Further to the announcement released earlier today, the Company is pleased to publish the details of its Final Results (the “Results”) for the Year Ended 30 June 2021. A full copy of the Results will be available via the company website at:
www.cloudbreakdiscovery.com/investors/
An electronic version will shortly be available for inspection at the National Storage Mechanism:
Chairman’s Statement
Dear Shareholder,
Enclosed are the financial results of Cloudbreak Discovery Plc (“Cloudbreak” or the “Company”) and its subsidiaries (together “the Group”) for the year ended 30 June 2021.
In June 2021, the Company changed its name from Imperial X Plc to Cloudbreak Discovery Plc and became a project generator to the natural resource sectors through the acquisition of a portfolio of mineral properties, equity and royalty positions diversified across multiple jurisdictions, but primarily in North America and West Africa (the “Acquisition”). The Acquisition was considered a reverse takeover transaction with the companies acquired (Cloudbreak Discovery Corp., Howson Ventures Inc. and Cabox Gold Corp., collectively “Cloudbreak Canada”) becoming the going forward entity for financial statement reporting purposes. The Company also acquired various equity and debt positions in Anglo African Minerals Plc, a Bauxite exploration company with assets in Guinea, West Africa. The company agreed to the terms on these Acquisitions in August 2020 and closed on them in June 2021.
Additionally, Cloudbreak was admitted to the Official List and commenced trading on the London Stock Exchange’s Main Market for listed securities on June 3, 2021. The Company successfully fundraised £2,416,348 during the year and entered into a Bought Deal Facility (the “Bought Deal Facility”) that allows the Company to utilize a non-revolving £10,000,000 facility as cash needs arise over a period of three years.
As a natural resource project generator listed on the London Stock Exchange’s Main Market, Cloudbreak is positioned to provide UK and European investors with a business model and range of assets which to date have largely been unavailable to UK and Europe investors. The Company can pivot between natural resource commodities for the best prospects and opportunities but will have a core focus on base, bulk and industrial materials and metals, which includes the suite of commodities required for the ongoing electrification revolution sweeping the globe. The Company has a well defined business strategy which limits its downside risk quickly by attracting quality partners to advance assets, giving Cloudbreak discovery exposure and considerable exploration exposure while minimizing dilution. Our business model is not constrained by geographic location or commodity, allowing us to diversify our range of assets, jurisdiction and partners.
Financial Review
During the 2021 year the Company earned £2 million in revenue from property sales and option sale agreements. At the end of the fiscal year, there was £1.3m in cash on hand with the cash reserves to be used in the short term to cover compliance costs, initial mineral property due diligence and acquisition costs and other costs incidental to the identification and development of mineral acquisition opportunities.
Subsequent to the year end, the Company has continued to review and acquire mineral properties and generate revenue through optioning out mineral properties to exploration partners. The buying and selling or optioning of its mineral properties will continue the establishment of the Company as a new, growth-focused diversified project generator and natural resource royalty business.
In January 2021, the company completed a private fundraising of £416,348 by issuing 16,653,937 ordinary shares at £0.025 per share. In February 2021, the Company executed a Bought Deal Facility. The agreement prescribes the conditions for the drawdown of £10,000,000 by way of non-revolving equity. In June 2021, the Company completed a private fundraising of £2,000,000 by issuing 66,666,667 ordinary shares at £0.03 per share.
The loss for the year was £902,060 (2020: £1,073,538 loss). The result for the year ended 30 June 2021 consisted mainly of income from property option payments and property sales and expenses from professional and consulting fees and a listing fee associated with the reverse take-over Acquisition. The change in fair value of the equity holdings also contributed positively to the Company’s 2021 year but was offset by the impairment of some of the properties Cloudbreak held and the Anglo African Minerals plc (“AAM”) assets.
Financial Position
The Group’s Statement of Financial Position as at 30 June 2021 and comparatives at 30 June 2020 are summarized below:
| 30 June 2021 £ | 30 June 2020 £ | |
| Current assets | 1,799,847 | 477,703 |
| Non-current assets | 4,383,998 | 435,402 |
| Total assets | 6,183,845 | 913,104 |
| Current liabilities | 895,264 | 316,039 |
| Total liabilities | 895,264 | 316,039 |
| Net (liabilities)/assets | 5,288,581 | 597,065 |
On behalf of the Board, I would like to record our thanks to those who have helped the Company throughout the year.
Kyler Hardy
Chairman and Chief Executive Officer Cloudbreak Discovery PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Group law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and as regards the parent company financial statements, as applied in accordance with international accounting standards in conformity with the Companies Act 2006. Under company law the Directors must not approve the group and parent company financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of the profit or loss of the group and parent company for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether international accounting standards in conformity with the requirements of the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
This report was approved by the Board on 29 December 2021 and signed on its behalf.
ON BEHALF OF THE BOARD:
Kyler Hardy
Chairman and Chief Executive Officer Cloudbreak Discovery Plc
Audit Report
In auditing the financial statements, the independent auditors have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. The independent auditors’ evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern basis of accounting included obtaining management’s assessment of going concern and associated cashflow forecasts for a period of 12 months from the date of approval of the financial statements.
The independent auditors reviewed the assessment and made enquiries of management to confirm key assumptions made and drivers of the assessment. The independent auditors evaluated the inputs to the cashflow forecast for reasonableness, compared nondiscretionary costs to historic costs incurred by the Group, and also considered the availability of funding or access to additional working capital of the Group. The Group’s liquid investment assets and existing debt facilities have been used as a basis to the going concern assumption.
Based on the work the independent auditors have performed, independent auditors have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
The Independent Auditor’s Report on the Group financial statements is set out in full on pages 22 to 26 of the 2021 Annual Report and Accounts.
Directors’ responsibilities pursuant to DTR4 (Disclosure and Transparency Rules)
The Directors confirm to the best of their knowledge:
- The Group and Company financial statements have been prepared in accordance with lFRS’s in conformity with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the group and company included in the consolidation taken as a whole; and
- The annual report includes a fair review of the development and performance of the business and financial position of the Group and Company together with a description of the principal risks and uncertainties.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
For the year ended 30 June 2021
| Note | As at 30 June 2021 £ | As at 30 June 2020 £ | |
| Continuing operations | |||
| Income Unrealised gain on financial investments | 11 | 1,412,787 | – |
| Realised gain on financial investments | 12,996 | – | |
| Profit on disposal of exploration & evaluation asset sales | 12 | 2,560,070 | 5,911 |
| 3,985,853 | 5,911 | ||
| Administrative expenses | 5 | (872,423) | (184,272) |
| Listing Fee | 4 | (2,365,634) | (557,992) |
| Bad debts | – | (384,614) | |
| 747,796 | (1,120,967) | ||
| Impairment of financial investments | 10,11,12 | (1,502,671) | – |
| Unrealised foreign exchange (loss) gain | (193,772) | 5,631 | |
| Finance income | 46,586 | 41,798 | |
| Profit/(Loss) before tax Taxation | 6 | (902,060) – | (1,073,538) – |
| Profit/(Loss) for the period attributable to equity shareholders of (902,060) (1,073,538) the Company | |||
| Other comprehensive income / (expenditure) for the period net of tax | – | – | |
| Total comprehensive income/(expenditure) for the period | (902,060) | (1,073,538) | |
| Earnings per ordinary share Basic and diluted loss per share attributable to the equity shareholders 7 | (0.85) | (0.83) |
The notes form part of these Financial Statements.
GROUP STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
| As at June 30 2021 | As at June 30 2020 | |||||||
| Note | ||||||||
| £ | £ | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Investments | 11 | 4,353,318 | 28,306 | |||||
| Royalty asset | 12 | 1 | 178,232 | |||||
| Exploration and evaluation assets | 10 | 30,679 | 228,863 | |||||
| Total non-current assets | 4,383,998 | 435,401 | ||||||
| Current assets | ||||||||
| Trade and other receivables | 13 | 518,849 | 2,971 | |||||
| Tax receivable | 3,381 | 8,290 | ||||||
| Convertible loan note receivable | 9 | – | 459,964 | |||||
| Cash and cash equivalents | 1,277,617 | 6,478 | ||||||
| Total current assets | 1,799,847 | 477,703 | ||||||
| TOTAL ASSETS | 6,183,845 | 913,104 | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 14 | 895,264 | 316,039 | |||||
| Total current liabilities | 895,264 | 316,039 | ||||||
| TOTAL LIABILITIES | 895,264 | 316,039 | ||||||
| NET ASSETS | 5,288,581 | 597,065 | ||||||
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY | ||||||||
| Share capital | 15 | 560,520 | 50,120 | |||||
| Share premium | 15 | 10,905,507 | 2,163,168 | |||||
| Reserve asset acquisition reserve | 4 | (4,134,019) | – | |||||
| Other reserve | 15 | 511,501 | 36,645 | |||||
| Retained losses | (2,554,928) | (1,652,868) | ||||||
| TOTAL EQUITY | 5,288,581 | 597,065 |
The notes form part of these Financial Statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
| As at June 30 2021 | As at June 30 2020 | |||||||
| Company number 06275976 | Note | |||||||
| £ | £ | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Investment in subsidiaries | 11 | 6,485,487 | 10 | |||||
| Investments | 11 | 107,679 | – | |||||
| Total non-current assets | 6,593,166 | 10 | ||||||
| Current assets | ||||||||
| Trade and other receivables | 13 | 514,849 | 40,018 | |||||
| Convertible loan note receivable | 9 | – | – | |||||
| Cash and cash equivalents | 1,232,385 | 34,430 | ||||||
| Total current assets | 1,747,234 | 74,448 | ||||||
| TOTAL ASSETS | 8,340,400 | 74,458 | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 14 | 449,885 | 111,374 | |||||
| TOTAL LIABILITIES | 449,885 | 111,374 | ||||||
| NET ASSETS | 7,890,515 | (36,916) | ||||||
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY | ||||||||
| Share capital | 15 | 560,520 | 227,586 | |||||
| Share premium | 15 | 10,905,507 | 1,328,494 | |||||
| Reserve asset acquisition reserve | 15 | – | 15,200 | |||||
| Other reserve | 15 | 407,656 | 112,406 | |||||
| Retained losses | (3,983,168) | (1,720,602) | ||||||
| TOTAL EQUITY | 7,890,515 | (36,916) |
Cloudbreak Discovery Plc has used the exemption granted under s408 of the Companies Act 2006 that allows the non-disclosure of the Income Statement of the parent company. The after-tax loss attributable to Cloudbreak Discovery plc for the period ended 30 June 2021 was £2,025,931 (2020: £369,920)
The notes form part of these Financial Statements.
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
| At July 01, 2019 | 43,566 | 1,471,495 | – | 21,109 | (579,330) | 956,840 |
| Issuance of warrants | – | – | 15,536 | – | 15,536 | |
| Share based payments – Professional fees | 1,355 | 79,146 | – | – | – | 80,501 |
| Issuance of shares – reverse take-over | 5,199 | 612,527 | – | – | – | 617,726 |
| Total comprehensive income for the year | – | – | – | – | (1,073,538) | (1,073,538) |
| Balance at June 30, 2020 | 50,120 | 2,163,168 | – | 36,645 | (1,652,868) | 597,065 |
| Issue of shares | 30,475 | 55,373 | – | – | – 85,848 | |
| Transfer to reverse acquisition reserve Recognition of Cloudbreak Discovery Plc equity at reverse acquisition | (80,595) 460,423 | (2,218,542) 7,969,714 | 2,259,668 (6,393,687) | 39,469 – | – – – 2,036,450 | |
| Warrants assumed – Reverse take-over | – – – | 37,971 | – | 37,971 | ||
| Options assumed – Reverse take-over | – – – | 211,978 | 211,978 | |||
| Issue of shares | 100,097 | 2,935,793 | – | 157,695 | – | 3,193,585 |
| Exchange differences on translation | – – – | 27,744 | – | 27,744 | ||
| Total comprehensive income for the year | – – – | – | (902,060) | (902,060) | ||
| Balance at June 30, 2021 | 560,520 | 10,905,507 | (4,134,019) | 511,501 | (2,554,928) | 5,288,581 |
The notes form part of these Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
| At July 01, 2019 | 202,786 | 876,297 | 31,215 | 161,753 | (1,400,029) | (127,978) |
| Issue of shares | 24,800 | 452,197 | – | – | – | 476,997 |
| Equity to be issued – movement | – | – | (16,015) | – | – | (16,015) |
| Exercise of warrants | – | – | – | (49,347) | 49,347 | – |
| Total comprehensive loss for the year | – | – | – | – | (369,920) | (369,920) |
| Balance at June 30, 2020 | 227,586 | 1,328,494 | 15,200 | 112,406 | (1,720,602) | (36,916) |
| Issue of shares – Acquisition of Cloudbreak Canada Subsidiary | 216,183 | 6,269,294 | – | – | – | 6,485,477 |
| Issue of shares | 116,751 | 3,307,719 | (15,200) | 195,678 | – | 3,604,948 |
| Options granted | – – – | 99,572 | – | 99,572 | ||
| Total comprehensive loss for the year | – – – | – | (2,262,566) | (2,262,566) | ||
| Balance at June 30, 2021 | 560,520 | 10,905,507 | – | 407,656 | (3,983,168) | 7,890,515 |
The notes form part of these Financial Statements.
GROUP AND COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
| Notes | Group Year ended June 30 2021 £ | Company Year ended Year ended Year ended June 30 2020 June 30 2021 June 30 2020 £ £ £ | |||
| Cash flows from operating activities Income from operations | (902,060) | (1,073,538) (2,262,566) (369,920) | |||
| Add items not affecting cash | |||||
| Exploration and evaluation asset sales | 10 | (2,186,891) | (28,279) – – | ||
| Change in fair value of investments | 11 | (1,412,787) | – (4,173) – | ||
| Gain on sale of investments | 11 | (12,996) | – – – | ||
| Impairment loss | 10,11,12 | 1,502,671 | – 1,035,990 – | ||
| Interest income | (36,021) | (42,012) | – | – | |
| Unrealized foreign exchange gain (loss) | (155,069) | 217 | 4,617 | – | |
| Finance charge | 16 | 200,000 | 15,536 | 200,000 | – |
| Listing fee | 4 | 2,365,634 | 557,992 | – | – |
| Bad debts | – | 384,614 | – | – | |
| Stock based compensation | 15 | – | 80,501 | 137,553 | 97,905 |
| Changes in non-cash working capital | |||||
| (Increase)/Decrease in trade and other receivables | (406,449) | (5,357) | (474,831) | (33,683) | |
| Increase/(Decrease) in trade and other payables | (542,836) | 104,279 | 338,511 | 21,903 | |
| Net cash used in operating activities | (1,586,804) | (6,047) | (1,024,899) | (283,795) | |
| Cash flows from investing activities | |||||
| Funds received on sale of investments | 11 | 195,510 | – | – | – |
| Funds spent on investments | 11 | (173,786) | (27) | (103,506) | – |
| Cash received in reverse take-over | 4 | 860,389 | 8,599 | – | – |
| Exploration and evaluation expenses | 10 | (29,675) | – | – | – |
| Cash flows generated from investing activities | 852,438 | 8,572 | (103,506) | – | |
| Cash flows from financing activities Issue of shares 15 | 2,008,773 | – | 2,326,358 | 316,480 | |
| Shares cancelled | 15 | (3,268) | – – – | ||
| Repayment of loans | – | – – 446 | |||
| Cash flows generated from financing activities | 2,005,505 | – | 2,326,358 | 316,926 | |
| Increase (decrease) in cash and cash equivalents | 1,271,139 | 2,524 | 1,197,955 | 33,131 | |
| Cash and cash equivalents at beginning of the period | 6,478 | 3,954 | 34,430 | 1,299 | |
| Cash and cash equivalents at end of the period | 1,277,617 | 6,478 | 1,232,385 | 34,430 | |
| The notes form part of these Financial Statements. |
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 1: ACCOUNTING POLICIES
General Information
The Company is a public limited company incorporated and domiciled in England (registered number: 06275976), which is listed on the London Stock Exchange. The registered office of the Company is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
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.
Basis of Preparation of Financial Statements
The financial statements have been prepared in accordance with international accounting standards in conformity with the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union. The financial statements have been prepared under the historical cost convention.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Cloudbreak Discovery plc and its subsidiaries as at 30 June 2021. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Cloudbreak Discovery plc owns the majority of the shareholdings and has operational control over all its subsidiaries. Please refer to Note 4 for information on the consolidation of Cloudbreak Discovery plc.
Cloudbreak Discovery plc has used the exemption grated under s408 of the Companies Act 2006 that allows for the non-disclosure of the Income Statement of the parent company. The after-tax loss attributable to Cloudbreak Discovery plc for the year ended 30 June 2021 was £2,262,566 (2019: £369,920).
Going Concern
The Group Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors are of the view that, the Group has funds to meet its planned expenses over the next 12 months from the date of these Financial Statements.
In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the current and future position of the Group, including current level of resources and the required level of spending on exploration and corporate activities. As part of the assessment, the Directors have also taken into account the potential for continuing warrant exercises and the ability to raise new funding and utilizing the Crescita facility whilst maintaining an acceptable level of cash for the Group to meet all commitments.
The Directors are confident that the measures they have available will result in sufficient working capital and cash flows to continue in operational existence. Taking these matters in consideration, the Directors continue to adopt the going concern basis of accounting in the preparation of the financial statements.
The spread of COVID-19 will continue to have a material impact on many economies globally both through the effects of the virus itself and the measures taken by government to restrict its spread. The situation and guidance being given in respect of COVID-19 is an evolving one, which the Board will continue to actively monitor. The Directors acknowledge that the market volatility may impact the ability of the Group to raise funds in the near future. The auditors have included a ‘material uncertainty’ paragraph in their audit report as a result of the uncertainty. The Directors, in light of all of the above circumstances, have a reasonable expectation that the Group will have access to adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the Financial Statements.
Changes in accounting policy and disclosures
During the financial year, the Group has adopted the following new IFRSs (including amendments thereto) and IFRIC interpretations that became effective for the first time.
| Standard | Effective date, annual period beginning on or after |
| Amendments to IFRS 3 Business Combinations | 1 January 2020 |
| Amendments to IAS 1 and IAS 8: Definition of Material | 1 January 2020 |
| Amendments to IFRS 9, IAS 39 and IFRS 17: Interest Rate Benchmark Reform | 1 January 2020 |
Their adoption has not had any material impact on the disclosures or amounts reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group and which have not been applied in these financial statements, were in issue but were not yet effective.
| Standard | Effective date, annual period beginning on or after |
| Amendments to IAS 1: Presentation of Financial Statements – Classification of Liabilities as Current or Noncurrent | Not yet confirmed* |
| Amendments to IFRS 3 Business Combinations | 1 January 2022* |
| Amendments to IAS 16: Property, Plant and Equipment | 1 January 2022* |
| Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets | 1 January 2022* |
| Annual Improvements to IFRS Standards 2018-2020 Cycle | 1 January 2022* |
| Amendments to IAS 8: Accounting Policies, Changes to Accounting Estimates and Errors | Not yet confirmed* |
| Amendments to IAS 12: Income Taxes – Deferred Tax arising from a Single Transaction | Not yet confirmed* |
*Subject to UK endorsement
The adoption of these standards is not expected to have any material impact on the financial statements of the Group
Foreign currency translation
- Functional and presentation currency
Items included in the Financial Information are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of the parent company is Pounds Sterling as is the functional currency of the subsidiary Imperial Minerals UK. The functional currency of the other subsidiary, Cloudbreak Discovery (Canada) is Canadian Dollars. The Financial Information in Cloudbreak Discovery (Canada) Ltd is translated in accordance with IAS 21 – The Effect of Changes in Foreign Exchange Rates.
- Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement in other comprehensive income. The financial statements are presented in Pounds Sterling (£), the functional currency of Cloudbreak Discovery Plc is Pounds Sterling, and the functional currency of its subsidiary Cloudbreak Discovery (Canada) Ltd is Canadian Dollars.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances with banks and similar institutions, which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. This definition is also used for the Statement of Cash Flows.
Trade and other receivables and prepaids
Trade and other receivables and prepaids are amounts due from third parties in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current
assets.
Trade receivables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Convertible loan notes receivable
Convertible loan notes receivable are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Royalty assets
Royalty financial assets are recognised or derecognised on completion date where a purchase or sale of the royalty is under a contract, and are initially measured at fair value, including transaction costs. All of the Group’s royalty financial assets have been designated as at fair value through profit and loss (“FVTPL”). The royalty financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in the ‘revaluation of royalty financial assets’ line item of the income statement.
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 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, as such at the year-end all intangibles held have an indefinite life 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 Income Statement.
Exploration and evaluation assets recorded at fair-value on business combination
Exploration assets which are acquired as part of a business combination are recognised at fair value in accordance with IFRS 3. When a business combination results in the 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.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Group uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Group. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group’s accounting policy for each category is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line. Other than derivative financial instruments, which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.
Amortised Cost
These assets comprise the types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward- looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset, based on analysis of internal or external information. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The Group considers a financial asset in default when contractual payments are 180 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.
The Group’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and – for the purpose of the statement of cash flows – bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.
Financial investments
Non-derivative financial assets comprising the Group’s strategic financial investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. These assets are classified as financial assets at fair value through profit or loss. They are carried at fair value with changes in fair value recognised through the income statement. Where there is a significant or prolonged decline in the fair value of a financial investment (which constitutes objective evidence of impairment), the full amount of the impairment is recognised in the income statement.
Listed investments are valued at closing bid price on 30 June 2021. Unlisted investments that are not publicly traded and whose fair value cannot be measured reliably, are measured at fair value through profit and loss less impairment.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability; or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Other reserves
Other reserves consist of:
The share option reserve consists of the fair value of warrants and options in issue.
Reverse asset acquisition reserve
Reverse asset acquisition reserve was recorded in connection with the reverse take-over (Note 4).
Share based payments
The Group operates an equity-settled, share-based scheme under which the Group receives services from employees or contractors as consideration for equity instruments (options and warrants) of the Group. The fair value of the third-party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options 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).
The fair value of the share options and warrants are determined using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
Taxation
Current tax is the tax currently payable or receivable based on the taxable loss for the year.
Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amounts of assets and liabilities and their tax bases, except when, at the initial recognition of the asset or liability, there is no effect on accounting or taxable profit or loss. Deferred tax is determined using tax rates and laws that have been substantially enacted by the Statement of Financial Position date, and that are expected to apply when the temporary difference reverses.
Tax losses available to be carried forward are recognised as deferred tax assets, to the extent that it is probable that there will be future taxable profits against which the temporary differences can be utilised.
NOTE 2: FINANCIAL RISK MANAGEMENT
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Treasury policy and financial instruments
During the years under review, the only financial instruments were cash and cash equivalents and other receivables which were or will be required for the normal operations of the Group.
The Group operates informal treasury policies which include ongoing assessments of interest rate management and borrowing policy. The Board approves all decisions on treasury policy.
The Group has raised funds to finance future activities through the placing of shares, together with share options and warrants. There are no differences between the book value and fair value of the above financial assets. The risks arising from the Group’s financial instruments are liquidity and interest rate risk. The Directors review and agree policies for managing these risks and they are summarised below:
Market risk and foreign exchange risk
The Group is exposed to market risk, primarily relating to interest rate and foreign exchange movements. The Group does not hedge against market or foreign exchange risks as the exposure is not deemed sufficient to enter into forwards or similar contracts.
Liquidity and interest rate risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. This is achieved by the close control by the Directors of the Group in the day- to-day management of liquid resources. Cash is invested in deposit accounts which provide a modest return on the Group’s resources whilst ensuring there is limited risk of loss to the Group.
Credit Risk
Credit risk arises from cash and cash equivalents. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The long-term Moody’s credit rating of HSBC Bank Plc is Aa3.
NOTE 3: CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENTS
The preparation of the Financial Information 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 Information and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce this Financial Information.
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:
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.
Classification of royalty arrangements: initial recognition and subsequent measurement
The Directors must decide whether the Group’s royalty arrangements should be classified as:
- Intangible assets in accordance with IAS 38 Intangible Assets; or
- Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify the characteristics which determine which accounting standard to apply to each royalty arrangement:
Type 1 – Intangible assets: Royalties, are classified as intangible assets by the Group. The Group considers the substance of a simple royalty to be economically similar to holding a direct interest in the underlying mineral asset. Existence risk (the commodity physically existing in the quantity demonstrated), production risk (that the operator can achieve production and operate a commercially viable project), timing risk (commencement and quantity produced, determined by the operator) and price risk (returns vary depending on the future commodity price, driven by future supply and demand) are all risks which the Group participates in on a similar basis to an owner of the underlying mineral licence. Furthermore, in a royalty intangible, there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment obligations or means to enforce production or guarantee repayment. These are accounted for as intangible assets under IAS 38.
Type 2 – Financial royalty assets (royalties with additional financial protection): In certain circumstances where the risk is considered too high, the Group will look to introduce additional protective measures. This has taken the form of minimum payment terms. Once an operation is in production, these mechanisms generally fall away such that the royalty will display identical characteristics and risk profile to the intangible royalties; however, it is the contractual right to enforce the receipt of cash which results in these royalties being accounted for as financial assets under IFRS. There are currently no royalties classified as financial royalty assets.
Estimated impairment of convertible loan notes receivable
The Group has assessed whether the convertible loan notes receivable continues to be fully impaired based upon all available information, which includes assumptions and judgments regarding circumstances in the future, which could have an impact upon recoverability.
Unlisted investments
The Group is required to make judgments over the carrying value of investments in unquoted companies where fair values cannot be readily established and evaluate the size of any impairment required. It is important to recognise that the carrying value of such investments cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately. Management’s significant judgement in this regard is that the value of their investment represents their cost less previous impairment.
Valuation of exploration and evaluation assets
Exploration and evaluation costs have a carrying value of 30 June 2021 of £30,679 (2020: 228,863). Such assets have an indefinite useful life as the Group has the right to renew exploration licenses or options and the asset is only amortised once extraction of the resource commences. The value of the Group’s exploration and evaluation expenditure will be dependent upon the success of the Group in discoverying economic and recoverable mineral resources, especially in the countries of operation where political, economic, legal, regulatory and social uncertainties are potential risk factors. The future revenue flows relating to these assets is uncertain and will also be affected by competition, relative exchange rates and potential new legislation and related environmental requirements. The Group’s ability to continue its exploration programs and develop its projects is dependent on future fundraisings the outcome of which is uncertain. The ability of the Group to continue operating within Botswana is dependent on a stable political environment which is uncertain based on the history of the country. This may also impact the Group’s legal title to assets held which would affect the valuation of such assets. There have been no changes made to any past assumptions.
The Directors have undertaken a review to assess whether circumstances exist which could indicate the existence of impairment as follows:
- The Group no longer has title to mineral leases
- A decision has been taken by the Board to discontinue exploration due to the absence of a commercial level of reserves
- Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and participation
Following their assessment, the Directors concluded that no impairment charge is necessary (2019: Nil).
NOTE 4: REVERSE ACQUISITION AND LSE LISTING
On June 2, 2021, the Company acquired the entire issued share capital of Cloudbreak Discovery Corp, Howson Ventures Inc, Cabox Gold Corp. and 1278953 B.C. Ltd. (together “Cloudbreak Canada”), which are private companies incorporated in British Columbia, by way of share exchange. These entities amalgamated on June 29, 2021, and were renamed Cloudbreak Discovery (Canada) Ltd. These financial statements are presented as if Cloudbreak Discovery Corp, Howson Ventures Inc, Cabox Gold Corp. and 1278953 B.C. Ltd. were amalgamated as of July 1, 2019.
Although the transaction resulted in Cloudbreak Canada becoming a wholly owned subsidiary of the parent company, the transaction constitutes a reverse acquisition in as much as the shareholders of Cloudbreak Canada own a majority of the outstanding ordinary shares of the Group. In substance, the shareholders of Cloudbreak Canada acquired a controlling interest in the Group and the transaction has therefore been accounted for as a reverse acquisition.
As the parent company was engaged in acquiring Cloudbreak Canada and raising equity financing to provide the required funding for the operations of the acquisition and listing on the main market of the LSE, it did not meet the definition of a business according to the definition in IFRS 3. Accordingly, this reverse acquisition does not constitute a business combination and was accounted for in accordance with IFRS 2 Share-based payment and IFRIC guidance, with the difference between the equity value given up by the Cloudbreak Canada shareholders and the share of the fair value of net assets gained by the Cloudbreak Canada shareholders charged to the statement of comprehensive income as the cost of acquiring an LSE quoted listing.
In accordance with reverse acquisition accounting principles, these consolidated financial statements represent a continuation of the consolidated financial statements of Cloudbreak Canada and include:
- The assets and liabilities of Cloudbreak Canada at their pre-acquisition carrying amounts and the results for both periods; and
- The assets and liabilities of the parent company as at 30 June 2021 and its results from 2 June to 30 June 2021.
On 2 June 2021, the parent company issued 216,182,566 shares for the issued and outstanding capital of Cloudbreak Canada.
On June 2, 2021, the quoted share price of Cloudbreak Discovery Plc was £0.03 and therefore this valued the investment in Cloudbreak Canada at £6,485,477.
Because the legal subsidiary, Cloudbreak Canada, was treated as the accounting acquirer and the legal parent company, Cloudbreak Discovery Plc, was treated as the accounting subsidiary, the fair value of the shares and warrants and options deemed to have been issued by Cloudbreak Canada was calculated at £2,764,950 based on an assessment of the purchase consideration for a 100% holding in Cloudbreak Discovery Plc.
The fair value of net assets of Cloudbreak Discovery plc at the date of acquisition was as follows:
| Cash and cash equivalents | £860,389 |
| Receivables | £215,267 |
| Liabilities | £ (1,122,063) |
| Net assets | £(46,407) |
The fair value of shares issued for Cloudbreak’s net assets and the warrants and options assumed upon acquisition was as follows:
| Warrants | £21,092 |
| Options | £99,572 |
| Common shares issued | £2,198,563 |
| Total deemed cost | £2,319,227 |
The difference between the deemed cost and the fair value of the net assets acquired of £2,365,634 has been expensed in accordance with IFRS 2, Share based payments, reflecting the economic cost to the Cloudbreak Canada shareholders of acquiring a quoted entity.
A reverse asset acquisition reserve has also been recorded of £4,134,019 which represents the retained losses of the Company before acquisition and the Company equity at reverse acquisition.
NOTE 5: EXPENSES BY NATURE
| Group | |||
| For the year For the year ended 30 June ended 30 June 2021 2020 £ £ | |||
| Professional fees | 279,568 | 145,790 | |
| Consulting fees | 302,485 | 2,955 | |
| Finance charge (Note 16) | 200,000 | – | |
| Transfer agent and filing fees | 65,178 | 695 | |
| Other expenses | 25,192 | 34,832 | |
| Total administrative expenses | 872,423 | 184,272 | |
| NOTE 6: TAXATION ON LOSS FROM ORDINARY ACTIVITIES | |||
| Group | |||
| For the year | For the year | ||
| ended 30 June | ended 30 June | ||
| 2021 | 2020 | ||
| £ | £ | ||
| Gain/(Loss) before tax | (902,060) | (1,073,538) | |
| Tax on gain (loss) for the year multiplied by the weighted average | (202,964) | (289,855) | |
| corporation tax rate of 22.5% (2019: 27%) | |||
| Tax losses carried forward on which no deferred tax asset has been recognised | 186,271 | 29,313 | |
| Expenses not deducted for tax purposes | 16,693 | 260,542 | |
| Tax charge for the year | – | – | |
The Group has not recognised a deferred tax asset in the financial statements as there is no certainty that taxable profits will be available against which these assets could be utilised.
NOTE 7: EARNINGS PER SHARE
The calculation of the basic loss per share of £0.85 is based on the loss attributable to ordinary shareholders of
£902,060 and on the weighted average number of ordinary and deferred shares of 105,829,101 in issue during the year.
In accordance with IAS 33, no diluted earnings per share is presented as the effect on the exercise of share options or warrants would be to decrease the loss per share.
Details of share options and warrants that could potentially dilute earnings per share in future periods are set out in Note 15.
NOTE 8: DIRECTORS AND EMPLOYEES
The total number of Directors who served in the year was 4 (2020: 4). There are no employees of the Group. The following amounts were paid during the year to Directors:
Directors Fees and Consulting Fees 23,760 –
23,760 –
Amounts included in Directors fees and salaries include £Nil (2020: £Nil) in relation to share option charges. 3,000,000 options were issued to directors on 2 June 2021 for their services. The options have an exercise price of
£0.03 and expire on 30 June 2024. Details of the Share Option charges can be found in Note 15.
NOTE 9: CONVERTIBLE LOAN
| Principal Total 2021 | Total 2020 | Total | Total | ||
| (£) | (£) | 2021 (£) | 2020 (£) | ||
| Convertible loan note | $500,000 USD (£361,847) | £450,591 | £459,964 | £ – | £ – |
| Convertible loan note | $420,000 USD (£303,744) | £350,718 | – | £ – | £ – |
| Convertible loan note | $49,790 USD (£35,949) | £44,000 | – | £ – | £ – |
| Convertible loan note | $250,000 USD (£180,500) | £220,281 | – | £ – | £ – |
| Impairment provision | £ (1,065,590) | ||||
| £ – | £459,964 | £ – | £ – |
On March 20, 2019, the Group issued a $500,000 USD (£361,847) unsecured convertible loan note to Anglo-African Minerals plc (“AAM”). The convertible loan note bears interest at 10% per annum and compounds monthly, is unsecured, and had an original maturity date of September 20, 2019. The convertible loan note is convertible into common shares of AAM at $0.01 USD per share. The maturity date of the convertible loan note was subsequently extended to March 20, 2020, and the Group was issued 21,029,978 AAM warrants per the terms of the extension. These warrants have a strike price of $0.025 USD per share, with an expiry date of September 19, 2021. As at June 30, 2021, the Group impaired the balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM from Cronin Services Ltd., a company controlled by the Chairman and CEO of the Group, that had a principal value of $420,000 USD (£303,744) and accrued interest of $61,261 (£44,304) for total value of $481,261 USD (£348,048). The Group issued 14,166,790 ordinary shares and 7,083,395 share purchase warrants to acquire this note. Each share purchase warrant may be converted into one ordinary share of the Group at £0.05 per ordinary share and expires June 2, 2025. The convertible loan note bears interest at 10% per annum and compounds monthly, is unsecured, and had a maturity date of May 31, 2021. The convertible loan note is convertible into common shares of AAM at $0.01 USD per share. As at June 30, 2021, the Group impaired the balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM from Cronin Capital Corp., a company controlled by the Chairman and CEO of the Group, that had a principal value of $49,790 USD (£35,949) and accrued interest of $9,826 USD (£7,094) for total value of $59,617 USD (£43,043). The Group issued 1,630,832 ordinary shares and 1,630,832 share purchase warrants to acquire this note. Each share purchase warrant may be converted into one ordinary share of the Group at £0.05 per ordinary share and expires 2025 June 2. The convertible loan note bears interest at 15% per annum and compounds monthly, is unsecured, and had a maturity date of 2020 September 30. The convertible loan note is convertible into common shares of AAM at $0.005 USD per share. As at June 30, 2021, the Group impaired the balance down to $Nil as collectability was considered doubtful.
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM by Reykers Nominees Limited that had a principal value of $250,000 USD (£180,500) and accrued interest of $52,776 (£38,104) for total value of $302,776 USD (£218,604). The Group also acquired 12,500,000 AAM share purchase warrants that had a conversion price of $0.03 USD and expiry date of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The Group issued 8,912,756 ordinary shares to acquire this convertible note, 1,200,000 ordinary shares to acquire the 12,500,000 AAM share purchase warrants and 3,520,000 ordinary shares to acquire the 11,000,000 AAM ordinary shares. The convertible loan note bears interest at 10% per annum and compounds monthly, is unsecured, and had a maturity date of 30 June 2020. The convertible loan note is convertible into common shares of AAM at $0.01 USD per share. As at June 30, 2021, the Group impaired the balance down to $Nil as collectability of the convertible loan was considered doubtful and the shares and warrants impaired.
NOTE 10: EXPLORATION AND EVALUATION ASSETS
As at June 30, 2021, the Group’s exploration and evaluation assets are as follows:
Group Company
| E & E Assets | 2021 (£) | 2020 (£) | 2021 (£) | 2020 (£) |
| Caribou Property, British Columbia | 1 | 1 | – | – |
| South Timmins, British Columbia | 16,080 | – | – | – |
| Gold Vista Property, British Columbia | 1 | 5,941 | – | – |
| La Blanche Property, British Columbia | – | 29,704 | – | – |
| Spectrum Property, British Columbia | – | 75,880 | – | – |
| Silver Vista Property, British Columbia | 1 | 53,470 | – | – |
| Silver Switchback Property, British Columbia | 1 | 4,456 | – | – |
| Rupert Property, British Columbia | 14,595 | 59,411 | – | – |
| Balance, June 30, 2021 | 30,679 | 228,863 | – | – |
As at June 30, 2021, the Group’s reconciliation of exploration and evaluation assets are as follows:
Group Company
| E & E Assets | 2021 (£) | 2020 (£) | 2021 (£) | 2020 (£) |
| Cost As at July 1 | 228,863 | 28,574 | – | – |
| Additions | 97,058 | 200,287 | – | – |
| Net proceeds from sale | (2,855,312) | – | ||
| Gain on sale | 2,560,070 | – | – | – |
| Balance, June 30 | 30,679 | 228,863 | – | – |
| Caribou Property, Canada |
On November 20, 2017, the Group acquired the Caribou mineral property for £1 from a company controlled by the CEO of the Group. As at June 30, 2021, included in Exploration and Evaluation Assets is £1 (June 30, 2020 – £1) attributed to the Caribou property.
On June 2, 2020, the Group entered into an option agreement with Norseman Silver Inc. (“Norseman”), a company with a common director, under which Norseman may acquire up to a 100% interest in the Group’s Caribou Property subject to a 2% net smelter return (“NSR”) to the Group. In order for Norseman to fully exercise the option on the Caribou Property, they must pay the Group an aggregate of $80,000 CAD, issue 2,750,000 common shares of Norseman and incur
exploration expenses of $225,000 CAD over three years. Norseman will have the right to repurchase one-half (1%) of the 2% NSR for $1,000,000 CAD.
During the year ended June 30, 2021, the Group received cash payments of $30,000 CAD (£17,517) and 1,750,000 Norseman shares in relation to the option payments due under the agreement valued at $290,000 CAD (£171,100).
South Timmins Property, Canada
During the year ended June 30, 2021, the Group paid $27,540 CAD (£16,080) in asset staking costs to acquire twelve mineral titles in Ontario, Canada known as the South Timmins property.
Subsequent to June 30, 2021, the Group optioned the South Timmins property. See Note 17.
Gold Vista Property, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of the rights to the Gold Vista Property located in British Columbia, Canada. To earn a 100% interest, the Group must make aggregate cash payments of $65,000 CAD ($30,000 CAD paid – £17,700), issue 1,375,000 shares in the Group and incur work commitments on the property of $225,000 CAD, over three years. The property is subject to a 2% NSR which the Group may acquire one-half (1%) for $1,000,000 CAD.
On October 6, 2020, the Group entered into an option agreement with Deep Blue Trading (“Deep Blue”) in which Deep Blue may acquire up to a 100% interest in the Gold Vista Property subject to a 1% NSR to the Group. Deep Blue will have the right to repurchase one-half (0.5%) of the NSR for $500,000 at any time prior to commercial production. In order for Deep Blue to fully exercise the option on the Gold Vista Property, they must pay the Group a $10,000 CAD (£5,839) (received) and assume certain obligations payable to the original vendor.
La Blache Property, Canada
On May 20, 2019, the Group purchased 100% of the La Blache mineral claims in Cote-Nord, Quebec for $50,000 CAD (£29,195).
On June 18, 2020, the Group and Cronin Services Ltd., a company controlled by the CEO and President of the Group (collectively known as “Vendors”), entered into a definitive agreement with Temas Resources Corp. (“Temas”) for the sale of 100% interest in the property for 10,000,000 Temas shares, $30,000 CAD in cash payments and a 2% NSR to the Group. Temas has the right to repurchase one-half (1%) of the NSR for $2,500,000 CAD. On September 23, 2020, the transaction closed with the Group receiving 10,000,000 Temas shares valued at $2,000,000 CAD
(£1,167,815) and $30,000 CAD (£17,517). The 10,000,000 shares the Group received are subject to pooling restrictions as follows: 25% of the Temas shares were released from the pool March 23, 2021, and the balance will be released September 23, 2021. Upon its sale, total value of $50,000 CAD (£29,195) in exploration and evaluation assets attributed to La Blache property was expensed.
Spectrum Property, Canada
On January 10, 2019, the Group entered into an option agreement to acquire 100% interests in the Southern Spectrum Mineral Property located in the Lillooet Mining Division of British Columbia. In order to exercise the option, the Group must pay an aggregate of $70,000 CAD in cash ($50,000 CAD, £29,500 paid), issue 1,200,000 common shares (675,000 issued), and incur work commitments of $1,250,000 ($50,000 CAD, £29,500 incurred) over three years. The property is subject to a 3% NSR which the Group may acquire 1% for $1,000,000 CAD.
During the year ended June 30, 2021, the Group sold, transferred and assigned all of the Group’s right, title interest and obligations under its original Spectrum property option agreement to 1162832 BC Ltd. (the “Vendor”) for $10,000 CAD (£5,839) cash. Upon the Vendor receiving at least 500,000 shares from the transfer, option, or other disposition of some or all of the Vendor’s interest in the Spectrum property (“Consideration Shares”), the Vendor will transfer to the Group at least 500,000 of those Consideration Shares. As a result of the sale, total value in exploration and evaluation assets of
$117,722 CAD (£49,456) attributed to the property was expensed in the current year.
Silver Switchback Property, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of the rights to the Silver Switchback Property located in British Columbia, Canada. To earn a 100% interest, the Group must make aggregate cash payments of $75,000 CAD ($15,000 CAD paid – £8,850), issue 1,850,000 shares (250,000 shares issued at a value of $40,000 CAD – £23,356) in the Group and incur work commitments on the property of $475,000 CAD over three years. The property is subject to a 2% NSR which the Group may re-purchase 1.5% for $1,250,000 CAD.
On August 27, 2020, the Group entered into an option agreement with Norseman, under which Norseman may acquire up to a 100% interest in the Group’s Silver Switchback Property subject to a 1% NSR to the Group. In order for Norseman to fully exercise the option on the Silver Switchback Property, they must pay the Group $30,000 CAD (received), issue 750,000 common shares (370,000 received valued at $83,250 CAD – £46,610), and assume certain obligations due to the original vendor over three years. Norseman will have the right to repurchase one-half (0.5%) of the NSR from the Group for $500,000 CAD.
Silver Vista, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of the rights to the Silver Vista Property located in British Columbia, Canada. To earn a 100% interest, the Group will need to make aggregate cash payments of $65,000 CAD ($20,000 CAD paid – £11,678), issue 1,375,000 shares (370,000 shares issued at a value of $75,000 CAD – £43,793) in the Group and incur work commitments on the property of $275,000 CAD, over three years. The property is subject to a 2% NSR which the Group may acquire one-half (1%) for $1,000,000 CAD.
During the year ended June 30, 2021 the Group made a payment of $80,000 CAD (£46,713) to a prior optionor to fulfil prior option agreement obligation.
On September 21, 2020, the Group entered into an option agreement with Norseman, under which Norseman may acquire up to a 100% interest in the Group’s Silver Vista Property subject to a 1% NSR payable to the Group. In order for Norseman to fully exercise the option on the Silver Switchback Property, they must pay the Group $50,000 CAD (received
- £29,500), and issue 2,000,000 common shares (received and valued at $40,000 CAD – £23,600). Norseman will have the right to repurchase one-half (0.5%) of the NSR for $500,000 CAD.
Rupert, Canada
On September 11, 2018, the Group entered into an asset purchase agreement with a company controlled by a director of the Group and two unrelated persons to purchase the Rupert Property, located in British Columbia, Canada. As consideration for the property, the Group issued 2,000,000 common shares valued at $100,000 CAD (£59,000) and granted a 2% NSR. At any time, 1% of the NSR can be purchased by the Group for $1,500,000 CAD. Of the common shares issued to acquire the property, 1,000,000 were issued to a company that was controlled by a director of the Group. The Group also agreed to incur aggregate expenditures on the property of $800,000 ($100,000 CAD – £59,000 incurred).
On December 11, 2020, the Group sold the Rupert Property to Buscando Resources Corp. (“Buscando”), a company with a director in common. Payments to be received by the Group are as follows:
- $150,000 CAD in total cash payments with $25,000 CAD (£14,750) on closing (received), $50,000 CAD on or before 12 months after Buscando is listed on a public exchange, $75,000 CAD on or before 24 months after Buscando is listed on a public exchange;
- 3,750,000 shares in total issued to the Group with 1,000,000 shares issued on closing (received and valued at $50,000 CAD – £29,500, 1,250,000 on or before 12 months after Buscando is listed on a public exchange, 1,500,000 on or before 24 months after Buscando is listed on a public exchange; and
- $200,000 expenditures incurred on the property with $100,000 CAD on or before 12 months after Buscando is listed on a public exchange, $100,000 CAD on or before 24 months after Buscando is listed on a public exchange.
As a result of the sale to Buscando, the original vendors waived the exploration commitments required by the Group
under the September 11, 2018 agreement.
New Moon, Canada
On August 20, 2020 the Group acquired the New Moon property in British Columbia, Canada for acquisition costs of
$6,188 CAD (£3,651). On December 9, 2020 the Group sold the New Moon property to Norseman,in exchange for
$10,000 CAD (£5,800)(received) and 2,500,000 Norseman shares (received and valued at $50,000 CAD – £29,500). The Group retained a 2% net smelter return on the property. Norseman will have the right to repurchase one-half (1.0%) of the NSR for $1,000,000 CAD any time prior to commercial production.
| NOTE 11: INVESTMENTS & INVESTMENTS IN SUBSIDIARIES | ||
| Investments in Subsidiaries | ||
| Company | ||
| 2021 £ | 2020 £ | |
| July 1 | 10 | 10 |
| Investment in Cloudbreak Discovery (Canada) Ltd. | 6,485,477 | – |
| Cost at the end of the year | 6,485,487 | 10 |
Investments in group undertakings are stated at cost. Cloudbreak Discovery (Canada) Ltd. was acquired during the year and is considered a reverse take-over (Note 4). The 216,182,566 Cloudbreak Discovery (Canada) Ltd. shares were valued at £0.03 for a value of £6,485,477.
Details of subsidiary undertaking
Details of the subsidiary undertaking at 30 June 2021 are as follows:
| Imperial Minerals (UK) Limited – nature of business is to make investments in the Group’s chosen business sector. | 6th Floor, 60 Gracechurch Street, London, EC3V 0HR | 100% |
| Cloudbreak Discovery (Canada) Limited – a mineral property project generator | Suite 520/999 West Hastings Street, Vancouver BC | 100% |
| V6C2W2 | ||
| Investments Held |
Financial assets at fair value through profit or loss are as follows:
| Level 1 £ | Level 2 £ | Level 3 £ | Total £ | |
| 30 June 2019 | – | – | – | – |
| Additions | – | – | 28,306 | 28,306 |
| 30 June 2020 | – | – | 28,279 | 28,306 |
| Additions | 3,008,047 | – | 434,090 | 3,178,842 |
| Disposal proceeds | (195,510) | – | – | (195,510) |
| Realized gain on sale of investments | 12,996 | – | – | 12,996 |
| Fair value changes | 1,412,787 | – – | 1,412,787 |
| Foreign exchange changes | 85,743 | – – | 85,743 |
| Impairment | – | – (433,141) | (433,141) |
| 30 June 2021 | 4,324,063 | – 29,255 | 4,353,318 |
As at June 30, 2021, investments were classified as held for trading and recorded at their fair values based on quoted market prices (if available). Investments that do not have quoted market prices are measured at cost less impairment.
Imperial Helium Corp.
On April 20, 2020, the Group purchased 450,000 preferred shares in Imperial Helium Corp. for $45 CAD (£26). On December 15, 2020, 45,000 of these preferred shares were converted into common shares for no additional consideration. On December 11, 2020, the Group purchased $110,000 CAD (£66,138) in Imperial Helium Corp. convertible debenture notes that yielded 10%. On May 18, 2021, the convertible debenture converted into 575,767 ordinary shares of Imperial Helium Corp. At June 30, 2021 the fair value of the Imperial helium Corp. shares is
£107,679.
Temas Resources Corp.
On September 23, 2020, the Group sold its La Blache property to Temas Resources Corp. (“Temas”) for a cash payment of $30,000 CAD (£17,517) and 10,000,000 Temas shares which had a value at the time of $2,000,000 CAD (£1,167,815). The Group retained a 2% net smelter return (“NSR”) on the La Blache property. The Temas shares are subject to pooling restrictions with 2,500,000 Temas shares released March 23, 2021, and 7,500,000 Temas shares to be released September 23, 2021.
Norseman Silver Inc.
On August 19, 2020, the Group received 1,000,000 shares from Norseman Silver Inc. in relation to the option agreement with Norseman for the Caribou property. The Norseman shares had a value of $50,000 CAD (£29,195) when received.
On August 27, 2020, the Group received 370,000 shares in Norseman Silver Inc. in relation to the option agreement with Norseman for the Silver Switchback property. The Norseman shares had a value of $83,250 CAD (£48,610) when received.
On December 9, 2020, the Group sold the New Moon property to Norseman Silver Inc., in exchange for $10,000 CAD (£5,839) and 2,500,000 Norseman common shares. The Group retained a 2.0% net smelter return royalty on the property.
On January 6, 2021, the Group sold and transferred 1,350,000 Norseman common shares for gross proceeds of
$337,500 CAD (£197,068).
On March 1, 2021, the Group participated in a private placement whereby they purchased 1,200,000 shares in Norseman Silver Inc at $0.25 per share for a cost of $300,000 CAD (£175,172).
On April 30, 2021, the Group received 2,000,000 shares from Norseman Silver Inc. in relation to the option agreement with Norseman for the Silver Vista property. The Norseman shares had a value of $760,000 CAD (£443,770) when received.
Buscando Resources Corp.
On December 31, 2020, the Group sold the Rupert property to Buscando Resources Corp., in exchange for 1,000,000 shares in Buscando Resources Corp at a value of $50,000 CAD (£29,195).
Linceo Resources Corp.
On August 17, 2019, the Group sold the Granny Smith and Fuji mineral claims to Linceo Media Group (“Linceo”), a company with a director in common, for 4,000 shares in Linceo at a value of $47,600 CAD (£27,793) and retained a 2.5% NSR on each property. During the year ended June 30, 2021, the Group impaired the shares in Linceo to $1.
AAM shares
On June 2, 2021, the Group acquired 12,500,000 AAM share purchase warrants that had a conversion price of $0.03 USD and expiry date of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The Group issued 1,200,000 ordinary shares to acquire the 12,500,000 AAM share purchase warrants (£36,000 value) and 3,520,000 ordinary shares (£105,600 value) to acquire the 11,000,000 AAM ordinary shares. The warrants expired on July 1, 2021, with the £36,000 impaired to $1. During the year ended June 30, 2021, the Group impaired the shares in AAM to $1.
NOTE 12: ROYALTY ASSET
Apple Bay Property, Canada
On April 5, 2017, the Group purchased a 1.50% production royalty on the Apple Bay property located in British Columbia, Canada. The production royalty was purchased for 3,000,000 shares of the Group at a deemed value of
$0.10 CAD (£0.058) per share from a company controlled by the CEO of the Group. As at June 30, 2021, included in Royalty Assets is £1 (June 30, 2020 – £178,232) attributed to the Apple Bay property. During the year ended June 30, 2021, the Group determined that the royalty was impaired and reduced the balance to £1.
NOTE 13: TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
| Group | Company | ||||
| 2021 | 2020 | 2021 | 2020 | ||
| £ | £ | £ | £ | ||
| Non-current | |||||
| Amounts due from subsidiary undertaking | – | – | 97,818 | 97,818 | |
| Provision for impairment | – | – | (97,818) | (97,818) | |
| – | – | – | – | ||
| Current | |||||
| Loan receivable | 119,468 | 119,468 | 119,468 | 119,468 | |
| Provision for impairment to loan | (119,468) | (119,468) | (119,468) | (119,468) | |
| Sundry Debtors | 227,019 | 2,971 | 213,844 | 27,700 | |
| Prepayments | 291,830 | – | 291,830 | 12,318 | |
| 518,849 | 2,971 | 514,849 | 40,018 | ||
The fair value of all current receivables is as stated above.
On 20 December 2014 the Group entered into a loan agreement with Symerton Holdings S.A (“Symerton”) in which the Group lent Symerton US$150,000 (equivalent to £119,468). The loan is unsecured and bears an interest rate of 12% per annum. The Directors have fully impaired the loan.
The maximum exposure to credit risk at the year-end date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. Except for the above-mentioned loan, trade and other receivables are all denominated in £ sterling.
NOTE 14: TRADE AND OTHER PAYABLES
| Group | Company | ||||||||
| 2021 £ | 2020 £ | 2021 £ | 2020 £ | ||||||
| Current Trade payables | 823,465 | 156,205 | 407,282 | 69,721 | |||||
| Accruals and other payables | 71,799 | 159,834 | 42,603 | 41,653 | |||||
| 895,264 | 316,039 | 449,885 | 111,374 | ||||||
NOTE 15: SHARE CAPITAL
| Share capital and share premium Issued | Number of | Share Capital | Share Premium |
| shares | £ | £ | |
| At 31 July 2019 | 43,566,071 | 43,566 | 1,471,495 |
| Share based payments (i) | 1,355,000 | 1,355 | 79,146 |
| Issuance of shares – RTO (ii) | 5,198,778 | 5,199 | 612,527 |
| At 30 June 2020 | 50,119,849 | 50,120 | 2,163,169 |
| Issue of shares (iii, iv, vi, vii, iv) | 30,475,001 | 30,475 | 55,373 |
| Transfer to reserve acquisition reserve | (80,594,850) | (80,595) | (2,218,542) |
| Recognition of Cloudbreak Discovery Plc equity at reverse acquisition | 289,468,015 | 460,423 | 7,969,714 |
| Issued – private placement (net of issuance costs) (viii) | 66,666,667 | 66,667 | 1,886,312 |
| Issue of shares – AAM acquisitions (x) | 29,430,378 | 29,430 | 853,481 |
| Issue of shares – equity drawdown facility fee (net of | 4,000,000 | 4,000 | 196,000 |
| issuance costs) (ix) | |||
| At 30 June 2021 | 389,565,060 | 560,520 | 10,905,507 |
As Cloudbreak Discovery Corp, Howson Ventures Inc. and Cabox Gold amalgamated on June 29, 2021, as Cloudbreak Discovery (Canada) Ltd., the below events are grouped by entity prior to the amalgamation:
Cloudbreak Discovery Corp.
- On May 11, 2020, Cloudbreak Discovery Corp issued 1,355,000 common shares at $0.10 CAD (£0.058) per share to a consultant of the Group for professional services. These were recorded as share-based payments of $135,500 CAD (£80,501).
- On May 19, 2020, Cloudbreak Discovery Corp merged with Ridge Royalty Corp. (“Ridge”) pursuant to which Ridge amalgamated with Cloudbreak Discovery Corp’s wholly owned subsidiary 1237611 B.C. Ltd. and became a 100% owned subsidiary of Cloudbreak Discovery Corp. Under the transaction, Cloudbreak Discovery Corp issued an aggregate of 26,485,071 post consolidated common shares pro rata to Ridge shareholders. After the merger, Cloudbreak Discovery Corp had 31,683,849 common shares issued and outstanding. Upon closing, former Ridge shareholders will hold approximately 84% of the outstanding shares of Cloudbreak Discovery Corp. After merger, three properties of Ridge: La Blache Property, Caribou Property and Apple Bay Property were included in the Exploration and Evaluation assets of Cloudbreak Discovery Corp. A listing expense of $944,011 (£557,992) was recorded.
The merger was considered a reverse takeover in which Ridge shareholders obtained control of Cloudbreak Discovery Corp. The transaction is therefore accounted for in accordance with IFRS 2 Share-based Payment whereby Ridge is deemed to have issued shares in exchange for the net assets of Cloudbreak Discovery Corp together with its Reporting Issuer status at the fair value of consideration received by Ridge. The accounting for this transaction was as follows:
- The consolidated financial statements of the merged entity are issued under the legal parent, the former Cloudbreak, but are considered a continuation of the financial statements of the legal subsidiary and accounting acquirer, Ridge.
- Since Ridge is deemed to be the acquirer for accounting purposes, its assets and liabilities will be included in the consolidated financial statement at their historical carrying values.
- The identifiable assets and liabilities of the former Cloudbreak will be recognized at their fair value at the acquisition date of May 19, 2020, with the excess of the fair value of the equity interest consideration paid over the fair value of the net assets acquired being charged to the consolidated statements of loss and comprehensive loss as a listing expense; and
- The fair value of the equity interest consideration paid is determined based on the percentage ownership former Cloudbreak Discovery Corp’s shareholders have in the consolidated entity after the transaction. This represents the fair value of the shares that Ridge would have had to issue for the ratio of ownership interest in the combined entity to be the same, if the transaction had taken the legal form of Ridge acquiring 100% of the common shares of Cloudbreak Discovery Corp. The consideration paid in the reverse-acquisition is therefore equivalent to the fair value of the 5,198,778 of Cloudbreak Discovery Corp shares deemed to have been issued by Ridge and controlled by former Cloudbreak Discovery Corp’s shareholders, estimated to be $1,039,756 CAD (£617,726) based on the fair market value of
$0.20 CAD (£0.11) per post consolidation share, being the price of a recent financing of Cloudbreak Discovery Corp.
- On October 23, 2020, the Group issued 575,000 common shares in relation to the Silver Vista and Switchback option agreements (Note 10).
Cabox Gold Corp
- On July 22, 2020, 5,000,001 shares in Cabox Gold Corp. were cancelled.
- On August 15, 2020, 5,000,000 shares in Cabox Gold Corp were issued at $0.001 CAD (£0.0005) per share for a gross proceeds of $5,000 CAD (£2,920).
- On December 15, 2020, 30,000,000 shares in Cabox Gold Corp were issued at $0.001 (£0.0005) per share for a gross proceeds of $30,000 CAD (£17,517).
Howson Ventures Inc.
- On December 23, 2020, there was a share buyback whereby 100,000 shares were purchase by Howson Ventures Inc. at a price of $0.05 per share for gross proceeds of $5,000 CAD (£2,920).
Cloudbreak Discovery Plc
- On June 2, 2021, the Group issued 66,666,667 shares at a price of £0.03 per share for gross proceeds of £2,000,000.
- On June 2, 2021, the Group issued 4,000,000 shares at a price of £0.05 per share valued at £200,000 which was a 2% commission fee related to the equity investment facility (Note 16).
- On June 2, 2021, the Group issued 29,430,378 shares at a price of £0.03 per share in relation to the acquisition of the AAM convertible notes (Note 9).
- On June 2, 2021, the Group entered into a reverse takeover transaction (Note 4). 73,285,449 ordinary shares were
issued, and an additional 135,587,716 ordinary shares were issued through a reverse split.
Other reserves
Other reserves consist of:
Share option and warrant reserve
During the year ended 30 June 2021, the outstanding options and warrants were cancelled and the residual value from 30 June 2020 being £36,644 was allocated to contributed surplus.
Options and warrants in issue
| The outstanding share options and warrants as at 30 June 2021 are shown below: | |||||||||
| Options | Warrants | Weighted average exercise price (£) | |||||||
| Exercisable at 30 June 2019 | 950,000 | 4,303,000 | 0.04 | ||||||
| Grant of Warrants – Howson Ventures | 500,000 | 0.06 | |||||||
| At 30 June 2020 | 950,000 | 4,803,000 | 0.05 | ||||||
| Cancelled – Howson Ventures Options | (950,000) | 0.03 | |||||||
| Cancelled – Howson Ventures Warrants | (500,000) | 0.06 | |||||||
| Cancelled – Cloudbreak Discovery Corp warrants | (4,303,000) | ||||||||
| Warrants Assumed with reverse take-over | 8,326,698 | 0.10 | |||||||
| Warrants Assumed with reverse take-over | 636,625 | 0.01 | |||||||
| Warrants Assumed with reverse take-over | 4,530,497 | 0.03 | |||||||
| Warrants Assumed with reverse take-over | 19,978,776 | 0.0125 | |||||||
| Issued – AAM Acquisition | 8,714,227 | 0.05 | |||||||
| Issued – Options | 5,050,000 | 0.025 | |||||||
| At 30 June 2021 | 5,050,000 | 42,186,823 | 0.015 | ||||||
| 30 June 2021 | |||||||||
| Range of exercise prices (£) | Weighted average exercise price (£) | Number of options/warrants | Weighted average remaining life expected (years) | Weighted average remaining life contracted (years) | |||||
| 0.01 | 0.01 | 636,625 | 0.55 | 0.55 | |||||
| 0.0125 | 0.0125 | 17,643,353 | 0.55 | 0.54 | |||||
| 0.0125 | 0.0125 | 928,598 | 0.63 | 0.63 | |||||
| 0.0125 | 0.0125 | 1,406,825 | 0.02 | 0.02 | |||||
| 0.025 | 0.025 | 5,050,000 | 3.08 | 3.08 | |||||
| 0.05 | 0.05 | 8,714,227 | 4.00 | 4.00 | |||||
| 0.10 | 0.10 | 4,530,497 | 2.71 | 2.71 | |||||
| 0.05 | 0.05 | 8,326,698 | 1.50 | 1.49 | |||||
| 30 June 2020 | |||||||||||
| Range of exercise prices (£) | Weighted average exercise price (£) | Number of options/warrants | Weighted average remaining life expected (years) | Weighted average remaining life contracted (years) | |||||||
| 0.03 | 0.03 | 950,000 (options) | 3.75 | 3.75 | |||||||
| 0.06 | 0.06 | 3,800,000 (warrants) | 1.55 | 1.55 | |||||||
| 0.06 | 0.06 | 200,000 (warrants) | 1.63 | 1.63 | |||||||
| 0.23 | 0.23 | 303,000 (warrants) | 1.02 | 1.02 | |||||||
The valuation of the options and warrants issued during 2021 were carried out using the Black Scholes model. Key assumptions used in the valuation are detailed in the table below.
| Warrants | ||||
| Jun 2, 2021 | Jun 2, 2021 | Jun 2, 2021 | ||
| Number of warrants – weighted average risk- free interest rate | 636,625 0.07% | 4,530,497 0.55% | 8,714,227 0.81% | |
| – dividend yield of | 0.00% | 0.00% | 0.00% | |
| – volatility rate | 74% | 100% | 100% | |
| – expected life (years) | 0.55 | 2.71 | 4 | |
| – fair value | £12,971 | £46,092 | £157,695 |
These 636,625 and 4,530,497 warrants were assumed at the reverse-take over and were charged to the deemed cost of the transaction (Note 4). The 8,714,227 warrants were charged as part of the AAM asset acquisition (Note 9).
Options
Jun 2,
2020
Number of options 5,050,000
- weighted average risk-free
interest rate 0.64%
- dividend yield of 0.00%
- volatility rate 100%
.- expected life (years) 3.08
- fair value £99,572
These 5,050,000 options were assumed at the reverse-take over and were charged to the deemed cost of the transaction (Note 4).
NOTE 16: BOUGHT DEAL FACILITY
On February 15, 2021, the Group entered into a £10,000,000 CAD bought deal facility with Crescita Capital. The Group can draw down funds from the £10,000,000 equity investment facility from time to time during the three‐year term at the Group’s discretion by providing a drawdown notice to Crescita Capital, and in return for each draw-down notice funded by Crescita Capital, the Group will allot, and issue fully paid common shares to Crescita Capital.
The shares issued in connection with any drawdown notice will be priced at the higher of (i) the floor price set by the Group and (ii) 90% of the average closing bid price resulting from the following ten days of trading after the drawdown notice (“Pricing Period”). The drawdown notice amount requested by the Group cannot exceed 700% of the average daily trading volume of the Pricing Period.
In connection with the bought deal facility, the Group paid a commitment fee. This fee consisted of a 2% commission to be paid in common shares, at a price of £0.05 per share (4,000,000 shares valued at £200,000) and warrants equal to 8% of the outstanding common shares of the Group (4,530,497 warrants valued at £46,092). The warrants have an exercise price of £0.10 per common share and expire three years from the grant date. The warrants were fair valued using the Black- Scholes Option Pricing Model upon acquisition of the Group using the following assumptions:
- average risk-free interest rate ‐ 0.55%;
- expected life ‐ 2.71 years;
- expected volatility ‐ 100.00%;
- forfeiture rate ‐ Nil and
- expected dividends ‐ Nil.
The value of the commitment fee was recorded as a finance charge (Note 5).
NOTE 17: SUBSEQUENT EVENTS
Subsequent to June 30, 2021, the Group staked the Atlin West Project in British Columbia, Canada and on August 9, 2021 optioned the Altin West Project to 1315843 BC Ltd. who will need to spend $700,000 CAD in exploration expenditures on the property, issue a total of 8,000,000 ordinary shares to the Group and make aggregate payments of $325,000 CAD over three years to the Group. Upon completion of the option agreement obligations, the Group will transfer 75% interest in the property to 1315843 BC Ltd. and will retain a 2% NSR, of which one-half (1.0%) can be re-purchased from the Group for $1,500,000 CAD.
On August 25, 2021, the Group issued 11,250,000 options to certain directors, officers and consultants of the Group. The options have an exercise price of £0.03 and expire on August 25, 2025.
On September 20, 2021, the Group optioned the South Timmins property in Ontario, Canada (Note 10) to 1315956 BC Ltd. who will need to spend $1,515,000 CAD in exploration expenditures on the property, issue a total of 2,250,000 shares and make aggregate payments of $495,000 CAD over three years to the Group. Upon completion of the option agreement obligations, the Group will transfer 100% interest in the property to 1315956 BC Ltd. and will retain a 1% NSR, of which one-half (0.5%) can be re-purchased from the Group for $750,000 CAD.
Subsequent to June 30, 2021 the Group staked the Yak Project in British Columbia, Canada and on October 13, 2021 optioned the Yak Project to Moonbound Mining Ltd. who will need to spend $700,000 CAD (£408,735) in exploration expenditures on the property, issue a total of 2,700,000 ordinary shares to the Group and make aggregate payments of
$145,000 CAD (£84,667) over three years to the Group. Upon completion of the option agreement obligations, the Group will transfer 100% interest in the property to Moonbound Mining Ltd. and will retain a 2% NSR, of which one-half (1.0%) can be re-purchased from the Group for $1,500,000 CAD.
Subsequent to June 30, 2021 the Group, along with its partner Alianza Minerals Ltd. (“Alianza”), staked the Klondike Project in Colorado, USA (50% each) and on December 3, 2021 optioned the Klondike Project to Allied Copper Corp (“Allied”). Allied will be required to incur $4,750,000 CAD in exploration expenditures on the property, issue a total of 7,000,000 ordinary shares, issue 3,000,000 share purchase warrants and make aggregate payments of $400,000 CAD over four years to the Group and Alianza. Upon Allied filing an NI 43-101 technical report indicating an inferred resource of at least 50,000,000 tonnes of copper or copper equivalent, Allied will issue an additional 3,000,000 warrants, in aggregate, to the Group and Alianza. Upon completion of the option agreement obligations, the Group and Alianza will transfer 100% interest in the property to Allied and will retain a 2% NSR, of which one-half (1.0%) can be re-purchased from the Group and Alianza for $1,500,000 CAD.
NOTE 18: RELATED PARTIES
Details of the directors’ remuneration can be found in Note 8. Key Management Personnel are considered to be the directors.
During the year, the Group sold La Blache property to Temas Resources and Rupert Property to Buscando Resources. Kyler Hardy is a director of both Temas Resources and Rupert Property.
At June 30, 2021, the Group held investments of £4,353,317 in Imperial Helium, Temas Resources, Norseman Silver and Buscando Resources where Kyler Hardy is also a director (2020: £Nil)
During the year, the Group paid amounts totalling £32,212 (2020: £5,941) to Cronin Capital Corp. through Cronin Services Limited, companies controlled by the CEO Kyler Hardy. These were in relation to consultancy fees under a management service agreement dated 1 February 2020 and 1 June 2021. In addition, the Group paid Cronin Services £60,000 for the provision of accounting and back-office management services during the year (2020: £44,855). The amount outstanding owing to Cronin Capital and Cronin Services at the year-end was £523,021 (2020: £33,267).
During the year the Group acquired convertible debenture notes from Cronin Capital and Cronin Services (Note 9).
During the year, the Group paid £32,212 (2020: £5,941) interest on a line of credit to a company with a common director.
NOTE 19: FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Board receives monthly reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility.
The Group reports in Sterling. Internal and external funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors. The Group does not use derivative financial instruments such as forward currency contracts, interest rate and currency swaps or similar instruments. The Group does not issue or use financial instruments of a speculative nature.
Capital management
The Group’s objectives when maintaining capital are:
- to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
- to provide an adequate return to shareholders.
The capital structure of the Group consists of total shareholders’ equity as set out in the ‘Statement of changes in equity’. All working capital requirements are financed from existing cash resources. Capital is managed on a day to day basis to ensure that all entities in the Group are able to operate as a going concern. Operating cash flow is primarily used to cover the overhead costs associated with operating as London Standard- listed company.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Directors consider that there is no significant liquidity risk faced by the Group. The Group maintains sufficient balances in cash to pay accounts payable and accrued expenses.
The Board receives forward looking cash flow projections at periodic intervals during the year as well as information regarding cash balances. At the balance sheet date the Group had cash balances of £1,277,617 and the financial forecasts indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances and will not need to establish overdraft or other borrowing facilities.
Interest rate risk
As the Group has no borrowings, it only has limited interest rate risk. The impact is on income and operating cash flow and arises from changes in market interest rates. Cash resources are held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Group’s investment objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate. This risk represents the potential loss that the Group might suffer through holding its financial investment portfolio in the face of market movements, which was a maximum of £4,353,319 (2020: £28,306).
The investments in equity of quoted companies that the Group holds are less frequently traded than shares in more widely traded securities. Consequently, the valuations of these investments can be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of the Group if there were to be a 20% movement in overall share prices of the financial investments held at 30 June 2021.
The impact of a change of 20% has been selected as this is considered reasonable given the current level of volatility observed and assumes a market value is attainable for the Group’s unlisted investments.
| 2021 | 2020 | |
| Other comprehensive income and Net assets | Other comprehensive income and Net assets | |
| £ | £ | |
| Decrease if overall share price falls by 20%, with all other variables held constant | (870,664) | (5,661) |
| Decrease in other comprehensive earnings and net asset value per Ordinary share (in pence) | (0.009)p | (0.000)p |
| Increase if overall share price rises by 20%, with all other variables held constant | 870,664 | 5,661 |
| Increase in other comprehensive earnings and net asset value per Ordinary share (in pence) | 0.009p | 0.000p |
Currency risk
The Directors consider that there is minimal significant currency risk faced by the Group. The current foreign currency transactions the Group enters into are denominated in CAD$ and US$ in relation to transactions associated with exploration and evaluation option payments and property expenditures. The Group maintains minimal foreign currency holdings to minimize this risk.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Group. The Group’s maximum exposure to credit risk is:
| 2021 £ | 2020 £ | |
| Cash at bank | 1,277,617 | 6,478 |
| Other receivables | 518,849 | 2,971 |
| Convertible loan note receivable | – | 459,964 |
| 1,796,466 | 469,413 |
The Group’s cash balances are held in accounts with HSBC, and with its Investment Broker accounts.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of Financial Position at either their fair value (financial investments) or at a reasonable approximation of the fair value (trade and other receivables, trade and other payables and cash at bank).
The fair values are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets within Trade and other receivables.
| Financial assets | 2021 £ | 2020 £ |
| Trade and other receivables – Non interest earning | 518,849 | 2,971 |
There are no financial assets which are past due and for which no provision for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade and other payables. These financial liabilities are predominantly non-interest bearing. Other liabilities include tax and social security payables and provisions which do not constitute contractual obligations to deliver cash or other financial assets.
| Financial liabilities | 2021 £ | 2020 £ |
| Trade and other payables | 895,264 | 316,039 |
NOTE 20: ULTIMATE CONTROLLING PARTY
The Directors believe there to be no ultimate controlling party.
