Annual Financial Report

RNS Number : 9779Q

Eastinco Mining and Exploration PLC

01 July 2022

 

01 July 2022

Eastinco Mining and Exploration plc

("EME" or the "Company")

Final results for the year ended 31 December 2021

Eastinco Mining and Exploration plc (AQSE: EM.P) announces its full year results for the year ended 31 December 2021.

Chairman's Statement

2021 was an encouraging year for the Company, as we continued to advance toward our goal of becoming an ethical, integrated exploration, development, and trading company across multiple mineral assets and jurisdictions. 

During this reporting period, we benefitted greatly from having independent experts on the Musasa mine, supported by external laboratory analysis, to evaluate and provide specialist metallurgical analysis and engineering on the wash plant. In December 2021, we signed a Metallurgical and Services Agreement with Quiver Limited, a heavy mineral separation and processing consultancy. Quiver is providing a Process Manager based on-site to control and manage daily operations and a metallurgical consultant to develop short and long-term process improvements and associated plant upgrade strategies to increase and optimise plant production, with further material testing and analysis at approved laboratories. The addition of Quiver has been instrumental in achieving a better understanding of the metallurgy of the Musasa Deposit and how to achieve optimum recoveries from the existing wash plant infrastructure.

We successfully concluded an additional joint venture agreement with HCK Mining Company Limited over an exciting new exploration play in southern Rwanda, which we are hopeful shall deliver positive near-term results. We have expanded the number of potentially mineralised zones for further evaluation work on this project (from two known occurrences when signing the joint venture to 18 targets after preliminary prospecting by the Company). An independent geologists' report for the area concluded that our licences in the south may prove to represent a significant new tantalum-bearing pegmatite field in Rwanda. We look forward to demonstrating this and developing the strategic and local stakeholder relationships to fully develop this asset.

During the period we suffered from what we hope to be the last COVID-related operational delays affecting the commissioning of the Musasa Mine wash plant in Rwanda.

Morocco Acquisition - Aterian Resources

On the 22^nd of November 2021, the Company signed a SPA to acquire 100% of the share capital of Aterian Resources Limited, a 100% owned indirect subsidiary of AIM and TSX-listed Altus Strategies Plc ("Altus"). Upon the successful completion of the acquisition, which is conditional upon the Company listing on the LSE, Altus will become a significant beneficiary shareholder. This proposed transaction transforms the Company into a multi-jurisdiction, multi-commodity, critical and strategic metals exploration and development company; and, we are excited to have Altus become a key shareholder.

The rationale for this acquisition is to acquire assets that will fit into our strategy of focusing on critical and strategic metals. Currently, the renewable energy, automotive and electronic manufacturing sectors are driving the requirement to develop secure supply chains of these key critical and strategic minerals. The exploration conducted to date by Altus on the Moroccan assets highlights the strong potential for the discovery of strategic metals deposits, in particular copper and silver. We firmly believe the market fundamentals for copper are excellent and specifically linked to the anticipated growing demand for renewable energy and the related electrification of transportation globally. We are keen to invest in Morocco to demonstrate the potential of our assets there. Importantly, the proposed listing on the LSE will provide us with exposure to a broader investor profile and greater liquidity in our shares, providing a more solid platform to support the Company's continued growth.

Financial Review

During the period under review the Group made a loss before taxation of £1,418 (2021: loss £466,687).

Post Balance Sheet Events

The Company will, upon completion of the acquisition of Aterian Resources, the Altus' Moroccan business, change its name to Aterian plc. The new name reflects the broad and important shift from a single asset to a multi-jurisdictional, multi-asset mining exploration and trading company with a pan-African focus. As part of the acquisition, the Company will appoint Mr Alister Masterton-Hume, the Chief Investment Officer of Altus, to the Board of Directors.

In line with our growth plans, the Board announced the appointment of Mr Kasra Pezeshki, the Chief Investment Officer of Britishvolt, to the Board of Directors. The appointment will take place immediately on the Company's admission to the Standard Segment of the LSE. Mr Pezeshki has over 17 years of experience in investment banking, structured finance, and private equity at institutions such as UBP, Morgan Stanley, Adveq, Bank of America and Enveq in London, New York, Geneva, and Zurich. He brings C-suite experience and a global network and perspective to the Board.

The Company will produce a prospectus (to be available on the Company's website) related to the proposed listing on the London Stock Exchange. Additionally, to support the costs associated with the listing and for working capital purposes, the Company has raised £519,567 of new funds through the placement of equity at 1p (GB pence) per share. The Company also secured a £500,000 working capital facility from a related party lender related to the Chairman of Eastinco, Mr Charles Bray.

Previously, in December 2020, our 100% owned Rwandan subsidiary, Eastinco Limited, was granted a Trading Licence by the Rwanda Mines, Petroleum and Gas Board (RMB), allowing the Company to purchase and sell metal ore from our production, as well as third-party producers. With the Musasa operation nearing production, we have decided to activate the Trading Licence and, in May 2022, initiated the process to gain membership to iTSCI, the responsible supply chain initiative that monitors the production and sale of metals in Central Africa. The focus initially is on the trading of coltan concentrate (tantalum), however, we shall seek to develop our trading expertise across the major minerals being mined and traded throughout the Great Lakes region. Ultimately, the decarbonisation of the global economy will boost demand across multiple mineral assets, including nickel, tungsten, tin, and copper. We intend to offer clients a verified ESG compliant product with material sourced solely from responsibly managed and certified mine and processing sites. Given the dominant role played by artisanal small-scale mining (ASM) entities across the region, it is vital to work closely with those who hold responsible supply chain certification and are demonstrably ESG compliant, ensuring the supply of responsibly sourced products.

COVID-19 Statement

The COVID pandemic continued to intermittently disrupt the Company's operations in Rwanda during 2021, with the Office of the Prime Minister imposing strict lockdown measures, including the restriction of movement across district boundaries and closing of the airport and international land borders. These measures were eased in late Q4, but some restrictions remain in place. The safety and well-being of EME's employees remain the highest priority for the Company, with the management of EME continuing to actively monitor the situation and the local government guidance being issued.

Strategic shift

EME is a critical and strategic metal focused exploration and development company focused on African metal resource investment opportunities. Our objective is to create and build an integrated critical and strategic mineral exploration, development and trading company to meet the expected shortfall in the supply of "green" metals required to satisfy the global demand for renewable energy sources and decarbonisation targets. We will continue to review and evaluate new strategic opportunities that would support us in meeting this objective. 

Director Changes

Mr Mike Staten resigned as an Executive Director on the 1^st of February 2021, and Mr Simon Rollason officially joined the Board of Directors as a Director on the 14^th of June 2021. Mr Rollason was previously announced as the Company CEO on the 30^th of October 2020.

Outlook

The Company is at a critical juncture with the acquisition of a portfolio of critical and strategic assets in Morocco and the expansion of the Rwandan portfolio. Market fundamentals remain strong for the Group, and the wash plant commissioning, once operational, will contribute to funding exploration efforts. I remain firmly optimistic about the Company's prospects going forward. We have gained very valuable processing experience over the past two years and look forward to putting this experience to good use on our new projects in Southern Rwanda, where we work to evaluate and define the various targets on the licence. Furthermore, the launch of our trading operations will allow us to develop critical  relationships to drive product trading and sales with other ESG conscious and compliant.

On behalf of the Company, I would like to take this opportunity to once again thank my fellow Board members, employees, and our shareholders for their continued support and patience.

Charles G Bray

Director

30 June 2022

This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended).

The Directors take responsibility for this announcement.

Enquiries:

For further information, please visit the company website www.eastinco.com or contact:

Eastinco Mining & Exploration Plc:

Charles Bray, Executive Chairman - [e-mail]

Simon Rollason, Director - [e-mail]

AQSE Growth Market Corporate Adviser:

Novum Securities Limited

David Coffman / Lucy Bowden

Tel: [phone]

Financial PR:
Yellow Jersey PR - [e-mail]
Tom Randell / Henry Wilkinson / Laurie Gellhorn
Tel: [phone]

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED 31 DECEMBER 2021

		Group
	Notes	Year to	Year to
		31-Dec-21	31-Dec-20
		£ '000	£ '000
Other revenue		-	44
Administrative expenses	4	(1,020)	(308)
Share based payments	17	(267)	-
Provision for impairment of ECL		(64)	-
Total operating loss		(1,351)	(264)
Interest payable and similar charges	5	(18)	(17)
Loss before tax		(1,369)	(281)
Income tax expense		-	-
Loss after tax		(1,369)	(281)
Other comprehensive loss		-	-
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations		28	(186)
Total comprehensive loss		(1,341)	(467)
Loss per share
Basic and Diluted  loss per share (pence)		(0.31)	(0.07)

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

		Group			Company
	Notes	31-Dec-21	31-Dec-20		31-Dec-21	31-Dec-20
		£'000	£'000		£'000	£'000
Non-current assets
Investment	8	-	-		2,261	2,261
Goodwill	9	2,168	2,168		-	-
Trade and other receivables	11	-	-		1,703	1,383
Property, plant and equipment	10	1,226	1,038		-	-
Total non-current assets		3,394	3,206		3,964	3,644
Current assets
Trade and other receivables	11	188	394		143	316
Cash and cash equivalents	12	196	52		190	49
Total current assets		384	446		333	365
Total assets		3,778	3,652		4,297	4,009
Equity and liabilities
Share capital	16	5,671	4,301		5,671	4,301
Share premium	16	2,144	2,144		2,144	2,144
Share based compensation reserve		1,615	1,348		1,615	1,348
Interest in shares in EBT		(395)	(133)		(395)	(133)
Translation reserve		(263)	(291)		-	-
Accumulated losses		(6,629)	(5,326)		(6,373)	(5,221)
Other reserves		80	80		58	80
Merger relief reserve		1,200	1,200		1,200	1,200
Total equity		3,423	3,323		3,920	3,719
Current liabilities
Trade and other payables	13	197	110		219	71
Total current liabilities		197	110		219	71
Non-current liabilities
Loan notes	14	158	219		158	219
Total non-current liabilities		158	219		158	219
Total Equity and liabilities		3,778	3,652		4,297	4,009

The company made a loss for the year of £1,152,000 (2020 - loss of £92,000).

These financial statements were approved by the Board and were authorised for issue on 30 June 2022 and signed on their behalf by

Charles G Bray   Simon Rollason

Chairman  Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2021

Group

	Share  capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Translation reserve	Other Reserve	Merger relief reserve	Accum- ulated losses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	3,613	1,835	1,348	(133)	(105)	97	1,200	(5,062)	2,793
Loss for the year	-	-	-	-	-	-	-	(281)	(281)
Other comprehensive loss	-	-	-	-	(186)	-	-		(186)
	3,613	1,835	1,348	(133)	(291)	97	1,200	(5,343)	2,326
Other reserve	-	-	-	-	-	(17)	-	17	-
Exercise of warrants	618	309	-	-	-		-	-	927
Issue of new shares	70	-	-	-	-		-	-	70
At 31 December 2020	4,301	2,144	1,348	(133)	(291)	80	1,200	(5,326)	3,323
At 1 January 2021	4,301	2,144	1,348	(133)	(291)	80	1,200	(5,326)	3,323
Loss for the year	-	-	-	-	-	-	-	(1,447)	(1,173)
Other comprehensive loss	-	-	-	-	(28)	-	-	-	28
	4,301	2,144	1,348	(133)	(263)	80	1,200	(6,773)	1,904
Other reserve	-	-	-	-	-	-		144	144
Share based compensation	-	-	267	(262)	-	-	-	-	5
Convertible loan notes issue	850	-	-	-	-	-	-		850
Issue of new shares	520	-	-	-	-		-	-	520
At 31 December 2021	5,671	2,144	1,615	(395)	(263)	80	1,200	(6,629)	3,423

COMPANY STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2021

	Share  capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Other Reserve	Merger relief reserve	Accum- ulated losses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	3,613	1,835	1,348	(133)	97	1,200	(5,146)	2,814
Loss for the year	-	-	-	-	-	-	(92)	(92)
	3,613	1,835	1,348	(133)	97	1,200	(5,238)	2,722
Transfer from other reserve to accumulated losses				-	(17)	-	17	-
Exercise of warrants	618	309	-	-	-	-	-	927
Issue of new shares	70	-	-	-	-	-	-	70
At 31 December 2020	4,301	2,144	1,348	(133)	80	1,200	(5,221)	3,719
At 1 January 2021	4,301	2,144	1,348	(133)	80	1,200	(5,221)	3,719
Loss for the year	-	-	-	-	-	-	(1,152)	(1,152)
	4,301	2,144	1,348	(133)	80	1,200	(6,373)	2,567
Other Reserve	-	-	-	-	(22)	-	-	(22)
Transfer from other reserve to accumulated losses	-	-	-	-	-	-	-	-
Share based compensation	-	-	267	(262)	-	-	-	5
Convertible loan notes issue	850	-	-	-	-	-	-	850
Issue of new shares	520	-	-	-	-	-	-	520
At 31 December 2021	5,671	2,144	1,615	(395)	58	1,200	(6,373	3,920

Reserves	Description and purpose
Share capital	Nominal value of the contributions made by shareholders in return for the issue of shares.
Share premium	Amount subscribed for share capital in excess of nominal value.
Share-based compensation reserve	Cumulative  fair  value  of the charge/(credit) in respect of share  options  granted  and recognised as an expense in the Income Statement.
Translation reserve	The translation reserve comprises translation differences arising from the translation of financial statements of the Group's foreign entities into Sterling (£).
Other reserves	The other reserve comprises differences arising from the discounting of loan notes.
Merger relief reserve	The merger relief reserve comprises differences between the fair value and at par value of shares issued for the acquisition of subsidiary
Interest  in  shares in  Employees Benefit Trust (EBT)	The Company set up an Employees Benefit Trust on 6 March 2015 (the Equatorial EBT) for the benefit of its employees.  The cost of shares held by the EBT that are presented as a deduction from entity.
Accumulated losses	Accumulated losses represents total losses.

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS YEAR ENDED 31 DECEMBER 2021

	Group			Company
	31-Dec-21	31-Dec-20		31-Dec-21	31-Dec-20
	£'000	£'000		£'000	£'000
Cash flow from operating activities
Loss before tax	(1,369)	(281)		(1,151)	(93)
Adjustments for:
Depreciation	2	23		-	-
Share based expense	267	-		267	-
Interest expense	18	17		18	17
Inter-company Interest income	-	-		(224)	(163)
Provisions against ECL	64	-		64	-
Foreign exchange gains	(28)	(74)		-	-
Operating profit/(loss) before working capital changes	(1,047)	(315)		(1,027)	(239)
Changes in working capital:
Decrease/(increase) in trade & other receivables	338	(129)		381	(82)
Decrease/(increase) in trade & other payables	(490)	(84)		(294)	59
Net cash outflows from operating activities	(1,199)	(528)		(940)	(262)
Cash flow from investing activities
Purchase of exploration and evaluation assets	(239)	(431)		-	-
Funds advanced to subsidiary	(5)	-		(5)	(688)
Net cash used in investing activities	(243)	(431)		(270)	(688)
Cash flow from financing activities
Net proceeds from borrowings	567	-		567	-
Amounts advanced from parent	500	-		-	-
Net proceeds from issue of shares	520	767		520	767
Net cash flow from financing activities	1,586	767		1,086	767
Net increase/(decrease) in cash & cash equivalents	144	(192)		141	(183)
Cash & cash equivalents at beginning of the year	52	246		49	232
Effect of exchange rate movements on cash	--	(2)		-	-
Cash & cash equivalents at end of the year	196	52		190	49

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021

The financial information set out below does not constitute the Group's statutory accounts for the year ended 31 December 2021 but is derived from those accounts.

1.  The financial information has been extracted from the statutory accounts of Eastinco Mining and Exploration Plc and is presented using the same accounting policies, which have not yet been filed with the Registrar of companies, but on which the auditors,  MHA MacIntyre Hudson , gave an unqualified report on 20 June 2022. The audit report included the following modification:-

Material uncertainty related to going concern

We draw attention to note 2 in the financial statements which states that the Group and Parent Company's operational existence is reliant on the ability to raise further funding through equity placing or through the support of the directors through an injection of capital. The impact of this together with other matters, indicate that a material uncertainty exists that may cast significant doubt on their ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and Parent Company's ability to continue to adopt the going concern basis of accounting included:

The consideration of inherent risks to the Group's operations and specifically its business model.

The evaluation of how those risks might impact on the Group's available financial resources.

Where additional resources may be required the reasonableness and practicality of the assumptions made by the Directors when assessing the probability and likelihood of those resources becoming available.

Liquidity considerations including examination of cash flow projections.

Solvency considerations including examination of budgets and forecasts and their basis of preparation, including review and assessment of the model's mechanical accuracy and the reasonableness of assumptions included within.

Held discussions with management regarding their future plans and strategies to begin operating in the future.

We have performed sensitivity analysis on management's forecasts to determine if this has a material impact on the Group's ability to continue as a going concern.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

2.  Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

	2021	2020
Earnings	£'000	£'000
Loss from continuing operations for the year attributable to the equity holders of the Company	(1,369)	(281)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share
	488,692,170	393,879,187
Basic and diluted earnings per share (pence)	(0.28)	(0.07)

The potential number of shares which could be issued following the exercise of options and warrants currently outstanding amounts to 19.2 Billion (see note 17). Dilutive earnings per share equals basic earnings per share as, due to the losses incurred, there is no dilutive effect from the existing share options and warrants.

3.  Prior Year Adjustment

The Group's 2020 figures have been restated as Eastinco Ltd has accounted for ECL provision related to year 2020 in the year 2021 for £ 47,566. The effect of the prior year adjustment can be seen in the Statement of Comprehensive Income and the Consolidated Statement of Financial Position.

Impact of restatement on-

Consolidated statement of comprehensive income-

following restatement Losses for the year 2021 increased to £ 1,341,000 from £ 1,293,000.

Consolidated statement of financial position-

following restatement Total current liabilities as at 31.12.2021 increased from £150,000 to £ 197,000.

Notes to Editors:

About Eastinco Mining and Exploration plc

www.eastinco.com

Eastinco Mining and Exploration plc is an exploration and development company developing its portfolio of African focused critical and strategic metal assets, listed on the AQUIS Market in London.

We are actively seeking to acquire and develop new critical and strategic metal resources to strengthen our existing asset base, whilst supporting ethical and sustainable supply chains. The supply of these metals is vital for the development of the renewable energy, automotive and electronic manufacturing sectors that are playing an increasing role in reducing carbon emissions and meeting climate ambitions globally.

In 2019, we acquired Eastinco Limited, our Rwandan based subsidiary exploration, development, and trading company. We currently have three joint ventures in Rwanda where we are exploring for and are developing small-scale tantalum-niobium-tin mining operations.

 

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