Interim Statement

RNS Number : 0533B

Arkle Resources PLC

29 September 2022

 

29 September 2022

Arkle Resources PLC

("Arkle" or the "Company")

Interim Statement for the period ended 30 June 2022

Chairman's Statement

The principal activities of Arkle in recent months have been on our Irish zinc holdings, where drilling is ongoing and on our Wicklow / Wexford gold licences. Action on our gold licences has been mainly focused on a review of recent drilling results. After an extended delay the licence covering our main gold prospect in Donegal was renewed.

The Environmental Targets for 2030 and 2050 cannot be reached without massive and substantial investment in both mineral and hydrocarbon resources. That is reality. Every EV, every windmill requires metals. In the case of windmills, an offshore windmill needs 1,650 tons of metals. Every EV requires metals for the body and scarce Battery Group Metals for propulsion. There are huge and growing gaps on projected demand against supplies. Since most mines have short lives finding new sources of metals is a condition precedent for Environmental Targets. This means exploration. This in turn requires investors willing to put up risk capital. Without discoveries there can be no new mines. That is a blinding glimpse at the obvious but is not recognised. Private investors have deserted explorers and institutions have backed off funding development.

Lithium, copper graphite and nickel are vital to the green economy, yet exploration is hard to fund. 

Gold, as you would expect in an uncertain world, remains in demand, but here again there is a dearth of early-stage exploration funding.

The lack of London investor interest in Irish exploration assets led the board to examine potential projects overseas. We focused on geographic areas where we have experience, Africa, and on minerals where we have knowledge, gold, base metals and, importantly, Battery Group Metals, in particular lithium. On our board and in the wider shareholder group there is a substantial body of knowledge relating to lithium. We made a tentative entrance into this area with the acquisition of three small areas in Zimbabwe, one of the largest lithium producers in the world. We continue to evaluate other opportunities.

Zinc

Recent months have seen the start of a six hole drilling programme on our Stonepark licence block (owned 23.44% by Arkle and 76.56% by Group Eleven Resources Corp.). A seventh, deeper hole has been added to the programme. The northern most licence of the six blocks holding contains 5.1 million tonnes of 11.3% combined lead and zinc. Most of the block remains unexplored. The six hole programme is designed to test new areas. The first three holes have been completed. One G-11-2531-01 was a 642 metre hole which discovered a 150 metre vertical displacement of the fault. Hole G-11-450-03, 3.7km away intersected a thick package of extensive brecciation and pyrite. The results may point to a large and compelling zinc target to the North of this hole. An additional hole to test this target will be drilled following the completion of the current three hole programme.

The third hole drilled to the West of the Stonepark discovery encountered a number of low grade zinc intervals. Drilling has commenced on the remaining three shallow holes which will test targets close to the existing discovery.

The six hole programme is paid for. The additional hole which could be as deep as 1,100 metres will cost in excess of €120,000. Arkle has indicated that it will participate in this hole. 

Gold

Arkle holds five prospecting licences in Wicklow / Wexford and two in Donegal.

In 2021 extensive surveys were followed by a 12 hole drilling programme on our Wicklow / Wexford ground. Some high grade results were found but the extreme "nuggety" nature of the gold made detailed analyses difficult. The conclusion was that the Tombreen target was larger than previously anticipated with visible gold identified along a 1.5km strike and 7km width. It is likely that this gold extends from the Tombeen licence into the adjacent Knocknalour licence.

It was decided to do a full review and modelling exercise of all current and historic data and drillcore on the five licences. The organisation due to undertake this exercise has not been in a position to complete it due to equipment issues.

Arkle holds two licences in Donegal. Significant gold indications have been discovered on the Meeneragh licence. It was planned to begin a drilling programme in summer 2022 but a long delay in renewing the licence meant that the weather window had shortened and this is now deferred until 2023.

New Opportunities

Lack of investor interest in Irish zinc and gold exploration combined with a growing anti-mining sentiment in certain parts of the Irish government led the board to consider opportunities outside of Ireland.

We focused on minerals and areas where we have some competence in particular gold, base metals and lithium in Africa. The search has been slow to gather momentum but is now making progress.

We put our toe into the water with the acquisition of three licences containing lithium type rocks in Zimbabwe. We have identified more ground but we are moving slowly. A number of gold projects have been and are being examined but as yet, we have seen none we deem worth pursuing. Base metals in sub-Saharan Africa offer interesting possibilities but the main focus is lithium, cobalt and platinum group minerals.

Future

Ireland has been the sole focus of Arkle activities. For two generations the Irish structure for exploration has been the envy of the world, certainty of title, a clear and quick path to obtaining and renewing of licences, fair taxation, no state equity involvement and good infrastructure. However, there is concern that changing Irish State attitudes will hamper and dampen the efforts of a small and declining group of explorers in Ireland.

What is absolutely certain is a growing shortage of critical metals. This can only mean higher prices. Investors willing to take the risks involved may be handsomely rewarded if prospects can be turned into mines.

John Teeling

Chairman

28 September 2022

Market Abuse Regulation (MAR) Disclosure

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.

Enquiries:

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

Arkle Resources plc
Financial Information (Unaudited)
	Six Months Ended				Year Ended
	30 Jun 22		30 Jun 21		31 Dec 21
	unaudited		unaudited		audited
Condensed Consolidated Statement of Comprehensive Income	€'000		€'000		€'000
Administrative expenses	(139)		(148)		(320)
	-		-		-
OPERATING LOSS	(139)		(148)		(320)
Profit/(Loss) due to fair value volatility of warrants	160		185		746
PROFIT BEFORE TAXATION	21		37		426
Income tax expense	-		-		-
PROFIT FOR THE PERIOD AND TOTAL COMPREHENSIVE INCOME	21		37		426
PROFIT PER SHARE - basic and diluted	0.01c		0.01c		0.14c
Condensed Consolidated Statement of Financial Position
	30 Jun 22		30 Jun 21		31 Dec 21
	unaudited		unaudited		audited
	€'000		€'000		€'000
NON-CURRENT ASSETS
Intangible Assets	3,949		3,514		3,831
CURRENT ASSETS
Other receivables	24		61		32
Cash and cash equivalents	120		571		80
	144		632		112
TOTAL ASSETS	4,093		4,146		3,943
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	(287)		(294)		(234)
Warrants	-		(653)		(160)
	(287)		(947)		(394)
NET CURRENT LIABILITIES	(143)		(315)		(282)
NET ASSETS	3,806		3,199		3,549
EQUITY
Share Capital - Deferred Shares	992		992		992
Share Capital - Ordinary Shares	864		765		765
Share Premium	6,817		6,680		6,680
Share based payments reserve	156		127		156
Retained deficit	(5,023)		(5,365)		(5,044)
TOTAL EQUITY	3,806		3,199		3,549

Condensed Consolidated Statement of Changes in Shareholders Equity
	Called-up	Called-up
	Share	Share				Share
	Capital	Capital		Share		Based		Retained
	Deferred	Ordinary		Premium		Reserves		Deficit		Total
	€'000	€'000		€'000		€'000		€'000		€'000
As at 1 January 2021	992	742		6,606		127		(5,470)		2,997
Shares issued	-	23		74		-		-		97
Fair value of warrants exercised	-	-		-		-		68		68
Profit for the period	-	-		-		-		37		37
As at 30 June 2021	992	765		6,680		127		(5,365)		3,199
Share options granted	-	-		-		29		-		29
Profit for the period	-	-		-		-		321		321
As at 31 December 2021	992	765		6,680		156		(5,044)		3,549
Shares issued	-	99		137		-		-		236
Profit for the period	-	-		-		-		21		21
As at 30 June 2022	992	864		6,817		156		(5,023)		3,806

Condensed Consolidated Cash Flow	Six Months Ended				Year Ended
	30 Jun 22		30 Jun 21		31 Dec 21
	unaudited		unaudited		audited
	€'000		€'000		€'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year	21		37		426
Share based payments charge	-		-		29
Fair value movement of warrants	(160)		(185)		(746)
Foreign exchange	7		(27)		(25)
	(132)		(175)		(316)
Movements in working capital	61		78		47
NET CASH USED IN OPERATING ACTIVITIES	(71)		(97)		(269)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation	(118)		(141)		(458)
NET CASH USED IN INVESTING ACTIVITIES	(118)		(141)		(458)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	236		97		97
NET CASH FROM FINANCING ACTIVITIES	236		97		97
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	47		(141)		(630)
Cash and Cash Equivalents at beginning of the period	80		685		685
Effects of exchange rate changes on cash held in foreign currencies	(7)		27		25
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	120		571		80

Notes:

1.  INFORMATION

The financial information for the six months ended 30 June 2022 and the comparative amounts for the six months ended 30 June 2021 are unaudited.

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have been prepared applying the accounting policies and methods of computation used in the preparation of the published consolidated financial statements for the year ended 31 December 2021.

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2021, which are available on the Company's website www.arkleresources.com  

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2.  No dividend is proposed in respect of the period.

3.  EARNINGS PER SHARE

Basic earnings per share is computed by dividing the profit after taxation for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the profit after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following table sets out the computation for basic and diluted earnings per share (EPS):

	30 June 22		30 June 21		31 Dec 21
	€		€		€
Profit per share - Basic and Diluted	0.01c		0.01c		0.14c
Basic profit per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
	€'000		€'000		€'000
Profit for the year attributable to equity holders	21		37		426
Denominator	Number		Number		Number
For basic and diluted EPS	330,296,947		305,051,947		220,039,097

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

4.  INTANGIBLE ASSETS

	30 June 22		30 June 21		31 Dec 21
Exploration and evaluation assets:	€'000		€'000		€'000
Cost at 1 January	3,831		3,373		3,373
Additions	118		141		458
Closing Balance	3,949		3,514		3,831

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 30 June 2022 was owned 23.44% (2021: 23.44%) by Limerick Zinc Limited (subsidiary of Arkle Resources plc) and 76.56% (2021: 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 an d 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.

On 23 June 2022 the Company announced that they been granted three licences covering 163 hectres to prospect for Lithium in the Insiza District of the Matabeleland South Province of Zimbabwe. The directors believe that these licences, which cover a small area, represent a low-cost entry into one of the largest lithium producing countries in the world.

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. Should this prove unsuccessful the carrying value included in the balance sheet would be written off to the statement of comprehensive income.

  The group's activities are subject to a number of significant potential risks including;

  - Uncertainties over development and operational risks;

  - Compliance with licence obligations;

  - Ability to raise finance to develop assets;

  - 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 30 June 2022, the directors are satisfied that the value of the intangible asset is not less than carrying value.

	30 June 22		30 June 21		31 Dec 21
Segmental Analysis	€'000		€'000		€'000
Limerick	1,698		1,600		1,600
Rest of Ireland	2,243		1,914		2,231
Zimbabwe	8		-		-
Closing Balance	3,949		3,514		3,831

5.  SHARE CAPITAL AND SHARE PREMIUM

			2022 €'000		2021 €'000
Authorised
1,000,000,000 Ordinary shares of 0.25c each			2,500		2,500
500,000,000 Deferred shares of 0.75c each			3,750		3,750
			6,250		6,250
	Number		Share Capital €'000		Share Premium €'000
Deferred Shares - nominal value of 0.75c	132,311,593		992		-
Ordinary Shares - nominal value of 0.25c	Number		Share Capital €'000		Share Premium €'000
Allotted, Called Up and Fully Paid:
Balance at 1 January 2021	297,044,926		742		6,606
Issued during the period	8,937,500		23		74
Balance at 30 June 2021	305,982,426		765		6,680
Issued during the period	-		-		-
Balance at 31 December 2021	305,982,426		765		6,680
Issued during the period	39,400,000		99		137
Balance at 30 June 2022	345,382,426		864		6,817

  Movement in shares

On 19 January 2021 a total of 8,937,500 shares were issued on the exercise of 8,937,500 warrants at a price of 0.5p and 1.2p per share to provide additional working capital and fund development costs.

On 22 February 2022 a total of 30,080,000 shares were issued on the exercise of 30,080,000 warrants at a price of 0.5p per share to provide additional working capital and fund development costs.

On 28 April 2022 a total of 9,320,000 shares were issued on the exercise of 9,320,000 warrants at a price of 0.5p per share to provide additional working capital and fund development costs.

6.  SHARE BASED PAYMENTS - OPTIONS

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.

	30 Jun 22	Weighted average exercise price in pence	30 Jun21	Weighted average exercise price in pence	31 Dec 21	Weighted average exercise price in pence
	'000		'000		'000
Outstanding at beginning of period	16,100	1.32	13,100	1.22	13,100	1.22
Granted during the period	-		-	-	3,000	1.80
Expired during the period	-		-	-	-	-
Outstanding at end of period	16,100	1.32	13,100	1.22	16,100	1.32
Exercisable at end of period	16,100	1.32	13,100	1.22	16,100	1.32

7.  SHARE BASED PAYMENTS - WARRANTS

  Fair Value

	30 June 22		30 June 21		31 Dec 21
	€'000		€'000		€'000
At 1 January	160		906		906
Expired	(4)		-		-
Exercised	(72)		(68)		(68)
Movement in fair value	(84)		(185)		(678)
Closing Balance	-		653		160

Number

	30 June 22		30 June 21		31 Dec 21
	'000		'000		'000
Outstanding at beginning of period	110,463		119,400		119,400
Granted during the period	-		-		-
Exercised during the period	(39,400)		(8,937)		(8,937)
Expired during the period	(2,000)		-		-
Closing Balance	69,063		110,463		110,463

On 1 January 2022 a total of 41,400,000 warrants with an exercise price of 0.5p per warrant were outstanding. During the period a total of 39,400,000 warrants with a fair value of €72,193 were exercised. The balance of the 2,000,000 warrants with a fair value of €3,664 expired in April 2022. The movement in fair value of €75,857 was expensed to the Consolidated Statement of Comprehensive Income. 

On 1 January 2022 a total of 69,062,500 warrants with an exercise price of 1.2p per warrant and a fair value of €83,814 were outstanding. These warrants have an expiry date of 7 September 2022. The movement in fair value of €83,814 was expensed to the Consolidated Statement of Comprehensive Income.

8.  POST BALANCE SHEET EVENTS

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

9.  The Interim Report for the six months to 30 June 2022 was approved by the Directors on 28 September 2022.

10.  The Interim Report will be available on Arkle Resources PLC's website www.arkleresources.com

 

END

 

 

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