For the six months ended 30 June 2024
First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to present its interim results for the six months ended 30 June 2024.
Interim Management Report
I. Operational Highlights
In early May FCM announced that field work had been initiated on its projects in Canada, with three exploration teams deployed:
· Review of the historical core from the Sunbeam Property
· Reconnaissance trip to the Quinlan claims for access appraisal
· Preparation for stripping at North Hemlo
Additionally, Prospectair has been retained to undertake a geophysical survey at the newly acquired Kerrs Gold Property.
Marc Sale, CEO commented:
“I am, as ever, enthusiastic with the speed at which FCM has started the field season, all thanks to EGS’ (Emerald Geological Services) support. The review of the Sunbeam Property core, the geophysics survey over Kerrs and the preparation for work at Dead Otter herald an exciting field season for First Class”
II. Corporate and Financial Highlights
Since the beginning of 2024, the Company has undertaken several corporate actions aimed at leveraging its exceptional team and extensive network. FCM is now entering a phase of development that is expected to result in a significant increase in activity across its portfolio of assets.
· On 22 February the Company successfully completed a private placement through a subscription with an existing high-net-worth shareholder, issuing 3,700,000 ordinary shares at a price of 4.5 pence per share, thereby raising £166,500. This placement was facilitated by an additional share loan from the Company’s Executive Chairman, James Knowles, consisting of 3,700,000 shares.
· On 20 March 2024, the Company received approval for a maximum CAD$200,000 OJEP Grant for work completed on the Zigzag lithium and critical metals property, covering up to 50% of exploration expenditures from 1 April 2023, to 15 February 2024. This grant, which First Class has successfully secured in consecutive years, reflects the Ontario Government’s commitment to supporting early exploration for junior companies, and FCM is proud to be the only UK company to receive this non-dilutive funding for the second year running.
· On 3 April 2024, the Company received a Goods and Services Tax (GST)/Harmonized Sales Tax (HST) credit amounting to CAD$212,780.03 for the year ending 2023. This credit reflects the Company’s eligible expenditures and represents an important financial benefit, enhancing cash flow and supporting ongoing operations.
· On 9 April 2024, discussions commenced with Seventy Ninth Resources Limited (“SNR”), a division of the Seventy Ninth Group Limited (“SNG”), regarding several of FCM’s core and non-core assets. This negotiation underscored FCM’s business model of acquiring, enhancing, and monetizing its assets. The Company continues to explore potential synergies with SNR to expand their portfolio of natural resources assets.
· On 13 June 2024, the McKellar and Enable properties were sold to SNG for a combined cash payment of £270,000. Additionally, the Company entered into a £230,000 drawdown facility with SNG over a 12-month period, which will be utilised for general working capital and to advance exploration activities on remaining FCM properties. The loan, drawn in a single tranche, is secured by a debenture over the assets of First Class Metals PLC, carries a 15% coupon, and is structured on an interest-only basis with repayment due on 25 May 2025. Seventy Ninth Resources continues to conduct further due diligence on additional FCM assets, as previously announced on 9 April 2024.
James Knowles, Chairman commented:
“In the first half of the year, First Class Metals achieved a significant milestone with the successful asset sale to 79th Group, enhancing our financial position and providing resources for future growth. Our recent capital raises through share placements reflect our commitment to advancing our core portfolio and maximising shareholder value. We appreciate shareholders’ support as we continue to strengthen our position in the Canadian precious & critical metals exploration sector and work towards achieving our strategic goals. Thank you for being a part of our journey.”
III. Post period highlights
In the last three months comprising July to September 2024, FCM has been active both operationally with its exploration projects in Canada as well as on its corporate side. The highlights for this period are:
· On 8 July 2024, the Company completed the repayment of a share loan from director James Knowles, issuing 9,695,332 new ordinary shares to settle the outstanding position related to two tranches previously loaned to the Company.
· On 17 July 2024, the Company completed a private placing of 3,035,714 ordinary shares at a price of 2.8 pence per share, raising gross proceeds of £85,000, which represented a 5.6% premium to the mid-market closing price on July 16, 2024. To facilitate this placing, Executive Chairman James Knowles entered into a share lending agreement to loan the required shares to the Company, with the allotment of 5,912,059 new shares from him. No fees or security were associated with this share loan.
· On 2 August 2024, the Company completed the repayment of shares loaned by Executive Chairman James Knowles, issuing 5,912,059 new ordinary shares to settle the outstanding position related to two tranches previously announced on 17 July 2024. On the same date the Company also completed a private placing of 9,500,000 shares at a price of 2.7 pence per share, raising gross proceeds of £256,500, with Axis Capital Markets acting as the sole placing agent and subsequently appointed as the Company’s new broker.
IV. Financial Review
Funding
At the period end, the Group was funded through equity raises as well as sale of certain properties as stated above. A sum of £435,000 was raised through private placement and sale of properties.
Current Assets
At 30 June 2024, the Group had trade and other receivables of £75,428 (Dec 2023: £290,012, June 2023: £157,632).
Liquidity, cash and cash equivalents
At 30 June 2024, the Group held £83,006 (Dec 2023: £140,802, 30 June 2023: £844,131) of cash and cash equivalents, all of which are denominated in pound sterling.
Going concern
The financial information has been prepared on the basis that the Group will continue as a going concern.
As a junior exploration company, the Directors are aware that the Company must seek funds from the market to meet its investment and exploration plans and to maintain its listing status.
The Group’s reliance on a successful fund raising presents a material uncertainty that may cast doubt on the Group’s ability to continue to operate as planned and to pay its liabilities as they fall due.
The Company successfully raised £166,500 in the period ended 30 June 2024 through issuing shares loaned by a director. Additionally Canadian Tax Refunds of $212,780, the “OJEP” Grant receipt of $200,000 and property sales of £270,000 have been received during the period.
The Directors are aware of the reliance on fund raising within the next 12 months and the material uncertainty this presents but having reviewed the Group’s working capital forecasts they believe the Group is well placed to manage its business risks successfully providing the fund raising is successful.
