MetalNRG plc (LON:MNRG), the natural resource investing and exploration company, announces final results for the 10 months’ period ended 31 December 2019 (“Final Results”).
The Company’s principal activity during the year was that of a natural resource investing company listed on the Main Market for listed securities of the London Stock Exchange.
The Company has had an eventful year, the most significant development of which was the announcement made on 23 July 2019 confirming admission of the Company’s entire issued share capital of 297,702,306 ordinary shares of nominal value 0.01 pence each, to listing on the standard segment of the Official List and to trading on the Main Market for listed securities of the London Stock Exchange under the TIDM “MNRG”.
This announcement and the move from the NEX Exchange Growth Market in London was the result of 9 months’ work and the beginning of a new journey. Initially, the Company had planned to list on the London Stock Exchange’s Main Market with the focus of the business being uranium and gold. In relation to uranium, we had two solid earn in agreements signed one with International Mining Company Invest Inc (“IMC”), a company with a uranium mining licence in the Kyrgyz Republic, which was ready to move into production and a second earn in agreement with Mkango Resources Limited (“Mkango”) for their African project also focused on Uranium. As a result of the decision of the government in the Kyrgyz Republic to propose a full ban on the exploration and production of uranium in that country, we had to review our strategy and hold off on our plans. This also meant delaying the planned re-listing of the Company. Following this set back, we decided to focus our efforts on our Gold projects in Arizona, our interests in Australia and to seek new projects to be added to our portfolio. With this revised strategy we listed the Company in July 2019 and since then we have been implementing our strategic plans.
The Company is focused on identifying projects that offer the opportunity for early stage cashflow and offer significant upside exploration opportunity. The Gold Ridge Project, our 100% owned gold project in Arizona, USA, meets these criteria, as reported to market previously.
On 28 November 2019, we announced the results of pillar sampling work completed at the Gold Ridge Project. The underground sampling programme we completed with assays confirming gold within all samples returned from the local ALS lab in Tucson. Our priority now is evaluation work on the last mined face on Level 6 at the Gold Ridge Mine. A sample from this area returned 30.4 grams/tonne (g/t) gold (Au) and 69 g/t silver. The face shows the exposed vein with a width of 0.6 metres on a mined face of 1.3 metres. The vein consists of quartz with massive sulphide mineralisation. These results support our belief that the Gold Ridge Project is a unique exploration and production opportunity with demonstrable high-grade mineralisation, potential for early avenues to revenue generative processing and a larger scale exploration opportunity. A further 17 samples were taken from selected pillars within Levels 6 and 4, representing approximately 10% of the pillars remaining within the Gold Ridge Mine. All samples contained gold with a range of gold values from 0.05 to 6.5 g/t Au.
These results, along with the results from the waste dump samples taken previously outside of Level 6 of the Gold Ridge Mine and historical mapping and information, have been reviewed in detail to establish the optimum way to progress with our plans at the mines and permits are being requested to progress our work. The apparent connectivity of the mineralised structures across the three previously producing mines that are within the Gold Ridge Project area is a significant feature that further bolsters the potential economic value of this 100% owned property.
Late in the year, the Company was offered the opportunity to co-invest in an Oil & Gas project in Romania. On paper this project meets our stated investment criteria and provides access to early cashflow and substantial exploration upside. As a result, we entered into an exclusivity period with the vendors to complete operational, financial and legal due diligence on the project.
To date we have completed a detailed desk top review of the data supplied by the vendors and we have completed a site visit which has confirmed that the assets on the target company’s balance sheet are sound and ancillary equipment is in good working order. We are now in the process of appointing a consultant to complete a detailed CPR on the assets and we are working on developing a operational plan that delivers on our investment criteria. Further announcements will be made as we make progress and reach the conclusion of our exclusivity period and the due diligence process.
Given our investment criteria, we have reviewed our asset in Australia, the Palomino Project, our 100% owned cobalt project held by our subsidiary, MetalNRG Australia Pty Ltd. The conclusion the Board reached was that this early stage cobalt opportunity no longer meets our investment criteria and as a result we are in the process of relinquishing the licence and closing MetalNRG Pty Ltd down which will enable us to reduce our costs.
Last but not least, the year saw some changes to our Board. Gervaise Heddle stepped down as a non- executive director from the Board in September 2019 and in November 2019 Pierpaolo Rocco joined the Board as executive director for Oil & Gas.
The year has been eventful and the Board now believes the Company is set to deliver real value to our shareholders over the next few years as we implement our strategy on early cashflow generative projects that offer additional exploration upside.
RESULTS AND DIVIDENDS
The loss of the Group for the 10 months’ period ended 31 December 2019, after taxation, attributable to equity holders of MNRG, the Parent Company, amounted to £584,855 (12 months ended 28 February 2019: £238,108 loss).
The directors do not recommend the payment of dividends but are confident that a suitable dividend policy can be considered in the future (12 months ended 28 February 2019: £nil).
POST PERIOD END EVENTS
During the past 10 months the Company has supported the listing on the London Stock Exchange of Cobra Resources Plc (“Cobra”), as an investment shell. Following Cobra’s acquisition and planned reverse take-over of Lady Alice Mines Pty Ltd, an Australian company that owns a previously producing copper mine in Australia, Prince Alfred, and which also has the right, by way of an earn in agreement, to earn up to 75% of a gold project, Wudinna, also in Australia, the Company supported the relisting of Cobra to the Main Market of the London Stock Exchange. The relisting and admission of Cobra’s shares to the Main Market was completed in early January 2020. MNRG has a shareholding in Cobra which represents 4.3% of its shares in issue.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group’s financial instruments comprise investments, cash at bank and various items such as available for sale assets, other debtors, loans and creditors. The Group has not entered into derivative transactions nor does it trade financial instruments as a matter of policy.
The Group’s credit risk arises primarily from cash at bank, other debtors and the risk the counterparty fails to discharge its obligations. At 31 December 2019 £25,000 (28 February 2019 – £35,000) was unpaid for shares in the Company but not impaired.
The Company’s credit risk primarily arises from inter-company debtors, which are considered to form part of the Company’s investment in the subsidiaries (see Note 8 to the Financial Statements) and cash at bank and other debtors, as per the Group. Should the subsidiaries’ exploration activities not be successful, it is possible that these debtors may become irrecoverable.
Liquidity risk arises from the management of cash funds and working capital. The risk is that the Group will fail to meet its financial obligations as they fall due. The Group operates within the constraints of available funds and cash flow projections are produced and regularly reviewed by management.
Interest rate risk profile of financial assets
The only financial assets (other than short term debtors) are cash at bank and in hand, which comprises money at call. The interest earned in the year was negligible. The directors believe the fair value of the financial instruments is not materially different to the book value.
Foreign currency risk
The Group has Australian and United States subsidiaries, which can affect the Group’s sterling denominated reported results as a consequence of movements in the sterling/Australian dollar/US dollar exchange rates. The Group also incurs costs denominated in foreign currencies which gives rise to short term exchange risk. The Group does not currently hedge against these exposures as they are deemed immaterial and there is no material exposure as at the period end (at 28 February 2019 – £nil).
The Group is also exposed to market risk arising from listed investments which are stated at their fair value.
KEY PERFORMANCE INDICATORS (KPIs)
The financial statements of a natural resource investing company can provide a moment in time snapshot of the financial health of the Company but do not provide a reliable guide to the performance of the Company or its Board.
At this stage in the Company’s development the Directors regularly monitor key performance indicators associated with funding risk, being primarily projected cash flows associated with general administrative expenses and projected cash flows on a project by project basis. This year the Company has been able to raise the funds as needed to finance its activities.
KPIs are not appropriate as a means of assessing the value creation of a company which is involved in natural resource investment and which currently has no turnover. The Board considers that the detailed information in the Business Review in the Strategic Report is the best guide to the Group’s performance during the year.
The Company’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern and develop its mining and exploration activities to provide returns for shareholders. The Group’s funding comprises equity and debt. The directors consider the Company’s capital and reserves to be capital. When considering the future capital requirements of the Group and the potential to fund specific project development via debt, the directors consider the risk characteristics of all the underlying assets in assessing the optimal capital structure.
Approved by the Board of Directors
and signed on behalf of the Board
Director and Chief Executive Officer
20 March 2020
The directors are pleased to submit their Reports and audited financial statements for MetalNRG plc (the “Company” and collectively with its subsidiaries the “Group”) for the 10 months’ period ended 31 December 2019.
The Strategic Report contains details of the Group’s principal activities and includes an Operational Review which provides detailed information on the development of the Group’s businesses during the last 10 months period and which provided indications of likely future developments and events that have occurred after the Balance Sheet date. The Strategic Report also contains details in Risks and Uncertainties of the Group’s exposure to risks and uncertainties and the Company’s risk management.
This Directors’ Report includes the information required to be included under the Companies Act or, where provided elsewhere, an appropriate cross-reference is given. The Corporate Governance Statement, approved by the Board, is incorporated by reference herein.
In common with many other mineral exploration companies, the Company raises finance for its exploration and appraisal activities in tranches as and when required. When any of the Group’s projects move to the development stage specific project financing is required.
The directors prepare budgets that extend beyond the period of 18 months from the date of this Directors’ Report. Taking into account the Company’s cash resources at the period-end, these projections include the proceeds of further fund-raisings that may be required within the next 12 months to meet the Group’s overheads and planned project expenditure and maintain the Company and its subsidiaries as going concerns. Although the Company has been successful in raising funding in the past, there is no guarantee that it will be able to raise sufficient funding in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Company’s and the Group’s ability to continue as going concerns and accordingly the Company and the Group may be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, the directors are confident that that they will be able to secure additional funding when required to meet further exploration costs for the foreseeable future as well as its corporate overheads and the directors therefore believe that the going concern basis is appropriate for the preparation of the Group’s financial statements.
RISKS AND UNCERTAINTIES AND FINANCIAL INSTRUMENTS
The business of mineral exploration, evaluation and development has inherent risks. The Company’s exposure to risks is explained in Risks and Uncertainties in the Strategic Report together with the policies of the Board for the review and management of those risks.
THE GROUP’S PERFORMANCE AND FUTURE DEVELOPMENTS
A review of the Company’s projects and their performance during the financial period and details of future developments and an indication of the outlook for the future, are contained in the Strategic Report.
The Board will continue with its strategic plans to generate growth in value for shareholders in line with its business model which is explained in the Strategic Report.
The directors of the Company during the period were:
Christopher Peter Latilla-Campbell – Non-executive Chairman of the Board and Chairman of the Audit Committee
Rolf Ad Gerritsen – Chief Executive Officer
Pierpaolo Rocco – Executive director, Oil & Gas (appointed to the Board on 29 November 2019)
Christian Schaffalitzky – Non-executive director and Chairman of the Remuneration Committee
Gervaise Robert John Heddle – Non-executive director (resigned from the Board on 23 September 2019)
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