XLON:BMV ESEF Annual Report
BLUEBIRD MINING VENTURES LTD (XLON:BMV)
ESEF Annual Report
2022-07-02
For: 2021-12-31
View Original
Added on
October 03, 2026
Bluebird Merchant Ventures Limited
Annual Report and Financial Statements
2021
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
1
GROUP INFORMATION
Directors Jonathan Morley-Kirk Non-Executive Chairman
Clive Sinclair-Poulton Non-Executive Director
Charles Barclay Executive Director
Aidan Bishop Executive Director
Colin Patterson Executive Director
Registered
Office
Harney Westwood & Riegels
Craigmuir Chambers
PO Box 71, Road Town
Tortola VG1110
Auditor PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
UK
Lawyers Legal Insight LLC
401, Nonhyeon-dong, M building
612 Nonhyeon-ro
Gangnam-gu, Seoul
South Korea
Registrars Computershare Investor Services (BVI)
Limited
Woodbourne Hall, Road Town
Tortola
British Virgin Islands
Depositary Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS13 8AE
UK
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
2
CONTENTS
1. Chairman’s Report
3
2. Chief Executive’s Comment
4
3. Directors’ Report 5
4. Strategic Report
4.1 Business Model and Strategy 12
4.2 South Korea Gold Project 12
4.3 Philippines Overview – Batangas Gold Project 14
4.4 Funding 16
5. Financial Statements
5.1 Independent Auditor’s Report to the Members of the Company 17
5.2 Consolidated Income Statement 23
5.3 Consolidated Statement of Comprehensive Income 24
5.4 Consolidated Statement of Financial Position 25
5.5 Consolidated Statement of Changes in Equity 26
5.6 Consolidated Cash Flow Statement 27
5.7 Notes to the Financial Statements 28
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
3
1. CHAIRMAN’S REPORT
2021 was a full year of the global covid-19 pandemic. There were global lockdowns and many
businesses moved into suspended animation or ceased trading. South Korea had very strict lockdown
restrictions which meant it was impossible to significantly progress the two mining projects Gubong
and Kochang. Staff were unable to enter and/or move freely around the country. This led to a year of
minimal activity at the mine sites. However, Management was able to continue to plan for the
commencement of production at the mine sites in South Korea once restrictions are lifted fully and
was able to undertake an in-country planning visit in May 2022 to meet with the Company’s legal
representatives to confirm the twenty-year tenure of the permits.
On 29 June 2021 the Company and Southern Gold Limited (“SAU”) announced that the Company
would acquire SAU's 50% share of the joint venture. The Company settled this transaction by the
issuance of 50 million shares immediately and another 150 million shares after the issuance of a
prospectus. The FCA approved the prospectus, and the second tranche of shares was issued on 20
December 2021. All 200 million shares were issued at a price of 3.6p per share to make a total
consideration of USD 10million.
I wish to thank my colleagues for their efforts in these difficult economic times. 2021 was a lost year
in mining project terms, but I expect that normality will start to return during 2022.
Jonathan Morley-Kirk
Chairman,
29 June 2022
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
4
2. CHIEF EXECUTIVE’S COMMENT
With Covid restrictions easing worldwide the BMV team has undertaken meetings to re-launch the
Korean projects in 2022. The team remain convinced of the immense upside of both the Gubong and
Kochang projects and that they will generate profit within two years of commencing construction.
BMV currently have sufficient funding to cover committed expenditure over the next 12 months unless
amounts drawn down under funding agreements, which can be settled in shares at the discretion of
the lender, are called upon to be paid in cash. The Directors are confident that sufficient funds will be
raised in this period to fund both the commencement of construction on the Korean projects (refer
note 2 of the audited financial statements) beyond the initial “proof of concept” gold being produced
at Kochang and repayment of amounts drawn down should cash repayment be sought by the lender.
Due to the travel and other restriction imposed by COVID-19 BMV continued to make every endeavour
to preserve cash resources as reflected in the accounts. Directors continue to take actions to minimise
costs in the build up to commencing production and I thank my fellow managers and directors for the
sacrifices they have made and for their amazing efforts during the year.
As stated last year, I look forward to future Annual Reports where I will be able to report on actual
gold production numbers.
I would like to thank our shareholders for their ongoing support as the Company seeks to bring about
gold production in our South Korean projects.
Colin Patterson
Chief Executive Officer
29 June 2022
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Annual Report and Financial Statements 2021
5
3. DIRECTORS’ REPORT
The Directors present their report together with the audited financial statements of the Group for the
year ended 31 December 2021.
The Company
The Company’s principal activity is to bring old gold mines back to life by using the management team’s
global experience in re-opening old mines to unlock hidden value.
The Company’s Ordinary Shares were admitted to listing on the London Stock Exchange, on the Official
List pursuant to Chapters 14 of the Listing Rules, which sets out the requirements for the Standard
Listing segment of the Main Market of the London Stock Exchange.
Results and Dividends
The Company has set out its results in the audited financial statements, and notes, and show a profit
of USD 7,530,988 for the year with an operating loss of USD 770,099 exclusive of the gain on
acquisition of joint ventures of USD 8,301,087 (year to 31 December 2020 showed a loss of USD
899,673).
The Directors do not recommend the payment of a dividend for the year ended 31 December 2021
(2020 Nil).
Future Developments
The Group’s future developments are outlined in the Strategic Report section.
Principal Risks and Uncertainties
The Group operates in an uncertain environment and is subject to a number of risk factors. The
Directors consider the following risk factors to be of particular relevance to the Group’s activities
although it should be noted that this list is not exhaustive and that other risk factors not presently
known or currently deemed immaterial may apply.
Detailed Development, Mining and other risks for the South Korean projects are detailed from page
25 of the June 2019 Prospectus (refer
http://www.bluebirdmv.com/wp-content/uploads/bsk-pdf-
manager/254922_Project_Olympic_-_Prospectus_FINAL_13-06-2019_14.pdf).
South Korea Projects
With the receipt of the two permits to mine Gubong and Kochang, Management’s plans were to
establish an operating office in South Korea and initiate activity at the sites in accordance with our
schedule. This has continued not to be possible during 2021 because of COVID-19 restrictions affecting
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Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
7
may not be able to source the required funds to progress the projects, however, the Directors believe
that they will be able to continue to raise the required funding as they have throughout the pandemic.
The Directors continue to adopt the going concern basis of accounting in preparing the financial
statements but note that the auditors make reference to going concern by way of a material
uncertainty over the ability of the Company and the Group to fund the recurring and projected
expenditure, including the potential repayment of loans and development of the Group’s key assets
(refer note 2 of the audited financial statements).
Key Performance Indicators
Key Performance Indicators will be developed and reported on once the mines enter the production
phase.
Corporate Governance
The Company is incorporated in the British Virgin Islands. The Company is not required to comply with
the provisions of the UK Corporate Governance Code. The Directors have responsibility for the overall
corporate governance of the Company and recognise the need for appropriate standards of behaviour
and accountability.
The Directors are committed to the principles underlying best practice in corporate governance and
have regard to certain principles outlined in the UK Corporate Governance Code to the extent they
considered appropriate for the Company given its size, early stage of operations and complexities.
The Directors note that the Company is not bound by the take-over code rules and, thereby, Southern
Gold Limited were not required to make a statutory takeover offer when their shareholding reached
more than 30% in December 2021.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the Company in August 2020. They have
expressed their willingness to continue in office and a resolution to reappoint them will be proposed
at the Annual General Meeting.
Company Directors
Position Appointed
Audit
Committee
Remuneration
Committee
Health &
Safety
Committee
J. Morley-Kirk Non-Exec. Chairman Mar-14 Chair Member Member
C. Sinclair-Poulton Non-Exec. Director Sep-15 Member Chair Chair
C. Barclay Executive Mar-17 - - Member
A. Bishop Executive Mar-14 - - -
C. Patterson Executive Sep-15 - - -
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Annual Report and Financial Statements 2021
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Shareholdings and warrants held by Directors and other Persons Discharging Managerial
Responsibilities (PDMRs) are outlined in notes 17 and 21 respectively of the audited financial
statements.
Internal Control
The Directors acknowledge they are responsible for the Group’s system of internal control and for
reviewing the effectiveness of these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of the Group failing to achieve its
strategic objectives. It should be recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size, and stage,
of the business.
The Group is at an early stage in its development and directors and senior management are involved
directly in approving all significant investment and expenditure decisions of the Company and its
subsidiaries and associate.
Audit Committee
The Audit Committee, which comprises two Non- Executive Directors, Jonathan Morley-Kirk and Clive
Sinclair-Poulton, is responsible for ensuring that the financial performance of the Group is properly
monitored and reported upon and that any such reports are understood by the Board. The Committee
meets formally at least twice each year.
Health, Safety and Environment Committee
The Group is committed to providing a safe, healthy and sustainable environment for all its employees,
contractors, visitors and neighbours. The Group strives actively to identify and manage the potential
direct and indirect effects of all its activities and reviews this at Board level through its HS&E
Committee.
Remuneration Committee
The remuneration of the Executive Directors is fixed by the Remuneration Committee, which
comprises two Non-Executive Directors and is chaired by Clive Sinclair-Poulton. The Remuneration
Committee is responsible for reviewing and determining the Company policy on executive
remuneration and the allocation of long-term incentives to executives and employees. The
remuneration of Non-Executive Directors is determined by the Board. In setting remuneration levels,
the Group seeks to provide appropriate reward for the skill and time commitment required in order
to retain the right caliber of Director at an appropriate cost to the Group.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
9
The remuneration paid to, or receivable by, Directors in respect of 2021 and 2020 in relation to the
period of their appointment as Director are:
Receivable in Cash (USD) Receivable in Equity (USD)
in the year
to 31-Dec-21
in the period
to 31-Dec-20
in the year
to 31-Dec-21
in the period
to 31-Dec-20
Executive Directors
C. Barclay - - 48,579 77,800
A. Bishop - - 34,145 70,006
C. Patterson - - 40,649 56,445
Non-Executive Directors
J. Morley-Kirk - - 37,767 35,279
C. Sinclair-Poulton* - - 27,192 25,401
Total - - 188,332 264,931
* Amounts are payable to a non-related party
All Directors remuneration relates to short-term employee benefits. The amounts in Receivable in
Equity to September 2021 were issued as equity during 2021 and amounts from October 2021 to
December 2021 are held as Unissued Share Capital at year-end (refer note 20 of the audited financial
statements).
Share Capital
At 31 December 2021 the issued share capital of the Company stood at 622,315,788 – with
224,668,382 new shares having been issued during the year. The issuances are outlined in note 20 of
the audited financial statements.
Substantial Shareholders
Substantial shareholders are outlined in note 20 of the audited financial statements.
Director and PDMR shareholdings are outlined in note 20 of the audited financial statements.
Employees
The Group has a policy of equal opportunities throughout the organisation and is proud of its culture
of diversity and tolerance. Employees benefit from regular communication both informally and
formally regarding Company issues.
Directors Indemnity Insurance
The Company has purchased Directors and Officers insurance cover on behalf of the Directors
indemnifying them against certain liabilities which may be incurred by them in relation to the Group.
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Annual Report and Financial Statements 2021
10
Events after the Reporting Date
The events after 31 December 2021 are detailed in note 23 of the audited financial statements.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable laws and regulations. The Directors have prepared the financial
statements for each financial period which present fairly the state of affairs of the Group and the profit
or loss of the Group for that period.
The Directors have chosen to use the International Financial Reporting Standards (“IFRS”) as adopted
by the European Union in preparing the Group’s financial statements.
International Accounting Standard 1 requires that financial statements present fairly for each financial
period the company’s financial position, financial performance and cash flows. This requires the
faithful presentation of the effects of transactions, other events and conditions in accordance with
the definitions and recognition criteria for assets, liabilities, income and expenses set out in the
International Accounting Standards Board’s “Framework for the preparation and presentation of
financial statements”. In virtually all circumstances, a fair presentation will be achieved by compliance
with all applicable International Financial Reporting Standards.
A fair presentation also requires the Directors to:
select consistently and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
make judgements and accounting estimates that are reasonable and prudent;
provide additional disclosures when compliance with the specific requirements in IFRS as adopted
by the European Union is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity’s financial position and financial
performance;
state that the Group has complied with IFRS as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the company will continue in business.
The Directors are also required to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the Stock Exchange.
The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Group, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and other irregularities and for the
preparation of financial statements.
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Annual Report and Financial Statements 2021
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Financial information is published on the Group’s website. The maintenance and integrity of this
website is the responsibility of the Directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no responsibility for any changes
that may occur to the financial statements after they are presented initially on the web-site.
Legislation in the British Virgin Islands governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ Responsibilities Pursuant to DTR4
In compliance with the Listing Rules of the London Stock Exchange, the Directors confirm to the best
of their knowledge:
The group financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and give a true and fair view of
the assets, liabilities, financial position and profit and loss of the Group.
The annual report includes a fair review of the development and performance of the business
and the financial position of the group, together with a description of the principal risks and
uncertainties that they face.
This Directors’ Report was approved by the Board of Directors on 28 June 2022 and is signed on its
behalf.
By Order of the Board
Jonathan Morley-Kirk
Chairman
29 June 2022
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Annual Report and Financial Statements 2021
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4. STRATEGIC REPORT
The Directors have voluntarily disclosed the Strategic Report for the year ended 31 December 2021
although it is not required under BVI regulations.
4.1 Business Model and Strategy
The Group is a project developer and targets Asian mining projects that may be brought into
production within 24 to 30 months of funding and the securing of all mining permits. Many
opportunities are presented in the form of old underground gold mines which can be re-opened, a
process with which the Company’s Management team has substantial experience.
Such projects offer significant advantages over “normal greenfield” exploration projects in that they:
cut out the major exploration costs;
the economics in terms of gold price at closure are known;
past production in the form of tonnes and grade are known;
to a large extent the existing development needs refurbishment which is far cheaper than new
development; and
the overall cost to reopen is far cheaper per ounce than new ounces at the same grade of a new
mine.
4.2 South Korea Gold Projects
South Korea is a modern, industrialised economy, a representative democracy and has substantial
infrastructure advantages, in many respects, superior to western jurisdictions. South Korea is an
investment-grade country with Moodys and Standard & Poors ratings of Aa2 and AA respectively.
4.2.1 Acquisition of South Korean Joint Ventures
In November 2020 the appointed Independent Expert valued Southern Gold Limited’s 50% of the
Gubong and Geochang project joint ventures at USD 9.945 million. This, and associated costs, was
settled with the issuance of 200 million BMV shares at GBP 3.6p (USD 5.0 cents) during 2021 – 50
million shares in June 2021 and 150 million shares in December 2021. This generated a gain on
acquisition of USD 8.3 million in addition to the recording of a fair value uplift in mines under
development of USD 17.4 million in the Group’s accounts (refer note 12 of the audited financial
statements).
4.2.2 The Gubong Project
The project is just over one hour’s drive west of Daejeon, the second largest city in South Korea. Access
to the site is by sealed roads to within 100 metres of the old mine. Other infrastructure such as power
and telecommunications are also placed conveniently nearby.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
13
History
Gubong was South Korea’s second largest gold producer historically and the largest during 1930-1943,
during the Japanese occupation. It still retains substantial remnant ore between mined blocks and
excellent exploration potential. Mine data indicates good potential for mine re-commissioning and
the possibility of relatively early cash flow.
There is a dearth of information considering the age of the mine and there is anecdotal evidence that
the information relating to gold production is understated as there was little government control over
the Japanese mining companies.
The Korean Resources Corporation (KORES) estimate of remaining resources at Gubong is 2.34M
tonnes at 7.34g/t. There are no declared JORC resource estimates currently at Gubong.
The immediate Gubong project area hosts five historical underground mines with the largest being
the Gubong mine which exploited high grade quartz veins hosted in gneissic granite and mined to a
vertical depth of approximately 500 metres.
Historic underground sampling results of the deeper levels of Vein 6, the main vein exploited at
Gubong, gives an arithmetic uncut average of 30.6 g/t gold from 146 values. Exploratory core drilling
below the now abandoned mine workings from one of five holes returned 27.9 g/t gold and 25 g/t
silver over 1.6 metres downhole from 845.2 metres. This demonstration of the persistence with depth
of the most developed mineralised structure supports the prospectivity of the property for auriferous
shoots with considerable depth continuity.
Interestingly, Vein 6 was found as a blind vein in the hanging wall during mine development work on
the other veins. This suggests substantial gold resources may be found in parallel vein systems that do
not outcrop in the area.
Work at Gubong
The Group has undertaken on-going care and maintenance and community relations work undertaken
at Gubong in the year to 31 December 2021. With the joint venture position now resolved with
Southern Gold Limited, operational activities are being planned for on the ground re-engagement
during 2022.
4.2.3 The Kochang Project
General Information on Kochang
The Kochang Mine began operations in 1928 with production records starting in 1938 with the Nippon
Mining Co, which mined the project until 1942. Production restarted in 1961 and was fairly constant
until 1975.
The workings extend over 1.2-1.5 km (2.5 km including the silver shaft area) from south west to north
east and extend down dip to about 120 m below surface. The workings exploit 5-7 veins striking 050
o
with a dip of 50-70 north west. There seem to have been 4 shafts (north shaft, south shaft, main shaft
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
14
and silver shaft). The gold and silver mines have been worked as separate mines in the past but recent
work suggests that they are part of the same deposit and that resources may extend between them.
Following the last year of recorded production in 1975, exploratory level development was carried out
in 1981 and 1990. Korean underground plans dated 1990 show the results of the sampling of quartz
veins along portions of the gold mine at Kochang. In aggregate, a total of 104 underground samples
are depicted with gold results ranging from 0.4 g/t up to 102.6 g/t for sample widths ranging from
0.03 metres to 0.6 metres in thickness. The length weighted average value of all the underground
samples is 17.05 g/t gold over 0.2 metres. There are no declared JORC resource estimates currently at
Kochang.
Of further interest is a particularly well mineralised 120 metre length of Vein 3 at the southern end of
the prospecting drive on 245RL which gave a length weighted average value of 57.27 g/t gold over a
0.29 metre width: indicating the presence of higher grade ore shoots at Kochang. Bonanza grades
were reportedly mined from upper levels of the north shaft vein.
In 1984, four inclined core holes were drilled at Kochang, but their coordinates are generally unknown.
Each hole intersected narrow quartz veins. Two of the holes were sampled for assay over intersections
of interest. One drill hole 84-2 was collared in a new deposit called the Sanpo Mine at 238 RL, azimuth
of 225 and dip 70. Of the nine results reported, Hole 84-2 gave two intersections above 1 g/t gold in
one hole. The intersections were 10.6 g/t gold and 12 g/t silver over 0.6 metres from 26.9 metres and
17.6 g/t gold and 4 g/t silver over 2.5 metres from 63.0 metres respectively. At 97.6 metres a 2.4m
vein gave trace gold and 1,763 g/t silver.
This drill hole opens up a “new” parallel mineralised structure of up to 2.5m wide to be explored and
the possibility of other as yet unknown structures related to the same hydrothermal fluid source and
regional structures.
Work at Kochang
The Group has undertaken on-going care and maintenance and community relations work undertaken
at Kochang in the year to 31 December 2021. With the joint venture position now resolved with
Southern Gold Limited, operational activities are being planned for on the ground re-engagement
during 2022.
4.3. Philippines Overview – Batangas Gold Project
The outlook for the Philippine mining industry has continued to improve during the year but the
Batangas Gold project remains under care and maintenance pending clarity of government policy.
The Company has applied for an extension of the exploration period of the MPSA due to improving
sentiment in the Philippines (refer note 23 of the audited financial statements).
The Company acquired the project from ASX Listed Red Mountain Mining Limited in November 2016
based on the highlights of a Pre-Feasibility Study (PFS) published by Red Mountain Mining Limited that
declared a Maiden Ore Reserve of 128,000oz of gold (including silver credits) including 100,000oz of
high-grade gold at 4.2g/t.
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Annual Report and Financial Statements 2021
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The acquisition cost allocated to the project was USD 2,137,855. The Batangas asset was fully impaired
in the period ended 31 December 2019 as the Board considered it appropriate to continue to follow
IFRS and to write the investment in Batangas down to zero in the financial statements.
Batangas Gold Project Mineral Resource JORC 2012
Deposit Resource
Classification
Tonnes Au g/t Au Oz Ag g/t Ag Oz
Kay Tanda West Indicated 1,421,000 2.1 96,000 9.2 421,000
Inferred 229,000 2.3 17,000 2.1 15,000
Total 1,650,000 2.1 113,000 11.3 436,000
Kay Tanda Main Indicated 1,161,000 1.9 70,000 1.4 50,000
Inferred 2,775,000 2.0 180,000 1.2 109,000
Total 3,936,000 2.0 250,000 2.6 159,000
Archangel MPSA Total 5,586,000 2.0 363,000 3.3 595,000
South West Breccia Indicated 214,000 6.4 44,000 1.8 12,600
Inferred 7,000 2.3 1,000 1.9 400
Total 221,000 6.3 45,000 1.8 13,000
Japanese Tunnel Indicated 26,000 3.3 3,000 5.9 5,000
Inferred 7,000 2.3 1,000 5.7 1,000
Total 33,000 3.0 4,000 5.7 6,000
West Drift (> 2g/t) Indicated 145,000 4.2 14,000 4.7 22,000
Inferred 205,000 2.4 19,000 4.3 28,000
Total 350,000 3.0 33,000 4.4 50,000
Lobo MPSA Total 604,000 4.2 82,000 3.6 69,000
Batangas Gold Project Indicated 2,968,000 2.4 227,000 5.4 511,000
Inferred 3,222,000 2.1 218,000 1.5 154,000
Total 6,190,000 2.2 445,000 3.3 665,000
Batangas Gold Project Ore Reserves JORC 2012
Deposit Ore
Reserve
Category
Tonnes Au
g/t
Au Oz Ag g/t Ag Oz Au Eq
g/t
Au Eq
Oz
Archangel
MPSA
Probable 1,225,000 2.1 86,000 10.0 403,000
2.3 91,000
Lobo MPSA Probable 186,000 6.2 37,000 2.2 13,000 6.2 37,000
Total Batangas
Project
Probable 1,441,000 2.6 123,000 9.0 416,000
2.8 128,000
The Pre-Feasibility Study was announced by Red Mountain Mining Limited (refer:
https://www.rscmme.com/report/Red_Mountain_Mining_Ltd_Batangas__15-6-2016).
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Annual Report and Financial Statements 2021
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4.4 Funding
The Company funded its activities during the period by receiving USD 176,600 from Auric Network, a
cryptocurrency organisation that operates in South Korea (2020, USD 176,700) and the drawdown of
a loan of USD 425,781 (refer note 16.3 of the audited financial statements).
The Company continued to benefit from Directors and the Management team continuing to agree to
take salary sacrifice shares rather than cash payments during the year.
This Strategic Report was approved by the Board of Directors on 28 June 2022 and is signed on its
behalf.
By Order of the Board
Jonathan Morley-Kirk
Chairman
29 June 2022
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
17
5. FINANCIAL STATEMENTS
5.1 Independent Auditor’s Report to the Members of the Company
Opinion
We have audited the financial statements of Bluebird Merchant Ventures Ltd (the ‘Group’) for the
year ended 31 December 2021 which comprise the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement 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 International Financial Report Standards
(IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
give a true and fair view of the state of the Group’s affairs as at 31 December 2021 and of its
profit for the year then ended; and
have been properly prepared in accordance with IFRSs as adopted by the European Union
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 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 2 in the financial statements, which indicates that the Group are loss
making, having incurred a loss of $770,099 when excluding the gain on change on ownership of the
two subsidiaries acquired in the year in 2021, are in a net current liability position of $1,062,754, as at
31 December 2021, and are dependent on obtaining financing in order to meet its working capital
requirements over the next 12 months. As stated in note 2, these events or conditions, along with the
other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant
doubt on the Group’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 Group’s ability to continue to adopt the going concern basis of accounting
included reviewing and challenging cashflow forecasts prepared by management covering the going
concern period and the relating key assumptions and discussing their strategies regarding future fund
raises.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
18
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. Materiality for the consolidated financial statements was set as
$400,000 (2020: $40,000) based upon 2% of gross assets (2020: 2% of gross assets). Materiality has
been based upon gross assets due to the significant value of the Consolidated Statement of Financial
Position and the number of identified risks in relation to the Consolidated Statement of Financial
Position relative to the Consolidated Statement of Comprehensive Income. Performance materiality
and the triviality threshold for the consolidated financial statements was set at $300,000 (2020:
$28,000) and $20,000 (2020: $2,000) respectively due to our accumulated knowledge of the group
and their assessed risk. We also agreed to report to the Audit Committee any other differences below
that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular we looked at areas involving significant accounting estimates
and judgements by the directors and considered future events that are inherently uncertain, such as
the recoverable value of the mines under development asset and the fair value assigned to the joint
venture companies upon gaining of control. 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.
A full scope audit was performed on the complete financial information of all seven components of
the Group.
Of the seven reporting components of the Group, one is located in the British Virgin Islands and two
in each of South Korea, Philippines and Singapore. PKF Littlejohn LLP audited the ultimate parent
company, situated in the British Virgin Islands, and all other reporting components. The Engagement
Partner conducted audit work in the United Kingdom but interacted regularly with the management
team in the Philippines during all stages of the audit and was responsible for the scope and direction
of the audit process. This, in conjunction with additional procedures performed, gave us appropriate
evidence for our opinion on the Group financial statements.
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 period 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. In addition to the matter described in the Material uncertainty related to
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
19
going concern section we have determined the matters described below to be the key audit matters
to be communicated in our report.
Key Audit Matter How our scope addressed this matter
Acquisition of Gubong and Kochang
On 29 June 2021 the Group announced that it
has executed an agreement to increase its
ownership in Gubong and Kochang from 50%
to 100%.
Due to the complexity and estimation
uncertainty there is therefore a risk of material
misstatement as the step acquisition of both
entities may not been correctly accounted for
and disclosed in accordance with IFRS 3.
See note 12 for the disclosure note addressing
this acquisition.
Our work included but was not limited to:
Obtaining and reviewing share purchase
agreements and ascertaining whether
the control was obtained and if
acquisition falls within the scope of IFRS
3;
Obtaining assurance over the accuracy of
the acquisition trial balance; and
Reviewing the step-acquisition
accounting and considering whether the
gain on change of ownership and
goodwill arising from acquisition were
correctly calculated and accounted for.
The acquisitions were found to have given the
Group control over the two entities and fallen
within the scope of IFRS 3. Based on the
procedures performed, we found that
managements accounting work for the
acquisition to be in line with IFRS 3 and to be
reasonable.
Carrying value of mines under development
As at 31 December 2021, the carrying value of
mines under development was $19,816k
(Note 12). This asset arose from the
acquisition of the previous joint venture
companies, Gubong and Kochang.
Given the value, the fact that the Group have
yet to enter into production and the
estimation uncertainty, there is a risk that this
asset may be materially impaired. There is also
a risk that those costs capitalised during the
year have been inappropriately capitalised.
Our work included but was not limited to:
Obtaining the directors’ impairment
assessment and reviewing and
discussing with the directors;
challenging the key inputs and
assumptions.
Considering any impairment indicators
noted; and
For a sample of costs capitalised in the
year, vouching to supporting
documentation and ensuring the cost
has been appropriately capitalised.
The directors’ recoverable value assessment,
which included the use of discount cashflow
forecasts and independent third-party valuations
of the subsidiaries and their underlying assets,
were found to be reasonable with no impairment
indicators noted.
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Annual Report and Financial Statements 2021
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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 financial statements does
not cover the other information and, 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.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible
for the preparation of the group 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 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 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.
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Annual Report and Financial Statements 2021
21
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 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 discussions with
Management, independent research and our accumulated knowledge and experience of the
industry.
We determined the principal laws and regulations relevant to the Group in this regard to be
those arising from the LSE Main Market listing rules, FCA rules and BVI Business Companies
Act.
We designed our audit procedures to ensure the audit team considered whether there were
any indications of non-compliance by the Group with those laws and regulations. These
procedures included, but were not limited to:
o Discussions with Management regarding compliance with laws and regulations by the
Group and all components;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
We also identified the risks of material misstatement of the financial statements due to fraud.
We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that there was potential for management bias in relation
to the impairment of mines under development assets and we addressed this by challenging
the assumptions and judgements made by management when auditing that significant
accounting estimate.
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; discussing with management
as to whether there had been any instances or suspicions of fraud within the subsidiaries and
evaluating the business rationale of any significant transactions that are unusual or outside
the normal course of business.
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:
www.frc.org.uk/auditorsresponsibilities.
This description
forms part of our auditor’s report.
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Annual Report and Financial Statements 2021
22
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our engagement
letter dated 25 March 2022. 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.
Joseph Archer (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4H
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Annual Report and Financial Statements 2021
23
5.2 Consolidated Income Statement
For the year ended 31 December 2021
Note
12 months
to 31-Dec-21
(USD)
12 months
to 31-Dec-20
(USD)
Administrative expenses (656,295 ) (633,278 )
Farm-in costs 5,614 (26,022 )
Operating loss 6 (650,681 ) (659,300 )
Gain on acquisition of joint ventures 12 8,301,087 -
Finance expense 9 (83,000 ) (58,859 )
Share of loss of joint ventures 11 (36,418 ) (181,514 )
Profit/(loss) before taxation 7,530,988 (899,673 )
Income tax expense 10 - -
Profit/(loss) for the year 7,530,988 (899,673 )
Earnings per share:
Basic earnings per share (USD cents per share) 20 0.0172 (0.0023 )
Diluted earnings per share (USD cents per share) 20 0.0168 (0.0023 )
The above results relate entirely to continuing operations.
The accompanying accounting policies and notes form an integral part of these financial statements.
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Annual Report and Financial Statements 2021
24
5.3 Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Profit/(loss) for the year 7,530,988 (899,673 )
Exchange difference on translating foreign operations* (99,249 ) 87,195
Total comprehensive income for the year 7,431,739 (812,478 )
* Items that may be reclassified to profit or loss
The accompanying accounting policies and notes form an integral part of these financial statements.
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Annual Report and Financial Statements 2021
25
5.4 Consolidated Statement of Financial Position
For the year ended 31 December 2021
Note
31-Dec-21
(USD)
31-Dec-20
(USD)
Non-current assets
Mines under development 12 19,816,088 -
Investment in joint ventures 11 - 1,677,198
Current assets
Trade and other receivables 13 58,606 36,656
Cash and cash equivalents 14 166,668 72,836
Current liabilities
Trade and other payables 15 (223,059 ) (239,616 )
Other financial liabilities 16 (779,081 ) (176,700 )
Derivative financial instruments 16 (285,888 ) (202,889 )
(1,288,028 ) (619,205 )
Net Assets 18,753,334 1,167,485
Equity
Issued share capital 20 19,584,044 8,670,780
Unissued share capital 20 34,521 793,675
Reserves 1,336,962 1,436,211
Retained earnings (2,202,193 ) (9,733,181 )
Total Equity 18,753,334 1,167,485
The accompanying accounting policies and notes form an integral part of these financial statements.
These financial statements were approved and signed on behalf of the Board of Directors.
Jonathan Morley-Kirk Colin Patterson
Chairman Chief Executive Officer
29 June 2022 29 June 2022
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
26
5.5 Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Note
Issued Share
Capital
(USD)
Unissued
Share Capital
(USD)
Retained
Earnings
(USD)
Reserves
(USD)
Total
Equity
(USD)
At 31-Dec-19 7,552,662 230,223 (8,699,901 ) 1,349,016 432,000
Prior year adjustment - 133,607 (133,607 ) - -
At 31-Dec-19 (Re-stated) 7,552,662 363,830 (8,833,508 ) 1,349,016 432,000
Loss for the year - - (899,673 ) - (899,673 )
Other comprehensive income for the period - - - 87,195 87,195
Total comprehensive loss - - (899,673 ) 87,195 (812,478 )
Shares issued/to be issued (net of expenses)
20 1,118,118 429,845 - - 1,547,963
Total transactions with owners 1,118,118 429,845 (899,673 ) 87,195 735,485
At 31-Dec-20 8,670,780 793,675 (9,733,181 ) 1,436,211 1,167,485
Profit for the year - - 7,530,988 - 7,530,988
Other comprehensive income for the period - - - (99,249 ) (99,249 )
Total comprehensive loss - - 7,530,988 (99,249 ) 7,431,739
Shares issued/to be issued (net of expenses) 20 10,913,264 (759,154 ) - - 10,154,110
Total transactions with owners 10,913,264 (759,154 ) 7,530,988 (99,249 ) 17,585,849
At 31-Dec-21 19,584,044 34,521 (2,202,193 ) 1,336,962 18,753,334
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
27
5.6 Consolidated Cash Flow Statement
For the year ended 31 December 2021
Note
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Cash flows from operating activities
Cash paid to suppliers and employees (401,453 ) (235,573 )
Net cash used in operating activities (401,453 ) (235,573 )
Cash flows from investing activities
Loans to joint ventures 11 (101,600 ) (257,749 )
Cash acquired on acquisition 46,429 -
Net cash used in investing activities (55,171 ) (257,749 )
Cash flows from financing activities
Cash received for shares - 401,119
Cash received from loans 16 550,456 159,000
Net cash from financing activities 550,456 560,119
Net increase/(decrease) in cash 98,832 66,797
Cash and cash equivalents at the start of the year 72,836 6,039
Cash and cash equivalents at the end of the year 166,668 72,836
There have been significant non-cash transactions relating to the settlement of operating and
financial liabilities in the periods (refer notes 17 and 21 of the audited financial statements).
The accompanying accounting policies and notes form an integral part of these financial statements.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
28
5.7 Notes to the Financial Statements
For the year ended 31 December 2021
1. Basis of Preparation and Adoption of International Financial Reporting Standards (IFRS)
The Group financial statements consolidate those of the Company and of its subsidiaries and have
been prepared in accordance with IFRS and International Financial Reporting Interpretations
Committee interpretations as adopted by the European Union.
The consolidated financial statements are prepared on the historical cost basis or the fair value basis
where the fair valuing of relevant assets and liabilities has been applied.
Certain amounts included in the consolidated financial statements involve the use of judgement
and/or estimation. Judgements, estimations and sources of estimation uncertainty are discussed in
note 3.
New and amended standards which are effective for these financial statements
No new standards, amendments or interpretations, effective for the first time for the financial year
beginning on or after 1 January 2021 have had a material impact on the Group.
Standards in issue but not yet effective
The following standards, amendments and interpretations which have been recently issued or revised
and are mandatory for the Group’s accounting periods beginning on or after 1 January 2022 or later
periods have not been adopted early:
Standard Impact on initial application Effective date
IFRS 3 (amendments) Business combinations 01 January 2022
IAS 37 (amendments) Onerous contracts 01 January 2022
IFRS standards (amendments) 2018-2020 annual improvement cycle 01 January 2022
IAS 16 (amendments) Proceeds before intended use 01 January 2022
IFRS 17 Insurance Contracts 01 January 2023
IFRS 17 (amendments) Insurance contracts 01 January 2023
IAS 1 (amendments)
Reclassification of liabilities as current or
non-current
01 January 2023
IAS 8 (amendments) Definition of accounting estimates 01 January 2023
IAS 12 (amendments) Deferred tax related to assets and liabilities 01 January 2023
It is expected that these standards will not have a material impact on the Group.
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Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
30
Mineral Resources and Ore Reserves (refer note 12 of the audited financial statements and sections
4.2 and 4.3 of the Strategic Report).
3.2 Recoverable value of mine under development
Consideration of impairment indicators for mining projects requires significant judgements and
estimates when assessing the available technical, financial and licencing information. At each period
end, the Directors carry out this process for each project taking into account all available information
to develop an expected recoverable value of the mines under development assets, which is compared
to the carrying value of the mine under development assets.
The Directors considered the projects’ developments since the date of this report. The Company
undertook an impairment review of the Korean projects and see no adverse factors that suggest that
the recoverable value of these assets has fallen below their carrying values. The Directors have
assessed the recoverable value of the assets by reviewing valuations reports and discounted cashflow
forecasts prepared, over six years with a discount rate of 15%, in respect of the two projects. The
Director's further believe that they will obtain the required funding, be able to complete the
construction of the mines and that they will generate the funds forecasted in the discounted cashflow
forecasts.
3.3 Valuation of share warrants
Share warrants issued by the Company are fair valued when granted and warrants, which are classified
as financial liabilities are revalued at each reporting date. This requires the Group to determine an
appropriate valuation methodology, which they have determined to be the Black-Scholes option
pricing model. The use of this model requires the determination of a number of key assumptions which
can have a significant effect on the valuation (refer note 16 of the audited financial statements).
4. Accounting Policies
4.1 Consolidation
The Group financial statements consolidate the results of the Company and its subsidiary undertakings
using the acquisition accounting method. On acquisition of a subsidiary, all of the subsidiary’s
identifiable assets and liabilities which exist at the date of acquisition are recorded at their fair values
reflecting their condition on that date. The results of subsidiary undertakings acquired are included
from the date of acquisition. In the event of the sale of a subsidiary, the subsidiary results are
consolidated up to the date of completion of the sale.
Subsidiaries are all those entities over which the parent has control. Control exists if the parent is
exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability
to affect those returns through its power over the subsidiary.
The costs of acquisition are recognised in the income statement. Identifiable assets acquired, liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date irrespective of the extent of any non-controlling interest.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
31
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference is recognised directly in the income statement as
a gain.
Transactions, balances and unrealised gains and losses on transactions between Group companies are
eliminated, unless the unrealised loss provides evidence of an impairment of the asset transferred.
Investments in associates and jointly controlled entities are accounted for using the equity method of
accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition
profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves
is recognised in other comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. When the Group’s share of losses exceeds its
interest in an equity-accounted investee the carrying amount of the investment, including any other
unsecured receivables, is reduced to zero, and the recognition of further losses is discontinued, unless
the Group has incurred obligations or made payments on behalf of the investee.
Accounting policies of equity-accounted investees have been changed where necessary to ensure
consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in
equity-accounted investees are recognised in profit or loss.
The Group discontinues the use of the equity method from the date when the investment ceases to
be an associate or when the investment is classified as held for sale. When the Group retains an
interest in the former associate or joint venture and the retained interest is a financial asset, the Group
measures the retained interest at fair value at that date and the fair value is regarded as its fair value
on initial recognition. The difference between the carry amount of the associate at the date the equity
method was discontinued, and the fair value of any retained interest and any proceeds from disposing
of a part interest in the associate is included in the determination of the gain or loss on disposal.
In addition, the Group accounts for all amounts previously recognised in other comprehensive income
in relation to that associate on the same basis as would be required if that associate had directly
disposed of the related assets of liabilities.
When the Group reduces its ownership interest in an associate but the Group continues to use the
equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had
previously been recognised in other comprehensive income relating to that reduction in ownership
interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets
or liabilities.
The difference between the fair value of the consideration to acquire the South Korean subsidiaries
and the fair value of the subsidiaries net assets was taken to mines under development (refer note 12
of the audited financial statements).
4.2 Joint Arrangements
Certain Group activities are conducted through joint arrangements in which two or more parties have
joint control. A joint arrangement is classified as either a joint operation or a joint venture, depending
on the rights and obligations of the parties to the arrangement.
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
32
Joint operations arise when the Group has a direct ownership interest in jointly controlled assets and
obligations for liabilities. The Group does not currently hold this type of arrangement.
Joint ventures arise when the Group has rights to the net assets of the arrangement. For these
arrangements, the Group uses equity accounting and recognises initial and subsequent investments
at cost, adjusting for the Group’s share of the joint venture’s income or loss, less dividends received
thereafter. When the Group’s share of losses in a joint venture equals or exceeds its interest in a joint
venture it does not recognise further losses.
Joint ventures are tested for impairment whenever objective evidence indicates that the carrying
amount of the investment may not be recoverable. The impairment amount is measured as the
difference between the carrying amount of the investment and the higher of its fair value less costs
of disposal and its value in use. Impairment losses are reversed in subsequent periods if the amount
of the loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised.
4.3 Investment in Associates
Associate companies are companies in which the group has significant influence generally though
holding, directly or indirectly, 20% or more of the voting power of the Group. Investments in associates
are accounted for in the financial statements by applying the equity method of accounting whereby
the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in
the Group’s share of net assets of the associate company. In addition, the Group’s share of the profit
or loss of the associate company is included in the Group’s profit or loss.
4.4 Segmental reporting
An operating segment is a component of the Group engaged in exploration or production activity that
is regularly reviewed by the Chief Operating Decision Maker (CODM) for the purposes of allocating
resources and assessing financial performance. The CODM is considered to be the Board of Directors.
The Group’s operating segments are determined on a geographical basis being the British Virgin
Islands, South Korea and the Philippines (refer note 5 of the audited financial statements).
4.5 Foreign currency translation
Functional and presentational currency
The functional currencies of the entities within the Group are the US dollar (for the Company and the
Singaporean companies), Philippine peso (for the Philippine companies) and the Korean won (for the
Korean companies) as the currencies which most affects each company’s costs and financing. The
Group’s presentational currency is the US dollar.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions, and from the translation at reporting period end exchange rates of
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
33
monetary assets and liabilities denominated in foreign currencies, are recognised in the income
statement.
On consolidation, the assets and liabilities of the Group’s overseas operations that do not have a US
dollar functional currency, are translated at exchange rates prevailing at the balance sheet date.
Income and expense items are translated at the average exchange rate for the period. Exchange
differences arising on the net investment in subsidiaries are recognised in other comprehensive
income.
4.6 Financial instruments
Financial assets and liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
De-recognition of financial instruments occurs when the rights to receive cash flows from the
investments expire or are transferred and substantially all of the risks and rewards of ownership have
been transferred. An assessment for impairment is undertaken where there is objective evidence that
a financial asset or a group of financial assets is impaired.
Financial assets
Financial assets are subsequently recognised at amortised cost under IFRS 9 if it meets both the hold
to collect and contractual cash flow characteristics tests. A financial asset is measured at fair value
through other comprehensive income if the financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
If neither of the above classifications are met the asset is classified as fair value through the profit and
loss or unless management elect to do so provided the classification eliminates or significantly reduces
a measurement or recognition inconsistency.
A financial asset that is not carried at fair value through profit or loss is assessed at each reporting
date to determine a loss allowance for expected credit losses. If the credit risk on a financial
instrument has increased significantly since initial recognition, the loss allowance is equal to the
lifetime expected credit losses. If the credit risk has not increased significantly, the loss allowance is
equal to the twelve month expected credit losses.
The expected credit losses are measured in a way that reflects the unbiased and probability weighted
amount that is determined by evaluating a range of possible outcomes; the time value of money and
reasonable and supportable information that is available about past events, current conditions and
forecasts of future economic conditions.
4.7 Financial liabilities
Financial liabilities include loans and trade and other payables. In the statement of financial position
these items are included within Non-current liabilities and Current liabilities. Financial liabilities are
Bluebird Merchant Ventures Ltd
Annual Report and Financial Statements 2021
34
recognised when the Group becomes a party to the contractual agreements giving rise to the liability.
Interest related charges are recognised as an expense in Finance costs in the income statement unless
they meet the criteria of being attributable to the funding of construction of a qualifying asset, in
which case the finance costs are capitalised.
Borrowings, including the loan notes, are initially recognised at fair value, net of transaction costs
incurred. They are subsequently stated at amortised cost with any difference between the proceeds
(net of transaction costs) and the redemption value recognised in profit or loss over the period of the
borrowings using the effective interest rate method.
When a loan is converted into equity the gain or loss arising, being the difference between the carrying
amount of the liability extinguished and the fair value of the equity issued, is recognised in the Income
Statement.
See separate accounting policies below in respect of accounting for warrants.
Trade and other payables and loans are recognised initially at their fair value and subsequently
measured at amortised costs using the effective interest rate, less settlement payments.
4.8 Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, demand deposits and short term highly liquid
investments and are measured at cost which is deemed to be fair value as they have short-term
maturities.
4.9 Share capital and unissued share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not
meet the definition of a financial liability. The Company’s ordinary shares are classified as equity and
have no par value. Costs directly associated with the issue of shares are charged to share capital.
Where the Company has a contractual right to issue a fixed number of shares to settle a fixed liability
it recognises unissued share capital pending the issue of shares.
4.10 Income taxes
Current income tax liabilities comprise those obligations to fiscal authorities in the countries in which
the Group carries out operations and where it generates its profits. They are calculated according to
the tax rates and tax laws applicable to the financial period and the country to which they relate. All
changes to current tax assets and liabilities are recognised as a component of the tax charge in the
income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This
involves the comparison of the carrying amount of assets and liabilities in the consolidated financial
statements with their respective tax bases. However, deferred tax is not provided on the initial
recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects taxable or accounting profit.
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Deferred tax liabilities are provided for in full; deferred tax assets are recognised when there is
sufficient probability of utilisation. Deferred tax assets and liabilities are calculated at tax rates that
are expected to apply to their respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
There are no deferred tax assets or liabilities in the Group’s statement of financial position.
4.11 Provisions, contingent liabilities and contingent assets
Other provisions are recognised when the present obligations arising from legal or constructive
commitment, resulting from past events, will probably lead to an outflow of economic resources from
the Group which can be estimated reliably. Provisions are measured at the present value of the
estimated expenditure required to settle the present obligation, based on the most reliable evidence
available at the balance sheet date. All provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
4.12 Share based payments
The Group operates equity settled share based compensation plans, which may be settled in cash
under certain circumstances. All employee services received in exchange for the grant of any share
based compensation are measured at their fair values. These are indirectly determined by reference
to the share based award. Their value is appraised at the grant date and excludes the impact of any
non-market vesting conditions. The Black-Scholes model is used to measure the fair value.
All share based compensation is ultimately recognised as an expense in profit and loss with a
corresponding credit to retained earnings, net of deferred tax where applicable. Where share based
compensation is to be cash settled, such as certain share based bonus awards, the corresponding
credit is made to accruals or cash. The Company may have certain share option schemes that may be
settled in cash at the absolute discretion of the Board.
If any equity settled share-based awards are ultimately settled in cash, then the amount of payment
equal to the fair value of the equity instruments that would otherwise have been issued is accounted
for as a repurchase of an equity interest and is deducted from equity. Any excess over this amount is
recognised as an expense.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest. Non-market
vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. Estimates are subsequently revised if there is any indication that the number of
share options expected to vest differs from previous estimates. No adjustment to the expense
recognised in prior periods is made if fewer share options are ultimately exercised than originally
granted.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction
costs, up to the nominal value of the shares issued, are allocated to share capital with any excess being
recorded in share premium.
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4.13 Impairment of exploration and evaluation assets
Whenever events or changes in circumstance indicate that the carrying amount of an asset may not
be recoverable an asset is reviewed for impairment. An asset’s carrying value is written down to its
estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if
that is less than the asset’s carrying amount.
Impairment reviews for exploration and evaluation assets are carried out on a project by project basis,
with each project representing a potential single cash generating unit.
An impairment review is undertaken at least each balance sheet date or when indicators of
impairment arise such as:
unexpected geological occurrences that render the resource uneconomic;
title to the asset is compromised;
variations in mineral prices that render the project uneconomic;
substantive expenditure on further exploration and evaluation of mineral resources is
neither budgeted nor planned; and
the period for which the Group has the right to explore has expired and is not expected
to be renewed.
4.14 Mine development costs
Once the decision has been taken to develop a mine the costs that are considered to be directly
attributable to the development are capitalised and reviewed for impairment each year. When
assessing this asset for impairment, management estimate the recoverable value of the asset, being
the higher of the assessed value in use or the assessed fair value less costs to sell. The higher of the
two is then compared to the carrying value of the asset.
4.15 Warrants
Warrants instruments are classified as derivative financial liabilities as the functional currency of the
Company is USD and the exercise price is GBP. They are carried in the consolidated statement of
financial position at fair value with changes in fair value recognised in the consolidated statement of
comprehensive income.
4.16 Fair value measurement hierarchy
The Group classifies its financial liabilities measured at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the fair value measurement.
The fair value hierarchy has the following levels:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices) (level 2);
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Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
The level in the fair value hierarchy within the financial liability is determined on the basis of the lowest
level input that is significant to the fair value measurement.
5. Segmental Reporting
5.1 Income Statement
For the year ended 31 December 2021
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Administrative costs (633,176) (23,119) - (656,295)
Farm-in (costs)/income - - 5,614 5,614
Finance expense (83,000) - - (83,000)
Gain on acquisition of joint ventures* 8,301,087 - - 8,301,087
Share of loss from associate - - (36,418) (36,418)
Profit/(loss) for the period 7,584,911 (23,119) (30,804) 7,530,988
Other comprehensive income - (6,267) (92,982) (99,249)
Total comprehensive profit for the year 7,584,911 (29,386) (123,786) 7,431,739
* Refer note 12 of the audited financial statements
5.2 Statement of Financial Position
For the year ended 31 December 2021
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Mines under development* - - 19,816,088 19,816,088
Trade and other receivables 42,392 - 16,214 58,606
Cash and cash equivalents 157,377 9,291 - 166,668
Total Assets 199,769 9,291 19,832,302 20,041,362
Trade and other payables (104,079) (97,448) (21,532) (223,059)
Other financial liabilities (779,081) - - (779,081)
Derivative financial instruments (285,888) - - (285,888)
Net (liabilities)/assets (969,279) (88,157) 19,810,770 18,753,334
* Refer note 12 of the audited financial statements
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5.3 Income Statement
For the year ended 31 December 2020
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Administrative costs (616,114) (17,164) - (633,278)
Farm-in costs - - (26,022) (26,022)
Finance expense (58,859) - - (58,859)
Share of loss from associate - - (181,514) (181,514)
Loss for the period (674,973) (17,164) (207,536) (899,673)
Other comprehensive income - 87,195 - 87,195
Total comprehensive loss for the year (674,973) 70,031 (207,536) (812,478)
5.4 Statement of Financial Position
For the year ended 31 December 2020
BVI
(USD)
Philippines
(USD)
South Korea
(USD)
Total
(USD)
Investment in joint ventures - - 1,677,198 1,677,198
Trade and other receivables 36,656 - - 36,656
Cash and cash equivalents 66,704 6,132 - 72,836
Total Assets 103,360 6,132 1,677,198 1,786,690
Trade and other payables (138,369) (101,247) - (239,616)
Other financial liabilities (176,700) - - (176,700)
Derivative financial instruments (202,889) - - (202,889)
Net (liabilities)/assets (414,598) (95,115) 1,677,198 1,167,485
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6. Loss for the Period Before Tax
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Loss for the period has been arrived at after charging
the following under administrative expenses:
Auditors’ remuneration – current period 40,000 31,500
Auditors’ remuneration – previous period 8,346 17,552
Directors’ remuneration
Staff costs
Prospectus costs
Share based payments
188,332
107,193
89,149
2,686
264,931
92,259
-
61,877
7. Remuneration of Key Management Personnel
In accordance with IAS 24 – Related Party transactions, key management personnel, including all
Executive and Non-Executive Directors, are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group.
12 months to 31-Dec-21 12 months to 31-Dec-20
Payable
in Cash
(USD)
Payable
in Equity
(USD)
Total
(USD)
Payable
in Cash
(USD)
Payable
in Equity
(USD)
Total
(USD)
Directors remuneration - 188,332 188,332 - 264,931 264,931
Key management
personnel
21,850 65,858 87,708 - 74,462 74,462
Other staff costs 19,485 - 19,485 17,797 - 17,797
Total remuneration 41,335 254,190 295,525 17,797 339,393 357,190
Details of the Directors remuneration is shown under the Remuneration Committee section of the
Director’s Report.
All amounts shown relate to short term employee benefits and there are no payments made for other
long term benefits, termination benefits or share based benefits.
Directors and key management personnel agreed to take all fees between May 2019 and September
2021 as equity post period end. The equity was issued in June 2021 and December 2021 (refer note
20 of the audited financial statements). Amounts payable for the period from October 2021 to
December 2021 have not been issued and are represented by unissued share capital (refer note 20 of
the audited financial statements).
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8. Average Number of Employees
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Directors 5 5
Management and Administration 2 2
Mining, Processing and Exploration staff 1 1
8 8
9. Finance Expense/(Gain)
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Loan interest
Fair value movement
10,385
83,000
-
58,859
93,385 58,859
10. Taxation
The Group contains entities with tax losses and deductible temporary differences for which no
deferred tax asset is recognised. A deferred tax asset has not been recognised within some of the
Group entities where the entities in which those losses and allowances have been generated either
do not have forecast taxable profits in the near future or the losses have restrictions whereby their
utilisation is considered to be unlikely.
The Company is taxed at the standard rate of income tax for British Virgin Island companies which is
0%. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The Group, including MRL Gold Inc, had no income tax liabilities for the year ended 31 December
2021 (2020, Nil).
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The tax charge for the period can be reconciled to the loss per the income statement as follows:
12 months to
31-Dec-21
12 months to
31-Dec-20
Profit/(loss) before taxation
Corporation
Tax
Rate
(USD)
Corporation
Tax
Rate
(USD)
BVI 0.0% (633,176) 0.0% (678,083)
Philippines 25.0% (23,119) 25.0% (14,054)
South Korea 25.0% (30,804) 25.0% (207,536)
Tax gain/(losses) carried forward not
recognised as a deferred tax asset
2.0% (687,099) 6.8% (899,673)
No disallowable expenses were incurred in 2021 (2020: USD nil). The only non-taxable gain in 2021
was the $8,301,087 gain on acquisition of joint venture (2020: USD nil).
11. Investments
11.1 Investments in Associates – Egerton Gold Philippines Inc
Summarised financial information in respect of the Group’s associate interest in Egerton Gold
Philippines Inc is set out below. The summarised information represents amounts shown in Egerton
Gold Philippines Inc’s financial statements, as adjusted for differences in accounting policies. Amounts
have been translated in accordance with the Group’s accounting policy on foreign currency
translation.
A summary of the Balance Sheet of Egerton Gold Philippines Inc before consolidation adjustments is
shown below:
31-Dec-21
(USD)
31-Dec-20
(USD)
Non-current assets
Deferred exploration costs 18,828,382 19,978,354
Current liabilities
Trade and other payables (19,220,319) (20,390,738)
Net liabilities (391,937) (412,384)
Equity
Issued Capital 122,387 129,863
Retained Earnings (514,324) (542,247)
Total Equity (391,937) (412,384)
Variances from 31 December 2020 to 31 December 2021 relate to FX differences
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Losses for the year ended 31 December 2021 were USD Nil (2020, USD Nil). The Batangas asset was
fully impaired in the period ended 31 December 2019.
11.2 Investments in Joint Ventures – Gubong Project JV Co Pte Ltd
Summarised financial information in respect of the Group’s 50% JV interest in Gubong Project JV Co
Pte Ltd, which is the 100% owner of the South Korean Gubong Project Co Ltd for the year ended 31
December 2020 is set out below. The summarised information represents amounts shown in the then
JV company’s 2020 financial statements, as adjusted for differences in accounting policies. Amounts
have been translated in accordance with the Group’s accounting policy on foreign currency
translation.
A summary of the Balance Sheet of the Gubong Project companies before consolidation adjustments
is shown below:
31-Dec-20
(USD)
Non-current assets
Mine under development 1,337,578
Property Plant & Equipment (Net) -
1,337,578
Current assets
Cash 1,097
Receivables 16,236
17,333
Current liabilities
Trade and other payables (1,847,803)
Net liabilities (492,892)
Equity
Issued Capital 2
Retained Earnings (518,277)
Reserves 25,383
Total Equity (492,892)
The balance sheet as at 31 December 2021 has not been included in the table below as control was
gained over this entity in June 2021 and thus the company’s assets and liabilities have been
consolidated into the consolidated statement of financial position.
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Investments – Gubong Project
12 months to
31-Dec-20
(USD)
Opening balance
Advances to JV company
Share of loss
756,148
73,086
(86,800)
Closing balance 742,434
Losses for the period ended 30 June 2021, before acquisition, were USD 29,672 (2020, USD 173,600).
USD 14,836 was included in the Group’s results in relation to the Group’s 50% ownership of the
company (2020, USD 86,800).
11.3 Investments in Joint Ventures – Kochang Project JV Co Pte Ltd
Summarised financial information in respect of the Group’s 50% JV interest in Kochang Project JV Co
Pte Ltd, which is the 100% owner of the South Korean registered Geochang Project Co Ltd for the year
ended 31 December 2020 is set out below. The summarised information represents amounts shown
in the then JV company’s 2020 financial statements, as adjusted for differences in accounting policies.
Amounts have been translated in accordance with the Group’s accounting policy on foreign currency
translation.
A summary of the Balance Sheet of the Kochang Project companies before consolidation adjustments
is shown below:
31-Dec-20
(USD)
Non-current assets
Mine under development 1,252,797
1,252,797
Current assets
Cash 25,955
Receivables 9,892
35,847
Current liabilities
Trade and other payables (1,728,145)
Net liabilities (439,501)
Equity
Issued Capital 2
Retained Earnings (467,057)
Reserves 27,554
Total Equity (439,501)
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The balance sheet as at 31 December 2021 has not been included in the table below as control was
gained over this entity in June 2021 and thus the company’s assets and liabilities have been
consolidated into the consolidated statement of financial position.
Investments – Kochang Project
12 months to
31-Dec-20
(USD)
Opening balance
Advances to JV company
Cost of JV participation rights
Share of loss
844,815
184,663
-
(94,714)
Closing balance 934,764
Losses for the period ended 30 June 2021, before acquisition, were USD 43,164 (2020, USD 189,428).
USD 21,582 was included in the Group’s results in relation to the Group’s 50% ownership of the
company (2020, USD 94,714).
12. Mines Under Development
31 Dec 2021
(USD)
Consideration paid to Southern Gold Limited 10,000,000
Company’s 50% Joint Venture Interest 10,000,000
Total consideration 20,000,000
Less fair value of net assets:
Non-current assets (2,535,532)
Current assets (other receivables) (64,302)
Current liabilities -
Fair value uplift to mines under development on acquisition 17,400,166
Mines under development before acquisition of joint ventures 2,415,922
Mines under development at year end 19,816,088
The mines under development asset fair value uplift has arisen from the execution of an agreement
the Company announced on 29 June 2021 to increase the Group’s ownership to 100% in the Gubong
and Geochang gold mines via the acquisition of Southern Gold Limited’s 50% Joint Venture Interest in
the South Korean gold projects, which were acquired as the Company, through its pre-feasibility
studies, demonstrated value in the projects for the Company’s shareholders.
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The total consideration was paid to Southern Gold Limited by the issuance of 200 million BMV shares
at GBP 3.6p per share (USD 0.5 cents). The Company issued 50 million shares to Southern Gold Limited
in June 2021 and the 150 million shares balance in December 2021, at a consideration of USD 2.5
million and USD 7.5 million respectively.
The Joint Venture Interest in the South Korean gold projects was revalued prior to acquisition to the
consideration required to acquire the joint ventures, which generated a gain on acquisition of USD 8.3
million and the recording of mines under development totalling USD 19.8 million at 31 December
2021.
If these businesses were acquired at the beginning of the reporting period, Group revenue would have
been USD Nil, and loss for the year from continuing operations would have been USD 36,418 more.
The directors of the Group consider these results to be representative of the performance of the
combined Group, annualised, and provide a reference point for comparison against periods in the
future.
13. Trade and Other Receivables
31-Dec-21
(USD)
31-Dec-20
(USD)
Other receivables 19,244 3,030
Prepayments 39,362 33,626
58,606 36,656
14. Cash and Cash Equivalents
31-Dec-21
(USD)
31-Dec-20
(USD)
Cash at bank 166,668 72,836
15. Trade and Other Payables
31-Dec-21
(USD)
31-Dec-20
(USD)
Trade and other payables 183,059 208,116
Accruals 40,000 31,500
223,059 239,616
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16. Other Financial Liabilities
16.1 Other Financial Liabilities
31-Dec-21
(USD)
31-Dec-20
(USD)
Loan notes issued to non-related parties 425,781 -
Funds received from Korean consortium 353,300 176,700
779,081 176,700
16.2 Derivative financial instruments
31-Dec-21
(USD)
31-Dec-20
(USD)
Derivative financial instruments – warrants 285,888 202,889
285,888 202,889
The warrants issued by the Company are detailed in note 16.5 of the audited financial statements.
16.3 Loans
In September 2021, the Company entered into short-term loan arrangements with a non-related party
for GBP 500,000 to meet the Company’s short-term working capital requirements – of which GBP
300,00 was drawn down in the year. The loan carries a 7.5% per annum coupon and 9,464,916
warrants at 3.962 GB pence were issued.
The loan was re-negotiated after the year-end date (refer note 23 of the audited financial statements).
The Group received USD 176,600 Auric Network, a cryptocurrency organisation that operates in South
Korea, in the year ended 31 December 2021 with a balance of USD 353,300 (2020, USD 176,700). This
funding is in the form of a prepayment of gold to be repaid upon production at a 20% discount to the
gold price at the time of delivery.
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16.4 Reconciliation of Liabilities arising from Financing Activities
For the year ended 31 December 2021
Current
Other
Financial
Liabilities
(USD)
Derivative
financial
instruments
(USD)
Total
(USD)
At 31 December 2019 134,518 121,139 255,657
Cash Flows 176,700 - 176,700
Non-cash flows:
Settlement through issue of shares (134,518) - (134,518)
Fair Value Changes - 81,750 81,750
At 31 December 2020 176,700 202,889 379,589
Cash Flows 550,456 - 550,456
Non-cash flows:
Loan charges and interest 51,925 - 51,925
Fair Value Changes - 82,999 82,999
At 31 December 2021 779,081 285,888 1,064,969
16.5 Share Warrants – Fair Value
The fair value of the warrants is derived from the Black-Scholes model on the parameters noted and
is represented by the following table:
31-Dec-21 31-Dec-20
Number (USD) Number (USD)
Issued in April 2016 and outstanding 5,757,924 79,497 5,757,924 110,926
Issued in period ended 31 December 2020
and outstanding
2,692,307 53,935 2,692,307 91,963
Issued in period ended 31 December 2021
and outstanding
9,464,916 152,456 - -
Derivative financial instruments – issued 17,945,197 285,888 8,450,231 202,889
Derivative financial instruments – unissued - - - -
Derivative financial instruments – warrants 17,945,197 285,888 8,450,231 202,889
The warrants were fair valued using a Black Scholes model, based on the following parameters – risk
free rate 1.3% (2020, 2.1%), volatility of 99% for 3 years (2020, 73%) and 84% for 1 year (2020,50%).
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16.6 Share Warrants – Issued
Warrants issued and warrants to be issued denominated in Sterling are classified as derivative financial instruments carried at fair value through profit and
loss. There were 9,464,916 warrants issued during the financial year (2020, 15,384,615).
Weighted Average Exercise Award
1.30p 2.00p 2.50p 3.00p 3.50p 3.962p 4.00p 5.75p
Outstanding at 31 December 2019 - 4,900,000 4,750,000 2,200,000 2,325,000 - 9,951,920 8,257,924
Issued in 2020 15,384,615 - - - - - - -
Converted in 2020 (12,692,308) (3,385,898) (1,500,000) (1,221,005) - -
Lapsed in 2020 - (1,514,162) (3,250,000) (978,995) (2,325,000) - (9,951,920) (2,500,000)
Outstanding at 31 December 2020 2,692,307 - - - - - - 5,757,924
Issued in 2021 - - - - - 9,464,916 - -
Converted in 2021 - - - - - - - -
Lapsed in 2021 - - - - - - - -
Outstanding at 31 December 2021 2,692,307 - - - - 9,464,916 - 5,757,924
Exercisable at 31 December 2021 2,692,307 - - - - 9,464,916 - 5,757,924
The 2,692,307 warrants at 1.30p were re-negotiated with an expiry date of September 2023 as part of the USD 500,000 funding raised post year end (refer
note 23 of the audited financial statements). The 9,464,916 warrants at 3.962p expire in September 2024. The 5,757,924 warrants at 5.75p were issued in
the April 2016 prospectus, have no expiry date and are held by a related party to Colin Patterson.
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17. Financial Instruments
17.1 Financial Assets measured at Amortised Cost
31-Dec-21
(USD)
31-Dec-20
(USD)
Trade and other receivables 19,244 3,030
Cash and cash equivalents 166,668 72,836
185,912 75,866
17.2 Financial Liabilities measured at Amortised Cost
31-Dec-21
(USD)
31-Dec-20
(USD)
Trade and other payables – current 183,059 239,616
Other financial liabilities 779,081 176,700
962,140 416,316
17.3 Derivative financial instruments measured at Fair Value
31-Dec-21
(USD)
31-Dec-20
(USD)
Derivative financial instruments – warrants 285,888 202,899
285,888 202,899
17.4 Fair Values
The fair values of the Group’s cash, trade and other receivables and trade and other payables are
considered equal to their book value.
Other financial liabilities are initially measured at fair value and subsequently at amortised cost. The
fair values of the Group’s other financial liabilities are considered equal to the book values as the effect
of discounting on these financial instruments is not considered to be material.
The warrants are classified as Level 3 financial instrument as certain inputs to the Black-Scholes
valuation model are not based on observable market data.
17.5 Liquidity Risk
The Group monitors constantly the cash outflows from day to day business and monitors long term
liabilities to ensure that liquidity is maintained. Trade liabilities of USD 183,059 are due on demand,
loans from the Korean consortium of USD 353,300 are due to be repaid from gold production by the
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Company and other loans of USD 425,781 (GBP 300,000) were due in March 2022 and GBP 50,000 was
repaid by the issuance of equity in April 2022 (refer notes 16.3 and 24 of the audited financial
statement.
As disclosed in the going concern statement in note 2, the Group is actively addressing the
requirement to manage the funds it is able to generate as well as to raise new financing to fund
corporate and development activities. This is an area which receives considerable focus from the
Board and management on a daily basis.
17.6 Credit Risk
Credit risk refers to the risk that a counterparty will default on, and not pay, its contractual obligations
resulting in a financial loss to the Group. In order to minimise this risk, the Group endeavours only to
deal with companies which are demonstrably creditworthy and this, together with the aggregate
financial exposure, is continuously monitored.
Credit risk on cash and cash equivalents is considered to be acceptable as the counterparties are either
substantial banks with high credit ratings or with whom the Group has offsetting debt arrangements.
Trade and other receivables have been recorded at cost and are in accordance with contractual
arrangements.
17.7 Interest rate risk
At the balance sheet date, the Group does not have any long-term variable rate borrowings.
17.8 Foreign currency risk
The Group’s cash at bank balance consisted of the following currency holdings:
31-Dec-21
(USD)
31-Dec-20
(USD)
US Dollars 6,511 26,615
Sterling 150,866 40,089
Philippine Pesos 9,291 6,132
166,668 72,836
The Group is exposed to transaction foreign exchange risk due to transactions not being matched in
the same currency. This is managed, where possible and material, by the Group retaining monies
received in various currencies in order to pay for expected liabilities in that currency. The Group
currently has no currency hedging in place.
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The Group’s exposure to financial assets and financial liabilities is as shown in the following tables:
Financial Assets
31-Dec-21
(USD)
31-Dec-20
(USD)
US Dollars 25,755 29,645
Sterling 150,866 40,089
Philippine Pesos 9,291 6,132
185,912 75,866
Financial Liabilities – Current
31-Dec-21
(USD)
31-Dec-20
Re-stated
(USD)
Sterling 748,726 220.582
US Dollars 401,855 265,876
Philippine Pesos 97,447 101,247
1,248,028 587,705
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with
respect to the Philippines Peso and Sterling, but these are not significant as most of the transactions
are in USD. However, the Group’s management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly.
18. Capital Management
The Group’s capital management objectives are to ensure that the Group’s ability to continue as a
going concern, and to provide an adequate return to shareholders. The Group manages the capital
structure through a process of constant review and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust
the capital structure, the Group may issue new shares, adjust dividends paid to shareholders, return
capital to shareholders, or seek additional debt finance.
The nature of the Group’s equity reserves is:
Reserves – cumulative gains and losses on translating the net assets of overseas operations to the
presentation currency, and share based payments for the acquisition of joint venture participation
rights;
Unissued share capital – this reflects the value of equity that management has agreed to issue for
settlement of remuneration, liabilities and funding provided;
Retained surplus/accumulated losses – comprise the Group’s cumulative accounting profits and
losses since inception.
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19. Share Based Payments
31-Dec-21 31-Dec-20
Number Number
Issued share – non-related parties - 5,000,000
Unissued share – non-related parties 103,679 -
103,679 5,000,000
Other share based payments for the year ended 31 December 2021 were USD 2,686 (2020, USD
61,877).
20. Share Capital
20.1 Issued Share Capital
31-Dec-21 31-Dec-20
Number USD Number USD
Opening Balance 397,647,406 8,670,870 366,001,617 7,552,662
Shares issued in the period (net cash) - - 19,568,379 320,548
Share based payments - - 5,000,000 61,877
Southern Gold Limited 200,000,000 10,000,000 - -
Settlement of liabilities - - 22,845,462 735,693
Salary sacrifice 24,668,382 913,174 - -
Treasury shares - - (15,768,052) -
Closing Balance 622,315,788 19,584,044 397,647,406 8,670,780
The shares have no par value.
Treasury shares were issued at the June 2019 prospectus to the Company itself at nil value. In the year
ended 31 December 2020 debt was settled through the issuance of shares which were grouped
together and held in Treasury until settled.
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53
Issued share capital at 31 December 2021 is represented by:
31-Dec-21 31-Dec-20
Number % Number %
Aidan Bishop* 66,955,536 10.8% 63,915,364 16.1%
Charles Barclay 15,791,813 2.5% 11,188,629 2.8%
Jonathan Morley-Kirk 4,806,253 0.8% 1,956,752 0.5%
Colin Patterson* 73,501,973 11.8% 69,930,300 17.6%
Clive Sinclair-Poulton** 1,816,776 0.3% - -
Graeme Fulton 5,830,989 0.9% 2,724,032 0.7%
Stuart Kemp 10,971,619 1.8% 4,537,229 1.1%
Total PDMR 179,674,959 28.9% 154,252,306 38.8%
International Gold PTE Limited
(Southern Gold Limited)
200,000,000 32.1% - -
Momentum Resources Limited 34,209,117 5.5% 34,209,117 8.6%
Other 208,431,712 33.5% 209,185,983 52.6%
Total Non-PDMR 442,640,829 71.1% 243,395,100 61.2%
Total Issued Shares 622,315,788 100.0% 397,647,406 100.0%
* Issued to a related party ** Issued to a non-related party
20.2 Unissued Share Capital
31-Dec-21 31-Dec-20
Number USD Number USD
Salary Sacrifice 714,325 31,835 23,480,530 793,675
Share based payments 103,679 2,686 - -
818,004 34,521 23,480,530 793,675
Directors and key management personnel agreed to take all fees between May 2019 and September
2021 as equity, which was issued in June 2021 and December 2021.
The unissued share capital balance at 31 December 2021 represents amounts due to directors and key
management personnel for the period from October 2021 to December 2021.
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20.3 Earnings Per Share
12 months to
31-Dec-21
(USD)
12 months to
31-Dec-20
(USD)
Basic earnings per share 0.0172 (0.0023)
Profit/(loss) used to calculate basic earnings per share 7,530,988 (899,673)
Weighted average number of shares used in calculating
basic earnings per share
438,244,730 385,087,402
Diluted earnings per share 0.0168 (0.0023)
Profit/(loss) used to calculate diluted earnings per
share
7,530,988 (899,673)
Weighted average number of shares used in calculating
diluted and earnings per share
449,529,235 385,087,402
Basic profit/loss per share is calculated by dividing the loss attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding and shares to be issued during the
period.
Dilutive profit/loss per share is calculated by dividing the loss attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding, shares to be issued and warrants issued
during the period.
20.4 Substantial Shareholders (unaudited)
At 31 December 2021 the following had notified the Company of disclosable interests in 5% or more
of the nominal value of the Company’s shares.
Number %
International Gold PTE Limited (Southern Gold Limited) 200,000,000 32.1%
Rene Nominees (IOM) Limited 109,443,013 17.6%
Fiske Nominees Limited 100,952,821 16.2%
Hargreaves Lansdown (Nominees) Limited 38,884,544 6.3%
Jim Nominees Ltd 35,477,735 5.7%
Interactive Investor Services Nominees Limited 34,427,524 5.6%
The Directors are of the view that at 31 December 2021, and the date of the signing of this Annual
Report, that there is no ultimate controlling party.
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Annual Report and Financial Statements 2021
55
21. Related Party Transactions
21.1 Amounts Due to Related Parties
There are no amounts due to related parties at 31 December 2021 or 31 December 2020 as Directors
and key management personnel agreed to take all fees between May 2019 and December 2021 as
equity. The equity for the period to 30 September 2021 was issued in June 2021 and December 2021
and the balance at 31 December 2021 was USD 31,836.
21.1 Other Related Party Transactions
Directors Remuneration and Key Management Personnel (refer note 7 of the audited financial
statements).
Issued and unissued share capital (refer note 20 of the audited financial statements).
Loans and warrants (refer note 16 of the audited financial statements).
22. Capital Commitments
At 31 December 2020 the Group had entered into no contractual commitments for the acquisition of
property, plant and equipment.
The Group has an office lease with an end date of August 2022 – the liability of USD 10,938 is payable
in less than one year. There are no amounts due in more than one year.
23. Events After the Reporting Date
On 12 April 2022, the Company announced a funding package comprising of USD 500,000 to catalyse
operations on the ground and an Option to subscribe for a further 100 million shares at a price of 2
pence per share over twelve months. The debt carries interest at a fixed rate of 10% and is repayable
on 15 April 2023. Attached to the debt are 15,280,000 warrants valid for three years with an exercise
price of 2.5 pence per share.
On 19 April 2022, the Company announced the issuance of 12,003,268 shares in settlement of GBP
50,000, plus interest, of the GBP 300,000 loan drawn down in 2021 (refer note 16.3 of the audited
financial statements). The Company announced on 12 April 2022 that the debt had been re-financed
with a repayment date of 09 May 2023. Attached to the re-financed debt are 10,000,000 warrants
valid for three years with an exercise price of 2.5 pence per share.
On 26 April 2022, the Company announced the first drawdown of the USD 500,000 funding to provide
a “proof of concept” initial gold production at the Kochang mine and demonstrate to both
stakeholders and to shareholders that gold can once again be mined economically.
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Annual Report and Financial Statements 2021
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On 25 May 2022, the Company announced an update on the Batangas Gold Project in the Philippines
– where the Company has made an application for a further two-year period of exploration to be
granted and has proposed an Exploration Work Program and Environmental Work Program to focus
on the potential for underground mining at Lobo.
24. Shares in Group Undertakings
During the period the subsidiaries and associate of the Company, including those indirectly held by
the Company, are shown in the following table:
Country of
Percentage of
Ordinary Share
Capital Held
Name of Entity Nature of Business Registration 2021 2020
MRL Gold Inc Batangas Gold Project Philippines 100% 100%
Egerton Gold Philippines Inc Batangas Gold Project Philippines 40% 40%
Gubong Project JV Co PTE Ltd* South Korea Gold Projects Singapore 100% 50%
Kochang Project JV Co PTE Ltd** South Korea Gold Projects Singapore 100% 50%
* Gubong Project JV Co PTE Ltd is the 100% holder of the South Korea registered Gubong Project Co Ltd (note 11)
** Kochang Project JV Co PTE Ltd is the 100% holder of the South Korea registered Geochang Project Co Ltd (note 11)
The Company acquired the other 50% of the South Korean companies in June 2021 from Southern
Gold Limited (refer note 12 of audited financial statements).