995,569,058 ordinary shares of €0.001 each, 306,779,844 deferred shares of €0.02 each, and 437,320,727 deferred shares of €0.00999 each (€22,500,000)).

Share premium

The share premium reserve comprises the excess consideration received in respect of share capital over the nominal value of the shares issued.

Capital conversion reserve fund

The ordinary shares of the Company were re-nominalised from €0.03174435 each to €0.03 each in 2001 and the amount by which the issued share capital of the Company was reduced, was transferred to the capital conversion reserve fund.

Share based payment reserve

The share based payment reserve represents the amount expensed to the condensed consolidated income statement in addition to the amount capitalised as part of intangible assets of share-based payments granted which are not yet exercised and issued as shares. During the six month period ended 30 November 2020 a number of unexercised warrants expired resulting in a transfer of €50,079 from this reserve to retained losses. During the six month period ended 30 November 2019 a number of unexercised warrants expired resulting in a transfer of €273,900 from this reserve to retained losses.

Retained losses

This reserve represents the accumulated losses absorbed by the Company to the condensed consolidated statement of financial position date.

The accompanying notes form an integral part of these condensed consolidated financial statements.

1. Accounting policies

Reporting entity

Conroy Gold and Natural Resources plc (the “Company”) is a company domiciled in Ireland. The unaudited condensed consolidated financial statements for the six month period ended 30 November 2020 comprise the condensed financial statements of the Company and its subsidiaries (together referred to as the “Group”).

Basis of preparation and statement of compliance

Basis of preparation

The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34: Interim Financial Reporting.

The condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as at 31 May 2020, which are available on the Group’s website - www.conroygold.com . The accounting policies adopted in the presentation of the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 May 2020.

The condensed consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments which are measured at fair value at each reporting date.

The condensed consolidated financial statements are presented in Euro (“). € is the functional currency of the Group.

The preparation of condensed consolidated financial statements requires the Board of Directors and management to use judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial period in which the estimate is revised and in any future financial periods affected. Details of critical judgements are disclosed in the accounting policies detailed in the annual consolidated financial statements.

The financial information presented herein does not amount to statutory consolidated financial statements that are required by Chapter 4 part 6 of the Companies Act 2014 to be annexed to the annual return of the Company. The statutory consolidated financial statements for the financial year ended 31 May 2020 were annexed to the annual return and filed with the Registrar of Companies. The audit report on those consolidated financial statements was unqualified.

These condensed consolidated financial statements were authorised for issue by the Board of Directors on 26 February 2021.

Going concern

The Group incurred a loss of €703,294 for the six month period ended 30 November 2020 (six month period ended 30 November 2019: €278,008). The Group had net current liabilities of €3,471,474 at that date (30 November 2019: €3,492,743).

The Board of Directors have considered carefully the financial position of the Group and in that context, have prepared and reviewed cash flow forecasts for the period to 31 January 2022.

In reviewing the proposed work programme for exploration and evaluation assets and on the basis of the proceeds from the fundraising and warrant exercises during the period and the exercise of warrants subsequent to the period end date, the results obtained from the exploration programme and the prospects for raising additional funds as required, the Board of Directors are satisfied that it is appropriate to prepare the condensed consolidated financial statements on a going concern basis.

Recent accounting pronouncements

The following new standards, amendments to standards and interpretations adopted and endorsed by the EU have been issued but were not effective for the financial year ended 31 May 2020:

• Amendments to references to the Conceptual Framework in IFRS Standards – Effective date 1 January 2020
• Amendments to IFRS 3 Business Combinations – Definition of a Business – Effective date 1 January 2020
• Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest Rate Benchmark Reform – Effective date 1 January 2020
• Amendment to IFRS 16 about providing lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification – Effective date 1 June 2020 

The adoption of the above amendments to standards and interpretations has been considered for the purposes of these interim financial statements and is not considered material.

The following new standards and amendments to standards have been issued by the International Accounting Standards Board but have not yet been endorsed by the EU, accordingly none of these standards have been applied in the current year. The Board of Directors are currently assessing whether these standards once endorsed by the EU will have any impact or a material impact on the consolidated financial statements.

• Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture – postponed indefinitely
• IFRS 1 amendments resulting from Annual Improvements to IFRS Standards 2018–2020 (subsidiary as a first-time adopter) – Effective date 1 January 2022
• IFRS 3 amendments updating a reference to the Conceptual Framework – Effective date 1 January 2022
• IFRS 4 amendments regarding the expiry date of the deferral approach – Effective date 1 January 2023
• Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16, and IAS 39 regarding replacement issues in the context of the IBOR reform – Effective date 1 January 2021
• IFRS 17: Insurance contracts – Effective date deferred to 1 January 2023
• IAS 1 amendments regarding the classification of liabilities - Effective date 1 January 2023
• IAS 16 amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use  – Effective date 1 January 2022
• IAS 37 amendments regarding the costs to include when assessing whether a contract is onerous – Effective date 1 January 2022.

2. Loss per share

Basic earnings per share			Six month period ended 30 November 2020 (Unaudited) €		Six month period ended 30 November 2019 (Unaudited) €		Year ended 31 May 2020 (Audited) €
Loss for the financial period/year attributable to equity holders of the Company			(703,294)		(278,008)		(677,380)
Number of ordinary shares at start of financial period/year			26,213,872		23,693,039		23,693,039
Number of ordinary shares issued during the financial period/year			6,045,833		-		2,520,833
Number of ordinary shares at end of financial period/year			32,259,705		23,693,039		26,213,872
Weighted average number of ordinary shares for the purposes of basic earnings per share			29,249,769		23,693,039		24,404,398
Basic loss per ordinary share			(€0.0240)		(€0.0117)		(€0.0278)
			-
Weighted average number of ordinary shares for the purposes of diluted earnings per share			29,249,769		23,693,039		24,404,398
Diluted loss per ordinary share			(€0.0240)		(€0.0117)		(€0.0278)

3. Subsidiaries

Shares in subsidiary companies (Unlisted shares) at cost:	30 November 2020 (Unaudited) €		30 November 2019 (Unaudited) €		31 May 2020 (Audited) €
Conroy Gold Limited – 100% owned	-		-		-
Trans International Mineral Exploration Limited   100% owned	2		2		2
	2		2		2

The registered office of the above non-trading subsidiaries is 3300 Lake Drive, Citywest Business Campus, Dublin 24, D24 TD21, Ireland.

Basis of consolidation

The condensed consolidated financial statements include the condensed financial statements of Conroy Gold and Natural Resources plc and its subsidiaries. Subsidiaries are entities controlled by the Company. Control exists when the Group is exposed to or has the right to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity. In assessing control, potential voting rights that presently are exercisable are taken into account. The condensed financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control commences until the date that control ceases. Intra-Group balances, and any unrealised income and expenses arising from intra-Group transactions are eliminated in preparing the condensed consolidated financial statements.

4. Intangible assets

Exploration and evaluation assets
Cost	30 November 2020 (Unaudited) €					30 November 2019 (Unaudited) €								31 May 2020 (Audited) €
At 1 June	22,330,743					21,772,045								21,772,045
Expenditure during the financial period/year
License and appraisal costs	23,902					105,307								189,591
Other operating expenses	170,660					200,165								369,107
Equity settled share based payments	-					-								-
At 30 November/31 May	22,525,305					22,077,517								22,330,743

Exploration and evaluation assets relate to expenditure incurred in the development of mineral exploration opportunities. These assets are carried at historical cost and have been assessed for impairment in particular with regard to the requirements of IFRS 6: Exploration for and Evaluation of Mineral Resources relating to remaining licence or claim terms, likelihood of renewal, likelihood of further expenditure, possible discontinuation of activities as a result of specific claims and available data which may suggest that the recoverable value of an exploration and evaluation asset is less than its carrying amount. 

The Board of Directors have considered the proposed work programmes for the underlying mineral resources. They are satisfied that there are no indications of impairment.

The Board of Directors note that the realisation of the intangible assets is dependent on further successful development and ultimate production of the mineral resources and the availability of sufficient finance to bring the resources to economic maturity and profitability.

5. Convertible loan

On 15 July 2019, the Company entered into an unsecured convertible loan agreement for €250,000 with Hard Metal Machine Tools Limited (the “Lender”). A further unsecured convertible loan note for €100,000 was issued on 30 October 2019 to the Lender. The convertible loan notes have a term of three years and attract interest at a rate of 5% per annum which is payable on the redemption or conversion of the convertible loan notes. The loan notes (including interest accrued) are convertible into ordinary shares in the capital of the Company at any time during the term of the loan notes at a conversion price of 7 pence sterling per share in respect of the first loan note and 6 pence sterling per share in respect of the second loan note agreement.

As the convertible loans are made up of both equity and liability components, they are considered to be compound financial instruments. At initial recognition, the carrying amount of a compound financial instrument is allocated to its equity and liability components. The fair value of the conversion feature is taken directly to equity. The fair value of the liability, which is the difference between the transaction price and the fair value of the conversion feature, is recognised as a liability in the consolidated statement of financial position. The liability is subsequently measured at amortised cost. The Company accounts for the interest expense of the convertible loan notes at the effective interest rate. The difference between the effective interest rate and interest rate attached to the convertible loan increases the carrying amount of the liability so that, on maturity, the carrying amount is equal to the capital cash repayment that the Company may be required to pay.

6. Related party transactions

(a) Directors’ and former Directors’ loans	30 November 2020 (Unaudited) €		30 November 2019 (Unaudited) €		31 May 2020 (Audited) €
At 1 June	659,832		551,832		551,832
Loan advance	-		98,000		108,000
Loan repayment	(82,425)		-		-
At 30 November/31 May	577,407		649,832		659,832

The Directors’ and former Directors’ loan amounts relate to monies owed to Professor Richard Conroy (Chairman) amounting to €282,918 (31 May 2020: €315,918), Maureen T.A. Jones (Managing Director) amounting to €Nil (31 May 2020: €49,425), Sorca Conroy amounting to €225,000 (31 May 2020: €225,000) and Seamus Fitzpatrick amounting to €69,489 (31 May 2020: €69,489).

Sorca Conroy and Seamus Fitzpatrick are both former directors in the Company having left the board in August 2017 (and are shareholders of the Company owning less than 3% of the issued share capital of the Company). Neither Sorca Conroy nor Seamus Fitzpatrick are classified as related parties under the AIM Rules for Companies. These loans are unsecured advances with no interest payable and there are no repayment or maturity terms.

1. Apart from Directors’ remuneration, and loans from Directors, there have been no contracts or arrangements entered into during the six month period in which a Director of the Group had a material interest.
2. The Group shares accommodation with Karelian Diamond Resources plc which have certain common Directors and shareholders. For the six month period ended 30 November 2020, the Group incurred costs totalling €39,388 (30 November 2019: €54,034) on behalf of Karelian Diamond Resources plc. These costs were recharged to Karelian Diamond Resources plc by the Group. At 30 November 2020 the Group owed €50,381 to Karelian Diamond Resources plc. At 30 November 2019, Karelian Diamond Resources plc owed the Group €29,812.

7.   Commitments and contingencies

The Group has received prospecting licences under the Republic of Ireland Mineral Development Acts 1940 to 1995 for areas in Monaghan and Cavan. It has also received licences in Northern Ireland for areas in Armagh in accordance with the Mineral Development Act (Northern Ireland) 1969.

At 30 November 2020, the Group had work commitments of approximately €388,000 for the forthcoming year, in respect of prospecting licences held (30 November 2019: €310,000).

8.  Subsequent events

On 25 February 2021, the Company signed a Letter of Intent (“LOI”) with Demir Export A.S. for a proposed joint venture on an earn-in basis over the twelve licences held by the Company along its 65km district scale gold trend in the Longford-Down Massif in Ireland. Full details of the proposed joint venture are set out in the Chairman’s Statement under the heading “Key Terms of the proposed Joint Venture”.

Subsequent to 30 November 2020, the Company received funds totalling £64,750 following the exercise of warrants at a price of 35 pence per warrant issued to places as part of the August 2020 fundraising.

COVID-19 continues to limit field and laboratory work given the restrictions on operations and movement and other work also continues in relation to the Company’s exploration and development programme.

There were no other material events subsequent to the reporting date which necessitate revision of the figures or disclosures included in the financial statements.

9. Approval of the condensed consolidated financial statements

These condensed consolidated financial statements were approved by the Board of Directors on 26 February 2021. A copy of the condensed consolidated financial statements will be available on the Group’s website www.conroygold.com on 26 February 2021.