2020 Financial Results

RNS Number : 2972A

Argos Resources Ltd

01 June 2021

 

1 June 2021

ARGOS RESOURCES LIMITED

("Argos" or "the Company")

2020 Financial Results

Highlights

Argos Resources Ltd (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, is pleased to announce its financial results for the year ended 31 December 2020.

· US$299,000 loss (2019: loss of US$401,000)

· US$438,000 cash reserves at 31 December 2020 (31 December 2019: US$768,000)

· In April 2021 the Falkland Islands Government agreed to a 12 month extension of the Second Phase of the Licence, with no additional work commitments.  The licence now expires on 1 May 2022

· $550,000 fund raising in April 2021 means the Group is fully funded for at least 12 months from sign-off of these accounts

The full Annual Report and Consolidated Financial Statements can be read and downloaded from the Company website:  http://www.argosresources.com/news.php?page=regulatory-news  

Argos Resources Limited ([phone])

www.argosresources.com

Ian Thomson, Chairman

John Hogan, Managing Director

Cenkos Securities plc (Nomad & Broker)

Derrick Lee ([phone])

Neil McDonald ([phone])

Joint Chairman's statement and Managing Director's review

During the reporting period Brent crude oil prices plummeted from over $65 per barrel at year-end 2019 to a low of $20 per barrel in April 2020. The fall in prices was driven initially by competition from OPEC for market share and then exacerbated later by the significant drop in global energy demand as a result of the Covid-19 pandemic supressing oil and gas consumption globally.

The industry was hit hard by this unexpected sharp drop in demand and commodity prices, and responded by reducing costs, cutting capital expenditure and delaying projects. Acknowledging this slowdown in activity, the Company requested an extension to the Licence term as more time will be required to recover from this downturn. In April 2021 the Falkland Islands government agreed to a twelve month extension to the Second Phase of the Licence to 1^st May 2022.

In April 2021 the Company also announced that, subject to shareholder approval, it had raised $550,000 through the placing of new shares. Shareholder approval was obtained at a General Meeting on 30^th April. The fund raise, when added to existing cash reserves, is sufficient to fund the Company's working capital requirements through the term of the Licence extension as well as costs expected to be incurred in technical work in furthering the Company's farmout efforts.

By the end of 2020 Brent crude oil prices had recovered to $50 per barrel and had fully recovered to the $65 per barrel range by April 2021. The oil industry is cautiously increasing activity in response to this recovery albeit still being hampered by operational and logistical difficulties caused by the continuing Covid-19 restrictions.

The Company continues to seek partners to participate in drilling on its Licence and is currently engaged with a number of counterparties who have expressed interest.  Given the current challenging environment the Company believes it may be some time before any expressions of interest are translated into commitments.

Results and dividend

The results for the year and the Group's financial position as at the year-end are shown in the attached financial statements.  The directors have not recommended a dividend for the year (2019: $nil).

Business review

The Group has returned a loss for the year ended 31 December 2020 of $299,000 (2019: loss of $401,000) which equates to a loss per share of 0.14 cents (2019: loss per share of 0.18 cents).

Administration expenses were $303,000 in 2020 compared to $433,000 in 2019. The difference is due largely to a one off $88,000 share-based payment charge for the extension of the options scheme in 2019 and the slowdown and reduced travel in 2020, experienced by the sector due to Covid-19.

Shareholders' equity has decreased from $29.5 million to $29.2 million in the year since 31 December 2019, reflecting the administration costs.  Cash in the year decreased from $768,000 to $438,000.

Outlook for the next financial year

The Group carried out a successful fund raise in April 2021 which will fund the continuing search for a farmout partner and means that the Group is fully funded for the period of the licence extension, and at least 12 months from sign-off of these accounts.

Going concern

The financial statements have been prepared on the going concern basis as, in the opinion of the directors, there is a reasonable expectation that the Group and the Company will continue in operational existence for the foreseeable future.

On 7 April 2021 the Company announced that it had conditionally raised US$550,000 through a subscription by certain new shareholders and Ian Thomson, Executive Chairman of the Company and the Fundraise was ratified by the passing of the required Resolutions at a General Meeting held on 30 April 2021.

On 20 April 2021 the Falkland Islands Government agreed an extension the second term of the Company's PL001 Licence by twelve months, to 1 May 2022.

Following the successful fund raise in April 2021 the Group has sufficient cash resources to continue for at least 12 months from sign-off of these accounts.

The Group's ability to achieve its long term strategy of developing its exploration projects is dependent on finding an exploration partner. The Group continues to seek partners to participate in drilling on its Licence and is currently engaged with a number of counterparties who have expressed interest.  However, given the current challenging environment the Group believes it may be some time before any expressions of interest are translated into commitments and further extensions to the Licence term may be required.

In order to continue as a going concern beyond the current Licence term, which expires on 1 May 2022, the Company will need to raise further finance, either through a farmout partner or by raising funds in an equity issue.

Should the Directors be unable to raise sufficient funds, find an exploration partner, or negotiate further Licence extensions the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

These factors indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Consolidated statement of comprehensive income

Year ended 31 December 2020

			Year ended 31 December 2020 $'000	Year ended 31 December 2019 $'000
Administrative expenses			(303)	(433)
Finance income			1	4
Foreign exchange gains			3	28
(Loss) for the year attributable to owners of the parent			(299)	(401)
Total comprehensive (loss) for the
period attributable to owners of the parent			(299)	(401)
Basic and diluted (loss) per share (cents)			(0.14)	(0.18)

Consolidated statement of financial position

As at 31 December 2020

			2020	2019
			$'000	$'000
Assets
Non-current assets
Exploration intangible assets			28,815	28,737
			28,815	28,737
Current assets
Other receivables			40	86
Cash and cash equivalents			438	768
Total current assets			478	854
Total assets			29,293	29,591
Liabilities
Current liabilities
Trade and other payables			59	58
Total liabilities			59	58
Total net assets			29,234	29,533
Capital and reserves attributable to
equity holders of the Company
Share capital			6,696	6,696
Share premium			30,071	30,071
Retained losses			(7,533)	(7,234)
Total shareholders' equity			29,234	29,533

Consolidated statement of cash flows

Year ended 31 December 2020

		Year ended 31 December 2020 $'000	Year ended 31 December 2019 $'000
Cash flows from operating activities
(Loss) for period before taxation		(299)	(401)
Adjustments for:
Finance income		(1)	(4)
Foreign exchange (gains)		(3)	(28)
Share based remuneration expensed		-	89
Net cash (outflow) from operating activities
before changes in working capital		(303)	(344)
Decrease in other receivables		1	377
Increase/(Decrease) in other payables		1	(3)
Net cash outflow from operating activities		(301)	30
Investing activities
Interest received		1	4
Exploration and development expenditure		(33)	(82)
Net cash (used) in investment activities		(32)	(78)
Net (decrease) in cash and cash equivalents		(333)	(48)
Cash and cash equivalents at beginning of period		768	788
Exchange gains on cash and cash equivalents		3	28
Cash and cash equivalents at end of the year		438	768

Consolidated statement of changes in equity

Year ended 31 December 2020

		Share capital $'000	Share premium $'000	Retained losses $'000	Total equity $'000
At 1 January 2019		6,696	30,071	(6,899)	29,868
Total comprehensive income for the year		-	-	(401)	(401)
Share based income expense		-	-	89	89
Share based income adjustment for expired options		-	-	(23)	(23)
At 31 December 2019 and 1 January 2020		6,696	30,071	(7,234)	29,533
Total comprehensive income for the year		-	-	(299)	(299)
At 31 December 2020		6,696	30,071	(7,533)	29,234

In preparing the financial information in this statement the Group, which consists of the Company Argos Resources Ltd, and its wholly owned subsidiary Argos Exploration Ltd, has applied policies in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").  The financial information has been prepared under the historical cost convention.

The financial information set out above does not constitute the company's statutory accounts for 2019 or 2020. Statutory accounts for 2019 and 2020 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2019 and 2020 were unqualified with an emphasis of matter paragraph included highlighting the material uncertainty relating to going concern .

 

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