Empire Metals Limited / LON: EEE / Sector: Natural Resources

19 June 2023

Empire Metals Limited

("Empire" or "the Company")

Final Results

Empire Metals Limited (LON: EEE), the AIM-quoted resource exploration and development company, announces its final results for the year ended 31 December 2022.

The annual report and accounts for the year ended 31 December 2022 will be posted to shareholders today and will be available for download on the Company's website, www.empiremetals.co.uk, later today.

Highlights:

·    Confirmed discovery of a new emerging "Giant" mineral system at the Pitfield Project which has been found to host titanium mineralisation of globally significant size and grade in addition to widespread anomalous copper values.

·    Titanium rich mineralisation (between 4% and 10% TiO₂) was identified in all but one of 21 holes drilled, starting at or very near surface and with nearly a quarter of the holes still ending in high TiO₂ values of up to 154 metres depth.

·    Only 2% of this highly prospective, giant mineral system has been drilled to date demonstrating enormous potential for additional discoveries through future drilling currently being planned.

·    Cash at bank as at the date of signing the Financial Statements of £1.8 million, well-funded for planned work programmes focussed on our recent titanium discovery at the Pitfield Project.

·    Continued exploration activity at the Eclipse-Gindalbie Project - a highly prospective and high-grade gold project with a new kaolin discovery of potential economic significance.

·    Significant growth of exploration footprint across Australia's premier mining regions - portfolio now has exposure to commodities including gold, copper, titanium and lithium.

·    Increased exploration area from 3.1km² to 2,155km² comprising four major projects and transforming Empire into a significant explorer and potential developer in Australia.

·    Talented exploration and development team now established in Western Australia including Ed Baltis, Louisa Stokes and bolstered by the appointment of Andrew Faragher as Exploration Manager post period end.

Shaun Bunn, Managing Director, commented: "Empire can now boast one of the largest and most prospective exploration footprints across Australia - a premier mining jurisdiction which continues to produce some of the most exciting exploration success stories globally.  Our agreement in April 2022 which saw Empire acquire majority interests in three highly prospective exploration projects, Pitfield, Walton and Stavely, set the tone for our activities for the next year. All projects are in geological regions well known for world-class copper and/or gold discoveries and we are actively leveraging the expertise of our technical team to deliver new discoveries as our exploration programmes continue.

"We have also been building an experienced and highly capable exploration team and we are now in an excellent position to move forward with exploration programmes across multiple projects, prioritising work at our Pitfield Project in Western Australia.  Although at an early stage, Pitfield has consistently demonstrated that there is a "Giant" mineral system present and understandably, our exploration team are eager to press on with work here towards defining the parts of this giant mineral system that host economically significant concentrations of metals.  To this end, our maiden drill programme at Pitfield discovered a zone of high-grade titanium mineralisation of genuinely massive proportions; a Giant in a Land of Giants.  Copper values are also ubiquitously anomalous indicating that the fluid(s) involved in the titanium mineralising event were also carrying huge amounts of copper which we believe formed significant copper deposits in other parts of this giant mineral system as evidenced by the historic copper mines and prospects in this region. Pitfield has every potential to become a giant polymetallic orebody district of global significance that Empire now controls.

"I look forward to sharing updates from across our portfolio over the coming months, including more from our exploration activities at Pitfield, expected during the course of Q3.  We are also expecting more news from Eclipse-Gindalbie including further details about the kaolin discovery, plus the launch of our exploration programme at Walton.  We are entering into an exciting year of exploration activity and potential discovery, and I remain very enthusiastic about what the future has in store for us."

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, as incorporated into UK law by the European Union (Withdrawal) Act 2018, until the release of this announcement.

**ENDS**

For further information please visit www.empiremetals.co.uk  or contact:

CHAIRMAN'S STATEMENT

Our objective for 2022 was to establish a portfolio of high-quality exploration assets through which to deliver value to our shareholders by making new discoveries, and by developing known deposits.  We had a strong first project in the Eclipse-Gindabie Project, however our exploration aspirations were truly realised in April of last year when we acquired majority interests in three large new project areas, Pitfield, Walton and Stavely.  Pitfield and Walton are located in mining regions of Western Australia, and in the Stavely Arc region of Victoria in the case of the Stavely project, and all are known for world class and significant copper and/or gold discoveries.  These new projects opened up prospective new geological terranes for us, and importantly, increased our exploration area from 3.1km2 to 2,155km2, instantly transforming Empire into an explorer and potential developer with substantial scope and scale.

Our immediate priority has been the Pitfield Project, which has demonstrated all the hallmarks of a "Giant" mineral system with the potential to contain multiple giant metal deposits across its huge regional extent.  Given the many historic copper prosects and small mines in the district our focus has been on locating the parts of this giant mineral system most favourable for hosting economic copper deposits. On our very first reconnaissance drill program this giant mineral system has delivered to us a globally significant primary titanium discovery. Copper values are also strongly anomalous which tells us that other parts of this giant mineral system may host significant copper deposits as well.

Pitfield lies within the Neoproterozoic Yandanooka intracratonic sedimentary basin; the Neoproterozoic being one of the major copper mineralisation epochs globally.  Pitfield is located immediately adjacent to the historic Baxters copper mine at Arrino which produced 106 tonnes of copper at a grade between 20-30% which, along with numerous other prospects, demonstrates high regional prospectivity for copper.  We embarked on our exploration efforts confident in our ability to demonstrate a new copper discovery but realizing that giant mineral systems are special and can surprise.

Our work began with an airborne magnetic survey, carried out in June 2022, which identified a significant structure along the western boundary of the magnetic anomaly that closely aligns with a surface copper anomaly stretching over 7km, previously identified by Conzinc Riotinto of Australia (which became part of Rio Tinto Group) when conducting surface sampling in the early 1990s.  This airborne magnetic survey was quickly followed with an airborne electro-magnetic survey, and an evaluation of the historical exploration database, which, following an expert review undertaken by Ed Baltis, confirmed the presence of an exceptionally large magnetic anomaly extending over 40km in length. 

Field work began in November 2022, with the first phase of activity comprised of mapping surface geology and soil sampling. This surface mapping resulted in a number of rock samples being collected which confirmed copper enrichment along with quartz and magnetite hosted by sandstones -key elements of certain types of sediment-hosted stratabound copper deposits such as Udokan in Russia.  The following month, a contract geophysical survey crew was mobilised and they completed five traverses of Dipole-Dipole Induced Polarisation (DD-IP) for a total of 8,450-line metres.  The aim of the DD-IP survey was to identify drillable targets of sufficient scale within the prospective Mt. Scratch Formation sandstones, as supported by existing geological mapping and surface sampling results.  Although the lines were wide-spaced the DD-IP programme successfully outlined a number of extensive, strong IP/resistivity anomalies, many coinciding with the regional gravity and magnetics anomalies, copper-in-soil geochemical anomalies and the prospective sedimentary host rocks.

Armed with this information, Empire launched its maiden drill programme post period end in March 2023, completing 21 holes for a total of 3,206m.  The results of this programme, announced in May 2023, were both expected and unexpected.  As expected, the holes confirmed the presence of a regionally significant and robust, giant (~40km by 8km) metal-rich hydrothermal mineral system formed by a fluid(s) that carried a lot of copper but unexpectantly where the Company has drilled widespread and high-grade concentrations of titanium were found which were nonetheless extremely exciting.  Titanium rich mineralisation (between 4% and 10% TiO2) was identified in all but one of the 21 holes drilled, starting at or very near surface and with nearly a quarter of the holes still ending in high TiO2 values of up to 154 metres depth.  Given the scale and extent of the known mineral system, as defined by combined geological-geophysical-geochemical datasets, the Company believes it has discovered a new high-grade, titanium deposit with the potential to be among the most significant primary titanium orebodies globally.  The Company also maintains that other parts of this giant mineral system are more prospective for the formation and preservation of significant copper deposits and perhaps other metals as well. This is a complex but rich mineral system that clearly will reward our continued exploration.

Only 2% of this highly prospective, giant mineral system has been drilled to date demonstrating enormous potential for additional discoveries through future drilling currently being planned.  In order to fully realise the Company's exploration ambitions at Pitfield, in mid-December, Empire took the decision to expand our exploration licence area through the addition of two new Exploration Licence Applications, covering extensions to the north and south of the massive alteration footprint previously identified by us.  These new Exploration Licences increase our Pitfield exploration camp from 615km2 to over 1,041km².

Looking to the wider portfolio, our work at Eclipse-Gindalbie continues to generate positive results for us.  The period started with news that Empire had negotiated a tribute agreement to access the highly prospective Gindalbie Gold Project, which is contiguous with the Eclipse licence, therefore consolidating the mineralised footprint around our foundation asset.  This move increased Empire's exploration land package in the area by over 200%, to a total of 943ha.

Empire has conducted multiple drilling campaigns at Eclipse-Gindalbie during 2022, which has confirmed that the mineralised system at Eclipse is much larger than originally thought.  Drilling identified high-grade parallel veins to the Eclipse lode and wide strike extensions at Jack's Dream, confirming the presence of exceptional gold mineralisation and also a thick layer of kaolin around the South Gippsland #3 shaft at Gindalbie.

Drilling at the Homeward Bound prospect, located toward the western extent of the Gindalbie project, reported stellar grade intercepts including 5m @ 8.99 g/t Au from 31m downhole (including 1m at 40.90 g/t Au), 3m @ 8.96 g/t Au from 98m downhole (including 2m at 13.28 g/t Au), and 3m @ 9.88 g/t Au from 46m downhole (including 1m at 26.20 g/t Au).

Eclipse-Gindalbie continues to merit further exploration efforts, particularly with regard to the kaolin discovery.  Kaolin could provide Empire with a new industrial mineral dimension to its commodity focus, with kaolin used extensively in a number of industries including paper, plastics, adhesives, rubber, paint, refractories, cement, bricks and ceramics, and is considered to be a desirable feedstock for the production of high-purity aluminium oxide, an essential component in lithium-ion batteries.  Further work to assess the commercial potential of this discovery is ongoing and will be reported in due course.

Financial Results

As an exploration and development group which has no revenue we are reporting a loss for the 12 months ended 31 December 2022 of £1,162,720 (31 December 2021: loss of £589,254).

The Group's cash position at the date of signing this report is £1.8 million.

Outlook

2023 is looking like a particularly promising and productive year for Empire, as we push forward determinedly with exploration programmes across multiple projects; most notably Pitfield and Eclipse-Gindalbie, but also the Stavely and Walton Projects.  Following our spectacular drilling results from our maiden programme at Pitfield, the team is keen to keep up the forward momentum and undertake additional work to better define and test this giant mineral system for additional discoveries including copper and begin to prove up the titanium find which we believe will become an asset of globally significant magnitude.  Across our wider portfolio, we are also awaiting the metallurgical testwork and evaluation of the kaolin mineralisation at Eclipse-Gindalbie, and we are eager to commence maiden exploration at Stavely and Walton using airborne geophysical surveys at Stavely and geological mapping and rock/soil sampling at Walton. 

Under the experienced leadership of Managing Director Shaun Bunn, and Andrew Faragher, our new Exploration Manager, I believe Empire is very well positioned to make significant new discoveries and bring new exploration success stories to our shareholders.

As ever, I am extremely grateful to our shareholders for their continued support and I look forward to sharing more news with you from across our portfolio of assets during the course of 2023.

Neil O'Brien

Non-Executive Chairman

16 June 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

As at 31 December 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                               

Year ended 31 December 2022

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 December 2022

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2022

ACCOUNTING POLICIES

1.   General Information

The principal activity of Empire Metals Limited ("the Company") and its subsidiaries (together "the Group") is to implement its mineral exploration strategy to advance projects towards defining a sufficient in-situ mineral resource to support a detailed feasibility study towards mine development and production.

The Company's shares are traded on AIM, a market operated by the London Stock Exchange. The Company is incorporated in the British Virgin Islands and domiciled in the United Kingdom. The Company changed its name to Empire Metals Limited on 10 February 2020.

The address of its registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, BVI.

2.   Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1  Basis of Preparation of Financial Statements

The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union. The Group Financial Statements have been prepared under the historical cost convention, unless stated otherwise.

The Financial Statements are presented in UK Pounds Sterling rounded to the nearest pound.

The preparation of Financial Statements in conformity with IFRSs requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.

2.2  Changes in accounting policy and disclosures

(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 January 2022

The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 December 2022 but did not result in any material changes to the Financial Statements of the Group.

b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on future Group Financial Statements.

2.3  Basis of Consolidation

The Group Financial Statements consolidate the Financial Statements of Empire Metals Limited and the Financial Statements of all of its subsidiary undertakings made up to 31 December 2022.

Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Where an entity does not have returns, the Group's power over the investee is assessed as to whether control is held. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Below is a summary of subsidiaries of the Group:

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.4  Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Report from page 3. In addition, Note 3 to the Financial Statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; and details of its exposure to credit and liquidity risk.

The Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating steady revenue streams, an operating loss has been reported and an operating loss is expected in the 12 months to 31 December 2023, the Directors believe that the Group will have sufficient funds to meet its immediate working capital requirements and undertake its targeted operating activities over the next 12 months from the date of approval of these Financial Statements. As at the balance sheet date, the Group has cash and cash equivalents of £1,467,769 and a further £1.25 million was raised via the issue of new ordinary shares in March 2023. These amounts combined are expected to adequately cover forecast working capital requirements. 

The Directors have, in the light of all the above circumstances, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group Financial Statements.

2.5  Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

Segment results, include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

2.6  Foreign Currencies

(a) Functional and presentation currency

Items included in the Financial Statements of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the Company is Sterling, the functional currency of the BVI subsidiaries is US Dollars, the functional currency of the Austrian subsidiary is Euros and the functional currency of the Australian subsidiary is AUD Dollars. The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.

(c) Group companies

The results and financial position of all the Group's entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

·    assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

·    income and expenses for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

·    all resulting exchange differences are recognised in other comprehensive income where material.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

2.7  Intangible Assets

Exploration and evaluation assets

The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets, relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.

Exploration and evaluation assets are recorded and held at cost.

Exploration and evaluation assets are assessed for impairment annually or when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. IFRS 6 permits impairments of exploration and evaluation expenditure to be reversed should the conditions which led to the impairment improve. The Group continually monitors the position of the projects capitalised and impaired.

Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement.

2.8  Property, Plant and Equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

Computer equipment - 20 to 50% straight line

Field equipment - 20 to 50% straight line

All assets are subject to annual impairment reviews. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replacement part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.

The asset's residual value and useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other gains / (losses)' in the income statement.

2.9  Impairment of non-financial assets

Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment.  An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

Non-financial assets that suffered impairment (except goodwill) are reviewed for possible reversal of the impairment at each reporting date.

2.10 Assets classified as held for sale

Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying value and fair value less costs to sell. An impairment loss is recognised for any subsequent write-down of the asset to fair value less costs to sell.

2.11 Financial Assets

(a) Classification

The Group classifies its financial assets in the following categories: at amortised cost including trade receivables and other financial assets at amortised cost, at fair value through other comprehensive income and at fair value through profit or loss, loans and receivables, and available-for-sale.  The classification depends on the purpose for which the financial assets were acquired.  Management determines the classification of its financial assets at initial recognition.

(b) Recognition and measurement

Amortised cost

Trade and other receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, in which case they are recognised at fair value. The group holds the trade and other receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method.

The group classifies its financial assets as at amortised cost only if both of the following criteria are met: 

·      the asset is held within a business model whose objective is to collect the contractual cash flows; and 

·      the contractual terms give rise to cash flows that are solely payments of principle and interest. 

(c)  Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

(d)           Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. This is the same treatment for a financial asset measured at FVTPL.

2.12 Financial Liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Trade and other payables

After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.

Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

Fair value

All assets and liabilities for which fair value is measured or disclosed in the consolidated Financial Statements are categorised within the fair value hierarchy. The fair value hierarchy prioritises the inputs to valuation techniques used to measure fair value. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments and other assets and liabilities for which the fair value was used:

-       level 1: quoted prices in active markets for identical assets or liabilities;

-       level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

-       level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

2.13 Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and in hand.

2.14 Taxation

Tax for the period comprises current and deferred tax.  Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity.  In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income.  Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.  It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated Financial Statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.  Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the group is unable to control the reversal of the temporary difference for associates. Only where there is an agreement in place that gives the group the ability to control the reversal of the temporary difference not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

There has been no tax credit or expense for the period relating to current or deferred tax.

2.15 Share Capital, share premium and other reserves

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement.

Other reserves consist of the share option reserve and the foreign exchange translation reserve. See Notes 15 and 16 for further detail.

2.16 Reverse acquisition reserve

The reverse acquisition reserve arose on the acquisition of Kibe Investments No. 2 Limited in 2010. There has been no movement in the reserve since that date.

2.17 Share Based Payments

The Group operates a number of equity-settled share-based schemes, under which the entity receives services from employees or third-party suppliers as consideration for equity instruments (shares, options and warrants) of the Group.  The Group may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled share based payments is recognised as an expense in the income statement or charged to equity depending on the nature of the service provided or instrument issued.  The total amount to be expensed or charged in the case of options is determined by reference to the fair value of the options or warrants granted:

·      including any market performance conditions;

·      excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and

·      including the impact of any non-vesting conditions (for example, the requirement for employees to save).

In the case of shares and warrants the amount charged to the share premium account is determined by reference to the fair value of the services received if available. If the fair value of the services received is not determinable the shares are valued by reference to the market price and the warrants are valued by reference to the fair value of the warrants granted as described previously.

Non-market vesting conditions are included in assumptions about the number of options or warrants that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.  At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement or equity as appropriate, with a corresponding adjustment to another reserve in equity.

When the warrants or options are exercised, the Company issues new shares.  The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the warrants or options are exercised.

2.18 Operating Leases

Leases of assets under which the short-term exemption under IFRS 16 has been taken and which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to the income statement on a straight-line basis over the period of the respective leases.

2.19 Revenue Recognition

Revenue is recognised in respect of amounts recharged to project strategic partners in accordance with their contractual terms. Revenue is also generated from management and consulting services to third parties.

The Group derives revenue from the transfer of services overtime and at a point in time in the service lines detailed below. Revenues from external customers come from consulting services.

The Group provides management services to subsidiary undertakings and joint venture entities for a fixed monthly fee. Revenue from providing services is recognised in the accounting period in which the services are rendered. Efforts to satisfy the performance obligation are expended evenly throughout the performance period and so the performance obligation is considered to be satisfied evenly over time.

2.20 Finance Income

Finance income consists of bank interest on cash and cash equivalents which is recognised using the effective interest rate method.

2.21 Discontinued Operations

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

·      represents a separate major line of business or geographic area of operations;

·      is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or

·      is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is represented as if the operation had been discontinued from the start of the comparative year.

3.   Financial Risk Management

3.1  Financial Risk Factors

The Group's activities expose it to a variety of financial risks being market risk (including, interest rate risk, currency risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

Market Risk

(a) Foreign currency risks

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and Euros against the UK pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiary in USD and Euros. The Directors will continue to assess the effect of movements in exchange rates on the Group's financial operations and initiate suitable risk management measures where necessary.

(b) Price risk

The Group is not exposed to commodity price risk as a result of its operations, which are still in the exploration phase. Other than insignificant consulting revenue, there is no revenue. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.

The Group has no exposure to equity securities price risk, as it has no listed equity investments.

(c) Interest rate risk

As the Group has no borrowings, it is not exposed to interest rate risk on financial liabilities. The Group's interest rate risk arises from its cash held on short-term deposit, which is not significant.

Credit Risk

Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables.

The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

Liquidity Risk

In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed. In March 2023, the Company raised net proceeds of £1.25m. See note 2.4 for further details on going concern and liquidity.

3.2  Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to provide returns for shareholders and to enable the Group to continue its exploration and evaluation activities.  The Group has no debt at 31 December 2022 and defines capital based on the total equity of the Company being £4.6m. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.

4.   Critical Accounting Estimates and Judgements

The preparation of the Group Financial Statements in conformity with IFRSs requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant items subject to such estimates and assumptions include, but are not limited to:

Impairment of exploration and evaluation costs

Exploration and evaluation costs have a carrying value at 31 December 2022 of £3,337,598 (2021: £1,952,419): refer to Note 9 for more information. The Group has a right to renew exploration permits and the asset is only depreciated once extraction of the resource commences. Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery.  This review takes into consideration the expected costs of extraction, long term metal prices, anticipated resource volumes and supply and demand outlook.  In the event that a project does not represent an economic exploration target and results indicate there is no additional upside, a decision will be made to discontinue exploration.

Towards the end of 2021, management had doubts over the viability of Central Menzies. These were confirmed shortly after the year end with the publication of the results of a second phase of RC drilling which focused on testing the Nugget Patch gold trend to confirm if there was higher grade mineralisation sitting at depth below a supergene gold enriched zone and to confirm historic high grade gold intersections closely associated with the main workings at Teglio. The results were generally inconclusive, with no obvious continuity along strike and no significant high-grade intercepts. In February 2022, the Directors formally announced that it would not take up the Option over the Central Menzies Gold Project. As such, management believe there were conditions at the year end to suggest that Central Menzies exploration asset was impaired and it was written off in full.

Share based payment transactions

The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and to suppliers for various services received.

The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates.  These assumptions have been described in more detail in Note 16.

5.   Segmental Information

As at 31 December 2022, the Group operates in three geographical areas, the UK, Austria and Australia. The Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Austria and Australia relate to exploration and evaluation work. The reports used by the chief operating decision maker are based on these geographical segments.

The Group generated no revenue during the year ended 31 December 2022: £nil (2021: £nil).

Segment assets and liabilities are allocated based on geographical location.

6. Expenses by Nature

7.   Taxation

The tax on the Group's loss differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:

No charge to taxation arises due to the losses incurred.

The weighted average applicable tax rate of 23% (2021: 23.3%) used is a combination of the 19% standard rate of corporation tax in the UK, 25% Austrian corporation tax and 25% Australian corporation tax.

The Group has accumulated tax losses of approximately £7,110,000 (2021: £6,965,000) available to carry forward against future taxable profits. A deferred tax asset has not been recognised because of uncertainty over future taxable profits against which the losses may be utilised.

8.   Property, Plant and Equipment

9.   Intangible Assets

The additions in the year relate to two of the Group's main project areas; the Eclipse-Gindalbie Project and the Pitfield Project.

Eclipse-Gindalbie Project

In 2020 the Group acquired an option to purchase 75% of the Eclipse Gold license. The option was exercised in February 2021 for a consideration of AUD$1,000,000 (approximately £550,000) in cash and AUD$500,000 (£277,750) settled via the issue of 7,095,510 new ordinary shares of no-par value at a price of 3.91p.

In January 2022, the Group entered into a Tribute Agreement for the Gindalbie license. The cost to enter into the Tribute Agreement was AUD$250,000 for an initial 6-month exploration term. An additional A$250,000 was paid in August 2022 to extend the exploration period by a further 18 months.

In February 2022, 1,676m of Reverse Circulation ("RC") drilling was completed, focused mainly on the Homeward Bound, Laurel-Bulletin, South Gippsland #3, Golden Puzzle and Bud's Find areas. Of the four RC holes drilled at the Homeward Bound target, three reported very high-grade intercepts.

Following from this, a further six Diamond Drill ("DD") holes for a total of 999m were completed at Eclipse during the year to test for continuity between Eclipse and Jack's Dream and to the north-west of Jack's Dream. Five of the six DD holes intercepted the mineralised shear reporting  significant gold intercepts.

Following on from successful drilling campaigns in February 2022 and June 2022, the Company decided to carry out a small RC campaign consisting of nine RC drill holes for 770m. The Company found evidence of kaolinite-rich clays within the intensely leached upper part of the weathering profile. The next phase of the exploration programme will focus on the metallurgical quality of the white kaolin samples collected from this drill programme.

Pitfield Project

During 2022, work was focussed on the reinterpretation of historic geochemical and geophysical work undertaken by previous explorers as well as some first phase mapping and sampling.

In accordance with IFRS 6, the Directors undertook an assessment of the following areas and circumstances which could indicate the existence of impairment:

•     The Group's right to explore in an area has expired or will expire in the near future without renewal.

•     No further exploration or evaluation is planned or budgeted for.

•     A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves.

•     Sufficient data exists to indicate that the book value may not be fully recovered from future development and production.

The Directors do not consider the assets to be impaired.

10.  Trade and Other Receivables

Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above. These assets, excluding prepayments, are the only form of financial asset within the Group, together with cash and cash equivalents.

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. All trade and other receivables are considered fully recoverable and performing.

11.  Financial Assets At Fair Value Through Profit or Loss

On 22 February 2021, the Company announced that it had successfully completed the Eclipse acquisition and owned 75% of the project and license. The cost of the option was transferred to Exploration and Evaluation assets in line with IFRS 6.

In May 2021, the Group purchased an option to acquire a 75% interest in four exploration licences which comprise the Central Menzies Gold project. The Group committed to spend AUD$500,000 on exploration at Central Menzies within the 9-month option period.

At the year-end management did not have plans to spend further funds on the Central Menzies license area and the minimum spend commitment had been met. Shortly after the period end, the Company announced that it would not exercise the option to acquire the 75% interest in the project. Given the existence of impairment indicators at the year end, management took the view to impair the Central Menzies exploration asset in full.

12.   Cash and Cash Equivalents

The Group's cash is held with facilities with AA and A credit ratings.

The carrying amounts of the Group and Company's cash and cash equivalents are denominated in the following currencies:

13.  Trade and Other Payables

The carrying amounts of the Group's trade and other payables are denominated in the following currencies:

14.   Share Capital and Share Premium

On 15 December 2010 the shareholders approved the removal of the Company's authorised share capital and so there is no limit on the number of shares the Company is authorised to issue. On that date the shareholders also approved the removal of the nominal value of the shares, as permitted under local company legislation. As such all amounts raised are considered to be share premium.

Issued share capital

On 22 February 2021, the Company issued and allotted 7,095,510 new Ordinary Shares at a price of 3.9 pence per share as consideration for the purchase of 75% of the equity of Eclipse Exploration Pty. The Company issued and allotted a further 7,095,510 new Ordinary Shares at the same price as payment of a finder's fee in respect of the Eclipse transaction.

On 20 May 2021, the Company issued and allotted 1,921,068 new Ordinary Shares at a price of 2.85 pence per share as consideration for the purchase of 75% of the equity of Central Menzies. The Company issued and allotted a further 1,921,068 new Ordinary Shares at the same price as payment of a finder's fee in respect of the Central Menzies transaction.

On 10 June 2021, pursuant to the advisory agreement, a fee of US$150,000 settled via the issue of 3,995,238 new ordinary shares in the Company at a price of 2.65p were allotted to the Company's Georgian advisor.

On 13 April 2022, following completion on Pitfield Copper Project, the Company issued 5,611,863 consideration shares to Century Minerals Pty Ltd.

On 28 April 2022, the Company announced a placing of 85,000,000 new ordinary shares of no par value, at a price of 0.02p.

15. Other reserves

Foreign currency translation reserve - the foreign currency translation reserve represents the effect of changes in exchange rates arising from translating the Financial Statements of subsidiary undertakings into the Company's presentation currency.

Share option reserve - the share option reserve represents the fair value of share options and warrants in issue. The amounts included are recycled to share premium on exercise or recycled to retained earnings on expiry. Note 16 outlines the share based payments made in the year.

16. Share Based Payments

Warrants and options outstanding at 31 December 2022 have the following expiry dates and exercise prices, and were valued using the Black Scholes model using the assumptions below:

The risk free rate of return is based on zero yield government bonds for a term consistent with the warrant and option life.  Volatility is calculated using an average of the Company's share price 6 months prior to the granted date.

The movement of options and warrants for the year to 31 December 2022 is shown below:

The total fair value charged to the statement of comprehensive income for the year ended 31 December 2022 and included in administrative expenses was £58,220 (2021: £473,059).

17.  Other losses

18.  Employees

The average monthly number of employees during the year was 1 (2021: 1).

19. Directors' Remuneration

*Resigned 8 June 2022

20. Earnings per Share

Continuing operations

The calculation of the total basic losses per share of 0.292 pence (2021: loss 0.706 pence) is based on the losses attributable to equity owners of the group of £1,162,720 (2021: £2,340,790) and on the weighted average number of ordinary shares of 398,508,796 (2021: 331,475,515) in issue during the period.

Discontinued operations

The calculation of the total basic and diluted earnings per share of nil pence (2021: 0.528 pence) is based on the profit attributable to equity owners of the group of £nil (2021: £1,751,536) and on the weighted average number of ordinary shares of 398,508,796 (2021: 331,475,515) in issue during the period.

In accordance with IAS 33, basic and diluted earnings per share are identical in 2022 as the effect of the exercise of share options or warrants would be to decrease the loss per share as the entity is loss making, these instruments are anti-dilutive.

21. Commitments

(a) Work programme commitment

The Eclipse Mining Licence has an annual minimum expenditure commitment of AUD$30,300.

Pitfield/Walton/Stavely - Eclipse has a commitment to spend AUD$1.4 mill in total across these three licence areas within 3 years of first completion being 6 April 2025

Gindalbie - under the tribute agreement we are obliged to spend a total of AUD$250,000 between 24th August 2022 and 24th Feb 2024

(b) Royalty agreements

As part of the contractual arrangement with Kibe No.1 Investments Limited the Group has agreed to pay a royalty on revenue from gold sales arising from gold mines developed by Noricum Gold AT GmbH and covered by licenses acquired by Kibe No.1 Investments Limited. Under the terms of the Royalty Agreement between Kibe No.1 Investments Limited and Noricum Gold AT GmbH, the Group shall pay royalties, based on total ounces of gold sold, equal to US$1 for every US$250 of the sale price per ounce.

(c) Lease agreements

During the period Eclipse Exploration Pty Ltd, a wholly owned subsidiary of Empire Metals Limited, entered into a 12 month office lease of AUD$17,160 per annum. At the year end the commitment amounted to AUD$3,900. Additionally, Empire entered into a 12 month office lease of £18,000 per annum. The year end commitment amounted to £12,000.

The lease payments in respect of the two leases have been expensed to the Consolidated Statement of Comprehensive Income in line with IFRS 16 for commitments spanning less than 12 months from the year end date.  

22. Financial instruments

Financial instruments measured at fair value

The fair value hierarchy of financial instruments measured at fair value is provided below. The different levels have been defined as follows:

-      Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),

-      Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2),

-      Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

Cost may be an appropriate estimation of fair value at the measurement date only in limited circumstances, such as for a pre-revenue entity when there is no catalyst for change in fair value, or the transaction date is relatively close to the measurement date. The financial asset relates to costs incurred with the acquisition of an option to invest in a 75% holding of Eclipse Exploration PTY. Further detail can be found in note 12.

Group

There were no assets held at fair value as at 31 December 2022.

There were no assets held at fair value as at 31 December 2021.

23. Related Party Transactions

Loans provided by Parent Company

As at 31 December 2022 there were amounts receivable of £10,933 (2021: £8,958) from Kibe No.2 Investments Limited. No interest was charged on the loans.

As at 31 December 2022 there were amounts receivable of £696,186 (2021: £694,186) from European Mining Services Limited.

As at 31 December 2022 there were amounts receivable of £4,376,213 (2021: £2,737,475) from Eclipse Exploration Pty Ltd.

As at 31 December 2022 there were amounts receivable of £145,325 (2021: £119,704) from Noricum AT GmbH.

As at 31 December 2022 there were amounts receivable of £51,602 (2021: £50,062) from GMC Investments Limited.

Loans provided by Kibe No.2 Investments Limited

As at 31 December 2022 there were amounts receivable of £754,517 (2021: £754,517) from Noricum AT GmbH.

All intra-group transactions are eliminated on consolidation.

Other Transactions

Westend Corporate LLP, an entity in which Gregory Kuenzel is a partner, was paid a fee of £84,040 (2021: £69,640) for accounting and corporate services to the Group. At the year-end there was an outstanding balance of £7,124 (2021: £7,053).

Michael Struthers received £57,625 (2021: £65,000) through his service company, MS Mining Consulting LDA, as disclosed in Note 19.

24. Ultimate Controlling Party

The Directors believe there to be no ultimate controlling party.

25. Events after the Reporting Date

On 13 March 2023 the Company completed a placing to raise £1.25 million before expenses by way of a placing of 55,555,554 new ordinary shares of no par value in the capital.

On 23 March 2023 the Company agreed to issue options over a total of 28,500,00 ordinary shares of no-par value in the capital to Directors and an employee of the Group.

On 26 April 2023 the Company announced the granting of the exploration licence for the Walton Copper-Gold-Lithium Project, in which a 70% interest is held.

On 27 April 2023 the Company received notification from a warrant holder to exercise warrants over 1,500,000 new ordinary shares of no par value in the share capital of the Company at a price of 1.3 pence per share.