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Phoenix Copper Ltd (PXC)

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Tuesday 14 April, 2020

Phoenix Copper Ltd

Final results for the year ended 31 December 2019

RNS Number : 5303J
Phoenix Copper Limited
14 April 2020
 

Phoenix Copper Limited / Ticker: PXC / Sector: Mining

14 April 2020

Phoenix Copper Limited (the "Company" or "Phoenix")

 

Final audited results for the year ended 31 December 2019

Notice of AGM

 

Phoenix Copper Limited (AIM: PXC; OTCQX: PXCLF), 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 2019.

 

Highlights

 

Corporate & Financial:

-  $3.3 million raised during the year

-  $1.85 million raised since the year-end

-  Investment in Empire Mine increased to $11.67 million (2018: $9.88 million)

-  Net assets increased to $10.56 million (2018: $9.15 million)

-  32% decrease in net loss to $1.13 million (2018: $1.65 million)

-  Phoenix loan to operating subsidiary increased to $8.3 million (2018: $6.3 million)

-  Company name changed to Phoenix Copper Limited

-  Ryan McDermott appointed as Chief Executive Officer

 

Empire Mine, Idaho, USA:

-  Updated Measured & Indicated open pit resource containing 73,872 tonnes of copper, 29,813 tonnes of zinc, 139,000 ounces of gold and 6.038 million ounces of silver

-  Maiden Inferred sulphide resource at newly discovered Red Star silver / lead zone

-  Further drilling at Red Star to commence shortly

-  Land acreage increased to 5,717 acres, including 2,420-acre Navarre Creek gold zone

-  Completion of environmental studies for both Empire open pit resource and Red Star

-  ESG Programme Coordinator appointed

 

The Company also announces that the Annual General Meeting ("AGM") will be held by webinar at 16.00 BST on 30 April 2020. Details of how to access the webinar platform and vote by proxy will be set out in the Notice of AGM.

 

The Notice of AGM and Forms of Proxy will be despatched to shareholders on 15 April 2020 and will be available on the Company's website at www.phoenixcopperlimited.com.

 

The Company's Annual Report and Consolidated Financial Statements for the year ended 31 December 2019 will also be available on the website from 15 April 2020.

 

COVID-19 Impact Statement

The Coronavirus pandemic has had a significant and immediate impact on the operations and funding of many businesses both in the USA and globally.  However, mining was named an essential service under Idaho Governor Brad Little's recent stay-at-home order, so Phoenix employees are moving the Empire and Red Star Projects forward without delay.  To protect the health and safety of its employees and the local community, the Company, in concert with community leaders, has developed an innovative plan that minimizes employee-to-employee contact and virtually eliminates contact with the community at large while allowing the Company to proceed with the Red Star drilling programme.  The Company has closely examined the supply chain and is confident that all necessary equipment and supplies will be readily available for the drilling programme.

 

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.

 

Contacts

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

Phoenix Copper Limited

Ryan McDermott

Dennis Thomas

Richard Wilkins

Tel: +1 208 954 7039  Tel: +44 7827 290 849

Tel: +44 7590 216 657

 

SP Angel

(Nominated Adviser)

 

David Hignell / Caroline Rowe

Tel: +44 20 3470 0470

Brandon Hill Capital (Joint Broker)

Jonathan Evans / Oliver Stansfield

 

Tel: +44 20 3463 5000

WH Ireland (Joint Broker)

Harry Ansell / Adam Pollock / Katy Mitchell

Tel: +44 207 2201666

Blytheweigh

(Financial PR)

Tim Blythe / Camilla Horsfall / Megan Ray

Tel: +44 20 7138 3204

 

Notes

 

Phoenix Copper Limited is a North American focused, base and precious metal explorer and developer, which has carried out a drilling programme and generated a copper, gold, silver and zinc resource on which it is carrying out a feasibility study to bring the historically producing Empire Mine in Idaho, USA, back into production. It is also evaluating the silver and gold resources around three other past producing mines within the 23 km Empire claims block as well as cobalt in two claims blocks north of Empire in Idaho.

Phoenix's primary operations are focused near Mackay, Idaho in the Alder Creek mining district. This district includes the historical Empire, Horseshoe, White Knob and Blue Bird Mines, past producers of copper, gold, silver, zinc, lead and tungsten from underground mines in the first half of the twentieth century. Additionally, the district includes Navarre Creek a Carlin-trend gold discovery which hosts a 6.1 km gold strike length within a 9.8 km² area.

Phoenix acquired an 80% interest in the historical Empire Mine property in 2017 and, based on a total of 320 drill holes, an oxide resource was completed in late 2017. A NI 43-101 compliant PEA (preliminary economic assessment) for an open pit heap leach solvent extraction and electrowinning ("SX-EW") mine was completed in April 2018. In 2018 a further 8,600 metres in 93 holes was completed to upgrade the oxide resources, provide samples for ongoing metallurgical test work, geotechnical and hydrological studies and condemnation drilling for the heap leach pad site, waste dump and plant site. An updated NI 43-101 compliant resource was completed in early May 2019.

Since acquiring the Empire project, Phoenix has increased the claim area from 818 acres to 5,717 acres, mainly to the northwest and west, and in so doing has increased the potential for additional oxide and sulphide copper resources, as well as the potential for stand-alone gold and silver resources, along a strike length of approximately 5.4 km towards the other brownfield mines of the Horseshoe, White Knob and Blue Bird Mines now within the property boundary.  In particular, a new discovery at Red Star, 330 metres north west of the Empire Mine proposed open pit, has revealed sulphide ore and from three shallow exploration drill holes a NI 43-101 compliant maiden resource of 1.6 million silver equivalent ounces was reported.

At Empire, it is estimated that less than 1% of the potential ore system has been explored to date and, accordingly, there is significant opportunity to increase the resource through phased exploration.

More details on the Company, its assets and its objectives can be found on PXC's website at www. phoenixcopperlimited.com .

 

 

 

 

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

Dear Shareholders

"May you live in interesting times," was first used, in English at any rate, by Sir Austen Chamberlain, in 1936, and later cited as an "ancient Chinese curse." As I write, copper trades 35% below its 2018 high at $2.14 a pound, a level at which approximately 17% of world copper production is losing money on a true, sustaining capital expenditure basis, according to analysts at Jefferies. However, the fundamentals of precious metals as a store of value while governments are printing money have begun to reassert themselves, and we are very fortunate to have the Red Star silver project, which shows robust economics at the current silver price, as a route to early production and revenue generation. We are commencing our 2020 drilling programme later this month, and as we will only have three crew members on a drill pad at any given time, Covid-19 should have less impact on us than on many other companies. Barring any delays at the assay laboratory, we hope to produce an updated resource at Red Star in Q3 2020, keeping us on track for commencement of production in late 2021. Meanwhile, we expect the electric vehicle and cleaner air revolution to resume once a degree of calm returns, creating shortages of both copper and cobalt.

Although fluctuations in metals prices have made planning decisions, and the funding of them, more difficult, we have also been very fortunate to have amongst our shareholders some long-term investors who have continued to support us.  We have continued to work on the development of the open-pit copper mine, in anticipation of higher copper prices, although we can see earlier cash flow potential from the Red Star project, to the north of the Empire open pit. The Red Star discovery is in primary high-grade silver/lead sulphide mineralisation. After only three holes drilled, we were able to generate a maiden NI 43-101 compliant resource of some 103,500 tonnes, containing over half a million ounces of silver. Our current view is that Red Star may develop into a high-grade underground silver-lead mine with a modest level of capital expenditure, and we are going full steam ahead with the drilling programme to prove up enough metal in order to make a production decision later in the year.

Although we are a small company, we have both "safe haven" and economically sensitive metals in our various claims. During 2019 we expanded our territory from 1,837 acres to 5,717 acres (7.43 sq km to 23.14 sq km), to include the old polymetallic workings at White Knob, Bluebird and Horseshoe, along with the historic prospects at Windy Devil and the 9.8 sq km Navarre Creek gold property to the north west. This expansion gives us 5.4 km of mineralised strike length at Empire, and a further 6.1 km at Navarre Creek. Mindful of keeping dilution by the issue of more shares at depressed prices to a minimum, we are working on sharing the costs of exploring these properties with potential joint venture partners.

Our properties are located in central Idaho.  Custer County, Idaho, home to our Empire Mine, has a recorded population of 0.9 people per square mile, making it one of the least populated Counties in the State.  Although the Company will be taking every precaution available when it comes to our employees' and contractors' health and safety, we believe that our location will help to minimise any possible business interruptions arising from the Coronavirus pandemic. I am lucky to have a great team of fellow directors and operatives in the UK and Idaho, and we were pleased Ryan McDermott agreed to step up to the role of Chief Executive Officer. Idaho born and raised, but with a wealth of international experience, he could not have a better resume for the job. Dennis Thomas, who brought the project to Phoenix, is now a Non-Executive Director and VP Investor Relations. We thank him for his contribution, and his energy and enthusiasm endure in his new role.

We are also pleased to announce the appointment of Idaho-based Ms Lenie Wilkie as head of ESG compliance. We take our environmental and social responsibilities very seriously and welcome her in this new role.

Although our sterling market capitalisation is currently not as we would wish I am encouraged that our balance sheet is denominated in US dollars, as are our principal assets. We have ensured that money raised from shareholders has been spent developing our assets. The Empire Mine now has a carrying value of approximately $12 million, and much of this value is underpinned by a shareholder loan of almost $9 million from Phoenix to Konnex Resources, our 80% owned operating subsidiary in Idaho. This loan earns interest at 6% per annum and will be repaid from cashflow generated from commercial production at Empire. It is our current intention that this loan, when repaid, together with profits distributed to us by Konnex, will allow us to return money to shareholders by way of dividends.

We thank you all for your continued support, and look forward to updating you on the Red Star development programme and other matters in what should still be an exciting year for us.

Marcus Edwards-Jones

Executive Chairman

9 April 2020

 

 

 

 

 

 

CHIEF EXECUTIVE OFFICER'S REPORT

 

Principal activities and review of the business

In 2017 the Phoenix team set out to explore and develop an open-pit oxide-copper deposit at our Empire Mine property in Idaho, USA.  What has become plainly clear in the past two years of extensive mapping, sampling and drilling is that the Empire group of projects, including Red Star, Horseshoe, and Navarre Creek, holds not only an oxide-copper resource, but it also offers a true suite of polymetallics including gold, silver, lead, zinc and sulphide copper.  The variety and grade of mineralization encountered thus far on the many claim blocks that make up the Empire property is providing Phoenix with the unique opportunity to exploit metals other than copper during a period where the fluctuating copper market is proving challenging for the industry as a whole.  While the 2019 copper market experienced some unforeseen lows, the precious metals markets have experienced some shining upswings.  The Company is in a good position, particularly with its Red Star high-grade silver and lead resource and its cobalt holdings, to expand beyond the oxide-copper resource whilst copper prices rebound. 

The Coronavirus pandemic has had a significant and immediate impact on the operations and funding of many businesses both in the USA and globally.  However, mining was named an essential service under Idaho Governor Brad Little's recent stay-at-home order, so Phoenix employees are moving the Empire and Red Star Projects forward without delay.  To protect the health and safety of its employees and the local community, the Company, in concert with community leaders, has developed an innovative plan that minimizes employee-to-employee contact and virtually eliminates contact with the community at large while allowing the Company to proceed with the Red Star drilling programme.  The Company has closely examined the supply chain and is confident that all necessary equipment and supplies will be readily available for the drilling programme.

It is not possible to predict with certainty the potential future impact on global copper, silver and other relevant mineral prices.  Markets will certainly fluctuate, as we have witnessed in 2019, and particularly at this time of the Coronavirus pandemic, but we believe that global initiatives in electrification and manufacturing will provide a demand well into the future.  It is also reassuring to note that the Company is operating in a geopolitically stable jurisdiction and that we have both early production potential and significant exploration upside.

Red Star - High-grade Silver and Lead

Red Star is a high-angle silver-lead vein system located 330 metres north-northwest of the proposed Empire oxide pit.  Red Star was identified from a 20-metre wide surface outcrop across a skarn structure. Surface mineralisation is a mix of spectacularly covered oxides and sulphides, with strong chrysocolla and bornite showings, exposed in a heavily timbered canyon. Three reverse circulation ("RC") drill holes were drilled on the target and assay results reported the presence of high-grade lead and silver sulphides including intercepts of 21% lead and 1,111 g/t silver. In early May 2019 the Company announced a small maiden "Inferred" sulphide resource of 103,500 tonnes, containing 580,324 ounces of silver, 3,985 tonnes of lead, 952 tonnes of zinc, 342 tonnes of copper, and 2,828 ounces of gold.

 

 

 

Grade / tonne

Metal Content

Class

Tonnes

Ag

Au

Pb

Zn

Cu

Ag

Au

Pb

ZN

Cu

 

 

g/t

g/t

%

%

%

ozs

ozs

tonnes

tonnes

tonnes

Inferred

103,500

174.4

0.85

3.85

0.92

0.33

580,324

2,828

3,985

952

342

 

Following the estimation of the inferred resource, a second drilling program was approved by the Company targeting the Red Star vein system along strike and at depth.  This represents an exciting exploration prospect for the Company.  Due to the depth of overburden and general lack of outcrop in the area, drill roads were constructed in late 2019 designed to "cut" below the overburden and into the sub-crop along the vein system's strike.  Channel samples were collected across the mineralized sub-crop where the vein system "daylighted" in the road cuts. The results of the channel sample assays were on par with the channel sample results taken from the Red Star discovery outcrop in 2018.  The 2020 drill programme will utilize the channel samples for drill hole targeting. 

Empire Mine - Open-Pit Oxide-Copper

In May 2019 we announced a new NI 43-101 compliant open pit copper-oxide "Measured and Indicated" resource of 15.2 million tonnes at 0.49% copper. This resource incorporated the 2017 and 2018 drilling results and included gold, silver and zinc occurring with the copper at the same cut-off grade.  The table below shows the distribution of metals and grades within the oxide-copper shell at a cut-off grade of 0.184% copper. The Empire copper-oxide deposit is envisioned as a heap-leachable, solvent extraction/electrowinning (SX/EW) process. 

 

CLASS

Tonnes

Average Grades

Metal Content

Cu

%

Zn

%

Ag

g/t

Au

g/t

Cu

tonnes

Zn

tonnes

Ag

oz

Au

oz

Measured

6,176,000

0.49

0.21

12.18

0.26

30,262

12,970

2,418,457

51,626

Indicated

8,993,000

0.48

0.19

12.51

0.30

43,166

17,087

3,616,976

86,738

M+I

15,169,000

0.49

0.20

12.38

0.28

74,328

30,338

6,037,559

136,552

Inferred

4,271,000

0.44

0.13

9.76

0.32

18,792

5,552

1,340,180

43,940

 

 

We are continuing down the feasibility study and permitting pathways with the copper-oxide resource, most recently completing two years of environmental studies directly applicable to the permitting and mine planning of the oxide-copper open-pit.  Although our resources are being focused in the direction of Red Star, we are continuing to move the copper-oxide project forward in order to better position ourselves as the copper market improves.

The Company is also currently examining alternative extraction methods that may allow for the recovery of gold, silver, and zinc along with copper.

Empire Mine Expansion - Horseshoe and White Knob, Windy Devil, and Navarre Creek

We have made a point of focusing our efforts on our flagship Empire Mine projects. However, we have increased our land position from time-to-time as our geologists recognize prospective and strategic opportunities.  At the time of the Company's IPO in mid-2017, our Empire Mine property consisted of 818 acres. Since then we have increased the core Empire claim block to 3,297 acres by expanding north to the former Horseshoe and White Knob Mines and onto Windy Devil. The expansion covers approximately 30 historic adits, shafts and prospects, which exhibit geology and mineralogy similar to Red Star.

In February 2019 we staked another 2,420 acres in Navarre Creek, north and west of the core Empire claim block.  Navarre Creek is a 6 km long zone of felsic volcanic and intrusive rocks with alteration and mineralization characteristics typical of epithermal, hot spring-type gold deposits.

Empire Mine - Polymetallic Sulphide Potential

The Red Star vein system appears to be a distal, near-surface expression of a deeper, copper-rich sulphide vein system that lies below the oxide-copper open pit and was mined extensively underground until the 1940s. Two deep diamond drill holes drilled in late 2017 confirmed the presence of higher-grade sulphide mineralisation in the skarn structures at depth. Both of the core holes intersected mineralised skarn over much of their length and the analytical data from both drill holes intersected numerous significant intervals of copper, gold, silver, zinc, lead, and tungsten throughout their depths. The tungsten values were particularly interesting as they positively reinforced the Company's consulting geologist's predictions of the Empire system being the uppermost horizon of a larger molybdenum-tungsten porphyry.  In 2018 five drill holes intercepted copper sulphide mineralisation. One hole returned 5.53% copper, 7.67 g/t gold, and 120 g/t silver, and was further north of any historical underground mining, whilst another returned 5.19% copper adjacent to historical underground workings. The gold and silver grades generally are major considerations, ranging to 7.93 g/t gold and 256 g/t silver.

Borah Resources - Idaho Cobalt Belt

Borah Resources is a 100% Idaho registered subsidiary of the Company. Comprised of two strategically located properties, Redcastle and Bighorn, the Company believes that they are an important asset in a time of global electrification and the rarity of cobalt resources from first world jurisdictions. The properties are strategically located in the USA's only prospective cobalt region, the Idaho Cobalt Belt, approximately 100 miles north of the Empire Mine. In 2018 we announced the results of our 2017 reconnaissance programme of 46 surface grab samples which gave cobalt values ranging from 2 ppm to 0.31% cobalt.

Environmental, Social and Governance

Our successes so far are related directly to the local community support we receive from the citizens of Custer County, Idaho.  We are fortunate to work in an area rooted so deeply in mining and with a population understanding of the economic benefits of the industry.  Our recent roll-out of the Company's Environmental, Social and Governance (ESG) programme was based largely on our desire to include the community in our team.  We initiated the programme by appointing Ms Lenie Wilkie to the position of ESG Programme Coordinator.  

Ms Wilkie is a well-respected local businesswoman and community leader and has been playing an integral role as liaison between the community and Phoenix, assisting in the hiring of local labour, reviewing and selecting the beneficiaries of Company donations, and managing local supply acquisitions and inventory.  She was integral in the placing of Company donations for the Mackay, Idaho FFA Fish Lab and the Lost River Robotics Youth Team.  Both organizations provide local youth the opportunity to compete in state and national level scientific-based competitions.  Her deep roots in the community, her Native American background, and her success driven work ethic provide her with a unique perspective on the importance of balancing sustainable job growth with an emphasis on both environmentally and socially responsible business practices.

Outlook

My outlook on the Company is more positive now than in the three years since joining the Phoenix team.  In that time, we have expanded our resources and exploration potential from a single oxide-copper resource into a high-grade silver lead vein system, a polymetallic sulphide vein system, a very prospective volcanic-hosted gold system, and two strategically located cobalt properties, all within the same geopolitically stable, pro-mining jurisdiction.

In addition to the expansion of the oxide-copper resource into the polymetallic system we currently recognise, I am particularly encouraged by the results of two years of extensive baseline environmental studies that we recently released that included the research of flora, wildlife, hydrological, and archaeological studies, and indicate that we have no critical habitat for threatened or endangered plant and wildlife species, including sage grouse.  The studies also concluded that no legacy impacts to surface or groundwater occurred as a result of any historical mining operations on the Empire Mine properties.  Archaeological studies were also unable to identify any significant cultural artefacts on the Empire property.  These findings are important as they clear the path to the development of an operating plan  for Red Star, and the permitting of the Empire oxide-copper deposit, and the deeper sulphide system.  That is three metal-rich systems with favourable environmental conditions.

Despite challenging metals markets, we came out of 2019 well positioned for further expansion and with more confidence in our projects than ever before.  We have an oxide-copper resource within a stone's throw of a high-grade silver lead vein system, all on patented mining claims in a first world jurisdiction, and all with favourable environmental baseline results.  The positives have not blinded us to the work we have ahead, however, but it has provided us confidence that we are on the cusp of developing a mineralized system of which we believe we have barely scratched the surface. 

Our Red Star discovery provides us with a seriously attractive and low cost near surface sulphide exploration target and the expanded claim holdings protect our future from competition, providing the Company with potential base and precious metals resources and perhaps the discovery of a world class polymetallic deposit.

In conclusion I would like to thank the dedicated and highly motivated team of professional staff, consultants and advisers, community liaisons, shareholders, and directors who will allow us to continue to adapt our work programmes to market conditions in order to maximise the medium and long-term benefits for the Company.  The Company understands the importance of putting shareholder money to work in the field, where it counts.  I look forward to next year's annual report, wherein I can report on what I still expect to be a very positive 2020 for the Company, despite current market conditions.

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 relevant feasibility studies are completed, 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 the Empire Mine nears fruition.

 

On behalf of the board

 

Ryan McDermott

Chief Executive Officer

9 April 2020

 

 

 

 

 

 

 

 

 

 

 

Consolidated income statement

 

Year

 Ended

31 December

Year

 Ended

31 December

 

 

 

2019

2018

 

Continuing operations

Note

$

$

 

Revenue

4

-

-

 

Exploration & evaluation expenditure

 

(3,429)

(169,863)

 

Gross loss

 

(3,429)

(169,863)

 

 

 

 

 

 

Administrative expenses

 

(1,101,811)

(1,347,980)

 

Expenses of Placing

5

-

(136,127)

 

 

 

(1,101,811)

(1,484,107)

 

 

 

 

 

 

Loss from operations

 

(1,105,240)

(1,653,970)

 

 

 

 

 

 

Finance income

 

-

1,709

 

 

 

 

 

 

Finance costs

 

(22,911)

-

 

 

 

 

 

 

Loss before taxation

 

(1,128,151)

(1,652,261)

 

 

 

 

 

 

Tax on loss on ordinary activities

 

-

-

 

 

 

 

 

 

Loss for the year

 

(1,128,151)

(1,652,261)

 

 

 

 

 

 

Loss attributable to:

 

 

 

 

Owners of the parent

 

(1,116,563)

(1,635,428)

 

Non-controlling interests

 

(11,588)

(16,833)

 

 

 

(1,128,151)

(1,652,261)

 

 

Loss per share attributable to owners of the parent:

 

 

 

 

Basic and diluted EPS expressed in cents per share

6

(2.76)

(5.82)

 

 

 

Consolidated statement of comprehensive income

 

Year

 Ended

31 December

Year

 Ended

31 December

 

 

 

2019

2018

 

 

 

$

$

 

 

 

 

 

 

Loss for the year

 

(1,128,151)

(1,652,261)

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

(1,116,563)

(1,635,428)

Non-controlling interests

 

(11,588)

(16,833)

 

 

(1,128,151)

(1,652,261)

 

 

Consolidated statement of financial position

 

 

 

 

31 December

31 December

 

 

 

 

2019

2018

 

 

Note

 

$

$

 

Non-current assets

 

 

 

 

 

Property, plant and equipment - mining property

7

 

11,671,660

9,876,697

 

Intangible assets

8

 

246,895

207,160

 

 

 

 

11,918,555

10,083,857

 

Current assets

 

 

 

 

 

Trade and other receivables

9

 

267,932

212,516

 

Cash and cash equivalents

 

 

210,591

112,964

 

 

 

 

478,523

325,480

 

 

 

 

 

 

 

Total assets

 

 

12,397,078

10,409,337

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

10

 

282,900

501,301

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Borrowings

11

 

800,000

-

 

Provisions for other liabilities

12

 

757,702

757,702

 

 

 

 

1,557,702

757,702

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

1,840,602

1,259,003

 

 

 

 

 

 

 

Net assets

 

 

10,556,476

9,150,334

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Ordinary shares

13

 

-

-

 

Share Premium

 

 

15,627,730

13,362,353

 

Retained loss

 

 

(5,186,083)

(4,338,436)

 

Foreign exchange translation reserve

 

 

(18,588)

(18,588)

 

Equity attributable to owners of the parent

 

 

10,423,059

9,005,329

 

Non-controlling interests

 

 

133,417

145,005

 

Total equity

 

 

10,556,476

9,150,334

             

 

Consolidated statement of changes in equity

 

Ordinary shares

Share premium

Retained loss

Foreign exchange

Translation reserve

Total

Non-controlling interest

Total equity

 

 

$

$

$

$

$

$

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

-

9,034,541

(2,876,840)

(18,588)

6,139,113

161,838

6,300,951

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

(1,635,428)

-

(1,635,428)

(16,833)

(1,652,261)

Total comprehensive income for the year

 

-

-

(1,635,428)

-

(1,635,428)

(16,833)

(1,652,261)

 

 

 

 

 

 

 

 

 

Shares issued in the period

 

-

4,653,727

-

-

4,653,727

-

4,653,727

Share issue expenses

 

-

(325,915)

-

-

(325,915)

-

(325,915)

Share-based payments

 

-

-

173,832

-

173,832

-

173,832

Total transactions with owners

 

-

4,327,812

173,832

-

4,501,644

-

4,501,644

7

 

 

 

 

 

 

 

 

At 31 December 2018

 

-

13,362,353

(4,338,436)

(18,588)

9,005,329

145,005

9,150,334

 

At 1 January 2019

 

-

13,362,353

(4,338,436)

(18,588)

9,005,329

145,005

9,150,334

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

(1,116,563)

-

(1,116,563)

(11,588)

(1,128,151)

Total comprehensive income for the year

 

-

-

(1,116,563)

-

(1,116,563)

(11,588)

(1,128,151)

 

 

 

 

 

 

 

 

 

Shares issued in the period

 

-

2,540,200

-

-

2,540,200

-

2,540,200

Share issue expenses

 

-

(274,823)

-

-

(274,823)

-

(274,823)

Share-based payments

 

-

-

268,916

-

268,916

-

268,916

Acquisition of non-controlling interest

 

-

-

-

-

-

-

-

Total transactions with owners

 

-

2,265,377

268,916

-

2,534,293

-

2,534,293

 

 

 

 

 

 

 

 

 

At 31 December 2019

 

-

15,627,730

(5,186,083)

(18,588)

10,423,059

133,417

10,556,476

 

 

 

 

Consolidated statement of cash flows

31 December

31 December

 

2019

2018

 

$

$

Cash flows from operating activities

 

 

 

 

 

Loss before tax

(1,128,151)

(1,652,261)

Adjustments for:

 

 

Share-based payments

268,916

173,832

Exchange differences

-

-

Other reserve movements

-

-

 

(859,235)

(1,478,429)

Increase in trade and other receivables

(55,416)

(198,266)

Decrease in trade and other payables

218,402

291,798

Net cash (used)/generated from operating activities

(1,133,053)

(1,384,897)

 

 

 

Cash flows from investing activities

 

 

Purchase of intangible assets

(39,735)

(139,591)

Purchase of property, plant and equipment

(1,794,962)

(4,594,101)

Cash transferred in business combination

-

-

Cash acquired with business

-

-

 

(1,834,697)

(4,733,692)

 

 

 

Cash flows from financing activities

 

 

Proceeds from the issuance of ordinary shares

2,540,200

4,653,727

Share-issue expenses

(274,823)

(325,915)

Proceeds from the issue of loan notes

800,000

-

Net cash generated from financing activities

3,065,377

4,327,812

 

 

 

Net (decrease)/increase in cash and cash equivalents

97,627

(1,790,778)

 

 

 

Cash and cash equivalents at the beginning of the year

112,964

1,903,742

 

 

 

Cash and cash equivalents at the end of the year

210,591

112,964

 

 

Significant non-cash transactions:

During the year the Directors capitalised $180,960 of fees into shares (2018: $84,138).

 

 

 

 

 

 

 

 

 

 

 

 

1

General information

 

Phoenix Copper Limited (formerly 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. The Company is listed on London's AIM (ticker: PXC) and trades on New York's OTCQX Market (ticker: PXCLF).

 

2

Going concern

 

The Group has no income and meets its working capital requirements through raising development finance. In common with many businesses engaged in exploration and evaluation activities prior to production and sale of minerals the Group will require additional funds and/or funding facilities in order to fully develop its business plan. The directors believe that such funds are likely to come from a combination of further equity issues and the arrangement of appropriate debt and/or offtake finance arrangements. Ultimately the viability of the Group is dependent on future liquidity in the development period and this, in turn, depends on the availability of funds.  Whilst a number of discussions are ongoing to secure both additional equity and appropriate structured finance for the development of the Empire Mine, and the directors are confident that the necessary funding will be available, at the date of the approval of these financial statements it is not certain that this will be the case.

 

The Covid-19 pandemic has had a significant, immediate impact on the operations and funding of many businesses both in the USA and globally. However, the Group has recently raised funds, has very few operational employees in Idaho and the Empire Mine is geographically remote from areas significantly currently impacted by the pandemic. 

 

The directors prepare annual budgets and forecasts in order to ensure that they have sufficient liquidity in place and that they comply with the terms and conditions of their obligations in relation to the ongoing development of the mining assets and the Group's environmental and other commitments.

 

In addition, in response to the rapidly evolving Covid-19 situation, the directors, in formulating the plan and strategy for the future development of the business, have considered a period beyond that for which formal budgets and forecasts are prepared.

 

At the date of approval of these financial statements it is not clear how long the current circumstances are likely to last and what the long-term impact will be. However, having regard to the above, and based on their latest assessment of the budgets and forecasts for the business of the Group, the directors believe it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

 

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 $563,476 (2018: $361,460) in respect of management services provided.

 

5

Expenses of placing

 

31 December

31 December

 

 

 

2019

$

2018

$

 

 

 

 

 

 

Admission to trading on the OTCQX Market. 

 

-

136,127

 

 

 

 

 

 

 

 

-

136,127

 

In October 2018 the Company was admitted to trading on the OTCQX Market in New York. 

6

Loss per share

31 December

31 December

 

 

2019

 $

2018

$

 

 

 

 

 

Loss attributable to the parent used in calculating basic and diluted loss per

 Share

(1,116,563)

(1,635,428)

 

 

 

 

 

Number of shares

 

 

 

Weighted average number of shares for the purpose of basic earnings

 per share (restated) 

40,862,399

28,120,624

 

 

 

 

 

Weighted average number of shares for the purpose of diluted earnings

 per share

40,862,399

28,120,624

 

 

 

 

 

Basic loss per share (US cents per share)

(2.76)

(5.82)

 

 

 

 

 

Diluted loss per share (US cents per share)

(2.76)

(5.82)

 

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 potentially issuable shares of 10,265,195 (2018: 3,121,206) all of which relate to the potential dilution in respect of warrants and share options issued by the Company. See also note 14.

 

 

 

 

 

 

 

 

 

 

7

Non-current assets

 

 

 

 

 

 

Mining property

 

Total

 

 

 

 

At 1 January 2018

 

5,282,596

5,282,596

 

Additions

 

4,594,101

4,594,101

 

At 31 December 2018

 

9,876,697

9,876,697

 

 

 

 

 

 

 

At 1 January 2019

 

9,876,697

9,876,697

 

Additions

 

1,794,963

1,794,963

 

At 31 December 2019

 

11,671,660

11,671,660

 

 

 

 

 

 

Net book value

 

 

 

 

1 January 2018

 

5,282,596

5,282,596

 

 

 

 

 

 

31 December 2018

 

9,876,697

9,876,697

 

 

 

 

 

 

31 December 2019

 

11,671,660

11,671,660

 

Mining property assets relate to the past producing Empire Mine copper - gold - silver - zinc 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.

 

The principal investment is based in the USA.

 

 

 

 

 

 

 

 

 

 

8

Intangible assets

 

 

 

 

Exploration

 and evaluation expenditure

 

 

 

$

 

 

 

 

 

At 1 January 2018

 

67,569

 

Additions

 

139,591

 

At 31 December 2018

 

207,160

 

 

 

 

 

At 1 January 2019

 

207,160

 

Additions

 

39,735

 

At 31 December 2019

 

246,895

         

 

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

 

 

 

 

 

 

 

 

31 December

2019

31 December 2018

 

 

 

 

$

$

 

 

 

 

 

 

 

Other receivables

 

 

243,928

212,516

 

Prepaid expenses

 

 

24,004

-

 

 

 

 

267,932

212,516

 

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.

 

10

Trade and other payables

 

 

 

 

 

 

 

 

31 December

2019

31 December 2018

 

 

 

 

$

$

 

 

 

 

 

 

 

Trade creditors

 

 

178,093

401,231

 

Other creditors

 

 

100,270

41,570

 

Accrued interest

 

 

4,537

58,500

 

 

 

 

282,900

501,301

 

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

Borrowings

 

 

 

 

 

 

 

 

31 December

2019

31 December 2018

 

 

 

 

$

$

 

 

 

 

 

 

 

Loan notes

 

 

800,000

-

 

The Company has issued loan notes with a redemption value of $800,000 in units of $25,000 (£20,000) each, including $50,000 issued to Andre Cohen, a director of the Company. The coupon is 12% per annum. The final redemption date is 30 September 2021, repayable earlier at the Company's option from new mezzanine or construction finance for the Empire Mine if secured.

 

Since the year end the Company has issued further loan notes with a redemption value of $309,500.

 

12

Provisions

 

 

 

 

 

 

 

 

 

 

 

$

 

 

 

 

 

 

At 1 January 2017

 

 

99,987

 

Arising from business combination

 

 

657,702

 

Exchange adjustments

 

 

9,755

 

At 31 December 2017

 

 

767,444

 

Exchange adjustments

 

 

(9,742)

 

At 31 December 2018 and 31 December 2019

 

 

757,702

             

 

The provision of $100,000 for decommissioning the Empire Mine is based on the directors' estimate after taking into account appropriate professional advice.

 

The other provision of $657,702 arises from a business combination in 2017 and comprises potential royalties payable in respect of future production at the Empire Mine. 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.

 

 

 

 

 

 

 

 

 

13

Share capital

 

 

 

 

Group and Company

Group and Company

 

 

 

 

Number

Number

 

 

 

 

2019

2018

 

 

 

Number of ordinary shares of no par value

 

 

 

 

 

At the beginning of the year

 

33,078,999

22,975,552

 

 

Issued in the year

 

11,705,882

10,103,447

 

 

At the end of the year

 

44,784,881

33,078,999

 

             

 

The Company does not have an authorised capital and is authorised to issue an unlimited number of no par value shares of a single class.

 

In the year the Company issued 11,705,882 ordinary shares at £0.17 per share to raise $2.54 million. All issued shares were fully paid.

 

Since the year end the Company has issued a further 7,900,000 shares at £0.15 per share. The Company currently has 52,684,881 ordinary shares in issue.

 

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 £0.20 to £0.60. At 31 December 2019 the number of warrants in issue was 7,115,195 (2018: 1,896,206).

 

Since the year end a further 300,000 warrants have been issued with an exercise price of £0.16.

 

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 exercise prices of £0.45 and £0.17. At 31 December 2019 the number of options in issue was 3,150,000 (2018: 1,225,000).

 

 

 

 

 

 

14

Share-based payments

 

The Company has issued 7,115,195 (2018: 1,896,206) 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 3,150,000 (2018: 1,225,000) 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 12 month holding period for 50% of the share options and a 24 month 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

2019

2018

 

 

 

Exercise price

Number

Number

 

 

 

 

 

 

 

At the beginning of the year

 

£0.38

1,896,206

1,024,308

 

Issued in the year

 

£0.20

800,000

-

 

Exercised in the year

 

£0.21

-

(53,095)

 

Issued in the year

 

£0.28

4,418,989

372,650

 

Issued in the year

 

£0.35

-

427,343

 

Issued in the year

 

£0.40

-

125,000

 

At the end of the year

 

£0.30

7,115,195

1,896,206

 

 

 

Share options issued

 

 

Weighted

31 December

31 December

 

 

 

average

2019

2018

 

 

 

Exercise price

Number

Number

 

 

 

 

 

 

 

At the beginning of the year

 

£0.045

1,225,000

1,200,000

 

Issued in the year

 

£0.170

1,925,000

25,000

 

At the end of the year

 

£0.120

3,150,000

1,225,000

 

The total share-based payment charge for all warrants and options issued in the year was $268,916 (2018: $173,832). 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 Company's quoted share price on AIM.  

 

The inputs into the Black-Scholes model for the warrants and share options issued and warrants modified in 2019 were as follows:

 

 

 

31 December

31 December

 

 

2019

2019

 

 

Warrants issued

Share options issued

 

 

 

 

 

Weighted average share price at grant date

£0.18

£0.18

 

Weighted average exercise prices

£0.27

£0.17

 

Expected volatility

50.01%

52.78%

 

Expected life

2.70

3.00

 

Weighted average contractual life

2.22

1.87

 

Risk-free interest rate

1.5%

1.5%

 

Expected dividend yield

0%

0%

 

Fair-value of options granted (pence)

£0.03

£0.06

 

The warrants were issued in four tranches. The share prices at the date of grant were between £0.13 to £0.19. The weighted average warrant exercise prices at the date of grant were from £0.20 to £0.60. Additionally, the exercise dates for 327,094 existing warrants with an exercise price of £0.60 were extended to 31 December 2021. The extension has been valued as a new instrument as at 20 December 2019 and the fair-values and charge included above.

 

The expected volatility ranged from 49.89% to 51.52%. The fair-values of warrants issued in the year were from £0.03 to £0.04. The expected life of the outstanding warrants and options ranged from 1.40 to 2.98 years.

 

 

 

Share-based payments charged to profit and loss

 

 

31 December

31 December

 

 

 

 

2018

2017

 

 

 

 

$

$

 

 

 

 

 

 

 

On issue of share options

 

 

38,622

19,553

 

On issue of warrants

 

 

229,736

154,279

 

On modification of warrants

 

 

558

-

 

 

 

 

268,916

173,832

 

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

 

15

Events after the balance sheet date

 

Since the year end the Company has raised a further $1.85 million, $1.54 million through the issue of 7,900,000 shares at £0.15, and $0.31 million through the issue of 12% unsecured loan notes.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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