Notes To The Financial Statements

For the year ended 31 December 2022

 

ACCOUNTING POLICIES

 

1.   General Information

 

The principal activity of Alien Metals Limited ("the Company") and its subsidiaries (together "the Group") is the acquisition and development of mineral resource assets.

 

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 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 and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards, IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the United Kingdom applicable to companies under IFRS. The Group and Company Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition.

       

The Financial Statements are presented in US dollars rounded to the nearest thousand.

       

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

 

2.2  Changes in Accounting Policy and Disclosures

(a) New and amended standards adopted by the Group and Company

 

The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions applicable for the period ended 31 December 2022 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:

 

Standard	Impact on initial application	Effective date
IFRS 17 (Amendments)	Insurance contracts	1 January 2023
IAS 1 (Amendments) and IFRS Practice Statement 2	Disclosure of Accounting Policies	1 January 2023
IAS 8 (Amendments)	Definition of Accounting Estimate	1 January 2023
IAS 12 Income Taxes (Amendments)	Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction	1 January 2023
IAS 1 (Amendments)	Classification of liabilities as current or non-current	1 January 2024
IFRS 16 (Amendments)	Lease Liability in a Sale and Leaseback	1 January 2024

 

None are expected to have a material effect on the Group Financial Statements.

 

2.3  Basis of Consolidation

The Group Financial Statements consolidate the Financial Statements of Alien 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:

 

Name of subsidiary	Place of business	Parent company	Share capital held	Principal activities
Compañía Minera Estrella de Plata S.A. de C.V.	Mexico	Alien Metals Ltd	100%	Exploration
Arian Silver Corporation (UK) Ltd	England and Wales	Alien Metals Ltd	100%	Holding
Arian Silver (Holdings) Limited	England and Wales	Alien Metals Ltd	100%	Holding
A.C.N. 643 478 371 Pty Ltd	Australia	Alien Metals Ltd	100%	Exploration
Iron Ore Company of Australia Pty Ltd	Australia	Alien Metals Ltd	100%	Exploration
Alien Metals Australia Pty Ltd	Australia	Alien Metals Ltd	100%	Exploration

 

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated on consolidation. 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

These financial statements have been prepared on the going concern basis. 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 Statement and the Strategic Report.

 

As at 31 December 2022, the Group had cash and cash equivalents of $2,177,000. The Directors have prepared cash flow forecasts to 30 June 2024 which take account of the cost and operational structure of the Group and Parent Company, planned exploration and evaluation expenditure, licence commitments and working capital requirements. These forecasts indicate that the Group and Parent Company's cash resources are not sufficient to cover the projected expenditure for the period for a period of 12 months from the date of approval of these financial statements.

 

In common with many exploration and evaluation entities, the Company will need to raise further funds within the next 12 months in order to meet its expected liabilities as they fall due and progress the Group into construction and eventual production of revenues. The Directors are confident in the Company's ability to raise additional funds as required, from existing and/or new investors, within the next 12 months.

 

Given the Group and Parent Company's current cash position and its demonstrated ability to raise capital, the Directors have a reasonable expectation that the Group and Parent Company has adequate resources to continue in operational existence for the foreseeable future.

 

Notwithstanding the above, these circumstances indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and, therefore, that the Group and Parent Company may be unable to realise their assets or settle their liabilities in the ordinary course of business. As a result of their review, and despite the aforementioned material uncertainty, the Directors have confidence in the Group and Parent Company's forecasts and have a reasonable expectation that the Group and Parent Company will continue in operational existence for the going concern assessment period and have therefore used the going concern basis in preparing these consolidated financial statements. The auditors make reference to going concern by way of a material uncertainty in their report.

 

 

 

 

 

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. The Board of Directors considers there to be only one operating segment during the year, the exploration, development and exploitation of mineral resources, and three geographical segments, being Mexico, Australia and United Kingdom.

 

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 Pounds Sterling, the functional currency of the Australian subsidiaries is Australian Dollars and Mexican subsidiary Mexican pesos. The Financial Statements are presented in US dollar, rounded to the nearest thousand.

 

(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 Consolidated Statement of Comprehensive Income.

 

(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 not subject to amortisation but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units ("CGU's"), which are based on specific projects or geographical areas. The CGU's are then assessed for impairment using a variety of methods including those specified in IFRS 6.

 

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 Consolidated Statement of Comprehensive Income.

 

 

Exploration and evaluation assets recorded at fair-value on acquisition

 

Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset.

 

During the year, the Company made several acquisitions of which the Directors have treated as asset acquisitions as explained in Note 9  to these financial statements. Per IFRS 3, an entity shall determine whether a transaction or other event is a business combination by applying the definition in this IFRS, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. As the acquisitions were not considered to meet the definition of a business combination under IFRS 3, the Group Financial Statements are prepared as though the group has acquired an asset. The fair value of the assets were determined by management and the assets were classified as intangible assets given that they represent exploration and evaluation assets.

 

2.8  Investment in Subsidiaries

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

 

2.9  Assets Under Construction

Assets under construction are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Assets under construction are not depreciated until they are completed and brought into use.

 

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 Consolidated Statement of Comprehensive Income 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 net gains / (losses)' in the Consolidated Statement of Comprehensive Income.

 

2.10 Right of Use Assets and Leases

The Group leases certain property, plant and equipment.

 

The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.

 

The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

 

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease liabilities are shown in Note 11.

 

Exemptions are applied for short life leases and low value assets, with payment made under operating leases charged to the Consolidated Statement of Comprehensive Income on a straight-line basis of the period of the lease.

2.11 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.

 

2.12 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 effective interest rate. 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 fair value through profit and loss.

 

 

2.13 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. Financial liabilities measured at amortised cost include current borrowings and trade and other payables that are short term in nature. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

 

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 effective interest rate ('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 Consolidated Statement of 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).

 

2.14 Cash and Cash Equivalents

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

2.15 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.

 

2.16 Share Capital, 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

 

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

 

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 Consolidated Statement of Comprehensive Income 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 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 directors revise their 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 Consolidated Statement of Comprehensive Income or equity as appropriate, with a corresponding adjustment to the share based payment reserve or warrant 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) when the warrants or options are exercised.

 

2.18 Finance Income and Cost

Finance income and finance costs are recognised using the effective interest rate method.

 

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

Market risk is the risk that the Group's future earnings will be adversely impacted by changes in market prices. Market risk for Alien Metals comprises two types of risk: foreign currency risk and price risk.

 

(a) Foreign currency risks

The Group's operational expenditure is made in Mexico in Mexican pesos, in Australia in Australian dollars, and head office expenses are predominantly made in the UK in pounds sterling, and United States dollars. The Group is therefore exposed to the movement in exchange rates for these currencies. The Group does not currently hedge foreign exchange risk.

 

At the year end the majority of the Group's cash resources were held in pounds sterling. The Group therefore also has downside exposure to any strengthening of United States dollar, Australian dollar, or the Mexican peso against pounds sterling as this would increase expenses in pounds sterling terms and accelerate the depletion of the Group's cash resources. Any weakening of United States dollar, Australian dollar or the Mexican peso against pounds sterling would, however, result in a reduction in expenses in pounds sterling terms and preserve the Group's cash resources.

 

The carrying amounts of the Group's foreign currency denominated financial assets and monetary liabilities at the reporting date are as follows:

 

	Liabilities		Assets
	2022	2021	2022	2021
Pounds sterling	148,000	542,000	2,256,000	6,436,000
United States dollars	37,000	-	2,000	20,000
Australian dollars	246,000	102,000	166,000	96,000
Canadian dollars	-	-	-	1,000
Mexican pesos	15,000	11,000	70,000	3,000

 

Sensitivity Analysis

 

The Group holds cash in pounds sterling to settle accounts payable balances derived in that currency. The main risk is through foreign exchange fluctuations in companies where the cash balances are held in a currency that is different to the functional currency.

 

Exposure to foreign currency risk sensitivity analysis:

 

	Against Sterling US$
15% strengthening in the United States dollar	(280,000)
15% weakening in the United States dollar	280,000

 

A 15% variation is considered an appropriate level of sensitivity given recent levels of foreign exchange volatility.

 

(b) Price risk

 

The price risk is the risk that the Group's future earnings will be adversely impacted by changes in the market prices of commodities. Given the Group has yet to enter production it is not possible to quantify this impact at this stage.

 

 

(c) Interest rate risk

 

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the Group uses. Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by the Group. Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets. No sensitivity analysis has been disclosed as management does not consider any reasonable fluctuation in interest rates to be sufficiently material to disclose as there are no interest bearing loans and interest income is only from cash held with banks.

 

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

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The directors regularly review cash flow forecasts to determine whether the Group has sufficient cash reserves to meet future working capital requirements and discretionary business development opportunities including exploration activities.

 

As at 31 December 2022, the Company had cash of $2.1m to settle accounts payable and lease liabilities of $500k. The Company's accounts payable have contractual maturities of less than 30 days and are subject to normal trade terms. In the short-term, liabilities will be funded by cash.

 

The Group's assets are at an early stage and in order to meet financing requirements for their development the Company has raised funds by way of several share placements, which is a common practice for junior mineral exploration companies.

 

Although the Company has been successful in the past in raising equity finance, there can be no assurance that the funding required by the Group will be made available to it when needed or, if such funding were to be available, that it would be offered on reasonable terms. The terms of such financing might not be favourable to the Group and might involve substantial dilution to existing shareholders.

 

3.2  Capital Risk Management

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern and have access to adequate funding for its exploration and development projects, so that it can provide returns for shareholders and benefits for other stakeholders. The Group manages the capital structure and makes adjustments in the light of changes in economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure the Group may issue new shares, acquire debt, or sell assets. Management regularly reviews cash flow forecasts to determine whether the Group has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities.

 

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:

 

 

Recognition and Impairment of exploration and evaluation costs

 

Exploration and evaluation costs have a carrying value at 31 December 2022 of $15,639,000 (2021: $5,939,000): refer to Note 8 for more information. During the year asset acquisitions with a carrying value of $7,688,000 were recognised, 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.

 

Fair value of assets acquired

 

During the year the group acquired a number of interests in different projects and these acquisitions did not fall within the scope of IFRS 3 but rather IFRS 6. As a result, these assets acquired were required to initially be recognised as fair value. The Directors assessed the fair value of all project interests acquired as being equal to the fair value of the consideration to acquire said interests in projects. See note 9 for further details

 

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 17.

 

5.   Segmental Information

 

As at 31 December 2022, the Group operates in three geographical areas, the UK, Mexico and Australia. The Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Australia and Mexico 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 (2021: $Nil).

 

 

2022	Australia	Mexico $	UK $	Total $
Administrative expenses	(171,000)	(98,000)	(2,083,000)	(2,352,000)
Other gains/(losses)	-	-	(30,000)	(30,000)
Finance income	-	-	7,000	7,000
Operating loss from continued operations per reportable segment	(171,000)	(98,000)	(2,106,000)	(2,375,000)
Reportable segment assets	15,660,000	783,000	2,163,000	18,606,000
Reportable segment liabilities	(291,000)	(15,000)	(157,000)	(463,000)
Reportable segment net assets	15,369,000	768,000	2,006,000	18,143,000

 

Segment assets and liabilities are allocated based on geographical location.

 

 

 

 

 

2021		Australia $	Mexico $	UK $	Total $
Administrative expenses		(95,000)	(107,000)	(2,053,000)	(2,255,000)
Operating loss		(95,000)	(107,000)	(2,053,000)	(2,255,000)
Net finance charges		-	-	(3,000)	(3,000)
Loss for the year attributable to equity shareholders of the parent		(95,000)	(107,000)	(2,056,000)	(2,258,000)
Reportable segment assets		3,650,000	71,000	9,336,000	13,057,000
Reportable segment liabilities		(102,000)	(11,000)	(673,000)	(786,000)
Reportable segment net assets		3,548,000	60,000	8,663,000	12,271,000

 

 

6. Expenses by Nature

	2022 $	2021 $
Directors' fees (Note 20)	438,000	382,000
Employee wages and salaries	307,000	261,000
Fees payable to the Company's auditors for the audit of the consolidated financial statements	59,000	35,000
Professional, legal and consulting fees	962,000	922,000
Insurance	82,000	52,000
Office and administrative expenses	90,000	90,000
Depreciation	102,000	-
Travel and subsistence	133,000	14,000
Share option expense	192,000	166,000
Other expenses	42,000	159,000
Foreign exchange movement	(55,000)	174,000
Total administrative expenses	2,352,000	2,255,000

 

7.   Taxation

	Group
	2022 $	2021 $
Loss before tax from continued operations	(2,375,000)	(2,258,000)
Income tax using the weighted corporation tax rate 18.6% (2021: 19%)	(442,000)	(429,000)
Expenditure not deductible for tax purposes	57,000	-
Effect of differing tax rates across jurisdictions	-	122,000
Net tax effect of losses carried forward on which no deferred tax asset is recognised	385,000	307,000
Income tax for the year	-	-

 

No charge to taxation arises due to the losses incurred.

 

The weighted average applicable tax rate of 18.6% (2021: 19%) used is a combination of the 19% standard rate of corporation tax in the UK, 25% Australian corporation tax and 30% Mexican tax rate. The Group has accumulated tax losses of approximately $30,459,000 (2021: $28,389,000) available to carry forward against future taxable profits.

 

Under IFRS, a net deferred tax asset has not been recognised due to the uncertainty as to the amount that can be utilised. No adjustments are required in respect of the subsidiaries.

 

8.   Intangible Assets

 

Exploration & Evaluation Assets at Cost and Net Book Value	2022 $	2021 $
Balance as at 1 January	5,939,000	3,641,000
Additions	3,029,000	2,432,000
Asset acquisitions (Note 9)	7,688,000	-
Foreign exchange  differences	(1,017,000)	(134,000)
As at 31 December	15,639,000	5,939,000

 

Deferred exploration costs relate to the initial acquisition of the licences and subsequent exploration expenditure incurred in evaluating the projects.

 

The additions in the year relate to the following license/project acquisitions:

 

·      Acquisition of 100% of Munni Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia

·      Acquisition of 100% of the Vivash Gorge Iron Ore Project in the Pilbara region of Western Australia from ASX-listed Zenith Minerals Ltd

·      Acquisition 90% of the Hancock and Brockman iron ore projects in the Pilbara region of Western Australia from Windfield Metals Pty Ltd

 

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.

 

 

9.   Acquisition of Exploration and Evaluation Assets

 

During the year, the Company acquired the following projects (together the "Projects"):

 

·      Munni Munni Platinum Group Metals and Gold Project

·      Vivash Gorge Iron Ore Project

·      Hancock and Brockman iron ore projects

 

The Directors have treated the Projects as asset acquisitions. As the acquisitions were not considered to meet the definition of a business combination under IFRS 3 and therefore they judged the fair value of the assets acquired to be equal to the fair value of the consideration.

 

In accordance with IFRS 3, "Business Combinations," a business combination is defined as a transaction or event where an acquirer obtains control over one or more businesses. Control is typically achieved through the acquisition of shares or other forms of ownership interest. On the other hand, an asset acquisition refers to a transaction where the acquirer obtains control over a set of identifiable assets and liabilities that do not constitute a business.

 

As per the above it is deemed that the Projects are all asset acquisitions due to the following reasons:

 

·      These acquisitions were of exploration licenses rather than businesses.

·      There were no processes in place to generate outputs independently.

·      There was no workforce acquired as part of the acquisitions.

·      There was no market relationships or presence as these are license tenements.

·      The fair value of the assets is deemed to be the value paid by Alien Metals which was done at arms length

 

 

Munni Munni

 

On 22 March 2022, the Company announced that it had entered into an acquisition agreement to acquire 100% of Munni Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia. The total consideration of $5,318,000 was satisfied as follows:

 

·      by the issue of 138,703,396 new Ordinary Shares to the sellers at a price of 0.7935 pence per Ordinary Share for a total of USD $1,383,000.

·      by the issue of 358,617,818 new Ordinary Shares to the sellers at a price of 0.699 pence per Ordinary Share for a total of USD $3,576,000.

·      $500,000 AUD in cash consideration (USD $359,000)

 

 

The consideration was based on an agreed price between the Company and vendor. The fair value assigned to the intangible assets is equal to the fair value of the consideration being $5,318,000

 

Vivash Gorge

 

On 20 June 2022, the Company announced that it had entered into an acquisition agreement to acquire 100% of the Vivash Gorge Iron Ore Project in the Pilbara region of Western Australia from ASX-listed Zenith Minerals Ltd. The total consideration of $68,000 USD was satisfied by the issue of 7,827,883 Ordinary Shares of no par value were issued for 0.7272 pence per share.

 

The Directors conclusion was that the transaction was an asset acquisition. The fair value assigned to the intangible assets is equal to the fair value of the consideration being $68,000.

 

In addition, Zenith Minerals Ltd is entitled to performance shares contingent on certain milestones, and a royalty of US$1.00/dwt (Dry Weigth Tonnes) of the quantity of shipped ore derived from the area within the boundaries of the Vivash Gorge license area. The milestones are as follows:

 

·     that number of Shares equal to the value of A$50,000 at a deemed price equal to the VWAP of Shares in the 10 trading days prior to the release of an announcement on the London Stock Exchange (LSE) confirming an initial, economic direct shipping ore (DSO) resource being defined at the area covered by the Licence, reported in accordance with the JORC Code and estimated (or based on documentation prepared) by a Competent Person as defined by the JORC Code.

 

·     that number of Shares equal to the value of A$100,000 at a deemed price equal to the VWAP of the Shares in the 10 trading days prior to the release of an announcement on the LSE confirming the conversion of the Licence from an exploration licence to a mining licence; and

 

·      that number of Shares equal to the value of A$200,000 at a deemed price equal to the VWAP of the Shares in the 10 trading days prior to the release of an announcement on the LSE confirming an economic, > 10Mt DSO resource, reported in accordance with the JORC Code and estimated (or based on documentation prepared) by a Competent Person as defined by the JORC Code.

 

Hancock and Brockman

 

On 20 December 2022, the Company announced that it had entered into an acquisition agreement to acquire 90% of the Hancock and Brockman iron ore projects in the Pilbara region of Western Australia from Windfield Metals Pty Ltd. The total consideration of $1,834,000 USD was satisfied as follows:

 

 

·    by the issue of 260,000,000 new Ordinary Shares to the sellers at a price of 0.7935 pence per Ordinary Share for a total of USD $1,414,000

·    by the issue of 100,000,000 Warrants exercisable at 1 pence on or before 31 December 2025 valued at $347,000 USD

·    £60,000 GBP in cash consideration (USD $73,000)

 

 

The consideration was based on an agreed price between the Company and vendor. The fair value assigned to the intangible assets is equal to the fair value of the consideration being $1,834,000.

 

Prior to the above, on 18 February 2022, the Company was required to issue certain securities to Windfield as agreed on 26 February 2020 as part of the consideration for the acquisition of a 51% interest in the Hamersley Project from Windfield. The agreed consideration includes the issuance of 100,000,000 performance shares to be issued at a Deemed Issue Price of 0.11p per share in two equal tranches convertible on a 1-for-1 basis into ordinary shares of the Company upon achievement of the following performance hurdles:

 

·      10,000,000 tonne JORC inferred resource at greater than 54% Iron "Fe" ("Hurdle 1"); and

·      20,000,000 JORC inferred resource at greater than 54% Iron "Fe" ("Hurdle 2").

 

The first hurdle was achieved in September 2021, Windfield has requested conversion of 50,000,000 performance shares into Ordinary Shares for a total value of $468,000 USD. The directors did not consider the second performance hurdle to be satisfied as a 20,000,000 JORC resource has not yet been confirmed.

 

Further, as part of the acquisition agreement, a contingent performance payment will be payable on certain conditions being met as follows:

·      In the event of a Tenement Sale: 50% of the value uplift attributable to the project;

·     In the event of an IPO/Spin-out event on a recognised stock exchange: 50% of the value uplift attributable to the project; or

·      In the event a decision to mine is made: 50% of the project valuation uplift attributable to the projects.

 

In each case, the uplift payments are reduced by 50% of the incurred project expenditure.

 

10.  Assets under Construction

 

 

	2022 $	2021 $
Balance as at 1 January	291,000	-
Additions	164,000	291,000
As at 31 December	455,000	291,000

 

Mining plant equipment, recertification costs and the related transport costs capitalised as a Mining asset in A.C.N 643 478 371 Pty Ltd in relation to the headframe and associated equipment for the Elizabeth Hill Silver mine.

11.  Right of use assets and lease liability

 

At the reporting date, the Group had their London offices under lease agreement. The agreement was signed on 21 April 2021 and covers office rent for the period from 1 May 2021 until 28 Feb 2023, with monthly payments of £6,916 (US$9,514) and a deposit of £20,748 (US$28,542). The Group recognised the following right of use asset and related lease liability in respect of this lease agreement:

 

Right of use asset

	2022 $	2021 $
Balance as at 1 January	131,000	-
Additions	-	209,000
Depreciation	(102,000)	(76,000)
Foreign exchange differences	(12,000)	(2,000)
As at 31 December	17,000	131,000

 

The depreciation charge of $102,000 (2021: $76,000) is recognised under Administration Expenses.

 

 

 

 

 

Lease liability

	2022 $	2021 $
Balance as at 1 January	131,000	-
Additions	-	209,000
Rental payments in the reporting period	(102,000)	(76,000)
Foreign exchange differences	(12,000)	(2,000)
As at 31 December	17,000	131,000

 

 

A maturity analysis of the undiscounted minimum lease payments due are as follows:

 

	$
No later than one year	17,000
As at 31 December	17,000

 

 

12.  Trade and Other Receivables

 

	2022 $	2021 $
VAT receivable	133,000	-
Prepayments	95,000	80,000
Other receivables	90,000	185,000
As at 31 December	318,000	265,000

 

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:

	2022 $	2021 $
UK Pounds	173,000	167,000
US Dollars	-	-
Australian Dollars	75,000	61,000
Mexican Peso	70,000	37,000
As at 31 December	318,000	265,000

 

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.

 

13.   Cash and Cash Equivalents

	2022 $	2021 $
Cash at bank and in hand	2,177,000	6,431,000

 

 

 

14.  Trade and Other Payables

	2022 $	2021 $
Trade payables	272,000	451,000
Other payables	69,000	-
Accrued expenses	105,000	204,000
As at 31 December	446,000	655,000

 

 

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

	2022 $	2021 $
UK Pounds	148,000	542,000
US Dollars	37,000	-
Mexican Peso	15,000	11,000
Australian Dollars	246,000	102,000
As at 31 December	446,000	655,000

                                                                  

 

 

 

 

 

15.   Share Capital and Share Premium

 

The Company is authorised to issue an unlimited number of common shares of no par value.

 

Issued share capital

 

Group	Number of shares	Total $
At 1 January 2021	3,420,791,048	65,181,000
Issue of Ordinary Shares on exercise of warrants - 15 January 2021	2,000,000	8,000
Issue of Ordinary Shares on project acquisition - 10 February 2021	100,000	1,000
Issue of Ordinary Shares on exercise of warrants - 23 March 2021	2,222,222	9,000
Issue of Ordinary Shares on exercise of warrants - 13 May 2021	4,200	-
Issue of Ordinary Shares on exercise of warrants - 20 August 2021	35,332	-
Issue of Ordinary Shares on exercise of options - 10 September 2021	5,000,000	17,000
Issue of Ordinary Shares on exercise of warrants - 20 September 2021	40,600	1,000
Issue of Ordinary Shares on exercise of warrants - 19 November 2021	1,400,000	5,000
Issue of Ordinary Shares for cash - 22 November 2021	470,588,223	5,502,000
Issue Costs - 22 November 2021	-	(302,000)
At 31 December 2021	3,902,181,625	70,422,000
Share issue costs - 1 January 2022	-	(60,000)
Issue of Ordinary Shares on exercise of warrants - 21 January 2022	202,247,000	367,000
Issue of Ordinary Shares on exercise of options - 21 January 2022	1,100,000	4,000
Issue of Ordinary Shares on exercise of warrants - 10 February 2022	1,111,111	5,000
Issue of Ordinary Shares on exercise of warrants - 10 February 2022	816,666	3,000
Issue of Ordinary Shares as consideration for asset acquisition - 23 February 2022 (Note 9)	50,000,000	467,000
Issue of Ordinary Shares on exercise of warrants - 14 March 2022	3,333,333	12,000
Issue of Ordinary Shares as consideration for asset acquisition - 22 March 2022 (Note 9)	138,703,396	1,384,000
Issue of Ordinary Shares as consideration for asset acquisition - 22 March 2022 (Note 9)	358,617,818	3,577,000
Issue of Ordinary Shares on exercise of warrants - 22 March 2022	66,666,666	153,000
Issue of Ordinary Shares on exercise of warrants - 22 March 2022	26,610,661	73,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022	14,000	1,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022	122,267	1,000
Issue of Ordinary Shares on exercise of warrants - 13 April 2022	984,375	3,000
Issue of Ordinary Shares on exercise of options - 26 April 2022	2,000,000	7,000
Issue of Ordinary Shares as consideration for asset acquisition - 20 June 2022 (Note 9)	7,827,883	69,000
Share issue costs - 7 September 2022	-	(12,000)
Issue of Ordinary Shares for cash - 8 September 2022	300,000,000	1,814,000
Share issue costs - 28 September 2022	-	(29,000)
Share issue costs - 28 September 2022	-	(99,000)
Issue of Ordinary Shares on exercise of options - 1 December 2022	2,500,000	8,000
Issue of Ordinary Shares as consideration for asset acquisition - 20 December 2022  (Note 9)	260,000,000	1,416,000
At 31 December 2022	5,324,836,801	79,586,000

 

On 21 January 2022, 202,247,000 Ordinary Shares of no par value were issued for cash at 0.15 pence each for the exercise of warrants. The share price at the time of exercise was 0.68 pence per share.

 

On 21 January 2022, 1,100,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options. The share price at the time of exercise was 0.68 pence per share.

 

On 10 February 2022, 1,111,111 Ordinary Shares of no par value were issued for 0.30 pence each for the exercise of warrants. The share price at the time of exercise was 0.97 pence per share.

 

On 10 February 2022, 816,666 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The share price at the time of exercise was 0.97 pence per share.

 

On 23 February 2022, 50,000,000 Ordinary Shares of no par value were issued for 0.78 pence each as part of the consideration due to Winfield Metals Pty Ltd.

 

On 14 March 2022, 3,333,333 Ordinary Shares of no par value were issued for for 0.3 pence per share for the exercise of warrants. The share price at the time of exercise was 0.82 pence per share.

 

On 22 March 2022, 138,703,396 Ordinary Shares of no par value were issued at 0.7935 pence per share as part of the consideration for the acquisition of Munni Munni

 

On 22 March 2022, 358,617,818 Ordinary Shares of no par value were issued for 0.699 pence per share as part of the consideration for the acquisition of Munni Munni

 

On 22 March 2022, 66,666,666 Ordinary Shares of no par value were issued at 0.19 pence per share for the exercise of warrants. The share price at the time of exercise was 0.82 pence per share.

 

On 22 March 2022, 26,610,661 Ordinary Shares of no par value were issued for 0.25 pence per share for the exercise of warrants. The share price at the time of exercise was 0.82 pence per share.

 

On 13 April 2022, 14,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The share price at the time of exercise was 0.80 pence per share.

 

On 13 April 2022, 122,267 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The share price at the time of exercise was 0.80 pence per share.

 

On 13 April 2022, 984,375 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of warrants. The share price at the time of exercise was 0.80 pence per share.

 

On 26 April 2022, 2,000,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options. The share price at the time of exercise was 0.77 pence per share.

 

On 20 June 2022, 7,827,883 Ordinary Shares of no par value were issued for for 0.73 pence per share as part of the consideration for the acquisition of Vivash Gorge.

 

On 8 September 2022, 300,000,000 Ordinary Shares of no par value were issued for 0.5 pence per share for cash.

 

On 1 December 2022, 2,500,000 Ordinary Shares of no par value were issued for 0.25 pence each for the exercise of options The share price at the time of exercise was 0.52 pence per share.

 

On 20 December 2022, 260,000,000 Ordinary Shares of no par value were issued for 0.7935 pence per Ordinary Share as part of the consideration for the acquisition of Hancock and Brockman.

 

16. Other reserves

	2022 $	2021 $
Foreign currency translation reserve	694,000	2,225,000
Share based payment reserve	771,000	1.179,000
Warrant reserve	739,000	865,000

 

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 presentational currency.

 

The share-based payment reserve arises on the grant of share options to directors, employees and other eligible persons under the share option plan. Refer to Note 17 for more information.

 

The warrants reserve arises on the issue of warrants. Refer to Note 17 for further information.

 

17. Share Based Payments

 

Share options outstanding at 31 December 2022 have the following expiry dates and exercise prices:

			Number
Grant date	Expiry date	Exercise price in £ per share	2022	2021
2017	09-Feb-22	0.0100	-	1,250,000
2018	14-May-23	0.0025	10,642,373		15,142,373
2019	28-Mar-24	0.0025	-		1,100,000
2019	28-Mar-24	0.0025	12,342,509		12,342,509
2019	28-Mar-24	0.0022	3,000,000		3,000,000
2019	28-Mar-24	0.0030	3,000,000		3,000,000
2019	28-Mar-24	0.0045	4,000,000		4,000,000
2020	30-Aug-23	0.0045	18,750,000		18,750,000
2020	30-Aug-23	0.0050	18,750,000		18,750,000
2020	30-Aug-23	0.0055	22,500,000		22,500,000
2021	21-Oct-24	0.0100	10,000,000		10,000,000
2021	21-Oct-24	0.0115	10,000,000		10,000,000
2021	21-Oct-24	0.0145	15,000,000		15,000,000
2022	26-Sep-26	0.008 - 0.014	345,000,000		-
Total			472,984,882		134,834,882

       

 

 

Warrants outstanding at 31 December 2022 have the following expiry dates and exercise prices:

 

			Number
Grant date	Expiry date	Exercise price in £ per share	2022	2021
2019	31-Jan-22	0.0015	-		202,247,000
2020	10-Mar-22	0.003	-		37,444,444
2020	10-Mar-22	0.0015	-		3,333,333
2020	18-May-23	0.0012	2,625,000		2,625,000
2020	10-Sep-23	0.006	12,000,000		12,000,000
2020	18-May-23	0.015	11,208,125		11,208,125
2020	10-Mar-22	0.0025	-		40,495,680
2020	19-Mar-22	0.0019	-		66,666,666
2020	30-Nov-23	0.013	13,600,000		13,600,000
2021	17-Nov-24	0.085	23,529,401		-
2022	14-Sept-25	0.0025	7,200,000		-
2022	31-Dec-25	0.0025	100,000,000		-
Total			170,162,526		389,620,428

 

 

The estimate of the fair value of the share options and warrants is measured based on the Black-Scholes model. The parameters used for options and warrants granted in the year ended 31 December 2022 are detailed below:           

 

	2022 Options	2022 Options	2022 Warrants
Granted on:	26/9/2022	26/9/2022	19/12/2022
Life (years)	3 years	3 years	3 years
Exercise price (pence per share)	8p	10p	2.5p
Risk free rate	1.7%	1.7%	3.49%
Expected volatility	12.8%	12.8%	69%
Expected dividend yield	-	-	-
Marketability discount	20%	20%	20%
Total fair value (£000)	5	1	329

 

	2022 Options	2022 Options
Granted on:	26/9/2022	26/9/2022
Life (years)	3 years	3 years
Exercise price (pence per share)	12p	14p
Risk free rate	1.7%	1.7%
Expected volatility	12.8%	12.8%
Expected dividend yield	-	-
Marketability discount	20%	20%
Total fair value (£000)	1	1

 

The expected volatility is based on the historical share prices over the prior 6 month period of the Company share price.

 

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

 

	2022			2021
	Number	Weighted average exercise price (£)		Number	Weighted average exercise price (£)
As at 1 January	134,834,882	0.0100		104,834,882	0.0041
Granted (not yet vested)	345,000,000	0.0100		35,000,000	0.0124
Exercised	(5,600,000)	0.0100		(5,000,000)	0.0025
Expired	(1,250,000)	0.0100		-	-
Outstanding as at 31 December	472,984,882	0.0100		134,834,882	0.0100
Exercisable at 31 December	127,984,882	0.0100		104,834,882	0.0100

 

 

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

 

	2022				2021
	Number	Weighted average exercise price (£)		Number		Weighted average exercise price (£)
As at 1 January	389,620,248	0.0024		395,322,602		0.0024
Granted	130,729,411	0.0025		-		-
Exercised	(301,906,079)	0.0024		(5,702,354)		0.0025
Expired	(48,281,064)	0.0024		-		-
Outstanding as at 31 December	170,162,516	0.004		389,620,248		0.0024
Exercisable at 31 December	170,162,516	0.004		389,620,248		0.0024

 

 

The weighted price and life for warrants and options for the year end 31 December 2022 is as follows:

 

	2022
Range of exercise prices ($)	Weighted average exercise price ($)	Number of shares	Weighted average remaining life  expected (years)	Weighted average remaining life contracted (years)
0.04-0.6	0.0083	643,174,418	2.29	2.29

 

The total fair value charged to the statement of comprehensive income for the year ended 31 December 2022 and included in administrative expenses was $192,000 (2021: $166,000).

 

Options and warrants exercised in 2022 resulted in 307,506,073 shares being issued (2021: 10,702,000) at a weighted average price of £0.0025 each (2021: £0.0025). 

 

During the year 178,000,000 incentive options were conditionally granted to certain directors and management and are to be awarded on the basis of certain milestones being met as follows:

·    IOCA Offtake

·    IOCA Finance Term Sheet

·    Mining Licence Approval

·    First Ore Mined

·    4 500,000 Fe Tonnes Exported

·    1,000,000 Fe Tonnes Exported

       

Performance Conditions one through to five have a 24-month vesting period and Performance Condition six has a 36-month vesting period with an exercise price yet to be determined.  The estimate of the fair value of the incentive options is measured based on the Black-Scholes model. The parameters used are detailed below:                  

         

         

	2022 Options
Granted on:	14/11/2022
Life (years)	2 years
Exercise price (pence per share)	4.5p
Risk free rate	1.7%
Expected volatility	16.5%
Expected dividend yield	-
Marketability discount	-
Total fair value (£000)	46

       

Based on the probability of the milestones being reached in 2022 and the fair value derived, the charge for 2022 is deemed to be immaterial and therefore not recognised for the year ended 31 December 2022.

 

 

18.  Net finance charges

	Group
	2022 $	2021 $
Finance charges	-	(4,000)
Interest income	7,000	1,000
	7,000	(3,000)

 

 

19.  Employees

	Group
Staff costs (excluding Directors)	2022 $	2021 $
Salaries and wages	256,000	243,000
Social security costs	13,000	11,000
Pensions	38,000	7,000
	307,000	261,000

 

The average monthly number of employees during the year was 6 (2021: 5).

 

20. Directors' Remuneration

 

2022	Short Term Employment benefits $	Share based payment $	Total $
Executive Directors
B Brodie Good	210,000	-	210,000
R McIllree	27,000	-	27,000
Non-executive Directors
D J Smith	74,000	-	74,000
J L Battershill	63,000	192,000	255,000
M C Culbert	32,000	-	32,000
	406,000	192,000	598,000

 

 

 

 

Employers tax contributions of $31,000 have not been included in the above. During the year, Jonathan Battershill was issued 35,000,000 options with fair value charged to the statement of comprehensive income for $192,000.

 

 

 

2021	Short Term Employment benefits $	Share based payment $	Total $
Executive Directors
B Brodie Good	254,000	22,000	276,000
Non-executive Directors
D J Smith	67,000	-	67,000
J L Battershill	38,000	136,000	174,000
M C Culbert	23,000	4,000	27,000
	382,000	162,000	544,000

 

 

 

 

21. Loss per Share

 

The calculation of the total basic losses per share of 0.050 cents (2021: loss 0.065 cents) is based on the losses attributable to equity owners of the group of $2,375,000 (2021: $2,258,000) and on the weighted average number of ordinary shares of  4,712,310,829  (2021: 3,476,524,868) in issue during the period.

 

In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise of share options or warrants would be to decrease the loss per share.

 

 

22. Commitments

 

(a) Work programme commitment

 

As at 31 December 2022, Alien Metals owned 16 mineral exploration licenses in Australia and 9 mineral exploration licenses in Mexico. These licences include commitments to pay annual licence fees and minimum spend requirements as follows:

 

 

	License fees $	Minimum spend requirements $	Total $
Less than 1 year	152,000	609,000	761,000
1 to 5 years	758,000	3,257,000	4,015,000
Total	910,000	3,866,000	4,776,000

 

 

(b) Lease agreements

 

The Group has their London offices under lease agreement. The agreement was signed on 21 April 2021 and covers office rent for the period from 1 May 2021 until 28 Feb 2023, with monthly payments of £6,916 (US$9,514) and a deposit of £20,748 (US$28,542). The lease payments have been treated in line with IFRS 16. As at 31 December 2022, $19,028 remained payable in respect of this lease.

 

23. Related Party Transactions

 

Transactions with key management personnel

 

During the year ended 31 December 2022 the Company entered into the following transactions involving key management personnel:

 

During the year Orwellian Investments, a company in which Daniel Smith is a director, charged the Company a total of $52,000 (2021: $49,524) for directors' fees. There was $3,000 outstanding balance at 31 December 2022 (2021: $5,404).

 

During the year iLaw, a company in which Mark Culbert is a partner, charged the Company a total of $4,320 (2021: $17,498) for legal fees.  There was a balance of no outstanding at 31 December 2022 (2021: $4,451).

 

During the year JJB Advisory, a company in which Jonathan Battershill is a director, charged the Company a total of $33,000 (2021: $28,889) for corporate advisory fees.  There was no outstanding balance at 31 December 2022 (2021: nil).

 

Daniel Smith and Guy Robertson are directors of Artemis Resources Ltd. During the year, Alien acquired of 70% of the Munni Munni project from Artemis Resources Ltd.

 

24. Ultimate Controlling Party

 

The Directors believe there to be no ultimate controlling party.

 

25. Events after the Reporting Date

 

On 12 January 2023, following the receipt of an Exercise Notice, the Company issued 2,500,000 ordinary shares of no par value in the capital of the Company at an issue price of 0.25 pence per share.

 

On 26 April 2023, the Company reported its JORC Mineral Resource Estimate for the Hancock Project of 9.1Mt at 60.3% Fe and JORC Probable Ore Reserve 1.9Mt at 60.2% Fe.

 

On 5 May 2023, the Company's wholly owned subsidiary, Iron Ore Company of Australia Pty Ltd, acquired Mallina Exploration Pty Ltd for a total consideration of $30,000 AUD payable with $10,000 AUD upon the Execution date of the agreement and $20,000 AUD within 15 days of a Mining licence being granted. At this stage the directors consider the acqusition to be outside the scope of IFRS3, as Mallina Exploration Pty Ltd is not deemed to be a business under IFRS3 and therefore will be classified as an Asset Acqusition.

 

On 17 May 2023, following the receipt of an Exercise Notice, the Company issued 8,142,373 ordinary shares of no par value in the capital of the Company at an issue price of 0.25 pence per share

 

 

 

For further information please visit the Company's website at www.alienmetals.uk, or contact:

 

Beaumont Cornish Limited (Nomad)

James Biddle / Roland Cornish Tel: +44 (0) 207 628 3396

 

WH Ireland Ltd (Joint Broker)

Harry Ansell / Katy Mitchell Tel +44 (0) 207 220 1666

 

BlytheRay (Financial PR)

Tim Blythe / Megan Ray / Said Izagaren Tel: +44 (0) 20 7138 3204

 

Notes to Editors:

Alien Metals Ltd is a mining exploration and development Company listed on the AIM market of the London Stock Exchange (LSE: UFO). The Company's focus is on delivering a profitable, long life direct shipping iron ore operation based out of the Pilbara in Western Australia. In 2019, the Company acquired 51% of the Brockman and Hancock Ranges high-grade (Direct Shipping Ore) iron ore projects and in December 2022 moved to 90% legal and beneficial ownership. The Company also acquired 100% of the Vivash Gorge Iron Ore project in the west Pilbara in July 2022.

The Company acquired 100% of the Elizabeth Hill Silver Project, which consists of the Elizabeth Hill Historic Mining Lease and the 115km² exploration tenement around the mine.

In March 2022 the Company acquired 100% of the former joint venture interest in the Munni Munni Platinum Group Metals and Gold Project in the West Pilbara, Western Australia, one of Australia's major underexplored PGE and base metals projects. Munni Munni holds a historic deposit containing 2.2Moz 4E PGM: Palladium, Platinum, Gold, Rhodium.

In May 2023, the Company acquired 100% of Mallina Exploration Pty Ltd and with it, the Western Hancock Tenement. The new tenement adjoins the Company's existing Hancock tenement, giving the entire Hancock project direct access to the Great Northern Highway.

The Company also holds silver, copper and base metal projects in various locations around the world however is currently looking at the best way to divest these for the benefit of shareholders.