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Altus Strategies PLC (ALS)

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Friday 29 April, 2022

Altus Strategies PLC

Audited Final Results

RNS Number : 7839J
Altus Strategies PLC
29 April 2022
 

 

Altus Strategies Plc / Index (EPIC): AIM (ALS) TSX-V (ALTS) OTCQX (ALTUF) / Sector: Mining

 

29 April 2022

Altus Strategies Plc

("Altus" or the "Company")

 

Audited Final Results

 

Altus Strategies Plc (AIM: ALS, TSX-V: ALTS, OTCQX: ALTUF) announces its audited final results for the year ended 31 December 2021. These are presented below and are available (along with the Company's 2021 Annual Report) to download on the Company's website at  http://altus-strategies.com/investors/financials/  and on SEDAR at  www.sedar.com .

 

Corporate highlights

· Acquisition of an effective 0.418% Net Smelter Return (" NSR ") royalty on the Caserones copper mine (" Caserones ") in northern Chile for US$34.1m

· Caserones royalty acquired via a strategic 50:50 partnership with NYSE-American and TSX-V listed EMX Royalty Corp (" EMX ") through a Chilean special purpose vehicle (" SPV ")

· Receipt of maiden royalty income of £1.7m (before tax) in respect of Q2 and Q3 2021 production at Caserones

· Acquisition of 24 royalty interests from Newcrest Mining Ltd (" Newcrest ") for US$24.0m, including royalties on two producing gold mines, one near-producing gold mine and 21 development and exploration stage projects (23 of which are located in Australia and one in Côte d'Ivoire)

· Newcrest royalties acquisition undertaken through a strategic joint venture with private company AlphaStream Limited (" AlphaStream ") through SPVs in United Arab Emirates and Australia; first close of the acquisition covering all assets except nine development and exploration stage assets for US$20.0m

· US$29 million strategic acquisition loan facility provided by the Company's largest shareholder La Mancha Fund SCSp (" La Mancha ")

· Moroccan portfolio of 14 primarily silver and copper projects to be vended to Eastinco Mining and Exploration Plc (" Eastinco ") subject to Eastinco listing on the Standard List of the London Stock Exchange; Altus to retain NSR royalty rights on all projects, to gain a royalty right on Musasa tantalum mine in Rwanda and to become a major shareholder of Eastinco

· Appointments to the senior management team strengthen the Company's corporate and technical capabilities across its key areas of operation:

Mark Campbell appointed as Non-Executive Chairman of 100% owned subsidiary Akh Gold Holdings Ltd and General Manager (Egypt)

Amilha Young appointed as Company Secretary and Legal Counsel

Boubacar Thera appointed as Corporate Manager (Mali)

David Hall appointed as Strategic Advisor (Egypt)

 

Operational highlights

· Expansion of activities into Egypt through award of gold exploration licences, forming four projects, totalling 1,565km2 located in the Eastern Desert through a competitive international bidding process; discovery of numerous hard rock artisanal gold workings from field reconnaissance at Gabal Om Ourada and Wadi Dubur projects

· Western Mali: High grade intersections including 21.9 grams per tonne (" g/t ") gold (" Au ") over 10.2m from 28m from diamond drilling (" DD ") at Diba gold deposit in western Mali (results are down-the-hole and not true widths)

· Southern Mali: Gold resource exceeds one million ounces (17.3 million tonnes at 1.2 g/t Au for 665,000 inferred ounces and 9.2 million tonnes at 1.2 g/t Au for 360,000 indicated ounces) at Tabakorole gold project in Southern Mali under Joint Venture (" JV ") with Australian Securities Exchange (" ASX ") listed Marvel Gold Ltd (" Marvel Gold ") (see Altus' news release "Gold Resource Exceeds One Million Ounces at Tabakorole in Southern Mali" dated 5 October 2021). Upgraded Mineral Resource Estimate (" MRE ") generated a 24% increase in indicated ounces and 7% increase in inferred ounces, with 70% of deposit comprising the MRE within 150m of the surface; encouraging DD results and discovery of a potential new parallel zone of mineralisation; significant increase in JV landholding at Tabakorole (by 100km2 to 292km2)

· Morocco: Grant of 10 new exploration licences taking the Company's portfolio to 14 projects covering 824km2 targeting primarily copper and silver; discovery of high-grade copper and silver from reconnaissance exploration at the newly granted Azrar, Izougza and Tata projects

· Completion of strategic review of Bikoula iron project in southern Cameroon by Mining Plus UK Ltd (" Mining Plus ") to determine next steps for project development

 

Financial highlights

· Completion in March 2021 of oversubscribed fundraising for £7.7m / C$13.4m at an issue price of £0.75 / C$1.30 per Ordinary Share with net proceeds primarily used to accelerate gold exploration programmes in Egypt and Mali

· Receipt of second tranche of 10 million shares in Canyon Resources Ltd (" Canyon ") with a value at the time of £0.6m / C$1.1m

· Completion in December 2021 of oversubscribed fundraising for £19.8m / C$33.7m at an issue price of £0.535 / C$0.90 per Ordinary Share with net proceeds primarily used for completion of the Newcrest royalty acquisition

· Cash balance of £6.4m / C$10.9m as at 31 December 2021

· Cash outflow from operating activities of £7.9m / C$13.4m for the year

· Listed equity holdings of £1.7m / C$2.9m as at 31 December 2021

 

Post-period end

· Second and final close of the Newcrest royalties acquisition covering nine development and exploration stage assets located in Australia for consideration of US$4.0m

· Completion of 11,832m drilling programme at Diba and Lakanfla gold project with latest results of up to 1.27 g/t Au over 127m from 21m on the Lakanfla Central prospect and 1.81 g/t Au over 10m from 256m at the Diba NW prospect (results are down-the-hole and not true widths)

· Extension of La Mancha loan facility to 30 June 2022 with annualised interest rate increased to 10% plus the United States Dollar (" USD ") London Inter-bank Offered Rate (" LIBOR ")

· 1.0% Gross Revenue Royalty (" GRR ") generated on Toura Nickel-Cobalt project in Côte d'Ivoire through sale of interest in local subsidiary to Firering Strategic Minerals Plc (" Firering ") for €15,000

· Revised joint venture agreement signed with Marvel Gold whereby the Company regained a 100% interest in the Lakanfla licence in western Mali, located 5km east of the Company's Diba project, and reduced its interest in the Tabakorole gold project in southern Mali to 30%; Altus retains a 2.5% NSR royalty on the Tabakorole project

· Award of a ten year (renewable) mining licence at the Agdz project in central Morocco covering an area of 34.36km2, representing the area of copper and silver mineralisation discovered to date

· Award of a four year (renewable) 'small scale' mining licence at the Diba gold project in western Mali covering an area of 83.1km2, incorporating the Diba Deposit and other key prospects

 

 

Steven Poulton, Chief Executive of Altus, commented:

"2021 marked another milestone year for Altus. With the acquisition of an NSR royalty on the Caserones copper mine in Chile and receipt of the maiden royalty payment just a month after closing the deal transformed Altus into a revenue generating business. Later in the year, we acquired a portfolio of 24 royalty interests from Newcrest Mining Ltd. The Newcrest portfolio includes royalties on two producing gold mines, one near-producing gold mine and 21 development and exploration stage projects, bringing the Company's global portfolio to 33 royalty interests and 27 project interests across nine countries and nine metals.

 

"Operationally, our focus during the period was on advancing and de-risking our royalty generation assets, primarily in Mali and Egypt. In southern Mali, an updated independent Mineral Resource Estimate at the Tabakorole gold royalty and JV project reported that gold resources now exceed one million ounces and there remains significant potential for further growth in parallel zones, along strike and at depth. Elsewhere in western Mali, diamond drilling we completed at the Company's 100% owned Diba gold project returned impressive high-grade intersections and discovered new zones. Earlier this month, post-period, Altus was granted a small-scale gold mining licence for Diba; an important step as we now progress with an updated MRE and Preliminary Economic Assessment for the combined Diba & Lakanfla project. In Egypt, Altus was awarded highly prospective gold exploration licences totalling 1,565km2 in the Eastern Desert, which we consider has world class discovery potential. Systematic exploration and target evaluation is already underway across these projects.

 

"Altus is exceptionally well-positioned to progress with its royalty generation activities across Africa while also reviewing accretive royalty income acquisition opportunities. The Company has a strong pipeline of transactions under review and we intend to further enhance and diversify our portfolio in the coming years growing our revenue streams in parallel.

 

"2022 is on course to be another highly productive year for the Company and we look forward to providing further updates in due course. "

 

For further information you are invited to visit the Company's website www.altus-strategies.com or contact:

 

Altus Strategies Plc

Steven Poulton, Chief Executive

Tel: +44 (0) 1235 511 767

E-mail: [email protected]

SP Angel Corporate Finance LLP (Nominated Adviser)

Richard Morrison / Adam Cowl

 

Tel: +44 (0) 20 3470 0470

SP Angel Corporate Finance LLP (Broker)

Grant Barker

Rob Rees

 

Tel: +44 (0) 20 3470 0471

Tel: +44 (0) 20 3470 0535

Shard Capital Partners LLP (Broker)

Isabella Pierre / Damon Heath

 

Tel: +44 (0) 20 7186 9927

Yellow Jersey PR (Financial PR & IR)

Charles Goodwin / Henry Wilkinson

Tel: +44 (0) 20 3004 9512

E-mail: [email protected]

 

About Altus Strategies Plc

Altus Strategies (AIM: ALS, TSX-V: ALTS & OTCQX: ALTUF) is a mining royalty company generating a diversified and precious metal focused portfolio of assets. Its differentiated approach of generating royalties on its own discoveries in Africa and acquiring royalties globally through financings and acquisitions with third parties, has attracted key institutional investor backing. Altus has established a global portfolio comprising 33 royalty interests and 27 project interests across nine countries and nine metals. The Company continues to assess royalty acquisition opportunities as well as actively advancing its portfolio of gold and base metal projects across Africa, as part of its 'boots on the ground' royalty generation strategy. Altus engages constructively with all stakeholders, working diligently to minimise its environmental impact and to promote positive economic and social outcomes in the communities where it operates. For further information, please visit www.altus-strategies.com .

 

Qualified Person

The technical disclosure in this regulatory announcement has been approved by Steven Poulton, Chief Executive of Altus. A graduate of the University of Southampton in Geology (Hons), he also holds a Master's degree from the Camborne School of Mines (Exeter University) in Mining Geology. He is a Fellow of the Institute of Materials, Minerals and Mining and has over 20 years of experience in mineral exploration and is a Qualified Person under the AIM rules and NI 43-101.

 

Cautionary Note Regarding Forward-Looking Statements

Certain information included in this announcement, including information relating to future financial or operating performance and other statements that express the expectations of the Directors or estimates of future performance constitute "forward-looking statements". These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, without limitation, the completion of planned expenditures, the ability to complete exploration programmes on schedule and the success of exploration programmes. Readers are cautioned not to place undue reliance on the forward-looking information, which speak only as of the date of this announcement and the forward-looking statements contained in this announcement are expressly qualified in their entirety by this cautionary statement.

 

Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is based on assumptions made in good faith and believed to have a reasonable basis. The forward-looking statements contained in this announcement are made as at the date hereof and the Company assumes no obligation to publicly update or revise any forward-looking information or any forward-looking statements contained in any other announcements whether as a result of new information, future events or otherwise, except as required under applicable law or regulations.

 

TSX Venture Exchange Disclaimer

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organisation of Canada accepts responsibility for the adequacy or accuracy of this release.

 

Market Abuse Regulation Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

Chairman's Statement

Reflection on the year

I am delighted to be able to report on a steep and transformational growth trajectory for Altus during the past year. The long-held business strategy of holding a diverse portfolio of royalties and discovery projects took a series of strong steps forward in 2021.

 

Perhaps the most significant new development was the acquisition of an interest in a cash-paying royalty at the Caserones copper mine in northern Chile. Not only was this the initial example of the parallel strategies of royalty acquisition and royalty generation working together in the business, it was also the Company's first asset outside of Africa as well as being a first in terms of taking a joint venture approach with a royalty partner. Within a month of the acquisition, we were delighted to report that the first royalty revenue was received in Altus' bank account.

 

In the same month that the first Caserones royalty was received, the Company opened a branch office in Cairo. Having been notified of the success of its bid for approximately 1,550km2 of gold exploration licences in Egypt's highly prospective Eastern Desert, our team began setting up the operations of our Egyptian subsidiary, Akh Gold Limited. In just a few months, the Company has built a team of talented and well-connected local geologists and support staff, including the appointment of Mark Campbell as Akh Gold's General Manager. Having completed the formalities for officially receiving the exploration licences, the team has rapidly commenced reconnaissance work across the nine licence blocks that make up the four projects. The area covered by these four projects is vast and largely unexplored, and offers a fantastic opportunity for the Company to make some exciting discoveries. The exploration bid process in Egypt has attracted major industry players including Barrick Gold, Centamin and B2 Gold amongst others.

 

Caserones and Egypt together perfectly illustrate the parallel strategy of royalty acquisitions that, as well as providing short term returns, also contribute to the Company's discovery activities, which, over time, offer the prospect of significant shareholder returns. In the coming years the team at Altus will seek to maintain the optimal balance of short term capital returns and long term income exposure across our portfolio of assets.

 

Altus finished the year strongly with the acquisition of a significant, high quality portfolio of predominantly gold metals royalties in Australia and Côte d'Ivoire, including the cash-paying or near-production royalties at the Ballarat, SKO and Bonikro mines. Altus started the year holding nine royalties - it ended it holding 24, a great achievement and a substantial platform for the future of the Company.

 

Management and Board

For a company of our size, Altus has a strong and experienced senior management team, Board of Directors and corporate governance procedures. There were no changes to the composition of the Board during the year, but following the year end, Gérard de Hert was appointed as a non-executive director. Gérard is the Managing Director of Technical Services at La Mancha, our largest shareholder, and, in accordance with the Strategic Investment Agreement with La Mancha of February 2020, he represents La Mancha's second appointee to our Board alongside La Mancha's CEO Karim Nasr. Prior to joining La Mancha, Gérard held senior management positions with a number of Africa-focused multinational gold miners, and his technical expertise in the exploration and development of mines in Africa will be of considerable value to Altus. I welcome Gérard as a director and look forward to working with him.

 

During the year, a number of key management appointments were made that further strengthened the Company's corporate and technical capabilities in line with our growth. Amilha Young was appointed Company Secretary and Legal Counsel. Amilha has over 20 years' experience in corporate governance in the financial services and natural resources sectors in Africa and the UK. Mark Campbell who lives in Cairo joined as the General Manager in Egypt, a key appointment in the establishment of the Company's business in Egypt, and was also appointed Non-executive Chairman of Akh Gold Holdings Ltd. Mark has over 40 years' experience in the mining, investment banking and petroleum industries, with 31 of those years being in Egypt. Also in Egypt, David Hall joined us as Strategic Advisor for Egypt, bringing 35 years of experience in the exploration and mining sector assessing exploration projects and mines in over 55 countries. In Mali, Boubacar Thera was appointed as Corporate Manager, to support our operations there, specifically, as we advance our 100% owned Diba & Lakanfla gold project, and to enhance the Company's profile in the region. Boubacar   is a Malian lawyer with over 25 years' professional experience in the natural resources industry in Africa focused on contract, joint venture and mining title negotiations.

 

After the year end, the Company's business development team was strengthened. Michael Starke was appointed VP Corporate Development to support the realisation of value from Altus' growing asset portfolio as well as to manage corporate communications. Michael has over 14 years' experience in corporate finance and will support Alister Hume, who was promoted to Chief Investment Officer, having played a pivotal role in the acquisitions of the Caserones royalty and the portfolio of royalties in Australia and Côte d'Ivoire from Newcrest.

 

Looking forward

The energetic team at Altus never lets the grass grow under its feet. Notwithstanding the effort that has gone into advancement of the Company along its strategic path during 2021, I have no doubt that the team will pursue new opportunities with diligence and resolve, and will work with intelligence and commitment to develop and grow Altus' exciting portfolio of royalties and projects.

 

On behalf of the Board, I thank the entire team at Altus for their contributions to a momentous year, and I thank our existing and new shareholders for their continued support.

 

David Netherway

Non-executive Chairman

 

Business Overview

Our royalty generator business model

Altus is a mining Royalty Generator focused on becoming a leading royalty business. The Company is based in the United Kingdom and dual-listed in the UK (AIM: ALS) and Canada (TSX-V: ALTS). Its shares also trade in the United States (OTCQX: ALTUF). The Company was founded by three of its current directors in 2007; namely Steven Poulton, Matthew Grainger and David Netherway. Since its formation, Altus has developed a portfolio of resource assets, diversified by commodity and jurisdiction and it has sought partnerships on our assets to further reduce risks and accelerate its growth. The team's track record of success in Africa and differentiated business model has also attracted notable institutional and other sophisticated investors. La Mancha is one such group, which joined the Company's register in 2020 as the largest shareholder with a 35% interest. As one of the world's largest and most respected mining investors, La Mancha's involvement has been transformational for the Company and the growth of both elements of its two-pronged strategy of generating royalties and increasing value per share, namely the Acquisition Strategy and the Discovery Strategy.

 

The Acquisition Strategy focuses on accelerating the growth of the Company's portfolio and cash flows through the acquisition of existing royalties on third party mines and development projects around the world, or by royalty creation through the provision of strategic capital to select mining and exploration companies. Our acquisition strategy aims to expand the Company's royalty portfolio, provide further diversification, maintain a high degree of quality assets to yield long term, sustainable income for Altus from cash-generating assets. This approach provides Altus with a steadily growing stream of lower-risk cash flows which it can deploy to further grow its royalty portfolio and to fund its discovery strategy.

 

The Discovery Strategy provides the Company's shareholders with exposure to the potentially significant outsized returns which can be generated from the success of targeted discovery work. Leveraging the Company's expertise and proven ability to identify and rapidly advance early-stage prospects, Altus aims to generate high-value projects by selectively acquiring multiple exploration licences in diverse jurisdictions and advance these through targeted appraisal undertaken by the Company's exploration geologists. As projects progress up the 'value curve', the Company typically enters JVs with third parties who fund advanced exploration and development, thereby reducing risk and preserving shareholder capital for investing in further opportunities. Income is generated through JV milestone payments which occur at exploration and development landmarks. As each project matures and develops, Altus' ownership may dilute but the Company looks to retain a minority equity position as well as a royalty, providing longer term optionality and cash flow potential once the project enters production.

 

Discovery Strategy focused on Africa

While Altus's acquisition strategy targets assets in all parts of the world, the Company's discovery strategy is focused on the continent of Africa where, due to the relative lack of exploration using modern techniques compared to many other parts of the world, economic mineral deposits can still be discovered close to and in many cases cropping out at surface.

 

It is reported that 24% of all discoveries in the last decade were found on the continent of Africa, despite it receiving only 14% of the global exploration budgets (source: MinEx Consulting). According to the same survey, deposits in Africa (excluding South Africa) are being discovered at average depths of just 9m below surface, which is much shallower than average global depths of 78m. In Canada and the USA the average discovery depths are even greater, at 125m and 198m respectively.

 

This opportunity to make discoveries across Africa without recourse to expensive subsurface exploration technologies, including drilling programmes, means that our shareholder capital can potentially generate more value and at greater speed if applied to exploration in Africa than it might in many other parts of the world, thus increasing the discovery potential per Altus share. Given the collective geographical, geological and operational expertise of our board, management and advisors, we believe Altus is well positioned to maximise this opportunity. The Company currently has interests in exploration licences in Egypt, Mali, Morocco, Cote d'Ivoire, Cameroon and Ethiopia.

 

Risk diversification

Risk diversification is at the heart of the Company's business model and is enacted by diversifying our asset portfolio across a variety of metals at different stages across several jurisdictions. Altus has a growing portfolio of 33 royalties comprising four royalties on producing mines, 15 royalties on development projects with mineral resources and 14 royalties on pre-resource projects, as of the publication date of this report. In addition to the royalty portfolio, the Company's project pipeline comprises 24 exploration projects, of which one is under JV (Tabakorole in Mali) while the Company's 14 Moroccan projects are in the process of being spun out into Eastinco Mining and Exploration plc which is seeking to list on the London Stock Exchange. Together, the Company's royalties and projects span nine countries and encompass nine commodities.

 

More than half of the Company's discovery portfolio is comprised of gold projects, the most advanced of which are located in western Mali. Aside from gold, Altus is focused on metals that it believes will be critical in the transmission, storage and efficient use of electricity in the coming decade, as the world seeks to decarbonise and implement 'Net Zero' policies. Copper will be paramount among these. Other metals such as nickel, cobalt, lithium, vanadium and aluminium also have a critical part to play, as will specialist and less well-known rare-earth metals, including neodymium and praseodymium that are used in the high-quality magnets of electric motors.

 

Chief Executive's Review

The year in summary

Acquisition of cash paying royalties

As our Chairman has highlighted, the acquisition of a royalty on the Caserones copper mine in northern Chile perhaps marked the most significant milestone for the Company in the year. Our team had been working hard to deliver on the Company's publicised parallel strategy of acquiring cash-paying royalties alongside generating our own royalties. This hard work came to fruition in August when an agreement was signed for the purchase of a 0.418% NSR copper royalty for $34.1 million. The Caserones mine is situated in a Tier-1 jurisdiction and at that time represented our first asset outside of Africa. The mine is owned and operated by JX Nippon Mining & Metals Corporation of Japan and had an estimated minimum 17 years of production remaining at the time of our NSR acquisition.

 

The Company was delighted to secure the acquisition of the Caserones royalty in partnership with NYSE-American and TSX-V listed EMX Royalty Corporation. Altus and EMX worked closely together on the deal and incorporated a special purpose vehicle in Chile which is jointly owned and managed by Altus and EMX. The Company's partnership with EMX is strengthened by Michael Winn, who is the Chairman of EMX, as well as being a Non-Executive Director of Altus.

 

The commitment made to the long-term development of Altus by our significant 35% shareholder, La Mancha, was underscored through the provision of a US$29.0 million acquisition bridge loan facility, which was drawn down to part-fund the acquisition. The facility, which was repayable in February 2022, has since been extended to 30 June 2022. The Company does not yet have alternative financing in place but has received a number of proposals to re-finance the loan.

 

Following the closing of the Caserones transaction, the team quickly moved on to its second acquisition of the year, which closed in December 2021. This deal saw Altus acquire interests in a portfolio of primarily precious metal royalties from Newcrest Mining Ltd for US$24 million. The portfolio includes two current gold mines and one near-production gold mine as well as 21 near-term development and exploration stage projects. All but one of the projects are located in Australia, further diversifying Altus' portfolio and adding another Tier-1 jurisdiction, the other is in Côte d'Ivoire, where Altus already holds royalties on two self-generated projects, one for gold and one for nickel-cobalt.

 

The first income from the Ballarat and SKO royalties in Australia was received in March 2022, which, together with Caserones, brought the quarterly gross income from royalties to approximately US$1.8 million.

 

For the transaction with Newcrest, Altus was delighted to be working with another royalty partner, AlphaStream Limited, a specialist mining royalty investment and streaming company. Altus and AlphaStream incorporated two SPV's one of which holds a 100% interest in an Australian subsidiary holding the Australian royalty assets, and the other which holds the royalty asset in Côte d'Ivoire directly.

 

The transaction with Newcrest was supported by a placing and subscription of new Ordinary Shares raising US$26.1 million from both existing as well as new institutional investors alongside a concurrent subscription by the Company's major shareholder, La Mancha, as well as various Altus directors, officers and other investors.  Further details of the royalties acquired in Chile, Australia and Côte d'Ivoire are provided in the portfolio review on pages 31 to 34.

 

Our Portfolio of gold projects in Mali

The Company has made notable progress during the year on its Diba and Lakanfla gold project in western Mali, where a series of drilling programmes has been undertaken across the project targeting strike extensions and new zones of mineralisation. Altus took the decision to self-fund these drilling programmes to accelerate advancement of the project, and to build on the MRE and PEA produced by Mining Plus UK Ltd in 2020.

 

In January 2022 Altus regained 100% ownership of the Lakanfla licence from its joint venture partner Marvel Gold. Lakanfla is located just 5km east of the Diba licence and is considered to be highly prospective based on previous exploration programmes and the presence of substantial hard rock artisanal gold workings. The drilling programme was expanded to test the on strike and down-dip potential of the Diba Deposit, Diba NW prospect and the Lakanfla Central prospect. An updated MRE and PEA for the combined Diba and Lakanfla project will be prepared once the results from the drilling programmes have been assessed.

 

In southern Mali, progress has continued with our joint venture on the Tabakorole gold project funded by partner Marvel Gold. An updated MRE on Tabakorole was published in October 2021 and exceeded one million ounces, (comprising 17.3 million tonnes at 1.2 g/t Au for 665,000 ounces ("oz") in the Inferred category, 9.2 million tonnes at 1.2 g/t Au for 360,000oz in the Indicated category). This is a major milestone for the project, and includes 70% of the upgraded MRE being within 150m of surface complemented by high metallurgical gold recoveries averaging 97%. Tabakorole is shaping up to be a potentially significant gold development project in west Africa with substantial upside for Altus. At the year end, Altus held a 49% interest in Tabakorole, which has since been reduced to 30% in line with the JV agreement. Altus holds a 2.5% NSR royalty on the Tabakorole project.

 

A new portfolio of gold projects in Egypt

The establishment of operations in Egypt in 2021 represents perhaps the most significant expansion of our activities since our plan of arrangement with TSX-V listed Legend Gold in 2018 for its portfolio of gold projects in Mali. Nine licences were awarded to Altus in Egypt in 2021, from the internationally competitive inaugural licence bid round process. The licences form four distinct project areas and cover a substantial area of the highly prospective Eastern Desert. By the end of the year, exploration was already underway on two of the projects, namely Gabal Al-Shaluhl and Wadi Dubur, representing 1,044km2 of the 1,565km2 of the Company's licence base in Egypt.

 

The ramp up of operations has been swift. An office has been set up in Cairo managed by Mark Campbell, our newly appointed General Manager in Egypt, ably supported by an enthusiastic and well-connected technical and administrative team. The Company is also delighted to have David Hall on the team, as Strategic Advisor for Egypt.

 

I am extremely pleased with the development of our growing and high-calibre team in Egypt and confident that they will make rapid progress in advancing our projects in the coming year. While exploration is still in its early stages, our initial reconnaissance is revealing a high incidence of hard rock artisanal gold workings within highly prospective geological belts which underscore the very high prospectivity of our licences.

 

Further details of the Company's discovery assets are provided in the Portfolio Review - Discovery Projects Portfolio on pages 36 to 48.

 

Divestment of Moroccan silver and base metal portfolio

Our royalty generation business is dynamic and predicated on our ability to make new mineral discoveries and monetise these for royalty interests, plus cash and equity. The sale of the Company's fourteen, primarily copper and silver, exploration projects in Morocco is in line with this strategy. We signed an agreement with Eastinco in November 2021 to divest Altus' interest in its Moroccan projects. Subject to the admission of the shares of Eastinco onto the LSE Standard List, Altus will become a material shareholder of Eastinco holding up to 25% of the issued capital, receive a reimbursement of up to £250,000 in respect of exploration expenditures incurred and retain a 2.5% NSR royalty interest on each of the Moroccan projects. Altus will also obtain an NSR royalty interest in Eastinco's producing Musasa tantalum project in Rwanda.

 

Funding

The Company completed two successful equity fundraisings during the year, raising a total of £27.5 million before expenses. The first of these, in March 2021, was undertaken to support the development of the Company's royalty generation assets, principally in Mali and Egypt. The second, completed in December 2021, provided funding for the acquisition of the portfolio of royalties from Newcrest. A number of existing investors participated in the equity fundraisings, including our cornerstone shareholder La Mancha, and we also welcomed several new and notable institutional investors to our register. A number of directors and senior managers also participated in the fundraisings.

 

La Mancha further demonstrated its strategic support for the Company through the provision of a US$29 million strategic acquisition debt facility to partly fund the acquisition of the Caserones royalty. This was the Company's first such use of debt funding and it was fundamental to catalysing our royalty acquisition strategy.

 

Market positioning

The Altus portfolio of royalties and projects is weighted towards gold, with exposure being over 50%. Gold remains the ultimate liquid "safe-haven" for investors seeking protection from heightened geopolitical risks and the value-destructive impacts of inflation on cash and cash-like investments.

 

The gold price started the year at around $1,900/oz, eased to around $1,700/oz by early March before recovering to around $1,800/oz, where it remained for much of 2021. Following the Russian incursion in Ukraine in early March 2022, gold rose briefly almost touching $2,100/oz before falling back closer to $1,900/oz. Our portfolio of cash paying and development stage gold royalties which Altus acquired from Newcrest in December 2021, provides our shareholders with direct and relatively low risk exposure to the current and future strength in the price of gold.

 

Notwithstanding the concerning situation in Ukraine and its wider geopolitical and inflationary implications, the world's major economies continue to promote an agenda to decarbonise the global economy with a "Net Zero" target. This objective will have potentially transformational, and perhaps yet to be fully appreciated, implications for the demand for copper, nickel and rare earth metals given their fundamental role in the generation, transmission and consumption of renewable energy. Altus continues to seek to increase its exposure to these metals and others which also stand to benefit from a post-Covid-19 recovery in global growth and infrastructure development. Already, there has been a sustained surge in the prices of many commodities, as global supply chains restock and government infrastructure spending increases. The copper price was on an upward trend at the start of the year, opening at around US$3.50 per pound ("lb"). It broke through US$4.00/lb in early February and remained above this threshold for the rest of 2021, dipping close to US$4.00/lb again in April and July, but climbing above US$4.70/lb in May and October. It too soared in early March 2022 to above US$4.90/lb before falling back slightly. Our ownership of a strategic royalty interest on the Caserones copper mine in Chile, acquired by Altus for US$34.5 Million in August 2021, provides our shareholders with direct and relatively low risk exposure to the current and future strength in the price of copper.

 

In response to accelerating inflation, central banks around the world have now started, arguably belatedly, to raise interest rates with the chairs of central banks guiding that more aggressive interest rate rises may be required in the months and years ahead. Should confidence in economic growth fall for whatever reason, in a period of rising interest rates and excessive (government, corporate and personal) debt, the potential for a substantial economic reset will be significant. Gold continues to represent the ultimate hedge against the potential dramatic consequences of a systemic debt driven financial crisis, as well as the impacts of real negative interests, for as long as inflation rates continue to exceed interest rates.

 

Outlook

This has been another transformational year for Altus and our asset portfolio. We have completed two landmark transactions to acquire cash paying royalties, received our maiden royalty income from these, expanded our discovery portfolio into the highly prospective Eastern Desert of Egypt, advanced our the Diba & Lakanfla gold project in Mali though successful drilling programmes, structured the divestment and royalty creation on our Moroccan portfolio of assets and embodied the Company's strategy of generating growth for shareholders through diversification.

 

Commodity markets are being pushed higher by the drive to decarbonise, the post-covid global recovery and by geopolitical events. The growth of Altus over the past year and the balance of assets in our portfolio puts us in a strong position to not just meet the challenges ahead, but to generate superior performance for our shareholders.

 

Our key objectives for 2022 are to:

 

continue to grow the Company's revenues with the acquisition of further cash-paying royalties;

 

continue to grow and realise value from our royalty generation activities across Africa;

 

to conduct business with due regard for the Company's stakeholders and our environmental as well as social responsibilities.

 

Our long-term objective is to realise substantial returns for shareholders, by generating significant positive cashflow from a diversified portfolio of high-quality royalty and project interests. Altus has never had a stronger asset base, team or outlook and I very much look forward to the year ahead.

 

In the meantime, I take this opportunity to thank all of the Altus team for their exceptionally hard work and dedication throughout what has been an extraordinarily busy year. I also take this opportunity to thank our new and existing shareholders for their continued support.

 

Steven Poulton

Chief Executive Officer

 

Strategic Report

Key Performance Indicators

The Board uses a mixture of financial and non-financial Key Performance Indicators ("KPIs") to help monitor the performance of Altus' group of companies (the "Group"). The following four categories of KPI's are used to assess the Group's performance:

 

1. Health, Safety, Environment and Communities (HSEC)

2. Portfolio growth and diversity

3. Financial KPIs

4. Share price performance

 

1. Health, Safety, Environment and Communities (HSEC)

 

The health and safety of our employees, contractors and suppliers is core to how we conduct our business. The Group promotes a strong culture of health and safety to ensure individuals take responsibility for doing the right work in the right way and ensure any breaches of this are recorded. This culture is supported by comprehensive processes, training and personal protective equipment to ensure a safe and healthy working environment. In 2021, the Group achieved a Lost Time Injury Frequency Rate (LTIFR) of 0 (2020: 0). LTIFR is calculated as (Number of lost time injuries in the reporting period x 1,000,000 ÷ Total hours worked in the reporting period). The Group's drilling contractor at the Diba project had one on site incident resulting in one day of lost time for one of its employees.  This is reportable under the contractor's Health and Safety statistics.

 

The Group has implemented an Environmental Management Plan in relation to its active exploration operations in several countries in Africa. The exploration process involves the short-term collection of small volumes of physical data from the earth including soil sampling, channel sampling, trenching and drilling. The potential impact to the environment from these activities is relatively minor, but includes very limited emissions to soil, water and air. Under the Group's Environmental Management Plan, potential emissions are mitigated in all circumstances in order to reduce any impacts. The Group has a goal of ensuring no significant environmental incidents across its operations with none reported in the year to 31 December 2021 (2020: none).

 

As part of its exploration operations in several countries in Africa, the Group ensures its "Social Licence to Operate" by building and maintaining strong relationships with the communities in which it operates. Through its programme of community engagement, the Group ensures effective two-way communication and resolution of potential issues.

 

2. Portfolio growth and diversity

 

The Group has a two-pronged approach to generating royalties, namely via its acquisition strategy and its discovery strategy. The KPI relating to the operational performance of each of these strategies focuses on the management of the existing portfolio of assets as well as the growth of the portfolio. The Group continually assesses potential licence applications, projects and third-party royalty acquisitions in new jurisdictions.



 


Acquisition Strategy

Discovery Strategy

Portfolio management

The Group actively engages with the 3rd party operators of assets over which it has acquired royalties. This includes management calls, production reviews and site visits. In addition, monitoring of news flow is undertaken.

The Group's generated royalties cover assets which are relatively earlier stage than it's acquired royalties. Nevertheless, the Group maintains proactive engagement with third party operators.

Portfolio growth

During the year to 31 December 2021, the Group acquired a total of 25 existing royalties:

 

1) On 17 August 2021, the Group announced the US$34.1m acquisition of an effective 0.418% NSR royalty on the Caserones copper mine in Chile.

 

2) On 13 December 2021, the Group announced the US$24.0m acquisition of a portfolio of 24 gold royalties from Newcrest Mining (the second close for nine of these royalties took place in January 2022).

 

During the year to 31 December 2021, the Group generated a total of 15 new potential royalties:

 

1) On 22 November 2021, the Group announced the proposed divestment of its Moroccan focussed subsidiary in return for 14 royalties generated over the projects in Morocco as well as one royalty over the Musasa tantalum mine in Rwanda.

 

Portfolio growth

Acquired royalties

Generated royalties

31 December 2021

16

8

31 December 2020

0

9

 

The Group's discovery strategy is underpinned by a solid pipeline of project across a number of commodities and jurisdictions. In February 2021, the Group was awarded nine gold exploration licences in Egypt and between March and July 2021, the Group was awarded ten licences, primarily for copper and silver, in Morocco.

 

Number of Projects by Country

31 December 2021

31 December 2020

Egypt

4

0

Mali

3

4

Morocco

14

4

Cameroon

2

2

Côte d'Ivoire (under application)

1

1

Ethiopia

2

2

TOTAL

26

13

 

Risk diversification is a key part of the Group's business model. This is achieved through both geographic diversification as well as commodity diversification.

 

Number of Royalties by Country

31 December 2021

31 December 2020

Australia

14

0

Mali

4

5

Côte d'Ivoire

3

2

Chile

1

0

Cameroon

1

1

Liberia

1

1

TOTAL

24

9

 

Aside from gold, the Group is focusing on metals that it believes will be critical in the increasingly decarbonised electricity industry, particularly copper. The Group also has interests in nickel, zinc, iron ore, silver and bauxite projects. The Group's single largest exposure by country and by mineral in terms of the number of royalties and projects in its portfolio is as follows.

 


By Geography

By Commodity

31 December 2021

Australia and Morocco - 29%

Gold - 65%

31 December 2020

Mali - 32%

Gold - 63%

 

3. Financial KPIs

 

The financial performance of the Group's asset portfolio is another important KPI and is focused on the management of income and expenditure associated with the implementation and advancement of each of these strategies. The Group focuses its expenditure on its most prospective opportunities for growth, and seeks to reduce project costs by pursuing potential JV and project sale transactions across its portfolio. Royalty income in 2021 was through an associate of the Group and is included under share of profit of associate in the Statement of Comprehensive Income.

 


2021

2020


£'000

£'000

Royalty income (pre-tax)

2,641

-

Royalty acquisitions

(39,913)

-

 

Exploration costs includes geologists, on site costs, assays/analysis and exploration support costs in Africa, as well as UK geologists' salaries, and an allocation of UK management time and UK exploration support costs. There was a significant acceleration of exploration activity on the Group's projects in Mali during the year. The UK support team was expanded, and this increased the proportion of exploration expenditure in overall costs.

 

The following is a breakdown of costs included in loss from operations in the Statement of Comprehensive Income (excluding foreign exchange losses and share based payments).



 

 


Exploration costs expensed

Administrative expenses

Listing & acquisition related costs

2021

63%

30%

7%

2020

71%

26%

3%

 

The Group focuses on deploying its cash on activities that are likely to maximise the value to shareholders while maintaining a strict control on administrative overheads. The Group's cash on hand and investments in marketable securities at 31 December (see table below) are sufficient to fund all projected expenditure for a minimum of 12 months from the date of this report.

 


31 December 2021

31 December 2020


£'000

£'000

Cash and cash equivalents

6,355

5,937

Investments (listed equities)

1,721

1,321

Total

8,076

7,258

 

4. Share price performance

 

The Company's share price performance broadly reflects the market appetite for the equity of resource companies and specifically for the Group's asset portfolio and growth prospects. In addition to providing returns to shareholders, a higher market valuation reduces the cost of capital for existing shareholders by reducing the amount of dilution when raising new capital through the issuance of equity. The remuneration of certain directors, management and other employees is part settled through the award of share options, further aligning the interests of shareholders and the Company's employees.

 

 

 

 

 

 

 



 

Principal Risks and Uncertainties

 

Risk description and impact

Risk management strategy

The Group's projects may not contain economically recoverable volumes of minerals or metals, due to insufficient quality or quantity. Delays in the construction and commissioning of mining projects or other technical difficulties may make the deposits uneconomic to exploit.

 

Risk is diversified by holding a portfolio of projects. At every stage of the exploration process, projects are rigorously reviewed, either internally or by qualified third-party consultants, to determine if the results justify the next stage of exploration expenditure.

 

Exploration activities, particularly more advanced activities such as drilling, carry a risk of local environmental damage or other issues, such as fuel spills, contamination of water courses, dust creation and damage to agricultural land or wild flora and fauna.

The Group aims to comply with provisions of PDAC's 'E3+' guidance on responsible exploration as applicable. It maintains its own Environmental Management Plan, which is regularly reviewed, and publicised to site-based employees. This contains a set of actions for each project based on a policy of Avoid, Mitigate, Remedy.

 

Exposure to Covid-19 could pose a serious threat to the health of the Group's employees. Long-term working from home could adversely impact the mental health of employees.

 

All public health advice is immediately put into practice and local restrictions are strictly adhered to. The isolation of working from home is mitigated by regular video calls involving all team members.

 

Exploration activity exposes the Group's employees to additional health and safety risks, such as travel to and from remote sites, use of equipment, and exposure to extreme weather or other environmental hazards.

The Group keeps the wellbeing of its employees as the highest of its priorities. As part of a risk-based approach, FCO travel advice is followed at all times, and regular first aid and other operational training is provided. Employees must also be up to date with all recommended vaccinations.

 

An extended period of restrictions on movement could disrupt exploration activity on the Group's projects.

Due to the portfolio nature of the Group's business, some projects are at a stage of development that requires office-based work such as remote sensing and historical data analysis. At times of restricted movement employees can be allocated to such projects to maintain momentum on the development of the portfolio and to minimise redundancy or underemployment. The Group's Africa-based staff has been able to continue on-site operations as local restrictions permitted.

 

A reduction in global demand for gold, copper or other metals could lead to a significant fall in the value of the Group's exploration assets as well as the cash flow from royalties and any production, or even result in the abandonment of a project should it prove uneconomical to develop. Similarly, commodity prices could fall in reaction to changes in international economic trends, impacting the revenue generated by royalties and projects in which the Group holds an interest. This may have a material adverse impact on the operating results and financial condition of the Group.

 

Altus has adopted a counter-cyclical business model which seeks to grow fastest during economic downturns. It has structured itself as a Company that can run extremely lean operations to undertake early-stage exploration, and works with funded JV partners for the advanced stages of exploration.

 

The Company diversifies its cash-paying royalty portfolio, holding assets principally in tier-1 jurisdictions, with high coverage levels for its debt facility.

The successful exploration and development of natural resources on any project will require significant capital investment. The Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce its level of exploration activity and divest or relinquish its assets.

The Group enters JV partnerships with established exploration, development and mining companies who fund exploration activity in return for an equity share in the exploration assets. The Group takes a disciplined and objective approach to its portfolio and maintains a high quality range of assets that is attractive to investors by relinquishing licences that it does not believe offer good prospects. This strategy is evidenced by a number of leading natural resources sector investors on the Company's share register.

 

The exploration licences and operations of the Group are in jurisdictions outside the United Kingdom, which subjects the Group to political risk. Adverse impacts could include the withdrawal or suspension of licences, and cancellation or onerous changes to permits or regulatory consents.

 

The Group makes every effort to ensure it has robust commercial agreements covering its activities. It maintains comprehensive documentation covering its licence assets and the Board and management oversee the good standing of these assets. The Group's Africa-based staff maintains a continual dialogue with local government agencies.

 

The Group is dependent upon a small executive team and other key personnel. The loss of these employees or the inability to attract additional qualified personnel as the Group grows restricts the ability of the Group to manage an expanded portfolio of projects.

The Remuneration & Nominations Committee reviews the Company's compensation package annually to ensure that it remains competitive (see Directors' remuneration report, pages 63-67). The Company maintains strong links with industry bodies and training establishments to ensure access to a wide pool of talent. The management team was expanded during the year to eight members.

As a UK-based junior mining project and royalty generator, Altus could struggle to attract JV partners to advance its projects to mine-readiness, and to create a long-term revenue stream.

Since 2017, Altus has listed on both the AIM in the UK and since 2018 also on the TSX-V in Canada, building a shareholder base and an industry reputation. During 2020 the Company's shares also commenced trading on the OTCQX market in the United States. Potential partners are engaged in these markets and elsewhere, including the ASX market in Australia. Altus actively markets its portfolio through news releases and its website, and networks with investors and partners at conferences and industry events.

 

Financial risks

Material financial risks are listed below.

Financial risks are also discussed in note 29.


Income from the Group's cash-producing royalties may vary depending on commodity prices and the operational performance of the mine and its operator.

The Group holds a diverse portfolio of cash-producing royalties across several different mines, countries and commodities. This diversification is part of its business model and seeks to protect revenues.

It will take some time for the Company's discovery projects to develop into operational mines with revenue streams able to positively impact Altus' cashflow. Until then, the Group will be reliant on funding from shareholders to continue its discovery programme insofar as this is not covered by the net income from cash paying royalties and dividends from associates less payments on borrowings.

The Group aims to maximise the opportunities for converting projects into revenue-generating assets by advancing the exploration of its licences and actively marketing them to potential partners, whilst at the same time maintaining a disciplined attitude to expenditure and preserving its cash. The Group also seeks JVs on its projects with third parties, which can reduce the Group's reliance on shareholder funding.

The Company's loan liability to La Mancha is repayable by 30 June 2022 and a re-financing has not yet been put in place. Were the Company unable to secure a re-financing of the loan, it could potentially impact the Company's ability to maintain its current business operations.

Altus has received a number of proposals to re-finance the loan before 30 June 2022.

The Group's shareholder financing is denominated in pounds sterling and Canadian dollars. Its royalty income is in US dollars and Australian dollars. Its exploration expenditure is incurred in US dollars and a range of African currencies.

When funds are received a cashflow forecast is prepared by currency to identify the anticipated currency transactions that will be required over the period that the funds are expected to be used. FX transactions are undertaken at the earliest opportunity to minimise currency risk.

 

 

Corporate and Social Responsibility

The Board of Directors of Altus is committed to the consideration of all stakeholders in its decision-making process and to the respectful treatment of stakeholders in the conduct of the Group's business. In addition, the Directors are conscious of the obligations imposed by section 172 of the Companies Act 2006 (England & Wales), their response to which is set out in the following paragraphs.

 

Sustainability and environmental protection

Altus is committed to conducting its business operations in a sustainable manner and strives continuously to limit the impact of its activities on the natural environment and on the local communities in the regions where it has operations. The business of Altus involves the acquisition and generation of royalties on producing mines as well as exploration activities on potential mining projects, and does not involve mining itself. Therefore, the environmental impact directly associated with its activities is limited. However, the Company is keenly aware that good environmental stewardship of its projects is fundamental to its operations, and the Company endeavours to ensure that all areas it explores are properly maintained, and conserved, and rehabilitated once operations are completed.

 

A central tenet of the Group's policy is the Environmental Management Plan ("EMP"), which guides the Group's on-site activities from the planning stage through on-site operation to the return of sites to local communities once the Group's activity has finished.

 

Many of the areas of operation are regions of subsistence farming, and Altus and its employees are conscious that the impact of operations may not be limited to nuisance or upset, but could have a serious impact on the livelihoods of local people. As a result, the Group operates a number of policies to prevent problems and to remediate those that cannot be avoided. Where arable or grazing land is affected, rates of compensation are agreed with the local authorities before any invasive activity begins. Meetings are held with local stakeholder groups to explain the project, to listen to local concerns and to mitigate any potential problems. At the other end of the project cycle, once activities have ceased, the Group arranges for replanting of crops or the promotion of flora re-growth, and returns to monitor progress after six months.

 

At the Diba gold project in western Mali, the Group applied its EMP to the drilling programmes undertaken during 2021. At Diba NW, the Group delayed commencing its drilling programme until after the harvest had been collected, and the team was given a radius of operations for each drill pad to give scope to avoid cutting down trees. Avoidance of damage is always the preferable option, but at Diba, where for approximately a quarter of the drill-pad movements it was not possible to avoid affecting farming land, compensation was paid to farmers at rates agreed with the local community before the programme commenced. Post-drilling, sites were inspected to ensure all waste material had been removed, diamond drilling sumps had been filled and ground had been levelled and raked.

 

The Board and management consider the potential ESG impact of its discovery business to be relatively low. This is based on the minimal footprint of these operations, particularly in terms of the limited scope and duration of the Company's own field activities. Nevertheless, the Group's portfolio of royalties includes royalties on mines which are already in development or production. These operations have the potential for a more significant environmental and social impression. As such, the Company ensures a programme of acquisition due diligence as well as ongoing monitoring and assessment of these assets. The Group acquired its first cash-paying royalty, which is located in Chile, in August 2021 and a further two cash-paying royalties (each located in Australia) in December 2021. In conducting its due diligence on these projects, the Group assessed the available information on aspects of ESG processes and management.

 

The Group is putting into practice a programme for the effective management of its ESG responsibilities with respect to assets it does not itself control. This will include engagement with mining operators for the purpose of sharing policies, and identifying and encouraging best practice. The Company will seek to have an effective positive influence wherever possible. It will be the specified responsibility of a team within the Company to monitor third-party operators from an ESG perspective, and to obtain a comprehensive and, where possible, independent picture in order to form a fair opinion. On an ongoing basis, the Company will assess the effectiveness of its portfolio of third-party royalty assets through an ESG lens and not just in terms of financial performance.

 

Community engagement

Altus is mindful that it has the capacity to have a positive impact in its areas of operation, many of which are remote and offer little alternative opportunity to local people. It employs a range of local people from trained geologists to administrative support and drivers. At the end of 2021, it employed 30 people in five African countries (2020: 16 people in four countries). To some of the local people in the more rural sites, Altus offers the opportunity to be involved in the exploration activity and to gain transferable skills, such as operating geotechnical equipment. Before the declaration of force majeure, Altus also assisted students of geology from the University at Mekele in Ethiopia to visit its exploration sites.

 

In August 2021, Altus completed the first phase of a community development programme ("CDP") at the Diba gold project in western Mali. Altus undertook a consultation process with representatives of the local communities close to Diba in order to prioritise programmes that would have the greatest positive impact. Following this consultation, the specialist environmental company, EBEF-Mali, was commissioned to install a low-maintenance system to provide safe drinking water on tap to the school and nearby village of Koropoto, which is located 2km to the east of the project, outside of the current Diba licence area. The project involved drilling a 72.5m borehole, construction of a 12m high water tank with a solar-powered water pump and installation of all other necessary infrastructure. The CDP will prioritise other health as well as education projects, and in time will be extended to other communities in the surrounding area.

 

Anti-corruption and bribery

It is the Group's policy to conduct its business in an honest and ethical manner. The Group takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all business dealings and relationships in our countries of operation. As part of this, it aims to implement and enforce effective systems to counter potential bribery and corruption.

 

The Group will uphold all laws relevant to countering bribery and corruption in the jurisdictions in which we operate. We also remain bound by UK laws, including the Bribery Act 2010, in respect of our conduct both in the UK and abroad. The Group's policy on Anti-corruption and bribery is available via the Company's website and forms an important part of the appointment of all new employees, contractors and suppliers.

 

Human rights

Altus is committed to best practice in socially and morally responsible exploration and in the development of mineral resources for the benefit of all stakeholders. The activities of the Group are undertaken in line with applicable laws on human rights.

 

Health & Safety

Altus takes the health and wellbeing of its employees, contractors and suppliers extremely seriously and works continuously to minimise the potential hazards encountered. A comprehensive health and safety programme is maintained incorporating official guidelines, industry best practice, lessons from previous incidents and employee suggestions.

 

There have been no road traffic accidents affecting the Group during the last three years of operation, although there was one in each of the two preceding years, both involving third party drivers and vehicles. While Altus could not have prevented these accidents, they reiterated the importance of high safety standards. Altus continues to review all of its standards regularly and to ensure its suppliers and service providers adhere to these at all times.

 

Employees

Altus fully appreciates that its team is central to its future development and success. The aim of the Group is to create an environment that will attract and retain staff, and motivate employees to maximise their potential. The Company provides a fair remuneration package, and gives due consideration to requests for flexible working arrangements. It aims to give employees exposure to wider aspects of the Company's operations. The Group promotes a culture of openness among its employees and welcomes their input into the good running of its operations.

 

In line with its commitment towards a gender balance in its workforce, Altus has engaged with the Women in Mining ("WIM") group, both in the UK and internationally. Annually, the Group offers at least one internship through WIM. At the end of 2021, the following numbers were represented on the Company's team (includes employees and contractors).

 


Women

Percentage

Board

-

0%

Management team

2

25%

Geologists/technical

2

9%

Administration/support

5

31%

Total

9

18%

 

Altus has a long track record in recruiting and training promising geologists. Each year the Group typically offers at least one MSc level project thesis to students of geology or mining geology in the UK. The Group is also proud to provide internships for recent graduates, allowing them to gain flexible work experience and if available the opportunity for a full-time role with the Group.

 

The Group welcomes diversity within its workforce and does not discriminate against its employees, workers or job applicants on the grounds of age, gender, ethnicity, disability, nationality, race, sexual orientation or religious belief.

 



 

Financial Review

Income

Due to the holding structure of the Group's royalty assets, income from royalties received in 2021 was recognised in the Statement of Comprehensive Income under share of profit of associates which is detailed in note 21. The share of profit of associates was £985,000 for the year (2020: £nil) and related solely to the royalty on the Caserones copper mine in northern Chile. The associate in question is SLM California, registered in Chile, in which Altus holds a 21.5% interest through its joint operation with EMX. The profit figure includes the royalty from the mine, amortisation of the royalty asset based on quarterly production figures, minimal local expenses and a provision for Chilean income tax. The profit relates to royalties declared in Q3 and Q4 of 2021 in respect of production in the preceding quarters.

 

Revenue and costs recovered from JV partners decreased to £318,000 (2020: £361,000) as a result of the JV with Marvel Gold covering the Lakanfla and Tabakorole projects in western and southern Mali progressing during the year to a stage where the Company no longer charges management fees or incurs rechargeable costs.

 

Expenses

Exploration costs expensed in the Statement of Comprehensive Income increased to £3,206,000 (2020: £2,350,000). This was driven to a large extent by costs associated with the drilling programmes on the Company's Diba gold project in western Mali. Although drilling costs themselves were lower at £725,000 (2020: £891,000), costs of associated assays increased from £49,000 to £297,000 and other on-site operational costs, principally at Diba but to a lesser extent also on the Company's four new projects in Egypt, resulted in an increase from £95,000 to £313,000. The split between exploration costs recovered from JV partners and those borne by the Company is shown in note 7 to the financial statements.

 

Expenditure relating to projects in Mali was £1,876,000 which accounted for 59% of total exploration costs (2020: £1,497,000 and 64%). The Company commenced the establishment of operations in Egypt in the spring of 2021, opening an office in Cairo in September, and sending its first geologists to site in the fourth quarter. Exploration expenditure in Egypt was £425,000 in the year, which represented 13% of the Company's total (2020: £8,000 which was <1%). The principal areas of expenditure were local and UK salaries (£222,000), on-site operations (£60,000), travel (£57,000) and business support costs (£55,000). Expenditure in Morocco increased to £429,000 (2020: £268,000) in the areas of technical consultants and travel, resulting from a high-resolution IP survey at the Agdz project. Exploration expenditure in the Company's other countries of operation reduced; in Cameroon it was £290,000 (2020: £319,000) due to a reduction in the number of assays analysed, in Ethiopia it was £177,000 (2020: £202,000) where operations were suspended under force majeure for the whole of 2021, and in Côte d'Ivoire to £6,000 (2020: £58,000) following the sale of the Company's Prikro gold project in November 2020.

 

Staff costs for UK-based geologists and the corporate team increased to £1,328,000 (2020: £997,000), which took staff costs for the Group to £1,873,000 (2020: £1,210,000). A key element of the increase was the new team in Egypt, which by the end of 2021 included a General Manager, five geologists and a logistics and administration support team in Cairo. Another element was the continued development of the team in the UK, which included the appointment of a full-time Company Secretary and Legal Counsel, and full-year salaries for those people hired in the course of 2020. The Company furloughed two members of technical staff for a short period in 2020, and there were no redundancies as a result of the pandemic. Staff costs including share-based payments increased to £2,851,000 (2020: £1,814,000) mainly resulting from the full year, fair value charge for share options granted in August 2020.

 

Administrative expenses in the Statement of Comprehensive Income increased to £1,789,000 (2020: £849,000), and excluding impairment charges on intangible assets were £1,219,000 (2020: £828,000). This included the increase in staff costs as well as costs of a second broker to the Company in the UK, the use of advisors to make improvements in shareholder communications and higher insurance premiums. There was a renewed attendance at industry conferences and events as travel restrictions were lifted, and additional premises costs for the Company's new office in Cairo. There was a reduction in external legal costs as work was brought in-house.

 

Listing and acquisition related costs for the year increased to £443,000 (2020: £88,000), which included in-house and external legal fees, tax advice and stamp duty for the royalty acquisitions in Chile, Côte d'Ivoire and Australia.

 

Other income and costs

Other operating costs increased to £1,255,000 (2020: £993,000) and included a share based payment charge of £982,000 (2020: £664,000) resulting from the valuation of share options granted to Directors and employees in August 2020 and August 2021, and a foreign exchange loss of £273,000 (2020: £329,000) which was mainly an accounting translation of cash balances into the functional currency rather than a realised loss.

 

Other income reduced to £227,000 (2020: £1,939,000) which was principally made up of the accrued UK Research & Development ("R&D") tax credit for the 2020 tax year that was filed at the end of 2021 and received in January 2022. The Group recorded a gain on revaluation of its three external investment holdings during the year of £45,000 (2020: £162,000 loss).

 

Assets and cash

The net assets of the Group increased to £31,862,000 (2020: £10,301,000) which was reflected in the creation of a new line in the Company's balance sheet valued at £25,367,000 for investments in associates, a higher value of investments in external investments of £1,721,000 (2020: £1,321,000) and higher intangible assets of £16,994,000 (2020: £3,277,000), offset by the addition of borrowings of £18,349,000 (2020: £nil).

 

Investments in associates comprises the Group's interests in two companies, SLM California in Chile and Legend Gold Mali SARL in Mali. SLM California is the entity holding the Caserones royalty in which Altus acquired a 21.5% interest in August 2021 for US$34.1 million. Legend Gold Mali SARL is the entity holding the Lakanfla and Tabakorole exploration licences interests which were the subject of a JV with Marvel Gold throughout 2021. Under the terms of the JV, the Group's interest in the entity reduced to 49% upon completion of a certain project stage, from which point the entity was derecognised as a subsidiary and recognised as an associate. Following the end of the period the Lakanfla licence was removed from the JV with Marvel Gold and the Company's interest in the UK incorporate JV holding company was reduced to 30%.

 

The increase in the balance of external investments was due to the receipt of a final tranche of 10 million shares of ASX-listed Canyon arising from the termination of the JV agreement in 2019.

 

The increase in the balance of intangible assets was due to the acquisition of the portfolio of royalty assets from Newcrest, the first close of which took place in December 2021 for a value of US$20.0 million. This included the Ballarat and SKO royalties in Australia and the Bonikro royalty in Côte d'Ivoire, as well as royalties on 12 development and exploration stage assets in Australia. The increase was offset by the full impairment of the Pitiangoma Est licence in southern Mali which was relinquished during the year, and due to the Lakanfla and Tabakorole projects ceasing to be recognised as intangible assets, instead being recognised as part of the investment in associate, Legend Gold, as detailed above. The Caserones royalty is accounted for as an intangible asset of its associate company, SLM California, and appears in the balance sheet under investment in associate rather than intangible assets.

 

The addition of a line in the balance sheet for borrowings represents the receipt of the US$29.0 million loan to the Group by La Mancha, which was used to partly fund the Caserones royalty acquisition. Of the balance of the facility drawn down, US$5.0 million was repaid during the year.

 

The Group's cash balance at the end of the year was £6,355,000 (2020: £5,937,000). Operating cash outflow increased to £3,245,000 (2020: £2,348,000) comprising an adjusted loss figure of £3,834,000 and positive movements in working capital of £589,000. Investing cash outflow was £40,315,000 (2020: £104,000) primarily for the acquisition of the Caserones royalty and Newcrest royalty portfolio, and also including £614,000 for interest on the loan provided by La Mancha. Financing cash inflow was £43,978,000 arising from the two equity fundraises, in March and December 2021, and the loan from La Mancha.

 

Fundraising

During the year, the Company raised a total £27.5 million (C$47.1 million) in two equity fundraisings. In March 2021, the Company raised £7.7 million (C$13.4 million) through a placement of 10,266,668 Ordinary Shares of the Company at a price of £0.75 (C$1.30) per share with existing and new institutional and private investors. La Mancha and certain directors and employees of the Group participated in the placement. The fundraising was led by joint brokers in the UK, SP Angel and Shard. The issue price of the new Ordinary Shares represented a discount of approximately 8.0% to the closing mid-market price of £0.815 / C$1.41 on 19 March 2021.

 

In December 2021, the Company raised £19.8 million (C$33.7 million) before expenses through a placement of 36,930,143 Ordinary Shares of the Company at a price of £0.535 (C$0.90) per share with existing and new institutional and private investors. La Mancha and certain directors and employees of the Group participated in the placement. BMO Capital Markets Limited acted as Sole Bookrunner with SP Angel and Shard acting as Lead Managers and Sprott Global Resource Investments Ltd acted as a finder in respect of some of the subscription shares. The issue price of the new Ordinary Shares represented a discount of approximately 7.0% to the closing mid-market price of £0.575 / C$1.01 on 14 December 2021.

 

Going concern

The Directors have assessed the cash resources available to the Company, including balances of cash and investments held in publicly traded companies at the reporting date. They have reviewed a detailed 24-month budget prepared by the Company, assessing the likelihood of receiving projected royalty and other income, debt coverage and the breakdown between committed and discretionary projected expenditure. Given the Company's previous statement of the low impact of Covid-19 on operations in the short-to-medium term, a renewed outbreak of Covid-19 has not been included in the analysis. Based on their assessment, the Directors anticipate that net income from the current portfolio of royalties is unlikely to be sufficient to cover exploration and other costs of the business over the next 12 months and that in that period the Company may have to raise additional funding. In making their assessment, the Directors acknowledged the existence of a number of material uncertainties including volatility in financial and commodity markets, and political and security risks. These and other risks faced by the Company are outlined in detail in the Strategic Report on pages 21 to 23.

 

The Company's loan liability to La Mancha, the balance of which was £18.3 million at 31 December 2021, is repayable by 30 June 2022. As at the date of this report, a re-financing of the loan has not been put in place. The Directors note that, were the Company unable to secure a re-financing of the loan, it could potentially impact the Company's ability to maintain its current business operations, and acknowledge that this constitutes a material uncertainty. However, the Directors also note that Altus has received a number of proposals to re-finance the loan before 30 June 2022, and they remain confident that the necessary funding will be secured.

 

Based on their assessment, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

Independent Auditor's Report to the Members of Altus Strategies plc

 

Opinion

We have audited the financial statements of Altus Strategies plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Group Statement of Comprehensive Income, the Group and Company Statement of Financial Position, the Group and Company Statement of Changes in Equity, the Group and Company Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2021 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

· the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Separate opinion in relation to IFRSs as issued by the IASB

As explained in note 1 to the group financial statements, the group, in addition to complying with its legal obligation to apply UK-adopted international accounting standards, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

 

In our opinion the group financial statements give a true and fair view of the consolidated financial position of the group as at 31 December 2021 and of its consolidated financial performance and its cash flows for the year then ended in accordance with IFRSs as issued by the IASB.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material uncertainty related to going concern

We draw attention to note 1 in the financial statements, which indicates that the Group is reliant on additional raising of capital or financing to refinance the existing debt facility in the going concern period.  As stated in note 1, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included reviewing the group's existing financing arrangements, the ongoing refinancing, forecasts and assumptions used in their preparation. Our work included comparing these forecasts to actual results and significant events subsequent to the year end.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

Our application of materiality

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the group financial statements was £275,000 (2020: £200,000), based on thresholds for net assets and the loss before tax. The benchmarks used and the percentages applied are unchanged from the prior period and were selected as the intangible assets and exploration costs are the primary drivers of the business. The performance materiality was £192,500 (2020: £140,000) and triviality of £13,750 (2020: £10,000). The materiality applied to the parent company financial statements was £80,000 (2020: £30,000) based upon the loss before tax. The performance materiality for the parent company was £56,000 (2020: £21,000).

 

Component materiality for all entities within the group was set lower than our overall group materiality and ranged from £1,000 to £75,000 with a performance materiality set at 70% of overall materiality.

 

We agreed with the audit committee that we would report all audit differences identified during the course of our audit in excess of £13,750 at group level, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

 

Our approach to the audit

Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement, aspects subject to significant management judgement as well as greatest complexity, risk and size.

 

As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. The recoverability of intangible assets and investments in subsidiary undertakings were assessed as areas which involved significant judgements by management. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

 

The accounting records of the parent company and all subsidiary undertakings are centrally located and audited by us based upon group materiality or risk to the group. The key audit matters and how these were addressed are outlined below.

 

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key Audit Matter

How the scope of our audit responded to the key audit matter

Valuation and recoverability of exploration assets and, for the parent company, amounts due from subsidiary and related undertakings (refer notes 17,19, and 21).

The carrying value of intangible assets as at 31 December 2021 is £16,993,769 (2020: £3,277,381) which comprises royalty assets acquired during the year and costs associated with exploration licenses and projects in Africa. The royalty assets are considered in more detail in a separate Key Audit matter below.

The carrying value of investments in subsidiaries, together with intra-group receivables was £56,856194 (2020: £14,912,031) as at 31 December 2021.

Management is required to assess annually whether there is any indication that the group's intangible assets are impaired, and consider whether the carrying value exceeds the expected recoverable amount. The carrying value of investments in subsidiaries, including intra group receivables, is directly linked to the underlying exploration assets.

Evaluating the recoverable amount, particularly for early stage royalty and exploration projects, requires significant estimation and judgement. This makes this area a key focus for the audit.

We reviewed the group's exploration licences and permits to confirm good title and standing. For licences which had expired and are in the process of renewal, we assessed the relevant factors, in conjunction with discussions with management, regarding the likelihood of renewal.

We reviewed the terms and status of the joint venture agreements in place, in conjunction with the accounting treatment adopted under the terms of those agreements.

The early stage projects were reviewed for indicators of impairment in accordance with IFRS 6. We discussed with management the scope of their future budgeted and planned expenditure on the licence area.

The recoverability of amounts due from subsidiary and related undertakings were assessed by reference to the underlying exploration projects. Management's impairment assessments were reviewed for reasonableness.

We reviewed the terms of the agreement leading to the loss of control and deconsolidation of the assets in Legend Mali sarl. We reviewed the accounting entries and ensured they were in line with IFRS 10. 

We considered any other information obtained during the course of our work, including applicable subsequent events, to assess whether there were any potential indicators of impairment not identified by management.

Accounting treatment and valuation of acquired royalty interests during the period (refer notes 17 and 20)

During the year, the group entered into an agreement to acquire an effective 0.418% net smelter return ("NSR") royalty interest on the producing Caserones Copper Mine of northern Chile.

In December 2021, the group also completed the first stage of completion on the acquisition of a portfolio of 24 royalty projects for US$24m.

There is a risk that the acquisitions have not been correctly accounted for or valued in accordance with the financial reporting framework.

Caserones

We reviewed the acquisition agreements and corporate structure of the proposed royalty assets. We reviewed management's assessment of the accounting treatment of the proposed structure and agreed that the entity holding the royalty should be accounted for as an investment in associate under IFRS 11 and IAS 28. We reviewed the good title to the assets shown. 

The accounting treatment and entries made upon acquisition were reviewed with reference to the royalty sale and purchase agreement and the consideration was substantively tested.

We reviewed the equity accounting and recognition of the share of profit of the associate with reference to the royalties received and dividends paid. 

We reviewed management's assessment of the carrying value of the assets and indicators of impairment.

Newcrest royalties

We reviewed the acquisition agreements and corporate structure of the proposed royalty assets. We reviewed management's assessment of the accounting treatment of the proposed structure and agreed that the arrangement constituted a jointly controlled operation under IFRS 11 and as a result is accounted for under the proportionate consolidation method. We reviewed the good title to the assets shown. 

The accounting treatment and entries made upon acquisition were reviewed with reference to the royalty sale and purchase agreement and the consideration transferred was substantively tested.

We reviewed management's assessment of the carrying value of the assets and indicators of impairment.


Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

· We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussion with management, our expertise in the sector and through the application of cumulative audit knowledge.

· We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from the Companies Act 2006, IFRS accounting standards, and the operating terms set out in the exploration licenses, as well as local laws and regulations.

· We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to:

enquiries of management; and

review of minutes and other correspondence.

· We also identified the risks of material misstatement of the financial statements due to fraud at both the group and parent company level. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, whether key management judgements could include management bias  was identified in relation to the carrying value of the exploration assets and we addressed this as outlined in the Key Audit Matters section.

· As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals;  reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

· Compliance with laws and regulations at the subsidiary level was ensured through enquiry of management and review of ledgers and correspondence for any instances of non-compliance.

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.

 

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

 

David Thompson (Senior Statutory Auditor)

For and on behalf of PKF Littlejohn LLP

Statutory Auditor

15 Westferry Circus

Canary Wharf

London

E14 4HD

 

Independent Auditor's Report to the Members of Altus Strategies plc in Respect of Canadian National Instrument 52-107

 

Opinion

We have audited the group financial statements of Altus Strategies plc and its subsidiaries (the "group") for the year ended 31 December 2021 which comprise the Group Statement of Comprehensive Income, the Group Statement of Financial Position, the Group Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board ("IASB").

 

In our opinion:

 

the group financial statements present fairly, in all material respects, the financial position of the group as at 31 December 2021 and 31 December 2020 and its financial performance and its cash flows for the years then ended; and

the group financial statements have been properly prepared in accordance with IFRSs as issued by the IASB.

 

Basis for Opinion:

 

We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by the IAASB and applicable law.

 

Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the group financial statements in the UK, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

We have determined the following key audit matters and set out our findings:

 

Key Audit Matter

How the scope of our audit responded to the key audit matter

Valuation and recoverability of exploration assets and, for the parent company, amounts due from subsidiary and related undertakings (refer notes 17,19, and 21).

The carrying value of intangible assets as at 31 December 2021 is £16,993,769 (2020: £3,277,381) which comprises royalty assets acquired during the year and costs associated with exploration licenses and projects in Africa. The royalty assets are considered in more detail in a separate Key Audit matter below.

The carrying value of investments in subsidiaries, together with intra-group receivables was £56,856194 (2020: £14,912,031) as at 31 December 2021.

Management is required to assess annually whether there is any indication that the group's intangible assets are impaired, and consider whether the carrying value exceeds the expected recoverable amount. The carrying value of investments in subsidiaries, including intra group receivables, is directly linked to the underlying exploration assets.

Evaluating the recoverable amount, particularly for early stage royalty and exploration projects, requires significant estimation and judgement. This makes this area a key focus for the audit.

We reviewed the group's exploration licences and permits to confirm good title and standing. For licences which had expired and are in the process of renewal, we assessed the relevant factors, in conjunction with discussions with management, regarding the likelihood of renewal.

We reviewed the terms and status of the joint venture agreements in place, in conjunction with the accounting treatment adopted under the terms of those agreements.

The early stage projects were reviewed for indicators of impairment in accordance with IFRS 6. We discussed with management the scope of their future budgeted and planned expenditure on the licence area.

The recoverability of amounts due from subsidiary and related undertakings were assessed by reference to the underlying exploration projects. Management's impairment assessments were reviewed for reasonableness.

We reviewed the terms of the agreement leading to the loss of control and deconsolidation of the assets in Legend Mali sarl. We reviewed the accounting entries and ensured they were in line with IFRS 10. 

We considered any other information obtained during the course of our work, including applicable subsequent events, to assess whether there were any potential indicators of impairment not identified by management.

Accounting treatment and valuation of acquired royalty interests during the period (refer notes 17 and 20)

During the year, the group entered into an agreement to acquire an effective 0.418% net smelter return ("NSR") royalty interest on the producing Caserones Copper Mine of northern Chile.

In December 2021, the group also completed the first stage of completion on the acquisition of a portfolio of 24 royalty projects for US$24m.

There is a risk that the acquisitions have not been correctly accounted for or valued in accordance with the financial reporting framework.

Caserones

We reviewed the acquisition agreements and corporate structure of the proposed royalty assets. We reviewed management's assessment of the accounting treatment of the proposed structure and agreed that the entity holding the royalty should be accounted for as an investment in associate under IFRS 11 and IAS 28. We reviewed the good title to the assets shown. 

The accounting treatment and entries made upon acquisition were reviewed with reference to the royalty sale and purchase agreement and the consideration was substantively tested.

We reviewed the equity accounting and recognition of the share of profit of the associate with reference to the royalties received and dividends paid. 

We reviewed management's assessment of the carrying value of the assets and indicators of impairment.

Newcrest royalties

We reviewed the acquisition agreements and corporate structure of the proposed royalty assets. We reviewed management's assessment of the accounting treatment of the proposed structure and agreed that the arrangement constituted a jointly controlled operation under IFRS 11 and as a result is accounted for under the proportionate consolidation method. We reviewed the good title to the assets shown. 

The accounting treatment and entries made upon acquisition were reviewed with reference to the royalty sale and purchase agreement and the consideration transferred was substantively tested.

We reviewed management's assessment of the carrying value of the assets and indicators of impairment.

 

Other information

The other information comprises the information included in the annual report and the management discussion and analysis, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information.

 

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

 

· Identify and assess the risks of material misstatement of the group's financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

· Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's and the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Are required to report on consolidated financial statements, obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for the audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

The partner in charge of the audit resulting in this independent auditors' report is David Thompson.

 

David Thompson (Engagement Partner)

for and on behalf of PKF Littlejohn LLP

Statutory Auditor

 

15 Westferry Circus

Canary Wharf

London

E14 4HD

 

 



 

ALTUS STRATEGIES PLC

Group Statement of Comprehensive Income

For the Year Ended 31 December 2021

 

 



 

2021


 

2020

Continuing operations

Notes

£


£

Revenue and costs recovered from JV partners

4

318,496


361,425

Exploration costs expensed

7

(3,205,673)


(2,350,028)

Administrative expenses

8

(1,788,914)


(848,794)

Listing and acquisition related costs

9

(443,137)


(88,440)

Foreign exchange gains/(losses)


(273,221)


(328,787)

Share based payments

31

(982,041)


(663,945)






Loss from operations


(6,374,490)


(3,918,569)

Finance costs

13

(613,905)


(4,923)

Other income/(expense)

14

227,150

 


1,938,615

Gain/(loss) on disposals

15

(461,869)


68,897

Fair value gain/(loss) on financial assets at fair value through profit or loss

15

44,937


(163,409)

Share of profit of associates accounted for using the equity method

21

984,727


-






Loss before taxation


(5,691,842)


(2,079,389)

Income tax

16

-


-

Loss for the year


(6,193,450)


(2,079,389)

Other comprehensive income





Exchange differences on retranslation of net assets of subsidiaries


77,459


-

Total comprehensive loss for the year


(6,115,991)


(2,079,389)






Loss for the year attributable to:





Owners of the parent company


(6,190,057)


(2,076,435)

Non-controlling interest


(3,393)


(2,954)



(6,193,450)


(2,079,389)

Total comprehensive loss for the year attributable to:





Owners of the parent company


(6,112,598)


(2,076,435)

Non-controlling interest


(3,393)


(2,954)



(6,115,991)


(2,079,389)






Earnings per share (pence) attributable to the owners of the parent





Basic earnings per share

17

(7.77)


(3.12)

 

The notes on pages 87-119 form part of these financial statements.

 


ALTUS STRATEGIES PLC

Group Statement of Financial Position

As at 31 December 2021

Company Registration No. 10746796

 

 




2021


2020



Notes


£


£


Non-current assets







Intangible assets

18


16,993,769


3,277,381


Property, plant and equipment

19


30,382


4,720


Right of use assets

33


103,671


60,198


Investments in associates accounted for using the equity method

21


25,366,597


-


Investments at fair value through profit or loss

22


1,721,039


1,320,542





44,215,458


4,662,841


Current assets







Trade and other receivables

23


622,164


853,629


Assets classified as held-for-sale

24


117,967


86,765


Cash and cash equivalents



6,355,011


5,937,486





7,095,142


6,877,880


Total assets



51,310,600


11,540,721









Current liabilities







Trade and other payables

25


(986,247)


(1,144,754)


Borrowings

26


(18,348,516)


-


Liabilities classified as held-for-sale

24


(34,020)


(34,020)


Provisions

27


(15,000)


(15,000)





(19,383,783)


(1,193,774)


Non-current liabilities







Trade and other payables  21

25


(64,671)


(45,848)


Total liabilities



(19,448,454)


(1,239,622)









Net current assets/(liabilities)



(12,288,641)


5,684,106


Net assets



31,862,146


10,301,099









Equity







Share capital

32


5,866,084


3,504,580


Share premium

32


37,555,608


13,222,115


Share based payment reserve

31


1,613,440


631,399

 

Other reserves



5,722,494


5,645,035

 

Retained earnings



(18,790,806)


(12,600,749)

 

Total equity attributable to owners of the parent



31,966,820


10,402,380


Non-controlling interest



(104,674)


(101,281)


Total equity



31,862,146


10,301,099


 

 


 

 

 

 

 

 



The notes on pages 87-119 form part of these financial statements. The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2022 and are signed on its behalf by:

 

Steven Poulton

Chief Executive Officer


ALTUS STRATEGIES PLC

Company Statement of Financial Position

As at 31 December 2021

Company Registration No. 10746796

 

 

 




2021


2020



Notes


£


£


Non-current assets







Investments in subsidiaries

20


4,608,930


4,608,930


Investments at fair value through profit or loss

22


318,760


413,634





4,927,690


5,022,564


Current assets







Trade and other receivables

23


52,388,337


10,375,059


Cash and cash equivalents



2,273,965


460,131





54,662,302


10,835,190


Total assets



59,589,992


15,857,754









Current liabilities







Trade and other payables

25


(2,602,268)


(328,404)


Borrowings

26


(18,348,516)


-


Total liabilities



(20,950,784)


(328,404)









Net current assets



33,711,518


10,506,786


Net assets



38,639,208


15,529,350









Equity







Called up share capital

32


5,866,084


3,504,580


Share premium

32


37,555,608


13,222,115


Other reserves

31


1,613,440


631,399


Retained earnings



(6,395,924)


(1,828,744)

 







 

Total equity



38,639,208


15,529,350


 

As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own statement of comprehensive income and related notes. The Company's loss for the year was £4,567,180 (2020: loss of £950,812).

 

The notes on pages 87-119 form part of these financial statements.

 

The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2022 and are signed on its behalf by:


 

Steven Poulton

Chief Executive Officer

 


ALTUS STRATEGIES PLC

Group Statement of Changes in Equity

For the Year Ended 31 December 2021

 


Notes

Share capital

Share
premium

Other reserves

Retained earnings

Total  equity

Non-controlling interest

Total



£

£

£

£

£

£

£

Balance at 1 January 2020


2,102,284

7,378,369

5,672,491

(10,524,314)

4,628,830

(98,327)

4,530,503

Year ended 31 December 2020









Total comprehensive loss for the year


-

-

-

(2,076,435)

(2,076,435)

(2,954)

(2,079,389)

Issue of share capital

32

1,402,296

5,843,746

-

-

7,246,042

-

7,246,042

Share based payments

31

-

-

603,943

-

603,943

-

603,943

Total transactions with owners, recognised directly in equity


1,402,296

5,843,746

603,943

-

7,849,985

-

7,849,985

Balance at 31 December 2020


3,504,580

13,222,115

6,276,434

(12,600,749)

10,402,380

(101,281)

10,301,099










Year ended 31 December 2021









Total comprehensive loss for the year


-

-

77,459

(6,190,057)

(6,112,598)

(3,393)

(6,115,991)

Issue of share capital

32

2,359,841

24,313,586

-

-

26,673,427

-

26,673,427

Issue of warrants

31

-

-

3,863

-

3,863

-

3,863

Exercise of warrants

32

1,663

19,907

-

-

21,570

-

21,570

Share based payments

31

-

-

978,178

-

978,178

-

978,178

Total transactions with owners, recognised directly in equity


2,361,504

24,333,493

982,041

-

27,677,038

-

27,677,038

Balance at 31 December 2021


5,866,084

37,555,608

7,335,934

(18,790,806)

31,966,820

(104,674)

31,862,146

 

 

 

 

The notes on pages 87-119 form part of these financial statements.


 

ALTUS STRATEGIES PLC

Company Statement of Changes in Equity

For the Year Ended 31 December 2021

 

 


 

Share

capital

Share premium account

Other reserves

 

Retained earnings

 

 

Total


Notes

£

£

£

£

£

Balance at 1 January 2020


2,102,284

7,378,369

27,456

(877,932)

8,630,177

Year ended 31 December 2020







Loss and total comprehensive income for the year


-

-

-

(950,812)

(950,812)

Issue of share capital

32

1,402,296

5,843,746

-

-

7,246,042

Share based payments

31

-

-

603,943

-

603,943

Total transactions with owners, recognised directly in equity


1,402,296

5,843,746

603,943

-

7,849,985








Balance at 31 December 2020


3,504,580

13,222,115

631,399

(1,828,744)

15,529,350








Year ended 31 December 2021







Loss and total comprehensive income for the year


-

-

-

(4,567,180)

(4,567,180)

Issue of share capital

32

2,359,841

24,313,586

-

-

26,673,427

Issue of warrants

31

-

-

3,863

-

3,863

Exercise of warrants

32

1,663

19,907

-

-

21,570

Share based payments

31

-

-

978,178

-

978,178

Total transactions with owners, recognised directly in equity


2,361,504

24,333,493

982,041

-

27,677,038








Balance at 31 December 2021


5,866,084

37,555,608

1,613,440

(6,395,924)

38,639,208

The notes on pages 87-119 form part of these financial statements.


ALTUS STRATEGIES PLC

Group Statement of Cash Flows

For the Year Ended 31 December 2021

 


2021

2020


£

£

Cash flows from operating activities



Loss from continuing operations

(6,193,450)

(2,079,389)

Net interest paid

613,905

4,923

Depreciation

7,342

23,845

Impairment of intangible assets

569,777

20,952

Equity-settled share based payments

982,041

663,945

Bad debt provision

-

(430)

Fair value (gain)/loss on investments

(44,937)

94,512

Receipt of shares as consideration

-

(1,180,838)

Loss on disposal of subsidiary (non-cash)

461,869

-

Share of profit of associate

(984,727)

-

Decrease/(increase) in trade and other receivables

53,050

(609,255)

Increase/(decrease) in trade and other payables

1,234,944

387,622

Other working capital

-

(2,364)

Net cash outflow used in operating activities

(3,300,187)

(2,676,477)




Investing activities



Investment in associate

(24,529,906)

-

Dividend payment from associate

463,722

-

Purchase of intangible assets

(15,511,111)

(95,383)

Purchase of property, plant and equipment

(33,004)

(5,310)

Deconsolidated cash on disposal of subsidiary

(31,466)

-

Interest received

-

1,775

Interest paid

-

(4,947)

Net cash used in investing activities

(39,641,765)

(103,865)




Financing activities



Net proceeds from the issue of shares

26,694,996

6,523,561

Loan from related party

21,068,997

-

Loan repayment to related party

(3,761,762)

-

Interest paid on borrowings

(613,905)

-

Principal element of lease payments

(23,310)

(13,473)

Interest element of lease payments

(5,540)

(4,902)

Net cash generated from financing activities

43,359,476

6,505,186




Net increase in cash and cash equivalents

417,525

3,724,844

Cash and cash equivalents at beginning of the year

5,937,486

2,212,642

Cash and cash equivalents at end of the year

6,355,011

5,937,486

Significant non-cash transactions

Significant non-cash transactions are detailed in note 35.

 

The notes on pages 87-119 form part of these financial statements.


 

ALTUS STRATEGIES PLC

Company Statement of Cash Flows

For the Year Ended 31 December 2021

 


2021

2020


£

£

Cash flows from operating activities



Loss before tax

(4,567,180)

(950,812)

Net interest paid

613,905

396

Fair value (gain) / loss on investments

94,874

(132,848)

Equity-settled share based payments

982,041

663,943

Receipt of shares as consideration

-

(71,833)

Increase in trade and other receivables

(69,116)

(55,271)

Increase in trade and other payables

1,071,328

36,691

Increase in intercompany balances

(39,700,344)

(5,772,643)

Net cash used in operating activities

(41,574,492)

(6,282,377)




Investing activities



Interest paid

-

(396)

Net cash used in investing activities

-

(396)




Financing activities



Net proceeds from the issue of shares

26,694,996

6,523,561

Loan from related party

21,068,997

-

Loan repayment to related party

(3,761,762)

-

Interest paid on borrowings

(613,905)

-

Net cash generated from financing activities

43,388,326

6,523,561




Net increase in cash and cash equivalents

1,813,834

240,788

Cash and cash equivalents at beginning of the year

460,131

219,343

Cash and cash equivalents at end of the year

2,273,965

460,131

 

Significant non- cash transactions

Significant non-cash transactions are detailed in note 35.

 

The notes on pages 87-119 form part of these financial statements.


 

ALTUS STRATEGIES PLC

Notes to the Financial Statements

For the Year Ended 31 December 2021

 

Accounting policies

Company information

Altus Strategies plc is a public company limited by shares and incorporated in England and Wales. The registered office is 14 Station Road, Didcot, Oxfordshire, OX11 7LL, United Kingdom. The Group consists of Altus Strategies plc and all of its subsidiaries, as listed in note 20.

 

Basis of preparation

These financial statements have been prepared in accordance with UK-adopted International Accounting Standards and IFRS interpretations committee (IFRS IC) interpretations issued by the IASB. The consolidated financial statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, (except as otherwise stated).

 

The financial statements have been prepared on the historical cost basis, as modified by the valuation of financial assets at fair value through profit or loss. The principal accounting policies adopted are set out below.

 

The financial statements are presented in British Pounds Sterling (£), which is also the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest whole pound.

 

As permitted by section 408 of the Companies Act 2006, the Company has not presented its own statement of comprehensive income and related notes. The Company's loss for the year was £4,567,180 (2020: loss of £950,812).

 

Basis of consolidation

The consolidated financial statements comprise the financial statements of Altus Strategies plc and its subsidiaries as at 31 December 2021. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

 

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

 

power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

Exposure, or rights, to variable returns from its involvement with the investee

The ability to use its power over the investee to affect its future

 

Generally, there is a presumption that a majority of the voting rights results in control. To support this presumption and when the Group has less than a majority of the voting rights or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has the power over an investee, including:

 

The contractual arrangements with the other vote holders of the investee

Rights arising from other contractual arrangements

The Group's voting rights and potential voting rights

 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

"Joint ventures" as referred to in the financial statements refer to agreements with exploration partners and not joint ventures as defined within IFRS 11.

 

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent company of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

 

Entities are recognised as joint operations if:

Their legal form gives parties rights to the assets and obligations for the liabilities relating to the joint arrangement

The contractual terms of the joint arrangement specify that parties have rights to the assets and obligations for the liabilities relating to the arrangement

The arrangement has been designed by the parties so that its activities provide the parties with an output which represents rights to substantially all of the economic benefits of the assets held in the separate vehicle

 

Joint operations are accounted for on a proportional assets and liabilities basis.

 

Investments in associates are accounted for using the equity method, with initial measurement based on costs of acquisition including transaction costs. The carrying amount is adjusted to recognise the Group's share of the change in net assets after the date of acquisition. Distributions received from an associate reduce the carrying amount of the investment. The Company's share of post-acquisition profit or loss is recognised in the Statement of Comprehensive Income based on its economic interest in the associate.

 

All intra-group assets and liabilities, equity income, expense and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

Going concern

During the year, the Company raised a total £27.5 million (C$47.1 million) in two equity fundraisings. In March 2021, the Company raised £7.7 million (C$13.4 million) through a placement of 10,266,668 Ordinary Shares of the Company at a price of £0.75 (C$1.30) per share with existing and new institutional and private investors. La Mancha and certain directors and employees of the Group participated in the placement.

 

In December 2021, the Company raised £19.8 million (C$33.7 million) before expenses through a placement of 36,930,143 Ordinary Shares of the Company at a price of £0.535 (C$0.90) per share with new and existing institutional investors and private investors. La Mancha and certain directors and employees of the Group participated in the placement.

 

The Directors have assessed the cash resources available to the Company, including balances of cash and investments held in publicly traded companies at the reporting date. They have reviewed a detailed 24-month budget prepared by the Company, assessing the likelihood of receiving projected royalty and other income, debt coverage and the breakdown between committed and discretionary projected expenditure. Given the Company's previous statement of the low impact of Covid-19 on operations in the short-to-medium term, a renewed outbreak of Covid-19 has not been included in the analysis. Based on their assessment, the Directors anticipate that net income from the current portfolio of royalties is unlikely to be sufficient to cover exploration and other costs of the business over the next 12 months and that in that period the Company may have to raise additional funding. In making their assessment, the Directors acknowledged the existence of a number of material uncertainties including volatility in financial and commodity markets, and political and security risks. These and other risks faced by the Company are outlined in detail in the Strategic Report on pages 21 to 23.

 

The Company's loan liability to La Mancha, the balance of which was £18.3 million at 31 December 2021, is repayable by 30 June 2022. As at the date of this report, a re-financing of the loan has not been put in place. The Directors note that, were the Company unable to secure a re-financing of the loan, it could potentially impact the Company's ability to maintain its current business operations, and acknowledge that this constitutes a material uncertainty. However, the Directors also note that Altus has received a number of proposals to re-finance the loan before 30 June 2022, and they remain confident that the necessary funding will be secured.

 

Based on their assessment, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

Exceptional items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so, to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount. Listing and acquisition related costs are included as exceptional items in profit or loss.

 

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 Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards. IFRS 13 applies a three-level hierarchy, from level 1 for regularly traded assets with a readily ascertainable market value to level 3 for rarely traded assets which require a high degree of estimation to ascertain their value. Fair value is applied to the following elements of the Company's assets.

 

Subsidiaries

Note 20

Level 2

Investments

Note 22

Level 1

 

Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the date of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the Statement of Comprehensive Income for the period.

 

Other reserves

Other reserves consist of a non-distributable merger reserve from historic acquisitions and the foreign currency translation reserve.

 

Adoption of new and revised standards and changes in accounting policies

New and amended standards adopted by the Group and Company

The Group and Company have applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2021:

 

Amendment to IFRS 16: Leases - COVID 19 - Related Rent Concessions

 

The Group and Company has assessed the adoption of these standards and amendments and there has been no material impact on the financial statements as a result of the adoption.

 

New and revised IFRSs in issue but not yet effective

The Group and Company have not applied the following new and revised Standards and Interpretations that have been issued but are not yet effective:

 


Effective date

Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current

TBC*

Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates

TBC*

Amendments to IAS 16: Property, Plant and Equipment

TBC*

Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets

TBC*

Annual Improvements to IFRS Standards 2018-2020 Cycle

TBC*

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - Phase 2

TBC*

* subject to endorsement

 

The Group and Company are evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group and Company's results or shareholders' funds.

 

Critical accounting estimates and judgements

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows.

 

Exploration and development costs

Note 7

Fair value of financial assets

Note 15

Impairment of intangible assets

Note 18

Investments in associates

Note 21

Share based payments

Note 31

 

Revenue and costs recovered from JV partners

Costs recovered from JV partners and management fees relating to JV projects are recognised in the month in which they arise. Milestone payments, which relate to various stages of JV projects including on signature of an agreement, election by the JV partner to proceed to the next project stage, definition of a resource or completion of a feasibility study, are recognised once the Company's performance obligation is satisfied, in accordance with IFRS 15 Revenue from Contracts with Customers. Royalty income received by associate companies is included in the share of profit or loss on associate (see note 21).

 



2021

2020



£

£

Costs recovered from JV partners


4,747

298,891

Milestone payments


293,923

38,262

Management fees


19,826

24,272

Total


318,496

361,425

 

Segmental analysis

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

 

 


UK

Africa

S. America

Australia

Total


2021

2021

2021

2021

2021

Group

£

£

£

£

£

Revenue and costs recovered from JV partners

64,573

253,923

-

-

318,496

Share of profit of associates

-

-

984,727

-

984,727

Loss from operations

(3,680,462)

(2,542,994)

(151,035)

-

(6,374,490)







Reportable segment assets

8,510,123

2,241,132

25,460,350

15,098,995

51,310,600

Reportable segment liabilities

(19,320,381)

(127,892)

(181)

-

(19,448,454)








UK

Africa

S. America

Australia

Total


2020

2020

2020

2020

2020


£

£

£

£

£

Revenue and costs recovered from JV partners

2,983

358,442

-

-

361,425

Share of profit of associates

-

-

-

-

-

Loss from operations

(2,882,546)

(1,036,023)

-

-

(3,918,569)







Reportable segment assets

7,701,600

3,839,121

-

-

11,540,721

Reportable segment liabilities

(991,704)

(247,918)

-

-

(1,239,622)

 

Operating loss



2021

2020

Operating loss for the year is stated after


£

£

Exchange (gains)/losses


(44,937)

328,790

Exploration and development costs (note 7)


3,205,673

2,350,028

Depreciation (including right-of-use assets, note 8)


31,540

23,845

Operating lease charges


25,531

20,604

Listing and acquisition related costs


443,137

88,440

Share-based payments


982,041

663,945

 



 

Exploration and development costs

The Group's costs derived from its operations in countries in which it holds exploration licences are detailed below.

 


Cameroon

Egypt

Ethiopia

Mali

Morocco

Other

Total


2021

2021

2021

2021

2021

2021

2021

Cost category

£

£

£

£

£

£

£

Drilling

-

-

-

725,309

-

-

725,309

Assays

58,131

-

-

231,507

7,824

-

297,462

Other operational costs

4,623

60,248

640

231,351

16,586

-

313,448

Salaries - Africa geologists

33,063

54,761

63,700

198,284

37,643

-

387,451

Salaries - UK geologists

37,526

75,051

37,526

75,051

75,051

-

300,205

Salaries - UK managers

25,800

51,601

25,800

51,601

51,601

-

206,403

Salaries - Africa support

12,602

835

16,464

27,133

28,598

-

85,632

Salaries - UK support

20,187

40,374

20,187

40,374

40,374

-

161,496

Technical consultants

10,547

29,477

116

26,575

92,496

-

159,211

Travel

11,693

57,060

2,225

121,060

58,116

-

250,154

Africa office rent

9,627

1,214

2,246

6,608

5,836

-

25,531

Africa support costs

66,065

54,514

7,625

140,811

14,595

9,385

292,995

UK support costs

-

-

-

-

-

376

376

Total

289,864

425,135

176,529

1,875,664

428,720

9,761

3,205,673

Costs recovered from

JV partners

-

-

-

(4,747)

-

-

(4,747)

Costs not recovered

289,864

425,135

176,529

1,870,917

428,720

9,761

3,200,926










Cameroon

Egypt

Ethiopia

Mali

Morocco

Other

Total


2020

2020

2020

2020

2020

2020

2020

Cost category

£

£

£

£

£

£

£

Drilling

-

-

-

891,144

-

-

891,144

Assays

14,208

-

5,580

23,555

6,106

-

49,449

Other operational costs

10,616

7,380

3,259

63,753

6,794

2,858

94,660

Salaries - Africa geologists

36,815

-

27,629

63,326

24,318

-

152,088

Salaries - UK geologists

41,047

-

41,047

54,730

54,730

13,682

205,236

Salaries - UK managers

50,847

-

50,871

67,828

67,828

16,957

254,331

Salaries - Africa support

22,597

-

17,316

25,257

28,456

-

93,626

Salaries - UK support

25,516

-

25,516

34,021

34,021

8,505

127,579

Technical consultants

-

-

2,695

94,669

5,602

-

102,966

Travel

43,870

27

5,211

81,667

8,066

-

138,841

Africa office rent

7,855

-

4,147

2,736

5,866

-

20,604

Africa support costs

58,529

54

11,730

83,126

17,109

11,163

181,711

UK support costs

6,857

96

6,498

11,064

8,609

4,669

37,793

Total

318,757

7,557

201,499

1,496,876

267,505

57,834

2,350,028

Costs recovered from

JV partners

-

-

-

(267,493)

-

-

(267,493)

Costs not recovered

318,754

7,557

201,500

1,229,383

267,506

57,835

2,082,535

These figures include an allocation of UK costs including geologists' salaries, management time and UK support costs, based on the number of projects running in each country during the year. During the year, the Group was awarded four projects in Egypt and 10 projects in Morocco, and it relinquished one project in Mali (Pitiangoma Est).

Administrative expenses

Administrative expenses include the balances in the table below.

 



2021

 

2020

Group


£

£

Employee costs (note 11)


659,940

392,723

Consultants and contractors


-

3,000

Legal fees


47,402

75,547

Audit, accountancy & tax


52,665

87,535

Registrar and Nomad fees


102,132

76,646

Investor relations


148,332

66,109

Other professional expenses


106,189

68,726

Travel expenses


11,123

7,979

Premises and office expenses


58,975

20,127

Depreciation of property, plant and equipment


7,342

3,780

Depreciation of leased assets


24,198

20,064

Impairment of licence


569,777

20,952

Other expenses


839

5,606

 

 

 

 

 

 


1,788,914

848,794

 

Listing and acquisition related costs

Listing and acquisition related costs primarily related to the acquisitions of the Caserones royalty and Newcrest portfolio of royalties and were as follows.

 



2021

2020



£

£


Legal fees

252,594

5,139


Tax advice

39,878

15,117


Stamp duty

145,642

-


Other costs

5,023

68,184



443,137

88,440

 

10  Auditor's remuneration

Fees payable to the company's auditor for the financial year were as follows.

 



2021

2020


For audit services

£

£


Audit of the financial statements of the group and company

30,000

25,500

 

11  Employees

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense unless those costs are required to be recognised as part of the cost of inventories or non-current assets. The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received. Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

 

The average number of employees of the Group during the year was as follows. Altus Strategies plc has no employees and incurs no remuneration costs.

 


2021

2020

Group

Number

Number

Directors

6

6




Employees (excluding consultants and associates)

34

24


40

30

 

Of the employees, ten (2020: eight) were employed in the UK and 24 (2020: 16) were employed in five (2020: four) countries in Africa. Remuneration of African-contracted employees is included in Exploration Costs, while remuneration of Directors and UK-contracted employees is allocated between Exploration and Administrative Costs on a time basis. Costs for the year were as follows.

 


2021

2020

Group

£

£

Exploration staff costs

1,213,262

817,328

Administrative staff costs

 

659,940

392,723


1,873,202

1,210,051

Wages, salaries and Non-executive Directors' fees

909,442

654,087

Contractors

149,146

32,493

Bonuses

100,000

168,000

Social security costs

91,293

93,772

Pension costs

78,161

45,924

Other costs

-

2,733

Total UK costs

1,328,042

997,009

Overseas staff

545,160

213,042


1,873,202

1,210,051

Share based payments

978,178

603,942


2,851,380

1,813,993

 

12  Directors' remuneration

Details of Directors' remuneration are included in the Directors' Remuneration Report on pages 63-67.

 


Fees/salaries

Bonuses

Pensions

Total

 


2021

2020

2021

2020

2021

2020

2021

2020

£

£

£

£

£

£

£

£









45,000

35,000

-

-

-

-

45,000

35,000

35,000

25,000

-

-

-

-

35,000

25,000

25,000

20,000

-

-

-

-

25,000

20,000

25,000

11,080

-

-

-

-

25,000

11,080









175,000

125,000

50,000

62,500

17,500

12,500

242,500

200,000

M. Grainger

110,000

100,000

15,000

50,000

11,000

10,000

136,000

160,000

Total

415,000

316,080

65,000

112,500

28,500

22,500

508,500

451,080

 

During 2021 retirement benefits accrued under defined contribution schemes for two Executive Directors (2020: two Directors).

 

13  Finance (costs)/ income


2021

2020

Group

£

£

Interest on bank deposits

-

1,775

Interest on lease liabilities (note 33)

(5,541)

(6,302)

Interest on loan from LMH Explorers S.à r.l. (note 26)

(608,364)

-

Other interest / Finance costs

-

(396)


(613,905)

(4,923)

 

14  Other income

Other income for the financial year was as follows.



2021

 

2020

Group


£

£

Receipt of shares in respect of contract termination


-

1,726,578

R&D tax credit


218,532

206,040

Event sponsorship


4,313

5,750

COVID-19 rent concession


4,289

-

Other income


16

247

 

 

 

 

 

 


227,150

 

1,938,615

 

15  Other gains and losses

See note 28 for accounting policy and detail of financial assets held at fair value through profit or loss. Fair value of investments is a Level 1 valuation under IFRS 13 as it is based on quoted market prices of tradable securities.

 


2021

2020


£

£

Group



Unrealised



Gain/(loss) on revaluation of investments

(217,082)

(162,368)

Other unrealised gains/(losses)

262,019

(1,041)

Total fair value gains/(losses) on financial assets at fair value through profit or loss

44,937

(163,409)

Realised



Gain/(loss) on disposal of fixed assets

2,586

-

Gain/(loss) on disposal of subsidiaries (note 20)

(464,455)

68,897


(461,869)

(94,512)

 

 



 

16  Income tax

Income tax represents the sum of the tax currently payable and deferred tax.

 

Current tax

Current tax is based on taxable profit or loss for the year. Taxable profit or loss differs from net profit or loss as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

 

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

 

Current tax for the year for the Company was £nil (2020: £nil), as follows.


2021

2020

Group

£

£

Income tax expense

-

-

 

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits/ (losses) of the consolidated entities as follows.

 


2021

2020

Group

£

£

Loss before taxation

(6,193,450)

(2,079,389)

Expected tax charge based on the standard rate of corporation tax in the UK of 19% (2020: 19%)

 

 

 

%)3

(1,176,756)

(395,084)

Tax effect of:



Expenses not deductible for tax purposes

292,591

181,819

Impairment not deductible for tax purposes

52,953

3,981

Unutilised tax losses for which no deferred tax asset is recognised

831,212

209,284

Tax expense for the year

-

-

 

The Group has tax losses of approximately £2,758,000 (2020: £1,927,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised in view of the uncertainty over the timing of future taxable profits against which the losses may be offset. An increase in the UK corporate tax rate from 19% to 25% (effective from 1 April 2023) was substantively enacted on 14 May 2021.

 

 

17  Earnings per share

The basic loss per share is calculated by dividing the loss attributable to owners of the parent company by the weighted average number of Ordinary Shares in issue during the year. Dilution is represented by a number of warrants and options outstanding, which at the end of the year numbered 5,541,388 and 5,675,000 respectively. No diluted earnings per share is presented as the loss-making nature means the warrants and options are anti-dilutive.

 


2021

2020

Loss attributable to owners (£)

(6,190,057)

(2,076,435)

Weighted average number of Ordinary Shares in issue

79,670,038

66,475,493

Basic loss per share (pence)

(7.77)

(3.12)




18  Intangible assets

Expenditure on exploration activities is written off against profit or loss in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated. Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis.

 

Deferred exploration costs: Not amortised

 

Deferred exploration costs comprise exploration licence fees capitalised in accordance with IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Licences are initially measured at cost. Management tests quarterly whether deferred exploration costs require impairment. Each exploration licence is subject to a quarterly review either by a consultant or senior Company geologist to determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting and infrastructure, external factors affecting the project, as well as the likelihood of on-going funding from current or potential JV partners. In the event that a licence does not represent an economic exploration target and results indicate that there is no additional upside, or that future funding from JV partners is unlikely, a decision will be made to discontinue exploration. A further review of the recommendations of the consultant or senior Company geologist is then performed by management.

 

Royalty assets are recognised at cost upon acquisition. Those assets denominated in a currency other than the functional currency are revalued at the end of the year. Each royalty asset is the subject of a plan for the units of production over the life of the mine either at the point of acquisition or at the commencement of mining activity. Amortisation of the asset is based on the units of production recorded in the period.



 

 


At

1 January 2021

Additions

Disposals & impairment

At 31 December 2021

Group

£

£

£

£

Royalty assets





Australia





Ballarat

-

4,690,652

-

4,690,652

South Kalgoorlie (SKO)

-

2,542,031

-

2,542,031

Exploration Royalties (AER)

-

310,189

-

310,189

Côte d'Ivoire





Bonikro

-

7,556,123

-

7,556,123

Total royalty assets

-

15,098,995

-

15,098,995






Exploration assets





Mali





Korali Sud (Diba)

1,344,579

1,085

-

1,345,664

Lakanfla

582,930

6,568

(589,498)

-

Tabakorole

614,666

-

(614,666)

-

Pitiangoma Est

569,777

-

(569,777)

-

Egypt





Wadi Jundi

16,723

162,994

-

179,717

Gabal Al Shaluhl

8,362

81,755

-

90,117

Gabal Om Ourada

8,362

80,980

-

89,342

Wadi Dubur

4,181

41,007

-

45,188

Cameroon





Laboum

54,159

8,060

-

62,219

Bikoula

51,103

8,529

-

59,632

Ndjele

11,979

4,181

-

16,160

Ethiopia





Daro

1,070

1,151

-

2,221

Zager

2,892

284

-

3,176

Morocco





Agdz

4,644

1,443

(6,087)

-

Takzim

616

-

(616)

-

New "Black Permits"

-

14,079

(14,079)

-

Côte d'Ivoire





Toura (application)

1,338

-

-

1,338

Total exploration assets

3,277,381

412,116

(1,794,723)

1,894,774






Total intangible assets

3,277,381

15,511,111

(1,794,723)

16,993,769

 



 

 

 



At

1 January 2020

Additions

Disposals & impairment

At 31 December 2020

Group


£

£

£

£

Exploration assets






Mali






Korali Sud (Diba)


1,336,143

8,436

-

1,344,579

Lakanfla


582,930

-

-

582,930

Tabakorole


582,908

31,758

-

614,666

Pitiangoma Est


569,777

-

-

569,777

Egypt






Wadi Jundi


-

16,723

-

16,723

Gabal Al-Shaluhl


-

8,362

-

8,362

Gabal Om Ourada


-

8,362

-

8,362

Wadi Dubur


-

4,181

-

4,181

Cameroon






Laboum


46,445

7,714

-

54,159

Bikoula


43,056

8,047

-

51,103

Ndjele


8,313

3,666

-

11,979

Ethiopia






Tigray-Afar


16,495

659

(17,154)

-

Daro


1,070

-

-

1,070

Zager


2,481

411

-

2,892

Morocco






Agdz


4,644

-

-

4,644

Takzim


616

-

-

616

Côte d'Ivoire






Prikro


2,936

-

(2,936)

-

Toura (application)


1,338

-

-

1,338

Liberia






Zolowo


3,798

-

(3,798)

-



3,202,950

98,319

(23,888)

3,277,381

 

19  Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

 

Fixtures, fittings and equipment  4 years straight line

Computer equipment  2 years straight line

Plant and machinery    4 years straight line

Motor vehicles    2 years straight line

 

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in profit or loss.

Impairment of non-current assets

At each reporting end date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 


 

 

 

Plant and machinery

 

Fixtures, fittings and equipment

 

Computer equipment

Motor vehicles

Total


Group

£

£

£

£

£


Cost







At 1 January 2021

795

44,729

25,891

67,553

138,968


Additions

-

19,365

13,639

-

33,004


Disposals

-

(252)

(6,816)

-

(7,068)


At 31 December 2021

795

63,842

32,714

67,553

164,904









Amortisation and impairment







At 1 January 2021

608

44,621

21,466

67,553

134,248


Charge in the year

139

1,383

5,820

-

7,342


Disposals

-

(252)

(6,816)

-

(7,068)


At 31 December 2021

747

45,752

20,470

67,553

134,552









Carrying amount







At 31 December 2020

187

108

4,425

-

4,720


At 31 December 2021

48

18,090

12,244

-

30,382








 



 


 

 

 

Plant and machinery

 

Fixtures, fittings and equipment

 

Computer equipment

Motor vehicles

Total


Group

£

£

£

£

£


Cost







At 1 January 2020

795

44,949

25,364

67,553

138,661


Additions

-

-

5,310

-

5,310


Disposals

-

(220)

(4,783)

-

(5,003)


At 31 December 2020

795

44,729

25,891

67,553

138,968









Amortisation and impairment







At 1 January 2020

469

44,691

22,758

67,553

135,471


Charge in the year

139

150

3,491

-

3,780


Disposals

-

(220)

(4,783)

-

(5,003)


At 31 December 2020

608

44,621

21,466

67,553

134,248









Carrying amount







At 31 December 2019

326

258

2,606

-

3,190


At 31 December 2020

187

108

4,425

-

4,720








Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

20  Subsidiaries

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently held at fair value. As there is no active market, fair value is considered to be amortised cost less impairments. This is a Level 2 valuation under IFRS 13. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss. None of the non-controlling interests is material to the group.

 




Company





2021

2020





£

£


At 1 January



4,608,930

4,608,930


Additions



-

-


Disposals



-

-





4,608,930

4,608,930

 

Altus Strategies plc has direct investments in the following subsidiary undertakings.



 

Name of undertaking

Incorporated

% Holding

Principal activity

Altus Exploration Management Limited1

UK

100.00

Business support services

Altus Royalties Limited1

UK

100.00

Royalty holding company

Altus Royalties Holdings Limited1

UK

100.00

Holding company

LGN Holdings (BVI) Inc11

BVI

100.00

Holding company

 

Altus Strategies plc is the ultimate parent but not the immediate parent of the following subsidiary undertakings.

 

Name of undertaking

Incorporated

% Holding

Principal activity

Aeos Gold Limited1

UK

100.00

Gold exploration

Auramin Limited1

UK

99.00

Gold exploration

Aluvance Limited1

UK

97.26

Iron ore exploration

Akh Gold Holdings Limited1

UK

100.00

Holding company

Akh Gold Limited1

UK

100.00

Bauxite exploration

Altau Resources Limited1

UK

100.00

Copper exploration

Aterian Resources Limited1

UK

100.00

Mineral exploration

Oxford Mining Club Limited1

UK

50.00

Events

Altus Royalties Australia Limited1

UK

100.00

Royalty holding company

Altus Royalties Mauritius Limited1

UK

100.00

Royalty holding company

Akh Gold Limited (branch)13

Egypt

100.00

Gold exploration

Altau Resources Limited2

Ethiopia

100.00

Copper exploration

Aucam SA5

Cameroon

97.26

Iron ore exploration

Valnord SA5

Cameroon

99.00

Gold exploration

Mining & Exploration Services Limited6

Liberia

99.00

Gold exploration

Azru Resources SARL AU8

Morocco

100.00

Copper exploration

Allegra Gold Mali SARL12

Mali

100.00

Gold exploration

Avalon Gold Mali SARL12

Mali

100.00

Gold exploration

LGC Exploration Mali SARL12

Mali

100.00

Gold exploration

LGC Piti SARL12

Mali

100.00

Gold exploration


 

The following are dormant subsidiaries.

 

Name of undertaking

Incorporated

% Holding

Principal activity

Altaucam Resources Limited3

Seychelles

100.00

Dormant

Altau Holdings Limited3

Seychelles

100.00

Dormant

Avance African Group Limited3

Seychelles

97.26

Dormant

Aucam Resources Limited3

Seychelles

97.26

Dormant

Inland Exploration Limited3

Seychelles

100.00

Dormant

Westcoast Exploration Limited3

Seychelles

100.00

Dormant

Mansion Resources Limited3

Seychelles

99.00

Dormant

Altar Resources Limited3

Seychelles

99.00

Dormant

Eagle Resources Limited3

Seychelles

99.00

Dormant

Enigma Resources Limited3

Seychelles

99.00

Dormant

Atlas Minerals3

Seychelles

100.00

Dormant

Atlantic Minerals3

Seychelles

100.00

Dormant

Alboran Minerals3

Seychelles

100.00

Dormant

Addax Minerals3

Seychelles

100.00

Dormant

Akkari Minerals3

Seychelles

100.00

Dormant

Aures Minerals3

Seychelles

100.00

Dormant

Azilal Minerals3

Seychelles

100.00

Dormant

Altus Diamonds3

Seychelles

100.00

Dormant

Avanor SARL4

Côte d'Ivoire

97.26

Dormant

Avanex SARL4

Côte d'Ivoire

97.26

Dormant

Bauxex SA5

Cameroon

97.26

Dormant

Adrar Resources SARL AU7

Morocco

100.00

Dormant

Altus Mining (SL)9

Sierra Leone

100.00

Dormant

Apalex Sarl4

Côte d'Ivoire

100.00

Dormant

Aza Minerals Sarl7

Morocco

100.00

Dormant

Akassori10

Chad

100.00

Dormant

Legend Mali (BVI) II Inc11

BVI

100.00

Dormant

Legend Mali (BVI) III Inc11

BVI

100.00

Dormant

Legend Mali (BVI) IV Inc11

BVI

100.00

Dormant

Legend Mali (BVI) V Inc11

BVI

100.00

Dormant

Legend Mali (BVI) VI Inc 11

BVI

100.00

Dormant

Akh Gold I Limited 1

UK

100.00

Dormant

Akh Gold II Limited 1

UK

100.00

Dormant

Akh Gold III Limited 1

UK

100.00

Dormant

Akh Gold IV Limited 1

UK

100.00

Dormant

Akh Gold V Limited 1

UK

100.00

Dormant

Akh Gold VI Limited 1

UK

100.00

Dormant

Legend Gold Limited 1

UK

100.00

Dormant

Legend Mali (UK) II Limited 1

UK

100.00

Dormant

Legend Mali (UK) III Limited 1

UK

100.00

Dormant

 

The following entities are held as joint operations.

 

Name of undertaking

Incorporated

% Holding

Principal activity

Minera Tercero SpA14

Seychelles

50.00

Royalty holding company

Alpha 2 SPV Limited15

Seychelles

50.00

Royalty holding company

Alpha 3 SPV Limited15

Seychelles

80.01

Royalty holding company

Alcrest Royalties Australia (Pty) Ltd16

Seychelles

50.00

Royalty holding company

 

As at 1 April 2021, a controlling interest in Legend Mali (UK) I Limited and its subsidiary Legend Gold Mali SARL passed to the Company's joint venture partner, Marvel Gold Limited. There was no consideration for the transfer, but Marvel Gold fulfilled various exploration and expenditure milestone requirements under the terms of the JV agreement covering the two licences. At 31 December 2021, the Company held a 49% interest in Legend Mali (UK) I Limited. The consolidated net assets derecognised on disposal of Legend Mali (UK) I Limited as a subsidiary were as follows.



 

 


Net assets


£

Intangible assets

1,204,164

Amounts due to related parties

(324,603)

Cash and cash equivalents

31,466


911,027

Fair value of 49% share of assets of associate

446,572

Loss on disposal of subsidiary

(464,455)

 

The fair value of the net assets was based on the value the intangible assets and other assets and liabilities as recorded in accordance with the Company's relevant policies. This constituted a Level 2 valuation under IFRS 13.

 

The registered office addresses applying to the tables in this note are as follows.

 

Registered office addresses

1.  1. 14 Station Road, Didcot, Oxfordshire OX11 7LL, United Kingdom

2.  2. Bole Sub-City, Kebele 08/09, House No. 811/A, P.O. Box 2633, Addis Ababa, Ethiopia

3.  3. Suite 24, First Floor, Eden Plaza, Eden Island, Victoria, PO Box 438, Mahé, Seychelles

4.  4. Cocody Les Deux Plateux, Rue des Jardins, Résidence Aziz, Porte B, 20 BP 725 Abidjan 20, Côte d'Ivoire

5.  5. BP: 5405 Bastos, Dernier poteau, Yaoundé, Cameroon

6.  6. PO Box 10-3218, 1000 Monrovia 10, Liberia

7.  7. Appt 9, IMM 18, Rue Jbel Tazekka, Agdal, Rabat, 10090, Morocco

8.  8. 46, Avenue Oqba, Appt No. 2, Agdal, Rabat, Morocco

9.  9. 2, Berthan Macauley Street, Freetown, Sierra Leone

10.  10. Quartier Diguel Nord, N'Djamena, Chad

11.  11. MMG Trust (BVI) Corp, Pasea Estate, Road Town, Tortola, British Virgin Islands

12.  12. Porte 608, Rue 136, Korofina Nord, Bamako, Mali

13.  13. 2nd Floor, Dorchester House, 4 Mohamed Abd Wahab St, Zamalek, Cairo, Egypt

14.  14. Av. Andrés Bello 2711, Piso 8, 7550611, Las Condes, Santiago, Chile

15.  15. 24th Floor, Al Sila Tower, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab Emirates

16.  16. 35 The Crescent, Vaucluse, NSW 2030, Australia

 

21  Investments in associates

During the year, the Company acquired an investment in associate in relation to the purchase of an interest in the Caserones mining royalty. In addition, there was a partial disposal of a Malian subsidiary with a loss of management control which resulted in the derecognition of the subsidiary and the recognition of an investment in associate. Investments in associates are accounted for using the equity method. The Company's share of post-acquisition profit or loss is shown in the Statement of Comprehensive Loss and distributions received from an associate reduce the carrying amount of the investment.

 



 

These Company's investments in associates are as follows.

 


SLM California

Legend Gold Mali

Total

2021

£

£

£

At 1 January

-

-

-

Acquisition of investment

24,976,478

446,572

25,423,050

Share of profit

984,727

-

984,727

Dividend received

(1,236,885)

-

(1,236,885)

Foreign exchange

195,705

-

195,705

At 31 December

24,920,025

446,572

25,366,597

 

SLM California

In August 2021, the Company acquired an interest in a net smelter return ("NSR") royalty on the Caserones copper mine in northern Chile. The royalty is payable to Sociedad Legal Minera California Una de la Sierra Peña Negra ("SLM California"). In conjunction with EMX Royalty Corp. of Canada, the Company incorporated a 50:50 joint entity in Chile, Minera Tercero SpA ("Tercero"), to acquire 43% of the issued shares of SLM California for US$68.2 million. SLM California holds a 1.94% NSR royalty on the Caserones mine, giving the Company an effective royalty interest of 0.418%. The acquisition value for the Company was US$34.1 million structured as a 25% equity investment (US$8.5 million) and a 75% loan from the Group to Tercero (US$25.6 million).

 

The Company has determined that Tercero should be treated as joint operation due to the fact that it has been designed by the joint owners to be the recipient and distributor of funds arising from the Caserones royalty. Therefore, the Company consolidates its share of the assets, liabilities, equity and profit or loss of Tercero. The Company has also determined that Tercero's 43% ownership of SLM California and its right to appoint one director to serve on the Board of SLM California does not give it control but does give it significant influence.

 

During the year, Tercero received dividends from SLM California in respect of the royalty on production at the Caserones mine during Q2 2021 and Q3 2021 of 1,158 million Chilean pesos (US$1.4 million). A further dividend of 351 million pesos (US$0.4 million) on production in the same quarter was paid to Tercero by SLM California after the period end. The dividends were calculated after provisions by SLM California for expenses and Chilean income tax.

 

The royalty is treated as an intangible asset within the individual financial statements of SLM California. An amortisation charge is made against the royalty asset in respect of royalties paid, and is based on the production data underlying the royalty payment as a proportion of the lifetime expected production from the mine.

 

Set out below is the unaudited summarised financial information for SLM California. SLM California's financial statements are not prepared under IFRS. The information below reflects the amounts presented in the financial statements of SLM California adjusted for differences in accounting policies between the Company and SLM California, which includes the recognition and subsequent amortisation of an intangible royalty asset.



 

 


2021

SLM California

£

Summarised balance sheet at 31 December 2021


Non-current assets

112,924,511

Current assets

3,784,886

Current liabilities

(3,648,362)

Non-current liabilities

-

Net assets

113,061,035



Summarised statement of comprehensive income for the period of ownership ending 31 December 2021


Royalty income

12,320,266

Profit before tax for the period

4,642,228

 

Legend Gold Mali

Legend Gold Mali SARL was a 100% owned subsidiary of the Company that held the Lakanfla and Tabakorole gold exploration projects in western and southern Mali respectively, and which was the subject of a joint venture agreement between the Company and Marvel Gold. Under terms of the agreement, Marvel Gold increased its ownership of the company to 51% during 2021 following the completion of specified exploration activities on the projects and the payment of certain project stage fees. Both parties acknowledged that management control of the company had passed to Marvel Gold as of April 2021. Legend Gold Mali SARL was de-consolidated at that date and subsequently equity accounted as an associate.

 


2021

Legend Gold Mali

£

Summarised balance sheet at 31 December 2021


Non-current assets

7,858,478

Current assets

1,044,605

Current liabilities

(8,899,984)

Non-current liabilities

(1,818)

Net assets

1,281



Summarised statement of comprehensive income for the period of ownership ending 31 December 2021


Profit before tax for the period

-

 

Under Marvel Gold, all of the exploration expenditure made by Legend Gold Mali is capitalised as an exploration asset.

 

22  Investments

The Group holds both financial assets at amortised cost and financial assets at fair value through profit and loss. See note 28 for further information on the accounting policies applied to financial assets.

 

Investments carried at fair value through profit or loss comprise listed equity shares (IFRS 13 - Level 1). The fair value of these equity shares is determined by reference to published price quotations in an active market.



 

 



Group

Company



2021

2020

2021

2020



£

£

£

£


At 1 January

1,320,542

302,072

413,635

208,953


Additions

617,579

1,180,838

-

71,839


Disposals

-

-

-

-


Revaluation gains/ (losses)

(217,082)

(162,368)

(94,875)

132,842



1,721,039

1,320,542

318,760

413,634

 

23  Trade and other receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, in which case they are recognised at fair value. The group holds the trade receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method.

 

Trade receivables - credit risk

All trade receivables are denominated in £ sterling and are fully performing.

 

Fair value of trade receivables

The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

 

No significant receivable balances are impaired at the reporting end date.

 

 



  Group

  Company



2021

2020

2021

2020



£

£

£

£


Trade receivables

-

-

-

-


VAT recoverable

68,179

30,526

25,523

13,833


Amounts due from group undertakings

-

-

52,247,263

10,303,101

 

 

 

 

 

 

 

Amounts due from related parties

32,832

33,366

-

-


Prepayments

90,541

63,089

70,076

58,125


Accrued income

-

5,919

-

-


Accrued other income from receipt of shares

45,475

617,579

45,475

-


R&D tax credit

218,532

100,288

-

-


Bid bonds on Egyptian licences

161,246

-

-

-


Other receivables

5,359

2,862

-

-



622,164

853,629

52,388,337

10,375,059

 

24  Held-for-sale assets

Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount or fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately in the balance sheet in accordance with IFRS 5.

 

The Group has concluded agreements that include the transfer of a number of its subsidiaries which have subsequently been designated as held-for-sale. An agreement made on 21 November 2021 provided for the transfer to Eastinco of UK-incorporated Aterian Resources Limited, its Seychelles subsidiary, Atlantic Minerals Limited, its Moroccan subsidiaries, Azru Resources SARL AU and Adrar Resources SARL AU and the Group's portfolio of exploration licences in Morocco including the Agdz licence. An agreement of February 2019 provided for the transfer to Canyon of the Group's Seychelles subsidiary, Aucam Resources Ltd, its Cameroon subsidiary, Aucam SA, and the Group's Birsok exploration licence in Cameroon.

 


2021

2020


£

£

Current assets



Intangible assets

117,967

85,967

Cash and cash equivalents

-

798


117,967

86,765

Current liabilities



Amounts due to related parties

(34,020)

(34,020)

 

25  Trade and other payables

Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Liabilities arising from a lease are initially measured on a present value basis. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

 



  Group

  Company



2021

2020

2021

2020



£

£

£

£


Current liabilities






Trade payables

499,156

291,843

17,542

38,266


Amounts due to group undertakings

-

-

2,355,349

111,533


Amounts due to related parties

69,192

59,034

69,192

-


Accruals and deferred income

376,954

772,232

160,185

178,605


Lease liabilities (IFRS 16)

40,945

20,065

-

-


Other payables

-

1,580

-

-

 

 

 

 

 

 

 


986,247

1,144,754

2,602,268

328,404


Non-current liabilities






Lease liabilities (IFRS 16)

64,671

45,848

-

-



1,050,918

1,190,602

2,602,268

328,404


 

 

 

 

 

 

 





26  Borrowings

During the year, the Company drew down the full value of a US$29.0 million acquisition loan facility provided by its shareholder LMH Explorers S.à r.l. Funds were used primarily to complete the acquisition of the Caserones royalty. Before the end of the year, US$5.0 million of the loan principal was repaid. Under its original terms, the facility bore annualised interest at a rate of 7% plus three-month USD LIBOR for the first three months and 9% plus three-month USD LIBOR thereafter, and was repayable by 17 February 2022. After the year end, the facility was extended to 30 June 2022 with interest at 10% plus three-month USD LIBOR. The outstanding liability on the loan was £18,348,516 at 31 December 2021. The facility is senior secured against the shares of Altus Royalties Limited, the material asset of which is the Company's 50% shareholding in the Chilean SPV, Tercero.

 


2021


£

Loan from related party

21,068,997

Loan repayment

(3,761,762)

Interest charges

613,905

Foreign exchange revaluation

427,376


18,348,516

 

27  Provisions

Provisions are recognised when the Group or Company has a legal or constructive present obligation as a result of a past event and the Company judges that it is probable that it will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

 


Company


2021

2020

2021

2020


£

£

£

£

Provisions

15,000 

  15,000

-

  -

 

All provisions are expected to be settled within 12 months of the reporting date.

 

A provision has been recognised in accordance with IAS 37 in respect of the company's obligation to its landlord for dilapidations on the expiry of its lease. The provision has been recognised because there is an obligation at the reporting date as a result of an onerous contract, where outflow is probable to settle the obligation and a reliable estimate can be made.

 

28  Financial instruments

The Group's financial instruments and their respective accounting policies are as follows.

 

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

 

Financial assets

Financial assets are recognised in the statement of financial position when the Group or Company becomes party to the contractual provisions of the instrument.

 

Financial assets are classified into specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition. Financial assets are measured at either amortised cost or at fair value through profit or loss.

 

Financial assets at fair value through profit or loss are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

 

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are held at amortised cost. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

 

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

 

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date. For loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

 

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

 

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

 

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

 

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.

 

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company's obligations are discharged, cancelled, or they expire.

 

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

 



 

The Group's financial assets are recorded as follows.

 


2021

2021

2020

2020


Assets at amortised cost

Assets at FVPL

Assets at amortised cost

Assets at FVPL

Group

£

£

£

£

Investments

-

1,721,039

-

1,320,542

Cash and cash equivalents

6,355,011

-

5,937,486

-

Trade and other receivables

531,620

-

790,540

-


6,886,631

1,721,039

6,728,026

1,320,542

 

The Company's financial assets are recorded as follows.

 


2021

2021

2020

2020


Assets at amortised cost

Assets at FVPL

Assets at amortised cost

Assets at FVPL

Company

£

£

£

£

Investments

-

318,760

-

413,634

Investments in subsidiaries

4,608,930

-

4,608,930

-

Cash and cash equivalents

2,273,965

-

460,131

-

Trade and other receivables

52,318,261

-

10,316,934

-


59,201,156

318,760

15,385,995

413,634

 

The Group and Company have the following financial liabilities.

 


2021

2020


Liabilities at amortised cost

Liabilities at amortised cost

Group

£

£

Trade and other payables

1,050,918

1,190,602

Borrowings

18,348,516

-


19,399,434

1,190,602

 

 



Company

£

£

Trade and other payables

2,602,268

328,404

Borrowings

18,348,516

-


20,950,783

328,404

 

29  Financial risk management

The Group's activities expose it to a variety of financial risks: credit risk, liquidity risk, price risk and interest rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groups financial performance. The Group has substantially renewed its risk management processes during the year to take account of new risks arising from the acquisition of cash-paying royalties which affect several areas of risk as outlined below.

 



 

Market risk

The Group's activities potentially expose it to market risks, which is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rate and foreign currency risk, all of which are exposed to general and specific market movements and changes in the level of volatility of market rates or prices such as interest rates and foreign exchange rates.

 

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from holding cash in various currencies. The Group's functional currency is pound sterling, its royalty income is in US dollars and Australian dollars and its major purchases are transacted in pounds sterling, US dollars, West African francs, Egyptian pounds, Ethiopian birr and Moroccan dirham. The Group's head office expenditures are mainly incurred in pounds sterling and the majority of its exploration costs are incurred in the local African currencies. When funds are received a cashflow forecast is prepared by currency to identify the anticipated currency transactions that will be required over the period that the funds are expected to be used. FX transactions are undertaken at the earliest opportunity to minimise currency risk. For the year ended 31 December 2021, the Group had an exchange loss of £271,183 (2020: £328,790 loss) which was not considered material to its operations.

 

Credit risk

Credit risk is the risk of suffering financial loss should the Group's customers, clients or counterparties fail to fulfil their contractual obligations to the Group. The Group's holding of cash-paying mining royalty interests expose it to the risk that mine operators will not fulfil their contractual obligations to make royalty payments to the Group. The Group will mitigate this risk by continually engaging with mine operators, visiting producing mines where possible and by obtaining regular operational and financial information with respect to the mines themselves and the operating companies.

 

With respect to its exploration activities, the Group undertakes due diligence on new suppliers and seeks to use respected suppliers within the industry. With respect to the Group's cash balances, risk is mitigated by depositing surplus cash with financial institutions with acceptable credit ratings in accordance with the Group's treasury management policies. The carrying value of financial assets approximates their fair value and the maximum exposure as at the Statement of Financial Position date is outlined in the following table.

 




2021

2020

Group



£

£

Trade receivables



-

-

Other receivables



5,356

2,862

R&D tax credit



218,532

100,288

VAT recoverable



68,179

30,526

Amounts due from related parties



32,832

33,366

Prepayments



90,541

63,089

Accrued income



-

5,919

Accrued other income from receipt of shares



45,475

617,579

Cash and cash equivalents



6,355,011

5,937,4866

Deposits



161,246

-

Held-for-sale assets



117,967

86,765




7,095,139

6,877,880

 

Commodity price risk

The Group's principal activity is the acquisition and generation of mining royalty interests. During the year, it acquired its first cash paying royalties. The Group is therefore exposed to commodity price risk in the valuation of the royalties it receives, and in the effect that a change in commodity prices may impact the viability of continued operations at a mine on which it holds a royalty. In addition, changes in commodity prices may impact the economic assessment of the exploration projects in which it holds an interest, which may restrict the availability of future finance for the project. The Group therefore maintains a diversified portfolio of both royalties and exploration licences, covering a range of nine base and precious metals including gold, silver, copper and nickel, in order to mitigate the risk of changes in the prices of individual metals.

 

Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management is achieved by maintaining sufficient cash balances and the availability of funding through an adequate amount of committed credit facilities. The Group manages liquidity by maintaining sufficient cash with banks to meet its changing commitments. The Group's objective is to ensure that there are sufficient committed financial resources to meet its current obligations and its future business requirements for a minimum of twelve months. Details of the Company's loan liability are included in note 1 and in the Financial Review on pages 29-30.

 

The table below presents the cash flows payable by the Group under remaining contractual maturities at the Statement of Financial Position date. The amounts disclosed in the table are the contractual undiscounted cash flows. The carrying values of financial liabilities approximates their fair values.

 



Up to 3 months

3 to 12 months

Over 12 months

Total


2021

£

£

£

£


Trade payables

499,156

-

-

499,156


Borrowings

18,348,516

-

-

18,348,516


Related parties

69,192

-

-

69,192


Lease payables

10,503

30,443

64,671

105,617


Accruals and deferred income

376,953

-

-

376,953


Provisions

-

-

15,000

15,000


Held-for-sale liabilities

34,020

-

-

34,020



19,338,340

30,443

79,671

19,448,454









Up to 3 months

3 to 12 months

Over 12 months

Total


2020

£

£

£

£


Trade payables

291,843

-

-

291,843


Related parties

59,034

-

-

59,034


Lease payables

4,841

15,224

45,848

65,913


Other payables

1,580

-

-

1,580


Accruals and deferred income

772,232

-

-

772,232


Provisions

-

-

15,000

15,000


Held-for-sale liabilities

34,020

-

-

34,020



1,163,550

15,224

60,848