Annual Financial Report and Notice of AGM

RNS Number : 3480O

Phoenix Global Mining Ltd

17 May 2018

 

Phoenix Global Mining Ltd / Ticker: AIM:PGM / Sector: Mining

17 May 2018

Phoenix Global Mining Ltd ('Phoenix' or the 'Company')

Final Audited Results for the year ended 31 December 2017 and Notice of AGM

Phoenix Global Mining Ltd (LSE AIM: PGM), the AIM quoted, North American-focused base and precious metals exploration and development company, is pleased to announce its audited results for the year ended 31 December 2017.

Highlights

·     Listed on AIM in June 2017 raising £4.6 million

·     Acquired 80% of Konnex Resources, owner of the past-producing Empire copper mine

·     51% increase in Empire open pit mineral resource

·     33% increase in Empire open pit contained copper

·     Zinc, gold and silver added to the open pit resource

·     Preliminary economic assessment on Empire open pit completed

·     16% increase in target copper production

·     Acquired two cobalt properties on the Idaho Cobalt Belt

·     Option to acquire 80% of the high grade Gordon Lake gold project in NWT, Canada

The Company also announces that the Company's Annual General Meeting ("AGM") will be held at the Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE on 11 June 2018 at 11:00am.

The Notice of AGM and Forms of Proxy will today be dispatched to shareholders and will be available on the website at www.pgmining.com

The Company's annual report and accounts for the year ended 31 December 2017 are also now available on the website.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

For further information please visit www.pgmining.com or contact:

Phoenix Global Mining Ltd	Dennis Thomas / Richard Wilkins	Tel: [phone] (Dennis) /  [phone] (Richard)
SP Angel (Nominated Advisor)	Lindsay Mair / Caroline Rowe	Tel: [phone]
Brandon Hill Capital (Broker)	Jonathan Evans / Oliver Stansfield	Tel: [phone]

Notes

Phoenix Global Mining Ltd (AIM: PGM) is a North American-focused, base and precious metal explorer and developer, which is fast-tracking the historically-producing Empire Mine in Idaho, USA, back into production and exploring for cobalt in Idaho and gold in Canada.

Having established an initial copper oxide JORC and NI 43-101 resource of 19.4 mt grading 0.47% copper ('Cu') for 90,547t contained Cu, plus zinc, gold and silver, Phoenix has defined a two-phase development strategy.  Phase One is focused on commencing low cost, open pit production from the current oxide resource, targeting 8,000t copper cathode per annum.  Stage Two will look to extend the life of mine by targeting the deeper (below c.120m), higher grade copper sulphides, where intercepts of up to 11.4% Cu have been recovered.  Preliminary Economic Analysis work on the priority open pit oxide resource is already underway.  It is estimated that only 5% of the potential ore system has been explored to date and accordingly there is significant opportunity to increase the resource through phased exploration; the current resource relates to the oxide resource only, which remains open along strike and does not include the deeper, higher grade sulphides.  Phoenix owns 80% of Empire.

The Company also holds 100% of the Bighorn and Redcastle cobalt-copper properties in Idaho, USA, which are located north of the Empire Mine on the Idaho Cobalt Belt.  These are situated close to the town of Cobalt and are close to projects being advanced by Canadian junior miners, including eCobalt Solutions and US Cobalt.  Exploration will continue during 2018 to identify drilling targets.

The Company has also acquired an exclusive option to earn into 80% of the Gordon Lake Project, in the Northwest Territories, Canada, a high-grade shear hosted gold project comprising of 17 known mineralised zones of which only four have been tested with 59 diamond drill holes.  The Company will proceed to examine the optimal way forward to develop the project as a low-cost underground gold producer.

With a management team that has successfully constructed, commissioned and operated mines and low risk, mining-friendly jurisdictions with excellent infrastructure, Phoenix is looking to fulfil its ambitions to become a mid-tier base and precious metals producing company, offering exposure to three high value and high demand metals with compelling demand/supply fundamentals.

CHAIRMAN'S STATEMENT

Dear Shareholders

I am delighted to be writing to you at the end of our first year as a listed company.

During the IPO marketing we made a number of bold claims and prognoses and I am glad to say the team has delivered on them. We started the year with, in April 2017, a JORC resource of 12.8 million tonnes of ore containing 68,300 tonnes of copper. In November this had increased by 51% to an NI 43-101 resource of 19.3 million tonnes of ore containing 90,547 tonnes of copper, 51,925 tonnes of zinc, 165,686 ounces of gold and 6.4m ounces of silver, worth over $1.2bn ($462m in April 2017) at recent prices.

We also delivered, in April 2018, a Preliminary Economic Analysis on our initial open pit project which supports production of over 8,000 tonnes per annum of copper over an eight year mine life. This represents a 16% increase on our previously targeted 7,000 tonnes per annum. With copper forecast by many respected analysts to be trading above $8,000 a tonne when we are in production, and a production cost of $4,000 a tonne, the economics of the Empire Mine project look exciting, and we look forward to sharing the proceeds with you all.

During the year we were able to acquire neighbouring claims abutting the Empire Mine and have increased our land position from 813 acres to 1,774 acres. We have also commenced opening up the old underground adits in order to be able to access the higher-grade sulphide area in our search for the source rock for the oxide cap on which we will commence production. Idaho State agencies have been helpful to us in enabling us to get back underground. Two diamond drill holes confirming the existence of the right geological structures were also completed.

In addition, we managed to secure two properties, totalling 1,180 acres, on the Idaho Cobalt Belt, where Konnex CEO and Empire Project Manager Ryan McDermott had worked on an exploration project several years ago. One of our neighbours is in the process of being acquired at a significant premium and we look forward to following up on our surface sampling, which showed cobalt mineralisation above detection limits in all cases, with a drilling programme.

As we are all aware, timing is important and we hope that with potential copper shortages developing, the growth in the number of electric cars, which use more than three times the amount of copper than internal combustion engine vehicles, and the rise in demand for cobalt for the batteries, our company is attractive to resources investors. We also anticipate that buyers of the metals we plan to produce will continue to focus on sustainability of production from geopolitically stable, transparent and responsible sources, such as Idaho in the United States.

We were gladdened during the year by the reduction of US corporation tax from 35% to 21%, which makes a significant difference to the forecast cash flows from the Empire Mine.

It is refreshing to be working in a mining-friendly state in a mining and business friendly country. We have been pleasantly surprised by the ease with which operations can be conducted in Idaho. To quote governor C.L. "Butch" Otter, "Idaho moves at the speed of business." The permitting process has been significantly accelerated by his creation and supervision of the Office of Energy and Mineral Resources, which works with the Federal Government to ensure that the federal and state permitting processes run concurrently rather than sequentially. We think this will have a significant effect on the relative attractiveness of Idaho as a mining destination, as well as speeding up the implementation of our open pit project.

Idaho is the fastest-growing state in the Union but approximately 30% of the State was not mapped until the 1990s so, apart from world-class mining districts such as Coeur d'Alene, Idaho has been "under the radar," according to Michael Gray, head of Canadian mining equity research, Macquarie Capital Markets.

However, Barrick Gold's recent announcement that it is acquiring 20% of Midas Gold, suggests that this might not be the case for much longer.

High grade gold also entered the Phoenix portfolio with the addition of the Gordon Lake project in the Northwest Territories of Canada, on which Phoenix has the option to earn into 80%, courtesy of our partners in the Empire project, ExGen Resources (EXG on the Toronto Stock Exchange). Gordon Lake contains 17 known zones of high grade, shear-hosted gold mineralisation. 59 holes have been drilled so far with intersections such as 4.8m at 34.1 g/t Au and 7.4m at 19.4 g/t Au, showing the potential of the project. Phoenix will be able to work on this project in the winter, when cobalt exploration will be more difficult. Gordon Lake is located to the North East of Yellowknife, near the Great Slave Lake, which is a major gold producing area and home to the Giant, Con and Discovery mines, which have historically produced 13.5 million ounces of gold.

As a result of our increased cooperation with ExGen, the CEO of ExGen, Mr Jason Riley, has joined the board of Phoenix as a non-executive director. We welcome him to our board and look forward to working with him as we look to widen our shareholder base into North America.

It has been an eventful and highly productive year but not without a moment of great sadness. During the IPO roadshow, Scott Anderson, CEO of Konnex Resources, and the General Manager of the Empire Mine passed away suddenly in London. Our thoughts remain with his family and friends. Scott was succeeded by Ryan McDermott who also possesses an encyclopaedic knowledge of Idaho mining matters, and we thank Ryan for his excellent work since taking over under such difficult circumstances.

I would like to thank the whole Phoenix team and our advisers for their hard work in passing the various milestones, and to you, our shareholders, for your continued support, and I look forward to updating you on further progress over the coming months.

Marcus Edwards-Jones

Chairman

16 May 2018

STRATEGIC REPORT

The directors present their report and the audited financial statements of Phoenix Global Mining Limited ("Phoenix" or "The Company") for the year ended 31 December 2017. The directors herewith provide a review of Company progress over the last year and also provide the required Strategic Report that outlines how the Company intends to deliver shareholder value going forward.

Principal activities and review of the business

The Empire Mine

The Empire Mine Oxide Open Pit

On completing its IPO on AIM on 29 June 2017 the Company acquired 80% of the Empire Mine operating company, Konnex Resources Inc, from ExGen Resources Inc. ExGen retains the balance of 20% of Konnex. The initial open pit oxide project became the chief focus for the Company with the intention of fast-tracking its development as a low strip-ratio open pit mine producing copper cathodes via a heap leach, solvent-extraction / electro-winning processing method (SX-EW).   A work programme immediately commenced with the aim of completing a Preliminary Economic Assessment (PEA) for an open pit mining operation to produce 7,000 tonnes of copper cathode per annum.

The Company successfully completed the PEA work programme in April 2018. This included:

·     appointing industry high profile resource, mining, process, metallurgical, geotechnical and environmental consultants

·     completing a detailed drone-based topographical survey

·     28 diamond and reverse circulation (RC) holes drilled into the oxide zone

·     completing an update of the pre-IPO JORC compliant oxide resource calculation for copper, gold, silver and zinc to NI 43-101 standards

·     continuing the programme of historic drill core logging and ore body modelling

·     completing bottle roll and column metallurgical test work on oxide samples

·     commencing ongoing detailed baseline environmental studies including vegetation, wildlife, and hydrology

·     expanding the Konnex land holding from the 813 acres of the original Empire claim block by adding 961 acres of the Horseshoe Mine claim block to the north of the property

·     site selection studies for waste dumps, heap leach pad site, plant site and infrastructure

·     geotechnical pit slope and site selection studies

Notably, in November 2017, the Company reported new increased resources following the 2017 drilling campaign.  The effect of the increase in new resources is summarised as follows:

-      51% increase in total mineral resources to 19,382,569 tonnes ore (April 2017: 12,809,000 tonnes)

-      43% increase in Measured and Indicated Resources to 10,419,483 tonnes ore (April 2017: 7,263,000 tonnes)

-      33% increase in total contained copper to 90,547 tonnes (April 2017: 68,300 tonnes)

The resource also included zinc, gold and silver for the first time, being:

Zinc 51,925 tonnes                         

Gold 165,686 ozs                             

Silver 6,411,703 ozs                        

The effect of this updated resource has been to increase the estimated contained metal value from approximately $460 million at the time of the IPO to over $1.2 billion at current metal prices.

The results from the PEA programme based on open pit oxide copper production and excluding any potential revenue from gold, silver or zinc, were announced in April 2018, the highlights of which are:

i)      8,124 tonnes of annual copper production, an increase of 16% above the originally projected output of 7,000 tonnes per annum

ii)     $65 million average annual revenue, assuming $8,265 per tonne copper price across the life of mine

iii)    8 year mine Life @ 0.24% copper cut-off grade

iv)    76% heap leach copper recovery, up from 61% originally estimated

v)     $61.2 million pre-production capex

vi)    $4,068 per tonne copper cash cost of production

vii)   $53.66 million after tax NPV (7.5% discount); $70.58 million (5% discount)

viii) 23.5% IRR after tax

The Empire Mine Sulphide Exploration Programme

The Company completed two scout diamond drill holes totalling 1,752 feet in early December 2017 as a prelude to an anticipated underground sampling programme below the oxide zone at the Empire Mine. The primary purpose of the drilling was to determine geological structure beyond the old workings at depth and specifically to locate the skarn structures which host the mineralisation. The two scout holes demonstrated that favourable primary sulphide ore hosting geology is present below surface oxide mineralisation and confirmed the presence of the predicted larger sulphide zone beneath the present oxide resources.  Both holes intersected the skarn structures over much of their length, with much of the core mineralised throughout its length and higher grade polymetallic values being returned, including significant occurrences of tungsten values.

A plan to reopen the historic 700 and 1100 level adits in order to gain access to old workings beneath the proposed open pit was also commenced.  Initial work commenced on reopening the 700 level.  Access was achieved for approximately 1,000 feet, where mineralisation was seen.  However, underground conditions were deemed too unsafe to allow sampling or further access to take place, due to the manner in which the historic workings had been abandoned in the 1940s.  Access to the 1100 level has proved more amenable and work continues at this level.

Bighorn and Redcastle Cobalt Projects

In August 2017 the Company registered in Idaho a 100% owned subsidiary company, Borah Resources Inc. Borah was established to enable the Company to explore for cobalt and copper in the prospective Idaho Cobalt Belt in Lemhi County, approximately 95 miles north of the Empire Mine in adjoining Custer County.   In October 2017 the Company announced that it had staked and filed two groups of claims, the Bighorn and Redcastle properties, for a total of 1180 acres.  The Company commenced a short exploration programme consisting of surface grab samples and collected 20 samples from Bighorn and 26 samples from Redcastle.   All of the sample results showed cobalt mineralisation above detection limits and ranged from 2.0 ppm to 3120 ppm, or 0.31% cobalt.  The sample results showing cobalt values greater than 100 ppm and copper values greater than 0.5% are considered significant for the purposes of future exploration and targeting for the 2018 exploration programme.

Gordon Lake

In February 2018 the Company signed an option agreement with ExGen Resources to earn into an 80% interest in the Gordon Lake high grade, shear-hosted gold exploration project located 68 miles northeast of Yellowknife, in the Northwest Territories, Canada.  The property consists of two mining leases covering an area of 1505 acres and contains 17 zones of high grade shear hosted gold mineralisation, over a 1 kilometre strike length.  59 mineralised diamond core holes have previosuly been drilled into 4 zones returning high grades of gold, including 4.8m at 34.1 g/t and 7.4m at 19.4 g/t.  

Operational update and Outlook

Empire Mine

Following the results of the PEA programme the Company is now concentrating on the execution of a programme to produce a Bankable Feasibility Study (BFS) for the oxide open pit. The target completion date is the second quarter of 2019.  This will include a programme of RC and diamond drilling aimed at enhancing and increasing the resources by infill drilling to move Inferred Resources to Measured and Indicated Resources and adding additional resources by step-out drilling outside the presently designated open pit area, especially towards the untested newly-acquired Horseshoe claims along the northern extension of the Empire orebody.  Further refinement of the mining and processing methodology will also be undertaken, as well as continued environmental baseline work in preparation for the formal mine permitting process to commence in 2019.  The Company will also continue its programme to gain entry to the 1100 and other levels, sampling underground workings where possible with a view to acquiring further information on planning the exploration of the historically mined high grade sulphide mineralisation potential.

Bighorn and Redcastle Cobalt Projects

The Company will carry out an exploration programme in the 2018 field season with the intention of identifying prospective drilling targets. These targets will then be the subject of a diamond drilling programme during the 2019 season.

Gordon Lake

The Company will carry out a preliminary detailed assessment of Gordon Lake, the objective over the medium term being to design and cost a field work programme to generate measured and indicated resources over a 2-3-year period to justify a small high-grade underground gold mine.

Outlook

With the completion of the PEA on the Empire oxide open pit, the Company has reached a significant milestone in its evolution.  We set out a series of objectives at our IPO and, thanks to the sterling efforts of the whole Phoenix team from Board to site, we have delivered what will now, as a result of the proposed BFS programme, progress into a commercially profitable copper mine, with significant additional gold and silver production potential.  The projected copper production is now targeted to be 16% higher than originally planned and, during our BFS programme, we will be refining the project both in the technical aspects of the operation, and the economic model, including expected reductions in both capital and operating costs.  We have a first class team of specialists in Mackay, Idaho working on the project and I expect, through their efforts and those of our consultants, the BFS to deliver an open pit project from which the Company and its shareholders will benefit considerably.

Additionally, since the IPO, we have started to probe the underground sulphides at the Empire Mine, while acquiring three additional very prospective projects.  Particularly exciting in this world of renewable energy and electric vehicles is the acquisition of the Bighorn and Redcastle projects in the Idaho Cobalt Belt (ICB).  In the present market, the ICB is one of the world's most desirable "addresses" for cobalt in which to have property, as evidenced by the recent acquisition of one of our neighbours at a significant premium to market capitalisation.  Our initial short field programme returned cobalt values in all samples and as we progress into the 2018 field season, we will continue to explore the properties with a view to establishing an appropriate drilling programme for 2019.  In Gordon Lake we have an exciting gold project which also has the potential for delivering significant value for the Company.

Financial Review

The results of the Group are set out below. The Company listed on AIM on 29 June 2017, raising gross proceeds of $6.0 million (£4.6 million) by way of a placing and subscription of 115,000,000 shares at 4.0 pence per share.

The directors' assessment of going concern is set out in note 2.

Key performance indicators ('KPIs')

To date the Group has been focused on the delivery of the project evaluation work programmes to assess the available mineral resources and the extraction methods to apply, each within the available financial budgets. This work will continue until the BFS is completed on the Empire open pit mine, and construction commences.

At that stage the Group will consider and implement appropriate operational performance measures and related KPIs as the objective of recommencing commercial production at Empire nears fruition.

On behalf of the Board

Dennis Thomas

Chief Executive Officer

16 May 2018

	CONSOLIDATED INCOME STATEMENT		Year  Ended 31 December	Year  Ended 31 December
			2017	2016
	Continuing operations	Note	$	$
	Turnover	4	-	-
	Cost of sales		(3,824)	(2,033)
	Gross loss		(3,824)	(2,033)
	Administrative expenses		(1,053,902)	(227,210)
	Expenses of Placing	5	(302,867)	(26,730)
	Payments to the shareholders of Continental Resources Development Group Limited	5	-	(50,684)
			(1,356,769)	(304,624)
	Loss from operations		(1,360,593)	(306,657)
	Finance income		1,903	-
	Loss before taxation		(1,358,690)	(306,657)
	Tax on loss on ordinary activities		-	-
	Loss for the year		(1,358,690)	(306,657)
	Loss attributable to:
	Owners of the parent		(1,346,635)	(306,657)
	Non-controlling interests		(12,055)	-
			(1,358,690)	(306,657)

	Loss per share attributable to owners of the parent:
	Basic and diluted EPS expressed in cents per share	6	(0.82)	(0.53)

	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME		Year  Ended 31 December	Year  Ended 31 December
			2017	2016
			$	$
	Loss for the year		(1,358,690)	(306,657)
	Items that may be subsequently reclassified to profit or loss:
	Currency translation differences		204,227	(167,243)
	Total comprehensive income for the financial year		(1,154,463)	(473,900)

Total comprehensive income attributable to:
Owners of the parent		(1,142,408)	(473,900)
Non-controlling interests		(12,055)	-
		(1,154,463)	(473,900)

	CONSOLIDATED STATEMENT OF FINANCIAL POSITION
					31 December	31 December
					2017	2016
		Note			$	$
	Non-current assets
	Mining development asset	7			-	1,429,987
	Property, plant and equipment - mining property	7			5,282,596	-
	Intangible assets	8			67,569	-
					5,350,165	1,429,987
	Current assets
	Trade and other receivables	9			14,250	86,100
	Cash and cash equivalents				1,903,742	19,214
					1,917,992	105,314
	Total assets				7,268,157	1,535,301
	Current liabilities
	Trade and other payables	10			199,762	340,176
	Non-current liabilities
	Provisions for other liabilities	11			767,444	99,987
	Total liabilities				967,206	440,163
	Net assets				6,300,951	1,095,138
	Equity
	Ordinary shares	12			-	-
	Share Premium				9,034,541	2,432,093
	Retained loss				(2,876,840)	(1,634,314)
	Foreign exchange translation reserve				(18,588)	297,359
	Equity attributable to owners of the parent				6,139,113	1,095,138
	Non-controlling interests				161,838	-
	Total equity				6,300,951	1,095,138

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Ord. shares		Share premium	Retained  loss			Foreign exchange Translation reserve		Total		Non-controlling interest	Total equity
	$		$	$			$		$		$	$
At 1 January 2016	-	2,019,635			(1,381,919)	49,924		687,640		-			687,640
Loss for the year	-	-			(306,657)	-		(306,657)		-			(306,657)
Foreign exchange translation differences	-	(414,678)			-	247,435		(167,243)		-			(167,423)
Total comprehensive income for the year	-	(414,678)			(306,657)	247,435		(473,900)		-			(473,900)
Shares issued in the period	-	827,136			-	-		827,136		-			827,136
Share issue expenses	-	-			-	-		-		-			-
Share-based payments	-	-			54,262	-		54,262		-			54,262
Total transactions with owners	-	827,136			54,262	-		881,398		-			881,398
At 31 December 2016	-	2,432,093			(1,634,314)	297,359		1,095,138		-			1,095,138
At 1 January 2017	-	2,432,093			(1,634,314)	297,359		1,095,138		-			1,095,138
Loss for the year	-	-			(1,346,635)	-		(1,346,635)		(12,055)			(1,358,690)
Foreign exchange translation differences	-	520,174			-	(315,947)		204,227		-			204,227
Total comprehensive income for the year	-	520,174			(1,346,635)	(315,947)		(1,142,408)		(12,055)			(1,154,463)
Shares issued in the period	-	7,035,364			-	-		7,035,364		-			7,035,364
Share issue expenses	-	(953,090)			-	-		(953,090)		-			(953,090)
Share-based payments	-	-			104,109	-		104,109		-			104,109
Acquisition of non-controlling interest	-	-			-	-		-		173,893			173,893
Total transactions with owners	-	6,082,274			104,109	-		6,186,383		173,893			6,360,276
At 31 December 2017	-	9,034,541			(2,876,840)	(18,588)		6,139,113		161,838			6,300,951

CONSOLIDATED STATEMENT OF CASH FLOWS	31 December	31 December
	2017	2016
	$	$
Cash flows from operating activities
Adjustments for:
Loss before tax	(1,358,690)	(306,657)
Share-based payment to CRD shareholders	-	50,684
Share-based payments	104,109	3,578
Exchange differences	408,639	11,719
Other reserve movements	161,838	-
	(684,104)	(240,676)
Decrease/(increase) in trade and other receivables	71,850	(86,100)
(Decrease)/increase in trade and other payables	(140,415)	235,319
Net cash (used)/generated from operating activities	(752,669)	(91,457)
Cash flows from investing activities
Purchase of intangible assets	(67,569)	-
Purchase of property, plant and equipment	(2,723,300)	(727,439)
Cash transferred in business combination	(798,664)	-
Cash acquired with business	144,456	-
	(3,445,077)	(727,439)
Cash flows from financing activities
Proceeds from the issuance of ordinary shares	7,035,364	827,136
Share-issue expenses	(953,090)	-
Net cash generated from financing activities	6,082,274	827,136
Net increase in cash and cash equivalents	1,884,528	8,240
Cash and cash equivalents at the beginning of the year	19,214	10,974
Cash and cash equivalents at the end of the year	1,903,742	19,214

Significant non-cash transactions:

Employee and consultants' fees and salaries, including directors, were partially paid through the issue of shares for both 2016 and 2017.

In 2016 payments to Continental Resources Development Group Limited ('CRD') were enacted through a share-for-share exchange.

In 2016 the purchase of mining property, included within property, plant and equipment, included shares included to conditionally acquire 80% of Konnex Resources Inc.

NOTES

1	General information
	Phoenix Global Mining Limited is engaged in exploration and mining activities, primarily precious and base metals, primarily in North America. The Company is domiciled and incorporated in the British Virgin Islands on 19 September 2013 (registered number 1791533). The address of its registered office is OMC Chambers, Wickhams Cay 1, Road Town, Tortola VG1110, British Virgin Islands.
2	Going concern
	The Company obtains all of the funds needed to meet its exploration, evaluation and administrative expenditure from its shareholders, issuing share capital as the need arises. The Company has sufficient cash resources to complete its Initial evaluation programme. The Company will seek additional funding from its shareholders prior to committing to commercial production.
3	Basis of preparation
	This preliminary information does not comprise full financial statements. The significant accounting policies and other information contained within this preliminary announcement has been extracted from the Company's audited financial statements a copy of which is available on the Company's website: www.pgmining.com. The financial information is presented in US dollars.

4	Revenue The Group is not yet producing revenues from its mineral exploration and mining activities. The Company charged its subsidiary entities of $238,164 (2016: $nil) in respect of management services provided.

5	Exceptional items of expenditure		31 December	31 December
			2017  $	2016 $
	Expenses of Placing and Subscription		302,867	26,730
	Payments to CRD Group shareholders		-	50,684
			302,867	77,414

In June 2017 the Company completed an Initial Public Offering (IPO) raising $6.1 million after expenses. The investment in Continental Resources Development Group Limited (CRD) was acquired in the year ended 31 December 2015 through an exchange of the whole of the issued capital of CRD for ordinary shares in the Company. CRD was acquired principally for access to the shareholders of CRD to assist with the raising, in the future, of share capital by the Company. CRD contained no ongoing business. There was also a significant overlap of directors and shareholders in both CRD and the Company. The transaction was accounted in 2016 as outside of the scope of IFRS3 'Business Combinations'. The investment in CRD provided no additional value to the Company and is considered to be impaired in full.

6	Loss per share	31 December	31 December
		2017  $	2016 $
	Loss attributable to the parent used in calculating basic and diluted loss per  Share	(1,346,634)	(306,657)
	Number of shares
	Weighted average number of shares for the purpose of basic earnings  per share	164,981,541	57,643,801
	Weighted average number of shares for the purpose of diluted earnings  per share	164,981,541	57,643,801
	Basic loss per share (US cents per share)	(0.82)	(0.53)
	Diluted loss per share (US cents per share)	(0.82)	(0.53)

Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Where the Group has incurred a loss in a year or period the diluted earnings per share is the same as the basic earnings per share as the loss has an anti-dilutive effect.

The Company has 22,243,075 potentially issuable shares (2016: 3,270,942) all of which relate to the potential dilution in respect of warrants and share options (2016: warrants only) issued by the Company.

7	Non-current assets - Group
		Mining property	Mining development assets	Total
		$	$	$
	At 1 January 2016	-	802,836	802,836
	Additions	-	837,181	837,181
	Exchange adjustments	-	(210,030)	(210,030)
	At 31 December 2016	-	1,429,987	1,429,987
	Exchange movements	-	4,377	4,377
	At date of acquisition of Konnex (note 14)	-	1,434,364	1,434,364
	Reclassification	1,434,364	(1,434,364)	-
		1,434,364	-	1,434,364
	Fair-value adjustment on acquisition of subsidiary (note 14)	684,338	-	684,338
	Additions	2,723,300	-	2,723,300
	Exchange adjustments	440,594	-	440,594
	At 31 December 2017	5,282,596	-	5,282,596
	Net book value
	1 January 2016	-	802,836	802,836
	31 December 2016	-	1,429,987	1,429,987
	31 December 2017	5,282,596	-	5,282,596

Mining development assets relate to the past producing Empire Mine copper - gold - silver - tungsten project in Idaho, USA. The Empire Mine has not yet recommenced production and no depreciation has been charged in the statement of comprehensive income. There has been no impairment charged in any period due to the early stage in the Group's project to reactivate the mine.

On completion of the acquisition of Konnex the accumulated expenditure on the Empire Mine mining development asset to date was reclassified as mining property.

The principal investment is based in the USA and therefore there is a currency risk in respect of the carrying value of the mining development assets. The Company does not currently engage in any hedging in respect of this asset.

8	Intangible assets - Group
				Exploration  and evaluation expenditure	Total
				$	$
	At 1 January 2016 and 1 January 2017			-	-
	Additions			67,569	67,569
	At 31 December 2017			67,569	67,569

Exploration and evaluation expenditure relates to the Bighorn and Redcastle properties on the Idaho Cobalt Belt in Idaho, USA. The properties are owned by Borah Resources Inc, a wholly owned subsidiary of the parent entity, registered and domiciled in Idaho.

9	Trade and other receivables - Group
		31 December  2017	31 December 2016
		$	$
	Other receivables	14,250	86,100
		14,250	86,100

There were no receivables that were past due or considered to be impaired. There is no significant difference between the fair value of the other receivables and the values stated above. The Company is exposed to exchange risk in respect of its loans made to US subsidiaries.

10	Trade and other payables - Group
		31 December  2017	31 December 2016
		$	$
	Trade creditors	147,951	192,383
	Accrued expenses	51,811	147,793
		199,762	340,176

All liabilities are payable on demand or have payment terms of less than 90 days. The Company is not exposed to any significant currency risk in respect of its payables.

11	Provisions - Group
			$
	At 1 January 2016		-
	Decommissioning provision established in the year		100,000
	Exchange adjustments		(13)
	At 31 December 2016		99,987
	Arising from business combination (note 14)		657,702
	Exchange adjustments		9,755
	At 31 December 2017		767,444

The provision for decommissioning is based on the directors' estimate after taking into account appropriate professional advice.

The provision arising from business combination comprises royalties payable in respect of future production at the Empire Mine acquired in the year. This liability will only be payable if the Empire Mine is successfully restored to production and will be deducted from the royalties payable.  The amount of the provision will be reassessed as exploration work continues and also on commencement of commercial production.

12	Share capital
				Number	Number
				2017	2016
	Number of ordinary shares of no par value
	At the beginning of the year			74,526,875	50,157,571
	Issued in the year			155,285,314	24,369,304
	Treasury shares cancelled in the year			(56,667)	-
	At the end of the year			229,755,522	74,526,875

The authorised share capital of the Company is a maximum of 2,000,000,000 (two billion) shares of no par value each of a single class.

In the year the Company issued 1,900,000 shares at a price of £0.001, 38,385,314 shares at a price of £0.021 and 115,000,000 shares at a price of £0.04. 56,667 treasury shares were cancelled in the year.

The ordinary shares in the Company have no par value. All ordinary shares have equal voting rights in respect of shareholder meetings. All ordinary shares have equal rights to dividends and the assets of the Company.

The Company has issued warrants to subscribe for additional shares to existing shareholders. Each warrant provides the right to the holder to convert one warrant into one ordinary share of no par value at exercise prices ranging from £0.021 to £0.06. At 31 December 2017 the number of warrants in issue was 10,243,075 (2016: 3,270,942).

Since the year end, 530,951 warrants have been exercised at £0.021, and a further 1,250,000 warrants have been issued with an exercise price of £0.04.

The Company has issued options to subscribe for additional shares to the directors and senior management of the Group. Each option provides the right to the holder to subscribe for one ordinary share of no par value, subject to the vesting conditions, at an exercise price of £0.045. At 31 December 2017 the number of options in issue was 12,000,000 (2016: nil).

Since the year end a further 250,000 options have been issued at an exercise price of £0.045.

The Company's ordinary shares have no par value.

13	Share-based payments - Group

The Company has issued 10,243,075 (2016: 3,270,942) warrants to shareholders to subscribe for additional share capital of the Company. Each warrant entitles the holder to subscribe for one ordinary equity share in the Company. The right to convert each warrant is unconditional.

Additionally the Company has issued 12,000,000 (2016: nil) share options to directors and senior employees of the Company. Each share option entitles the holder to subscribe for one ordinary equity share in the Company once the vesting conditions have been satisfied. The right to subscribe for ordinary shares in the Company is subject to a minimum twelve month holding period for 50% of the share options and a 24 month minimum holding period for the balance of 50% of the share options.

In the periods presented the Company has settled remuneration liabilities by the issue of equity in lieu of cash payments for services but has not operated any equity-settled share based incentivisation schemes for employees.

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the Black-Scholes technique, at the date of issue. The warrants were issued as exercisable from the date they were issued and there are no further vesting conditions applicable.

	Warrants issued		Weighted	31 December	31 December
			Average	2017	2016
			Exercise price	Number	Number
	At the beginning of the year		£0.06	3,270,942	3,124,042
	Issued in the year		£0.037	6,972,133	150,000
					-
	Exercised in the year		£0.06	-	(3,100)
	At the end of the year		£0.044	10,243,075	3,270,942

On 19 December 2017 the warrant expiry date to subscribe for 3,270,942 ordinary shares at £0.06 per share was extended from 31 December 2017 to 31 December 2019. An additional charge of $5,257 has been incurred to reflect the change in fair-value arising from the effect of this modification.

In the year 1,810,570 warrants with an exercise price of £0.021, exercisable until 14 June 2020, and 5,161,563 warrants with an exercise price of £0.04, exercisable until 28 June 2020, were issued.

	Share options issued			Weighted	31 December
				average	2017
				Exercise price	Number
	At the beginning of the year			-	-
	Issued in the year			£0.045	12,000,000
	At the end of the year			£0.045	12,000,000

The total share-based payment charge for the year was $104,109 (2016: $54,262). The share-based payment charge was calculated using the Black-Scholes model. All warrants issued vest immediately on issue. Share options vest over a 24 month period from the date of issue.

Volatility for the calculation of the share-based payment charge in respect of both the warrants and the share-options issued was determined by reference to movements in the FTSE350 Mining Stocks Index.

The inputs into the Black-Scholes model for the warrants and share options issued and warrants modified in 2017 were as follows:

			31 December	31 December	31 December
			2017	2017	2017
			Share options issued	Warrants issued	Warrants Modification
	Weighted average share price at grant date		£0.04	£0.04	£0.08
	Weighted average exercise prices		£0.045	£0.04	£0.06
	Expected volatility		23.94%	23.94%	23.94%
	Expected life of share options/warrants in years		3.0	3.0	2.0
	Weighted average contractual life of outstanding warrants in years		2.2	3.0	1.0
	Risk-free interest rate		1.5%	1.5%	1.5%
	Expected dividend yield		0.0%	0.0%	0.0%
	Fair-value of options and warrants granted  (pence)		0.5	0.5 to 0.18	0.12

	Share-based payments charged to profit and loss					31 December		31 December
						2017		2016
						$		$
	On issue of share options					19,823		-
	On issue of warrants					79,263		3,578
	On modification of warrants					5,023		50,684
					104,109		54,262

The share-based payment charge has been classified as an administrative expense, and simultaneously credited to retained deficit.

14

Business combinations

Summary of acquisition

On 29 June 2017 the parent entity acquired 80% of Konnex Resources Inc, a company registered and domiciled in British Columbia, Canada. On 25 August 2017 Konnex was redomesticated to Idaho, USA. Konnex owns the mining interests in the Empire Copper Mine in Idaho, USA (the 'Empire Mine' or the 'Mine').  The fair-values of assets and liabilities assumed were finalised on 31 December 2017. Details of the purchase consideration and the net assets acquired are as follows:

	Purchase consideration			31 December
				2017
				$
	Cost of investment brought forward:
	5.0 million Ordinary Shares issued at 6 pence in 2015			390,000
	6.3 million Ordinary Shares issued at 3 pence in 2016			245,700
	Cash transferred 1 January 2014 to 29 June 2017			798,664
	Fair-value of consideration			1,434,364

The assets and liabilities recognised as a result of the acquisition were:

	Book value $	Adjustments  $	Fair-values $
Non-current assets
Property plant & Equipment
Mining development assets	1,368,704	749,998	2,118,702
Current assets
Cash acquired with the businesses	144,456	-	144,456
Non-current liabilities
Amounts due to ExGen Resources Inc.	(657,702)	-	(657,702)
Net identifiable assets	855,458	749,998	1,605,456
Less: Non-controlling interests			(171,092)
Net assets acquired			1,434,364
Fair-value of consideration			(1,434,364)
Goodwill			-

Significant judgments

The recoverability of the value of the mining development assets acquired is based upon the directors' estimate of the outcome of future evaluation, exploration and mine development work to be undertaken. The directors' have referred to the mining expertise of locally appointed technical specialists in Idaho when reaching their opinion.

Amounts due to ExGen Resources Inc will only be payable if the mine is successfully restored to production, and will be deducted from royalties payable.

Accounting policy choice for non-controlling interests

The Group recognises non-controlling interests in an acquired entity at the non-controlling interest's share of net identifiable assets.

Results of the acquired business

The acquired business had no revenue in the period since acquisition to 31 December 2017. The result of the acquired entity for the same period was a loss of $60,276. This result has been calculated using the subsidiaries results and adjusting them to adhere to the Group's accounting policies.

15	Events after the balance sheet date

In February 2018 the Company entered into an exclusive option to acquire 80% of the high grade Gordon Lake gold property in the Northwest Territories, Canada, from ExGen Resources Inc., at an initial cost of $25,000. In addition the Company issued 2,000,000 shares to ExGen and has committed to spend a minimum of $250,000 on the property within twelve months of entering into the option in order to exercise the option.

 

END

 

 

FR UNOWRWOAVAAR