Alba Mineral Resources PLC Half-year Report (5629J)

TIDMALBA

RNS Number : 5629J

Alba Mineral Resources PLC

17 August 2023

Alba Mineral Resources plc

("Alba" or the "Company")

HALF-YEARLY REPORT

The Board of Directors of Alba Mineral Resources plc (the "Company" or "Alba") is pleased to report the Company's interim results for the six months ended 31 May 2023. They incorporate the results of its subsidiary companies Aurum Mineral Resources Limited ("AMR"), Mauritania Ventures Limited ("MVL"), Dragonfire Mining Limited ("DML"), the Gold Mines of Wales group of companies ("GMOW") and GMOW (Gwynfynydd) Limited (together, the "Subsidiary Companies", collectively with Alba, the "Group").

For the period to 9 March 2023 the interim results also consolidate the GreenRoc Mining Plc group of companies ("GreenRoc") comprising Greenroc Mining Plc, Obsidian Mining Limited ("OML"), White Eagle Resources Limited ("WERL") and White Fox Resources Limited ("WFRL") (together, "GreenRoc"). After this date the investment is treated as an associate.

CHAIRMAN'S STATEMENT

I am pleased to present shareholders with a review of our activities in the six months to 31 May 2023.

   1.      REVIEW OF ACTIVITIES 
   1.1    WELSH GOLD PROJECTS 

(Clogau-St David's, Gwynfynydd and Dolgellau Gold Exploration Project) (100%)

During the reporting period, a lot of our work was focused on securing the ecological permits required for us to be able to dewater and then explore the Lower Llechfraith Workings at the Clogau-St David's Gold Mine in north Wales ("Clogau" or the "Mine"), this being our highest priority gold target within the Mine system.

The Lower Llechfraith workings have all the key geological characteristics for the occurrence of high-grade gold mineralisation, including greenstone sills, Clogau Shales and structural complexity in the lode itself. This area was a key focus for the last large-scale development efforts at Clogau, prior to Alba's time. Historical plans from that period record sightings of visible gold within these lower workings. Alba's 2020-21 surface drilling programme proved the downward continuation of the Llechfraith lode structure up to around 122 metres below where it was last explored on Level 4. As such, the target structure below this level has been untouched by historical exploration and development.

Access to the Lower Llechfraith workings has not been possible for some decades due to flooding, hence the requirement for a dewatering programme to be undertaken, during which water would be pumped out of the flooded workings and then treated in the Clogau mine yard using a settlement tank to remove excess suspended solids.

The inability to progress work on this principal target has of course been a source of some considerable frustration. However, in July 2023 we were delighted to report the award to us of those key ecological permits. Having already done much of the preparatory and planning work in advance in terms of lining up contractors, equipment and materials, we were able to start the dewatering exercise within a matter of days following permit grant. And once the workings had been dewatered to a sufficient extent, our contractors were able to start work on the essential safety and access works which would enable us to make our way safely into the lower workings.

All safety works at Level 2 and Level 3 have now been completed, which will allow safe access down to Level 4 once dewatering has been completed. Alba's contractors are in the process of completing a cabin structure on the Llechfraith Adit level which will provide the final bat exclusion and noise mitigation measure in advance of blasting and other exploration activities at Level 4, post dewatering.

Dewatering was initially successfully undertaken down to ca. six metres depth, however unseasonal and exceptionally heavy rainfall during the dewatering period, some three times higher than the average for the time of year, has resulted in the workings reflooding, following which the Company has requested from the regulator, Natural Resources Wales ("NRW"), an extension to the higher rate (100m3/day) abstraction rate. While, as at the time of writing, NRW has indicated that it is not minded to grant a temporary variation, the Company continues to make formal representations in that regard. The Company is at the same time in the process of applying for formal variations to both the discharge and abstraction permits to increase the applicable thresholds under both permits.

An initial dewatering of the workings to at least around 15 metres in vertical extent would allow the Company to commence the planned safety, clean-up and exploration works (surveying, mapping and sampling) on Level 4. The second phase of dewatering (down to around 30m vertical extent), subject to the permitted development rights notification regime, would allow the sinking of winzes below Level 4 for the purposes of the planned bulk sampling of the exposed development, in order to determine the gold content and test the Company's existing geological model. Depending on the outcome of that work, the subsequent phase of work is expected to involve putting in new development, commencing with the sinking of a new shaft or the extension of the existing Llechfraith Shaft.

Since the implementation of mitigation measures within the settlement tank being used to remove excess solids, daily analysis of the tank discharge consistently shows that dissolved Cu is <1ug/L, dissolved Fe <10ug/L, dissolved Zn <5ug/L, total As <5ug/L and total Al <50ug/L, all being well within the prescribed discharge permits criteria.

Generally, the fact that the permitting process over the course of the past two years has included a lengthy Habitat Regulations Assessment ("HRA") undertaken by the regulator NRW, for which process we generated and contributed a huge volume of ecological survey data and analysis and devised wide-ranging mitigation and safety measures for the protection of the environment, should provide a framework for a more streamlined and efficient process for future permitting applications.

In relation to the waste tip at Clogau, the Company is close to submitting the pre-application enquiries to the Local Planning Authority as a precursor to the submission of a full planning application for the exploitation of the tip.

Across the wider Dolgellau Exploration Project, our plans to undertake an aerial, UAV (unmanned aerial vehicle) geophysical survey over some of our key regional gold targets have been delayed somewhat by a backlog of applications at the regulator, the Civil Aviation Authority (CAA). However, we are advised that the CAA has now issued the CAA Operational Authorisation which sets out the agreed safety case for operating the UAV in the target area, and that the final step is to have the area approved and notified. As such, the Company remains on track to commence the survey in September 2023.

   1.2      GREENROC MINING PLC 

From September 2021, when Alba completed the spin-out and IPO of our Greenland assets into GreenRoc Mining Plc ("GreenRoc"), until March 2023, Alba held a 54% majority interest in GreenRoc. As such, Alba's consolidated financial statements include GreenRoc and its subsidiaries to that date.

More recently, fundraisings completed by GreenRoc in order to push forward the development of the high-grade Amitsoq project in southern Greenland have resulted in the dilution of Alba's stake in GreenRoc to 44.67% as at the reporting date and to 42.97% in the most recent placing which was announced on 1 August 2023. Nonetheless, we remain by some distance GreenRoc's largest shareholder and remain heavily involved in the strategic direction and development of the company.

In fact, we did participate in GreenRoc's most recent fundraising, contributing GBP115,000 to GreenRoc's total raise of GBP470,000. We have always made it clear that we would look to support GreenRoc's fundraising efforts as and when it is feasible to do that. In my view, the GreenRoc management team has consistently delivered excellent results and made great strides at what is turning into a world-class graphite project at Amitsoq. With an independent Preliminary Economic Assessment (PEA) due to be delivered soon and graphite samples being prepared for a potential international off-take customer, Amitsoq is well set to continue its upward trajectory towards development and production.

Highlights of the progress made at Amitsoq during the reporting period include the declaration of a substantial, near three times Resource upgrade in January 2023. It can often be the case that in seeking to add tonnes to a Resource by further rounds of drilling, that can come at the expense of the overall grade. At Amitsoq, however, not only have we been able to grow the Resource substantially, from 8.28Mt to 23.05Mt, but we have also managed to increase the overall Resource grade from 19.75% to 20.41% C(g), giving a total graphite content of 4.71 Mt. This has cemented Amitsoq's position as one of the very highest-grade graphite deposits in the world.

Meanwhile, on the processing side of things, a 700kg bulk sample of graphite ore from Amitsoq is nearing the final stages of separation at process engineering contractors UVR-FIA.

The excellent progress delivered at Amitsoq has not only been on these technical aspects. In February 2023, the European Raw Materials Alliance and EIT Raw Materials, bodies created by the European Union for the purpose of ensuring security of supply of critical raw materials for Europe, declared their official support for GreenRoc and Amitsoq, calling the latter a deposit of "global importance". And in March 2023, GreenRoc signed a Memorandum of Understanding ("MoU") with Leonhard Nilsen & Sønner A/S ("LNS"), a significant construction and mining group headquartered in Norway, in relation to the development of Amitsoq Graphite.

The MoU provides a framework for LNS and GreenRoc to explore the commercial opportunities relating to Amitsoq, and the potential appointment of LNS as the civil, mining and/or logistics contractor for Amitsoq during the construction and operational phases. LNS has decades of experience as a contractor and mine operator in the Arctic region and other parts of the world, not only in Norway, where it is the operating contractor for a number of mining companies, but also in Greenland itself, most recently at the producing Aappaluttoq Ruby Mine on the east coast.

GreenRoc is also currently working on the provision of graphite concentrate and spheronised graphite samples from Amitsoq to a potential international offtake partner in order for that party to conduct its own testwork.

Steady progress is also being made in relation to the Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) work, with both studies remaining on track for delivery in 2024. And an independent Preliminary Economic Assessment (PEA), which is being conducted by SLR Consulting and which is expected to help advance discussions with potential project and strategic partners in the latter part of this year and into 2024, is advancing as planned with expected delivery this autumn.

   1.3     OTHER PROJECTS AND INVESTMENTS 

During the period, we surrendered the licence for our Limerick Base Metals Project. The targets we had identified for exploration drilling could not be progressed as planned due to landowner access issues, and alternative drill collar locations proved not to be economically viable. As such, we were obliged to surrender the licence.

In March 2023, the majority licence holder of the Horse Hill Oil Field in Surry, England, UKOG Plc, announced the terms of a proposed farmout arrangement to a third-party group which would fund a seismic survey at Horse Hill. The farmout is subject to approval by the shareholders of the operator of the field, Horse Hill Developments Limited, including Alba. As at the date of this report, the shareholders have not approved the farmout.

   2.        CORPORATE 

Post-period end, on 7 July 2023, Alba announced a share placing raising GBP750,000. A broker option was included as part of the placing, allowing shareholders and others to apply through their brokers for an allocation in the placing, and on 24 July 2023 it was announced that an additional GBP15,150 had been raised via the broker option.

On 9 March 2023, following the dilution of its shareholding in GreenRoc due to a share placing by the latter, the Group ceased to consolidate the GreenRoc companies and instead accounted for its holding in GreenRoc as an "Investment in Associate".

Under applicable accounting standards, the dilution and resulting change in GreenRoc's status from subsidiary to associate is a deemed disposal of GreenRoc by Alba which results in an accounting gain. Previously, any fair value uplift arising from the initial IPO transaction was eliminated through the consolidation whereas going forward that uplift is no longer eliminated. This accounting gain does not have any tax implications for the Group.

On 1 August 2023 GreenRoc announced a further placing, raising gross proceeds of GBP470,000 at 3.8p per share. Alba participated in the placing, subscribing for 3,026,316 Placing Shares for a total subscription of GBP115,000. Following the placing, Alba has a shareholding of 42.97% in GreenRoc.

   3.        RESULTS 

The Group made a profit of GBP2,102,000 after tax (2022: loss of GBP815,000), including an accounting profit in relation to the de-consolidation of GreenRoc of GBP2,672,000 (2022: nil).

This transaction is presented unaudited so the accounting treatment may be revised in the full year accounts, subject to technical review by the Company's auditors.

Operating losses were GBP459,000 compared with GBP814,000 in the comparative period. The reduction in costs is principally due to ceasing to consolidate GreenRoc Mining plc from 9 March 2023. The underlying operating losses of Alba and its remaining subsidiaries are at a similar level year-on-year.

During the period, GBP202,000 was spent on exploration activities across the Group. Cash at the period end was GBP58,000, reduced in part by removing GreenRoc's cash asset from the consolidated balance sheet. As noted above, Alba has raised funding of GBP750,000 since the reporting date.

Intangible assets decreased by GBP3.8m from the comparative interim period last year, reflecting the exclusion of GreenRoc's Greenland project assets from the balance sheet now that it is no longer consolidated. Instead, a new line item is shown in the balance sheet, namely the "Investment in Associate" of GBP5.4m, representing the Group's investment in GreenRoc at cost less a proportionate share of losses.

   4.        OUTLOOK 

Alba remains in a strong position to generate real and sustained growth across its existing portfolio of assets and investments. We also continue to assess opportunities to expand our portfolio's value by the acquisition of additional complementary assets.

On behalf of the entire Board, I would like to take this opportunity to thank our shareholders for all their support.

George Frangeskides

16 August 2023

Executive Chairman

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.

For further information, please visit www.albamineralresources.com or contact:

Alba Mineral Resources plc

   George Frangeskides, Executive Chairman                              [phone] 

SPARK Advisory Partners Limited (Nomad)

   Andrew Emmott                                                                 [phone] 

CMC Markets plc (Broker)

   Thomas Smith          / Douglas Crippen                                           [phone] 

St Brides Partners (Financial PR)

   Isabel de Salis / Catherine Leftley                                [e-mail] 

Alba's Projects and Investments

 
 Mining Projects Operated        Location     Ownership 
  by Alba 
 Clogau (gold)                   Wales        100% 
                                -----------  ---------- 
 Dolgellau Gold Exploration 
  (gold)                         Wales        100% 
                                -----------  ---------- 
 Gwynfynydd (gold)               Wales        100% 
                                -----------  ---------- 
 Investments Held by Alba        Location     Ownership 
                                -----------  ---------- 
 GreenRoc Mining Plc (mining)    Greenland    42 .97 % 
                                -----------  ---------- 
 Horse Hill (oil)                England      11.765% 
                                -----------  ---------- 
 

UNAUDITED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHSED 31 MAY 2023

 
                                      Unaudited        Unaudited     Audited Year 
                                 6 months ended         6 months         ended 30 
                                    31 May 2023         ended 31         Nov 2022 
                                                        May 2022 
                                        GBP'000          GBP'000          GBP'000 
 
 Administrative expenses                  (459)            (814)          (1,623) 
 Impairment expense                           -                -            (984) 
 Operating (loss)/profit                  (459)            (814)          (2,607) 
 
 Revaluation of financial 
  liability                                   -                -                2 
 Gain on deemed disposal 
  (dilution)                              2,672 
 Share of loss of associate               (110)                -                - 
 Finance costs                              (1)              (1)                - 
                               ----------------  ---------------  --------------- 
 Profit/(loss) before tax                 2,102            (815)          (2,605) 
 
 Taxation                                     -                -                - 
                               ----------------  ---------------  --------------- 
 Profit/(loss) for the 
  year                                    2,102            (815)          (2,605) 
                               ----------------  ---------------  --------------- 
 
 Attributable to: 
 Equity holders of the 
  parent                                  2,182            (592)          (2,039) 
 Non-controlling interests                 (80)            (223)            (566) 
                               ----------------  ---------------  --------------- 
                                          2,102            (815)          (2,605) 
                               ----------------  ---------------  --------------- 
 
 Profit/(loss) per ordinary 
  share 
 Basic                              0.030 pence    (0.009) pence    (0.031) pence 
  Diluted                           0.028 pence    (0.009) pence    (0.031) pence 
 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MAY 2023

 
                                              Unaudited         Unaudited   Audited Year 
                                         6 months ended    6 months ended       ended 30 
                                            31 May 2023       31 May 2022       Nov 2022 
                                                GBP'000           GBP'000        GBP'000 
 
 Non-current assets 
 Property, plant and equipment                      144               153            150 
 Intangible fixed assets                          3,214             7,030          8,450 
 Investment in associate                          5,386                 -              - 
 Investments - Horse Hill 
  Developments                                    2,600             3,385          2,600 
 Total non-current assets                        11,344            10,568         11,200 
                                       ----------------  ----------------  ------------- 
 
 Current assets 
 Trade and other receivables                        117               211            129 
 Cash and cash equivalents                           58             2,024            456 
                                       ----------------  ----------------  ------------- 
 Total current assets                               175             2,235            585 
                                       ----------------  ----------------  ------------- 
 
 Current liabilities 
 Trade and other payables                         (257)             (383)          (464) 
 Financial liabilities                                -             (221)              - 
                                       ----------------  ----------------  ------------- 
 Total current liabilities                        (257)             (604)          (464) 
                                       ----------------  ----------------  ------------- 
 
 Net current assets / (liabilities)                (82)             1,631            121 
                                       ----------------  ----------------  ------------- 
 
 Net assets                                      11,262            12,199         11,321 
-------------------------------------  ----------------  ----------------  ------------- 
 
 Capital and reserves 
 Called up share capital                          5,076             5,005          5,076 
 Share premium account                           10,461             9,877         10,461 
 Warrant reserve                                    782             1,444          1,187 
 Dilution of ownership reserve                        -               991            991 
 Other reserve                                        -               115            136 
 Retained losses                                (5,226)           (7,958)        (8,929) 
 Foreign currency reserve                           169               169            168 
-------------------------------------  ----------------  ----------------  ------------- 
 Equity attributable to 
  equity holders of the parent                   11,262             9,643          9,090 
 Non-controlling interests                            -             2,556          2,231 
-------------------------------------  ----------------  ----------------  ------------- 
 Total equity                                    11,262            12,199         11,321 
-------------------------------------  ----------------  ----------------  ------------- 
 

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 31 MAY 2023

 
                                               Unaudited   Unaudited        Audited 
                                                6 months    6 months     Year ended 
                                                ended 31    ended 31    30 Nov 2022 
                                                May 2023    May 2022 
 
 Cash flows from operating 
  activities 
 Operating loss                                    (459)       (814)        (2,607) 
 Share based payment charge                           21          52            228 
 Depreciation                                          6           3              7 
 Foreign exchange revaluation                          -           1              - 
  adjustment 
 Profit on sales to associate                          3 
 Increase / (decrease) in creditors                (207)       (288)          (208) 
 (Increase)/ decrease in debtors                      12        (33)             49 
 Deemed disposal of subsidiary 
  - working capital impact                           205 
                                               ---------  ----------  ------------- 
 Net cash used in operating 
  activities                                       (419)       (984)        (1,547) 
                                               ---------  ----------  ------------- 
 
 Cash flows from investing 
  activities 
 Payments for deferred exploration 
  expenditure                                      (202)       (919)        (2,417) 
 Payments for tangible fixed 
  assets                                               -        (20)           (20) 
 Deemed disposal of subsidiary                      (98)           -              - 
  - cash impact 
                                               ---------  ----------  ------------- 
 Net cash used in investing 
  activities                                       (300)       (939)        (2,437) 
                                               ---------  ----------  ------------- 
 
 Cash flows from financing 
  activities 
 Proceeds from issue of shares 
  and warrants                                         -           -            522 
 Cost of issue                                         -           -           (30) 
 Group net proceeds from subsidiary                  322           -              - 
  issue shares 
 Finance expense                                     (1)         (1)              - 
 Net cash generated from financing 
  activities                                         321         (1)            492 
                                               ---------  ----------  ------------- 
 
 Net increase in cash and cash 
  equivalents                                      (398)     (1,924)        (3,492) 
 Cash and cash equivalents 
  at beginning of period                             456       3,948          3,948 
                                               ---------  ----------  ------------- 
 Cash and cash equivalents 
  at end of period                                    58       2,024            456 
                                               ---------  ----------  ------------- 
 
 
 

NOTES TO THE HALF-YEARLY FINANCIAL INFORMATION

   1.            Basis of preparation 

The Group consolidates the financial statements of the Company and its subsidiary undertakings.

The financial information has been prepared under the historical cost convention in accordance with UK-adopted International Financial Reporting Standards ("IFRS"), International Accountant Standards ("IAS") and IFRS Interpretations Committee ("IFRIC") interpretations. The financial information set out in this half-yearly report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The same accounting policies, presentation and methods of computation are followed in this interim condensed consolidated report as were applied in the Group's annual financial statements for the year ended 30 November 2022. The auditor's report on those financial statements was unqualified and did not contain any statements under section 498(2) or section 498(3) of the Companies Act 2006.

   2.            Taxation 

No charge for corporation tax for the period has been made due to the expected tax losses available.

   3.            Earnings per share 

Earnings per share is calculated by dividing the profit attributable to ordinary shareholders of GBP2,182,000 (May 2022: loss of GBP592,000; November 2022: loss of GBP2,039,000) by the weighted average number of shares of 7,121,568,996 in issue during the period (May 2022: 6,404,645,919; November 2022: 6,476,717,573 ).

Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders of GBP2,182,000 by the weighted average number of shares and warrants in issue during the period, being 7,831,499,826.

In prior periods the diluted profit per share calculation was identical to that used for basic loss per share as the exercise of warrants would have had the effect of reducing the loss per ordinary share and therefore was not dilutive.

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August 17, 2023 02:00 ET (06:00 GMT)