Half Year Report

RNS Number : 2805T

Celsius Resources Limited

17 March 2023

 

17 March 2023

Celsius Resources Limited

("Celsius" or the "Company")

HALF-YEAR FINANCIAL REPORT

31 DECEMBER 2022

The Directors of Celsius announce the Company's half-year financial report for the half year ended 31 December 2022.

Please see below extracts from the Company's full half-year report comprising the:

Directors' Report

Statement of Profit or Loss and Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

A copy of the half-year report is available on the Company's website, at https://celsiusresources.com

For further information contact:
Celsius Resources Limited
Peter Hume	P: [phone] E: [e-mail] W: www.celsiusresources.com
Multiplier Media
Jon Cuthbert	M: [phone] E: [e-mail]
Beaumont Cornish Limited (Nominated Adviser) Roland Cornish/Felicity Geidt/Andrew Price	[phone]
SP Angel Corporate Finance LLP (Broker)
Ewan Leggat	[phone]

DIRECTOR'S REPORT

Your Directors present their report together with the half-year financial report on the consolidated entity, consisting of Celsius Resources Limited and the entities it controlled at the end of, or during the half-year ended 31 December 2022.

DIRECTORS

The Directors in office at the date of this report and at any time during the half-year are as follows: 

Mr Julito Sarmiento	Non-Executive Chairman (appointed 15 November 2022)
Mr Jonathan Colvile	Vice Chairman (appointed 15 November 2022)
Mr Peter Hume	Executive Director (appointed 16 June 2022)
Mr Michael Hulmes	Non-Executive Director
Mr Simon Farrell	Non-Executive Director (appointed 17 June 2022)
Mr Paul Dudley	Non-Executive Director (appointed 30 January 2023)
Mr Martin Buckingham	Executive Chairman (resigned 14 November 2022)

PRINCIPAL ACTIVITIES

During the half-year, the principal activities of the consolidated entity consisted of mineral exploration in Australia, Namibia and the Philippines.

There were no significant changes in the nature of the activities of the consolidated entity during the half-year.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the consolidated entity during the half-year.

REVIEW OF OPERATIONS

Corporate

The consolidated net loss of the consolidated entity after income tax and non-controlling interest for the half-year ended 31 December 2022 amounted to $2,061,756 (31 December 2021: $3,074,056)

Performance Rights

At the Company's Annual General Meeting held on 28 November 2022, shareholders approved to vary the terms of the Tranche 3 Performance Rights under the Celsius Resources Incentive Scheme, by extending the date by which the Milestone is required to be satisfied from 30 November 2022 to 31 March 2023.

The Milestone for these Tranche 3 Performance Rights is the completion and delivery of a Mining Project Feasibility ("DMPF")  for the Maalinao-Caigutan-Biyog ("MCB") Copper-Gold Project (MCB Project). This has been delayed due to several external circumstances outside the Company's control, including the impact of COVID-19. The DMPF is expected to be delivered in Q1 of 2023 and consequently the Company sought shareholder approval to extend the date by which the Milestone is required to be satisfied.

On 30 December 2022, 3,600,000 Tranche 2 Performance Rights lapsed.

Maalinao-Caigutan-Biyog Copper Gold Project, Philippines (Celsius - 100%)

Makilala Mining Company, Inc. ("MMCI"), a wholly owned Philippine subsidiary of Celsius, is nearing completion  its Exploration, Environment, and Community Development Programs as it moves closer to mine construction and operations for the Maalinao-Caigutan-Biyog ("MCB") Copper-Gold Project in the Cordillera Administrative Region. 

Exploration Work

Drilling Program

Five holes were drilled for the period (MCB-040, MCB-041, MCB-042, MCB-043, and MCB-044) which completed the resource and geotechnical drilling for additional Information to support mine development studies. Geotechnical and geologic core logging was also completed with core samples submitted for geochemical analysis.

Drill hole results continue to extend the envelop of the near surface higher-grade copper mineralisation to the east complementing previous MCB drill results from 2021 and validating the historical drilling information completed by Freeport-McMoRan.  The confirmation of shallow high-grade mineralisation will allow for a more refined mine plan as part of the proposed feasibility study work in 2023.

Updated Mineral Resource

An updated JORC Compliant Mineral Resource was announced in December 2022 with a global mineral resource of 338Mt @ 0.47% copper and 0.12g/t gold, for a total of 1.6Mt of contained copper and 1.3M0zs of contained gold reported to a preferred lower cut-off grade of 0.2% copper.

The geological interpretations and technical information that have contributed to the 2022 Mineral Resource Estimate (MRE) at MCB are based largely on surface mapping and analysis of 55 diamond drill holes completed by Freeport-McMoRan from 2006 to 2013, and nine drill holes completed by Makilala Mining from 2021 to 2022.

The most substantial effect of the drilling results was the inclusion of a Measured component to the MRE confirming the continuity of the copper mineralisation at key locations throughout the MRE through infill drilling. The infill drilling enabled better definition of the boundaries to the overall copper mineralisation at MCB, in addition to the specific locations which were tested to confirm the orientation and continuity of the internal higher-grade copper mineralisation. The impact of the additional copper mineralisation was significant at shallow levels, as defined by an increase to the copper content at higher cut-off grades and tighter definition of the higher-grade material.

A further change to the MRE has been the inclusion of a small portion of weathered material which was not reported in the 2020 MRE. There is potential to process weathered material from the surface stabilization and surface infrastructure works feeding into the proposed feasibility study. Given the prospect for mining and processing of at least a portion of the weathered copper mineralisation, it has now been included as part of the MCB Mineral Resource Estimate.

Social, Environmental Licenses, and Government Approvals

MMCI lodged an application for the Declaration of Mining Project Feasibility (DMPF) to the Mines and Geosciences Bureau (MGB) on 28 September 2022 which is a critical step in securing a Mineral Agreement with the national government. The application included the submission of major documents such as the Project Feasibility Study Report, Final Exploration Report, Environmental Protection and Enhancement Program, Final Mine Rehabilitation and/or Decommissioning Plan, Social Development and Management Program, Care and Maintenance Program, and project endorsements from the Local Government Units, among others. These documents underwent a rigorous consultation process with the host community and local government officials to capture the aspirations of the community as well as alignment with local development plans and programs. Social and environmental safeguards were also integrated into the overall mine development and operations plan in line with Philippine Mining regulations and standards.

Interim approvals have been secured for its Social Development and Management Program and Care and Maintenance Program while the rest of the documents are under technical review by the MGB.

The DMPF approval, anticipated to be secured early in 2023, will trigger the next phase of obtaining a Mineral Processing Sharing Agreement (MPSA). Preparation of key requirements for the MPSA application are well underway.

A Memorandum of Agreement with the Balatoc Indigenous Cultural Community (ICC) was signed on 14 November 2022 reflecting the consent of the host community to allow the development and operations of the MCB Project for 25 years, renewable for another 25 years. The MOA outlines the commitments and obligations of all parties, as well as the economic, social, environmental, and cultural benefits of the project to the Balatoc ICC during the life of mine. The MOA was obtained through a Free, Prior and Informed Consent process which serves as a basis for the issuance of the Certification Precondition from the National Commission on Indigenous Peoples attesting the grant of consent from the ICC. The issuance of the Certification Precondition is a mandatory requisite for the MPSA application.

The Environmental Compliance Certificate from the Environmental Management Bureau is expected to be released early in 2023.

A proposal from potential local partners, Sodor, Inc. and the PMR Group, was also received, leading to the signing of a Non-Binding Term Sheet on 13 December 2022 to satisfy the MPSA requirement of a 60% Filipino-owned company.

Community Development

Monthly meetings with the Council of Elders and the Barangay Council (COE-BC) were regularly held as a way of strengthening the traditional leadership structure to manage projects, issues, and concerns among the community.

Several infrastructure projects have been completed for the period which include the construction and improvement of footbridges, waiting sheds, hand-washing facilities, public latrine, repairs of school roofing, among others. These were based on the identified and priority needs to improve the community's access to basic social and economic services. Financial support continued to be extended in observance of and respect for the community's socio-cultural traditions and during calamities.

Environment

Progressive site rehabilitation was carried out for completed drill holes (MCB-040 to MCB-044) in accordance with the Company's Environmental Work Program.  Temporary structures were removed, all excavations were backfilled with bagged topsoil, and disturbed areas were revegetated with regional species.

Pine and bamboo seedlings were also planted along the trails as a contribution to the reforestation and climate change mitigation efforts of the government's National Greening Program.

Information, education, and communications campaign initiatives were also sustained to instill an environmentally conscious culture among employees, workers, and the community.

Regulatory Compliance

The Company has submitted and complied with all the regulatory reportorial requirements on schedule with no penalties incurred from the Mines and Geosciences Bureau and zero accidents/incidents for the period and since the company recommenced operations in 2020. This earned the Company a Safety Mine Award for Exploration Category during the 2022 Presidential Mineral Industry Environmental Awards.

Sagay Copper-Gold Project, Philippines (Celsius - 100%)

Tambuli Mining Company, Inc. ("TMCI"), a wholly owned Philippine subsidiary of Celsius in the Philippines, temporarily suspended drilling operations of its Sagay Copper-Gold Project ("Sagay Project") in the Negros Islands. 

Desktop works were undertaken to review the current drilling results along with previous drilling and exploration data to reinterpret the geologic and mineralisation models and resource evaluation to improve exploration and future development strategies.

A Maiden Mineral Resource was announced on 7 November 2022, comprising of a Global Mineral Resource Estimate (MRE) of 302 million tonnes at 0.41% copper and 0.11g/t gold, at a lower cut-off grade of 0.2% copper. The MRE has been defined by a total of 32 broadly spaced diamond drill holes showing copper mineralisation over an extensive area from surface down to 1.2km in depth.

Drilling has broadly defined a large-scale copper mineralisation interpreted to be a typical porphyry copper style mineralisation common throughout the Philippine archipelago. A lower cut-off grade of 0.2% copper was applied in the reported MRE which aligns broadly with the expected economic limits of the likely mining and processing options considered in the Sagay Project.

The next phase of exploration will focus on investigating the possible extensions of these higher-grade positions closer to the surface.

Opuwo Cobalt Project, Namibia (Celsius - 95%)

The Opuwo Cobalt Project is one of the largest undeveloped Cobalt projects outside of the Democratic Republic of Congo. It has a JORC Mineral Resource of 225.5 million tonnes at a grade of 0.12% cobalt, 0.43% copper, and 0.54% zinc.

Metallurgical test work is ongoing to further refine the cobalt and copper recoveries, and therefore improve the economics of the project.  Two downstream processing methods are currently being examined: a hydrometallurgical route and a roasting & tank leach route.

The preliminary roasting & tank leach test work results show recoveries of up to 95% for cobalt and 98% for copper for this processing step. This is an improvement from the 2018 autoclave leaching test results with historical recoveries of 72.6% cobalt and 74.1% copper and demonstrates that Opuwo is amenable for simple roasting & tank leach downstream processing.  Further test work is being undertaken to delineate the roasting and tank leach parameters which may further improve cobalt recovery.

The Company engaged SFH Metallurgy to explore a hydrometallurgical processing route. In late August 2022, a 20 kg composite sample of ore was sent to AMML laboratories in Gosford Australia to support the test work program.

From an economic viewpoint, the hydrometallurgical route being explored requires the initial processing of the ore via flotation/beneficiation to produce a bulk concentrate at a targeted metal value recovery of >80%.

For testing of both the flotation and the hydrometallurgical steps, preliminary "sighter" tests were performed to identify processing characteristics of the ore relevant to its future treatment. Tests for the flotation process began in September 2022, and involved using a key combination of milling, screening and flotation. These tests were aimed at identifying key considerations in the production of a bulk concentrate.

By November 2022, a representative sample of bulk concentrate was generated, allowing a "diagnostic" leach test to be performed as part of the evaluation of the hydrometallurgical route. The analysis of these samples and refinement of results is currently still under review with further refinements being considered.

The tenement permits are due to expire in March 2023. As such, the Company has lodged the necessary documentation to have the permits renewed with favourable feedback from the Ministry of Mines.

The Company has received strong interest from parties in partnering on the Opuwo Project. A data room has been established with a number of Non-Disclosure Agreements having been signed.

Cullarin West Project, Australia (Celsius - 100%)

The Company entered into a tenement sale agreement with Second String Pty Ltd ("Second String") for the sale of its 100% interest in EL 8996 located in the Lachlan Fold Belt, NSW. Completion of the agreement was conditional upon Second String completing a Listing Agreement and the satisfaction of regulatory approvals. If the conditions were not satisfied (or waived) by 30 September 2022, either party may terminate the agreement.

Second String have more recently advised that after finalising relevant technical work programs, it has decided not to proceed with completing the transaction and notified their intention to terminate the option agreement.

The Company will now assess the viability of the opportunity and gauge interest from other possible partners.

 

EVENTS SUBSEQUENT TO REPORTING DATE

On 18 January 2023, the Company issued 3,000,000 ordinary shares on the exercise of unlisted options at an exercise price of $0.012 per share.

On 23 January 2023, the Company issued 4,000,000 ordinary shares on the exercise of unlisted options at an exercise price of $0.012 per share.

Admission to trading on AIM

On 30 January 2023 the Company successfully completed its admission to trading on AIM , a stock market operated by the London Stock Exchange plc . Strong interest from UK and European investors was identified during the process, along with Institutional support which may now underpin additional long-term support for the Company and its projects. It is envisaged that AIM will provide the Company with wider exposure to countries and sectors with access to a diverse set of investors to support current and future development of the Company's assets into operating mines. The AIM market has a good track record for raising capital for companies with operations in both the Philippines and Africa.

The admission to trading on AIM followed a placing by SP Angel Corporate Finance LLP for a total of 299,375,000 Ordinary Shares at GBP0.008 per ordinary Share, raising gross proceeds of GBP2.4 million (AUD4.3 million), before expenses.

On 30 January 2023, Mr. Paul Dudley was appointed as a Non-Executive Director.

On 31 January 2023, the Company issued 3,000,000 ordinary shares on the exercise of unlisted options at an exercise price of $0.012 per share.

The Directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity the results of those operations, or the state of affairs of the consolidated entity in future financial years.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

		Consolidated
		31 December 2022 $	31 December 2021 $
Other income		27,430	22,386
Directors' and employee benefits expense		(356,993)	(425,646)
Legal and other professional fees		(842,132)	(375,868)
Travel and accommodation		(60,404)	(2,947)
Depreciation		(10,264)	(14,718)
Management fee		(13,131)	(254,152)
Finance costs		(273)	(42,686)
Share based payments	7	(21,472)	(222,645)
Impairment expense	4	(398,689)	(733,475)
Exploration expenditure		(27,522)	-
Other expenses		(361,790)	(1,089,333)
Loss before income tax		(2,065,240)	(3,139,084)
Income tax expense		-	-
Loss for the period		(2,065,240)	(3,139,084)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations		(182,567)	112,816
Total other comprehensive (loss)/income		(182,567)	112,816
Total comprehensive loss for the period		(2,247,807)	(3,026,268)
Loss for the period attributable to:
Non-controlling interests		(3,484)	(65,028)
Members of the parent		(2,061,756)	(3,074,056)
		(2,065,242)	(3,139,084)
Total comprehensive loss attributable to:
Non-controlling interests		3,687	(69,129)
Members of the parent		(2,251,494)	(2,957,139)
		(2,247,807)	(3,026,268)
Loss per share:		Cents	Cents
Basic loss per share		(0.14)	(0.29)
Diluted loss per share		(0.14)	(0.29)

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022  

		Consolidated
	Note	31 December 2022 $	30 June 2022 $
ASSETS
Current assets
Cash and cash equivalents	3	2,037,031	1,289,845
Trade and other receivables		94,577	227,689
Other assets		141,479	95,609
Total current assets		2,273,087	1,613,143
Non-current assets
Deferred exploration expenditure	4	29,497,116	28,242,540
Property, plant and equipment		277,404	227,317
Total non-current assets		29,774,520	28,469,857
Total assets		32,047,607	30,083,000
LIABILITIES
Current liabilities
Trade and other payables		788,141	1,396,808
Other liabilities	5	1,520,147	1,486,532
Total current liabilities		2,308,288	2,883,340
Total liabilities		2,308,288	2,883,340
Net assets		29,739,319	27,199,660
EQUITY
Issued capital	6	69,451,007	64,808,602
Reserves	7	1,158,533	1,203,210
Accumulated losses		(40,898,770)	(38,837,014)
Equity attributable to the owners of Celsius Resources Limited		29,710,770	27,174,798
Non-controlling interest		28,549	24,862
Total equity		29,739,319	27,199,660

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2022

Consolidated
		Issued capital $	Accumulated losses $	Share based payments reserve $	Foreign currency translation reserve $	Non-controlling interest $	Total $
Balance at 1 July 2021		61,984,186	(34,923,389)	1,850,000	(732,694)	75,004	28,253,107
Loss for the period		-	(3,074,056)	-	-	(65,028)	(3,139,084)
Other comprehensive income/(loss)		-	-	-	116,917	(4,101)	112,816
Total comprehensive loss for the period		-	(3,074,056)	-	116,917	(69,129)	(3,026,268)
Transactions with owners, directly in equity
Issue of share capital		-	-	-	-	-	-
Capital raising costs		(1,637)	-	-	-	-	(1,637)
Performance rights converted		183,000	-	(183,000)	-	-	-
Share based payments		-	-	222,645	-	-	222,645
Balance at 31 December 2021		62,165,549	(37,997,445)	1,889,645	(615,777)	5,875	25,447,847
Balance at 1 July 2022	64,808,602		(38,837,014)	2,418,105	(1,214,895)	24,862	27,199,660
Loss for the period	-		(2,061,756)	-	-	(3,484)	(2,065,240)
Other comprehensive loss	-		-	-	(189,738)	7,171	(182,567)
Total comprehensive loss for the period	-		(2,061,756)	-	(189,738)	3,687	(2,247,807)
Transactions with owners, directly in equity
Issue of share capital	5,066,645		-	-	-	-	5,066,645
Capital raising costs	(424,240)		-	123,589	-	-	(300,651)
Vesting of share based payments	-		-	21,472	-	-	21,472
Balance at 31 December 2022	69,451,007		(40,898,770)	2,563,166	(1,404,633)	28,549	29,739,319

STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2022

		Consolidated
		31 December 2022 $	31 December 2021 $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees		(2,201,262)	(2,219,392)
Interest received		2,430	2,386
Interest paid		-	(41)
Other receipts		-	20,000
Net cash outflow from operating activities		(2,198,832)	(2,197,047)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment		(60,351)	(85,144)
Payments for exploration and evaluation		(1,593,992)	(629,646)
Cash paid for acquisition of subsidiary		-	(1,516,601)
Net cash outflow from investing activities		(1,654,343)	(2,231,391)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue		4,858,295	-
Share issue costs		(300,651)	(1,637)
Net cash inflow/(outflow) from financing activities		4,557,644	(1,637)
Net decrease in cash held		(704,469)	(4,430,075)
Effect of exchange rate changes on the balance of cash held in foreign currencies		42,717	(4,193)
Cash at the beginning of the financial period		1,289,845	6,484,053
Cash at the end of the financial period		2,037,031	2,049,785

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

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