Final Results for the Year Ended 31 December 2020

RNS Number : 1509D

Arkle Resources PLC

25 June 2021

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

25 June 2021

Arkle Resources PLC

("Arkle", the "Group" or the "Company")

Final Results for the Year Ended 31 December 2020

Arkle Resources PLC (LON: ARK), the Irish gold and zinc exploration and development company, is pleased to announce its audited results for the year ending 31 December 2020.

Chairman's Statement

It is pleasing to be able to report drilling on our Mine River licences in Wexford / Wicklow is producing good results notably where earlier detailed soil sampling had identified a totally new zone with gold potential some 750 metres from the 2017 Tombreen discovery.

We have drilled three 100 metre holes into this area, now known as Tombreen West, and each hole contained multiple zones of gold bearing veins providing a strong indication of a gold bearing system.

We moved the fourth hole approximately 700 metres away into the main Tombreen area. This 200 metre hole showed visible gold in veins between 145 and 150 metres depth. Laboratory analysis is underway with results expected in early July 2021. Reflecting the evidently positive results of this hole an immediate revision of the exploration programme is underway.

Additional holes will be drilled in a pattern around Hole 4 in Tombreen. Permits have been obtained and drilling will commence once the current hole 5 is completed.

Of equal significance is the suggestion that the shallow holes at Tombreen West may not have gone deep enough to detect the high grade gold. It is likely that one or more 200 metre holes will be drilled at Tombreen West.

The detailed soil sampling at our second property in Donegal, using new more advanced techniques, rediscovered what we believe to be the gold bearing veins we first found in 2016. We intend to drill Donegal when permits are obtained and after the current campaign is completed at Mine River.

The Donegal drilling campaign will focus on the encouraging soil sample results and follow up trenching survey data obtained in 2020 which we have now analysed and modelled. The focus of the new campaign will be to follow the vein first identified in 2016 which contained high gold grades.

Turning to our zinc project, the 23.44% owned Stonepark project in Limerick which has a NI-43-101 compliant resource in excess of 5 million tonnes. There is plenty of scope for growth at this project as the mineralisation has been identified in recent drilling to extend out with the current resource and is open on three sides. Our target is to increase the resource to 10 million tonnes. The licences are held in a private joint venture company where the majority shareholder (76.6%) is Group Eleven who are the operator.

In recent months, Arkle commissioned a report on Stonepark to confirm forward exploration strategies.  This recommended drilling a suite of 10 holes. Arkle would be pleased to participate in this programme and are liaising with our partners, Group Eleven, to expedite this if possible.

There has been a significant external interest from multinationals in the Stonepark project. The Company was an active participant in negotiations with two of the interested companies and proposals acceptable to Arkle were received but they were not accepted by Group Eleven.

Group Eleven have been active on their Carrickittle ground which is adjacent to the Stonepark ground. They have reported very strong drilling results in holes close to Stonepark. The holes are close to the Kilteely hole drilled on Stonepark in 2019. This hole showed zinc mineralisation. There is a geological model which posits a zinc bearing trend from the Carrickittle ground through the Stonepark licences and on to the Pallas Green licences where 45million tonnes of zinc bearing ore have been reported.  The results in the Kilteely hole are at greater depths than the current Stonepark deposit.

We believe that the Stonepark deposit is a very valuable resource for Arkle and will be even more so with additional drilling.

Funding

Arkle is well funded for current and any proposed exploration campaigns. We anticipate that outstanding warrants will be exercised which would further increase available funding for exploration.

John Teeling

Chairman

24 June 2021

www.arkleresources.com

Enquiries:

Arkle Resources PLC
John Teeling, Chairman	[phone]
Jim Finn, Finance Director	[phone]
SP Angel Corporate Finance LLP Nominated Adviser & Joint Broker
Matthew Johnson/Adam Cowl	[phone]
First Equity Limited
Joint Broker
Jason Robertson	[phone]
Blytheweigh	[phone]
Megan Ray
Rachael Brooks
Teneo
Luke Hogg	[phone]
Ciara Wylie	[phone]

ARKLE RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

	2020 €	2019 €
Administrative expenses	(324,099)	(295,216)
Impairment of exploration and evaluation assets	(330,000)	-
OPERATING LOSS	(654,099)	(295,216)
Loss due to fair value volatility of warrants	(441,829)	(18,644)
LOSS BEFORE TAXATION	(1,095,928)	(313,860)
Income tax expense	-	-
LOSS FOR THE FINANCIAL YEAR AND TOTAL COMPREHENSIVE INCOME	(1,095,928)	(313,860)
Loss per share - basic and diluted	(0.50c)	(0.24c)

ARKLE RESOURCES PLC

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2020

	2020	2019
	€	€
ASSETS:
NON-CURRENT ASSETS
Intangible assets	3,373,488	3,445,710
CURRENT ASSETS
Other receivables	21,923	3,864
Cash and cash equivalents	684,837	39,631
	706,760	43,495
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(176,664)	(207,352)
Warrants	(906,198)	(18,644)
NET CURRENT LIABILITIES	(376,102)	(182,501)
NET ASSETS	2,997,386	3,263,209
EQUITY:
Called-up share capital - Ordinary	742,612	1,323,116
Called-up share capital - Deferred	992,337	-
Share premium	6,605,681	6,209,190
Share based remuneration reserve	127,199	44,989
Retained deficit	(5,470,443)	(4,314,086)
TOTAL EQUITY	2,997,386	3,263,209

ARKLE RESOURCES PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

	Called up Share Capital Deferred	Called up Share Capital Ordinary	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€	€
At 1 January 2019	-	1,139,116	6,136,298	31,631	(4,000,226)	3,306,819
Shares issued	-	184,000	72,892	-	-	256,892
Credit to equity for equity-settled share-based payments	-	-	-	13,358	-	13,358
Loss for the year	-	-	-	-	(313,860)	(313,860)
At 31 December 2019	-	1,323,116	6,209,190	44,989	(4,314,086)	3,263,209
Sub-division of shares (Note 5)	992,337	(992,337)	-	-	-	-
Shares issued		411,833	396,491	-	-	808,324
Share issue expenses	-	-	-	-	(60,429)	(60,429)
Credit to equity for equity-settled share-based payments	-	-	-	82,210	-	82,210
Loss for the year	-	-	-	-	(1,095,928)	(1,095,928)
At 31 December 2020	992,337	742,612	6,605,681	127,199	(5,470,443)	2,997,386

Deferred share capital

The deferred share reserve comprises of the value of the deferred shares that arose when the Company divided the ordinary shares via special resolution on 22 April 2020 the shares into 500,000,000 deferred shares of 0.75 cent each and 500,000,000 ordinary shares of 0.25 cent each.

Called up ordinary share capital

The called up ordinary share capital reserve comprises of the nominal value of the issued share capital of the Company.

Share premium

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

Share based payment reserve

The share based payment reserve arises on the grant of share options to directors and consultants under the share options plan.

Retained deficit

Retained deficit comprises accumulated losses in the current and prior financial years.

ARKLE RESOURCES PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

	2020	2019
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year	(1,095,928)	(313,860)
Impairment of exploration and evaluation assets	330,000	-
Share based payments charge	42,679	6,679
Fair Value movement of warrants	441,829	18,644
Foreign exchange	(4,847)	(235)
	(286,267)	(288,772)
MOVEMENTS IN WORKING CAPITAL
(Decrease)/Increase in trade and other payables	(30,688)	70,475
(Increase)/Decrease in other receivables	(18,059)	19,489
NET CASH USED IN OPERATING ACTIVITIES	(335,014)	(198,808)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation	(218,247)	(124,719)
NET CASH USED IN INVESTING ACTIVITIES	(218,247)	(124,719)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	1,254,049	256,892
Share issue expenses	(60,429)	-
NET CASH FROM FINANCING ACTIVITIES	1,193,620	256,892
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS	640,359	(66,635)
Cash and cash equivalents at beginning
of financial year	39,631	106,031
Effect of exchange rate changes on cash held in foreign currencies	4,847	235
Cash and cash equivalents at end
of financial year	684,837	39,631

Notes:

1.  Accounting Policies

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2019.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.  Loss per Share 

	2020	2019
	€	€
Loss per share - Basic and Diluted	(0.50c)	(0.24c)

Basic loss per share

The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

	2020	2019
	€	€
Loss for the year attributable to equity holders of the parent	(1,095,928)	(313,860)
	2020	2019
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	220,039,097	129,085,292

Basic and diluted loss per share is the same as the effect of the outstanding share options and warrants is anti-dilutive.

3.  Going Concern

The Group and Company incurred a loss for the financial year of €1,095,928 (2019: €313,860) and the Group had net current liabilities of €376,102 (2019: net current liabilities €182,501) at the balance sheet date leading to concern about the Company and Group's ability to continue as a going concern.

The Group and Company had a cash balance of €684,837 (2019: €39,631) and €684,510 (2019: €39,504) respectively, at the balance sheet date.

Included in current liabilities is an amount of €127,500 (2019: €82,500) owed to key management personnel in respect of remuneration due at the balance sheet date. Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.

The directors have prepared cashflow projections for a period of at least twelve months from the date of approval of these financial statements. The cashflow projections include any anticipated impacts of the Covid-19 pandemic on the Group and Company as well as the minimum spend/cash call requirements in relation to licenses held by the Group. As the Group and the Company are not revenue or cash generating they rely on raising capital from the public market. The cash flow projections prepared by the Group and Company indicate that additional finances will be required to meet the obligations of the Group and Company for a period of at least twelve months from the date of approval of these financial statements. The directors are confident that additional capital can be raised as required. The Group completed capital raisings during the year.

As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include any adjustment to the carrying amount, or classification of assets and liabilities, if the Company or Group was unable to continue as a going concern.

4.  Intangible Assets

Exploration and Evaluation:	2020	2019
	€	€
Cost:
At 1 January	3,445,710	3,314,312
Additions	257,778	131,398
Impairment	(330,000)	-
At 31 December	3,373,488	3,445,710
Carrying amount:
At 31 December	3,373,488	3,445,710

In 2012 the Group entered into an agreement with Teck Ireland Limited ("Teck"), a subsidiary of Teck Resources Limited, which gave Teck the option of earning a 75% interest in licences held by the Group in Cavan/Meath by spending €1.35 million on the licences in order to earn the option to acquire 75% interest. As per the agreement the licences had been transferred into a new company, Oldcastle Zinc Limited. As at 31 December 2019 Teck had completed €1.35 million worth of expenditure to give them a total of 75% in the company.

On 10 November 2020, the Group and Teck Ireland Limited agreed to terminate the Oldcastle agreement and dissolve the joint venture. Accordingly, the directors have impaired in full all expenditure relating to the Oldcastle licences, resulting in an impairment charge of €330,000 in the current year.

In 2007 the Group entered into an agreement with Teck Cominco which gave Teck Cominco the option to earn a 75% interest in a number of other licences held by the Group. Teck Cominco had to spend CAD$3m to earn the interest. During 2012 the relevant licences were transferred to a new company, TILZ Minerals Limited, which at 31 December 2020 was owned 23.44% (2019: 23.44%) by Limerick Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2019: 76.56%) by Group Eleven Resources Corp (third party).

On 13 September 2017 t he board of Arkle Resources plc were informed that Group Eleven Resources Corp. a private company, has acquired the 76.56% interest held by Teck Ireland in TILZ Minerals. Arkle Resources plc owns the remaining 23.44%.

The Group's share of expenditure on the licences continues to be capitalised as an exploration and evaluation asset. The Group is subject to cash calls from Group Eleven Resources Corp. in respect of the financing of the ongoing exploration and evaluation of these licences. In the event that the Group decides not to meet these cash calls its interest in TILZ Minerals Limited may be diluted accordingly.

The realisation of the intangible assets is dependent on the discovery and successful development of economic reserves which is subject to a number of risks as outlined below:

The Group's exploration activities are subject to a number of significant and potential risks including:

  - uncertainties over development and operational risks;

  - compliance with licence obligations;

  - liquidity risks; and

  - going concern risks;

The directors are aware that by its nature there is an inherent uncertainty in such exploration and evaluation expenditure as to the value of the asset. Having reviewed the carrying value of exploration and evaluation of assets at 31 December 2020 the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental Analysis

	2020	2019
	€	€
Limerick	1,600,424	1,537,931
Oldcastle	-	330,000
Rest of Ireland	1,773,064	1,577,779
	3,373,488	3,445,710

5.  Share Capital and Share Premium

	2020	2019
	€	€
Authorised:
500,000,000 Ordinary shares of €0.0025 each (2019: €0.01)	5,000,000	5,000,000
500,000,000 Deferred shares of €0.0075 each (2019:Nil)

Deferred Shares - nominal value of €0.0075

		Share	Share
	Number	Capital	Premium
		€	€
At 22 April 2020	132,311,593	992,337	-
31 December 2020	132,311,593	992,337	-

Ordinary Shares - nominal value of €0.0025 (2019: €0.01)

Allotted, Called-Up and Fully Paid:

		Share	Share
	Number	Capital	Premium
		€	€
At 1 January 2019	113,911,593	1,139,116	6,136,298
Issued during the financial year	18,400,000	184,000	72,892
At 31 December 2019	132,311,593	1,323,116	6,209,190
Transfer to deferred shares	-	(992,337)	-
Issued during the financial year	164,733,333	411,833	396,491
31 December 2020	297,044,926	742,612	6,605,681

Movement in shares

On 5 March 2019, a total of 18,400,000 shares were issued at a price of 1.25p per share to provide additional working capital and fund development costs.  For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 1.8p per share until 11 September 2020, refer to Note 7 below.

On 27 March 2020, a total of 50,400,000 shares were issued at a price of 0.5p per share to provide additional working capital and fund development costs.  For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 0.5p per share until 22 April 2022, refer to Note 7 below.

On 22 April 2020 the authorised shares of the Company were subdivided via special resolution in 500,000,000 deferred shares of 0.75 cent each and 500,000,000 ordinary shares of 0.25 cent each.

On 18 May 2020, a total of 33,333,333 shares were issued at a price of 0.75p per share to provide additional working capital and fund development costs. 

On 17 August 2020, a total of 75,000,000 shares were issued at a price of 0.8p per share to provide additional working capital and fund development costs.  For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 1.2p per share until 7 September 2022, refer to Note 7 below.

On 3 November 2020, a total of 4,000,000 shares were issued on the exercise of 4,000,000 warrants at a price of 0.5p per share to provide additional working capital and fund development costs. 

On 7 December 2020, a total of 2,000,000 shares were issued on the exercise of 2,000,000 warrants at a price of 0.5p per share to provide additional working capital and fund development costs.  

6.  Share Based Payments

Equity-settled share-based payments are measured at fair value at the date of grant.

The Group plan provides for a grant price equal to the average quoted market price of the ordinary shares on the date of grant. 

OPTIONS

	2020	2020	2019	2019
	Options	Weighted average exercise price in pence	Options	Weighted average exercise price in pence
Outstanding at beginning of the financial year	2,800,000	2.276	2,800,000	2.276
Granted during the financial year	10,300,000	0.93	-	-
Outstanding at the end of the financial year	13,100,000	1.22	2,800,000	2.276
Exercisable at the end of the financial year	13,100,000	1.22	2,800,000	2.276

On 19 May 2020 a total of 9,000,000 options with an exercise price of 0.95p per option were granted to the directors with a fair value of €71,156. The fair value was calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model were as follows:

Weighted average share price at date of grant (in pence)	0.95p
Weighted average exercise price (in pence)	0.95p
Expected volatility	83.98%
Expected life	7 years
Risk free rate	0.1%
Expected dividends	none

On 16 September 2020 a total of 1,300,000 options with an exercise price of 0.80p per option were granted to individuals who have performed services for the Group with a fair value of €11,054. The fair value was calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model were as follows:

Weighted average share price at date of grant (in pence)	1.0p
Weighted average exercise price (in pence)	0.80p
Expected volatility	84.75%
Expected life	7 years
Risk free rate	0.1%
Expected dividends	none

Expected volatility was determined by management based on their cumulative experience of the movement in share prices over the years.

The terms of the options granted do not contain any market conditions within the meaning of IFRS 2.

The Group capitalised expenses of €39,531 and expensed costs of €42,679 relating to equity-settled share-based payment transactions during the financial year.

7.  Warrants

Fair Value
	2020 €	2019 €
At 1 January	18,644	-
FV of warrants issued during the year at grant date	445,725	18,644
Movement in fair value	478,633	-
At 31 December	906,198	18,644

Number

	2020	2020	2019	2019
	Warrants	Weighted average exercise price in pence	Warrants	Weighted average exercise price in pence
Outstanding at beginning of the financial year	46,203,312	4.7	39,431,219	5.9
Granted during the financial year	125,400,000	1.4	18,400,000	1.8
Expired during the financial year	(46,203,312)	4.7	(11,627,607)	4.41
Exercised during the financial year	(6,000,000)	0.5	-	-
Outstanding and exercisable at the end of the financial year	119,400,000	1.4	46,203,312	4.7

On 27 March 2020 a total of 50,400,000 warrants with an exercise price of 0.5p per warrant were granted as part of the placing with a fair value of €160,396. On 31 December 2020 the fair value for the warrants were €414,200. The loss due to the movement in fair value of €253,805 was expensed to the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model as at 31 December 2020 were as follows:

Weighted average share price at 31 December 2020 (in pence)	1.18p
Weighted average exercise price (in pence)	0.50p
Expected volatility	106.185%
Expected life	1.25 years
Risk free rate	0.1%
Expected dividends	none

On 17 August 2020 a total of 75,000,000 warrants with an exercise price of 1.2p per warrant were granted as part of the placing with a fair value of €285,329. On 31 December 2020 the fair value for the warrants were €510,157. The loss due to the movement in fair value of €224,828 was expensed to the Consolidated Statement of Comprehensive Income. The fair value was calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model were as follows:

Weighted average share price at 31 December 2020 (in pence)	1.18p
Weighted average exercise price (in pence)	1.2p
Expected volatility	105.23%
Expected life	1.6 years
Risk free rate	0.1%
Expected dividends	none

On 8 March 2020, a total of 27,803,312 warrants at a price of 7p per warrant expired. On 11 September 2020, a total of 18,400,000 warrants at a price of 1.8p, with a fair value of €18,644 expired.

During November and December 2020, a total of 6,000,000 warrants with a fair value of €18,160 were exercised at a price of 0.5p per warrant.

8.  Post Balance Sheet Events

There are no material post balance sheet events affecting the Group.  

9.  Annual General Meeting

The Company's Annual General Meeting will be held at held at the Hotel Riu Plaza The Gresham, 23 O'Connell Street Upper, North City Dublin, D01 C3W7, Ireland on 27 July 2021 at 12.30pm (the "AGM").

We are closely monitoring the Coronavirus (COVID-19) situation. The Board takes its responsibility to safeguard the health of its shareholders, stakeholders and employees very seriously and so certain measures will be put in place for the AGM in response to the COVID-19 pandemic. Details of these measures will be provided in a letter that will be attached to the Notice of AGM.

General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2020.  The financial information for 2019 is derived from the financial statements for 2019 which have been delivered to the Companies Registration Office.  The auditors have reported on 2019 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, investment in subsidiaries and amounts due by group undertakings.  The financial statements for 2020 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2020 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.  The annual report will shortly be available for viewing at Arkle's website at www.arkleresources.com

 

END

 

 

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