NOTES TO THE FINANCIAL STATEMENTS

 

1.  Summary of Significant Accounting Policies

 

a.      General Information and Authorisation of Financial Statements

The Company is registered in the British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1396532 and is located at Craigmuir Chambers, Road Town, Tortola. The Company's ordinary shares are traded on AIM, a market of the London Stock Exchange.

 

The principal activity of the Company during the year was that of a holding company for a group engaged in the identification, evaluation, acquisition and development of natural resource projects.  

 

The Financial Statements of Arc Minerals Limited for the year ended 31 December 2025 were authorised for issue by the Board on 25 June 2026.

 

b.      Basis of Preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union.

 

The consolidated financial statements have been prepared on the historical convention, as modified by the measurement to fair value of financial assets through profit and loss and held for sale assets and liabilities as described in the accounting policies below.

 

The financial information is presented in Pounds Sterling (£) and all values are rounded to the nearest thousand Pounds Sterling (£000's) unless otherwise stated.

 

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.

 

c.      New and amended standards adopted by the Group

There were no new standards, amendments or interpretations effective for the first time for periods beginning on or after 1 January 2025 that had a material effect on the consolidated or company financial statements.

 

At the date of approval of these financial statements, there were no new standards or amendments to IAS which have not been applied in these financial statements which were in issue but not yet effective and are expected to have a material impact on the consolidated and company financial statements.

 

d.      Basis of Consolidation

The Consolidated Financial Statements comprise the financial statements of the Company and its subsidiaries made up to 31 December. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

 

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

·      The contractual arrangement with the other vote holders of the investee;

·      Rights arising from other contractual arrangements; and

·      The Group's voting rights and potential voting rights

 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

 

Subsidiaries

 

Subsidiaries are entities over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

The consolidated financial statements consolidate the financial statements of Arc Minerals Limited and the financial statements of its subsidiary undertakings made up to 31 December 2025.

 

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

e.      Associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The Group's investment in associates includes any goodwill identified on acquisition.

 

Where the ownership interest in an existing investment is increased whereby significant influence is obtained, the Group re-measures the existing investment immediately prior to obtaining significant influence with resulting gains/losses recognised immediately in profit or loss. The fair value of the existing investment added to the fair value of the consideration of the additional investment is treated as the deemed cost and is continued to be accounted for under the equity method.

 

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

 

The Group's share of post-acquisition profit or loss is recognised in the statement of comprehensive income, and its share of post-acquisition movements is recognised in the other comprehensive income section of the statement of comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

 

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amounts of the associate and its carrying value and recognises the amount adjacent to 'share of profit/loss of associate' in the group statement of comprehensive income.

 

When the Group loses significant influence over an associate, it derecognises that associate and recognises a profit or loss being the difference between the sum of the proceeds received and any retained interest, and the carrying amount of the investment in the associate at the date significant influence is lost.

Gains and losses resulting from upstream and downstream transactions between the Group and its associates are recognised in the Group's financial statements only to the extent of unrelated investor's interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

Impairment gains and losses arising in investments in associates are recognised in the statement of comprehensive income.

 

When the Group gains control of an associate the fair value of the associate undertaking is then assessed with any gain or loss arising being recognised within the income statement.

 

f.       Going Concern

The Directors have reviewed a detailed cash flow forecast prepared by management covering a period of at least twelve months from the date of approval of these financial statements. The forecast incorporates the Group's currently approved exploration and evaluation activities, expected corporate overheads and working capital requirements, with flexibility to defer certain discretionary expenditure if required.

 

In reviewing the forecast, the Directors considered assumptions regarding the timing and level of planned expenditure and the availability of certain cash resources currently subject to restrictions, which the Directors expect will become available during the forecast period. The forecast does not include any proceeds from potential warrant or option exercises, future equity fundraisings or other financing arrangements.

 

Based on this assessment, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence and to meet its obligations as they fall due for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing these financial statements.

 

g.      Business combinations and asset acquisitions

 

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of the subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition by acquisition basis; either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net asset.

 

Acquisition related costs are expensed as incurred.

 

If a business combination is achieved in stages, the acquisition date carrying value of the acquiree's previously held interest in the acquire is re-measured to fair value at the acquisition date; any gain or loss arising from such a re-measurement are recognised in profit or loss.

 

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the identifiable net assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss in the Income Statement.

 

Any interest of non-controlling interests in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

 

Asset acquisitions

The considerations for asset acquisitions are similar to business combinations. The acquisition method mentioned above (including calculating the fair value of the consideration transferred, identifying identifiable assets and liabilities, and recognising non-controlling interest, treatment of acquisition related costs as expenses and remeasuring the previously held interest at acquisition date) is still applied.

 

The excess of consideration transferred and the fair value of non-controlling interest over the identifiable net assets acquired, and liabilities as assumed, is recognised in the exploration asset.

 

In applying the acquisition method to the Handa transaction, where control was obtained through Anglo's withdrawal from the JV agreement, it was determined that the transaction did not meet the definition of a business as defined in IFRS 3 (this includes inputs, processes applied to these inputs, and outputs, resulting in returns to investors). The transaction was therefore accounted for as a step acquisition of a non-business. See Note 13 for further disclosures of the transaction.

 

h.      Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Board, being the Group's chief operating decision-maker ("CODM").

 

i.       Foreign currencies

The Group presentational currency is pound sterling (GBP). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. At present the functional currency for the Zambian subsidiaries is the Zambian Kwacha ("ZMW"). The functional currency of the Botswana subsidiary is the Botswanan Pula (BWP). The functional currency for all other entities is GBP.

 

The presentational currency (GBP) is used primarily because the Parent Company Arc Minerals Limited is listed on AIM, a market of the London Stock Exchange, and raises its funding in GBP.

 

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

·      monetary assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

·      income and expenses are translated at average exchange rates during the accounting year; and

·      all resulting exchange differences are recognised in other comprehensive income where material.

 

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, such cumulative exchange differences are subsequently reclassified in the income statement as part of the gain or loss on sale.

 

j.       Taxation

Tax is recognised in the consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.  However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

 

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax assets and liabilities are not discounted.

 

There has been no tax credit or expense for the year relating to current or deferred tax.

 

k.      Intangible assets

Exploration and evaluation assets

Exploration and development costs are carried forward in respect of areas of interest where the consolidated entity's rights to tenure are current and where these costs are expected to be recouped through successful development and exploration, or by sale. Alternatively, these costs are carried forward while active and significant operations are continuing in relation to the areas of interest and it is too early to make reasonable assessment of the existence or otherwise of economically recoverable reserves. When the area of interest is abandoned, exploration and evaluation costs previously capitalised are impaired.

 

Costs incurred by the Company on behalf of its subsidiaries and associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining development project is successful, the related expenditures will be written-off over the estimated life (useful economic life) of the commercial ore reserves on a unit of production basis. Impairment reviews are carried out regularly by the Directors of the Company. Where a project is abandoned or is considered to be of no further commercial value, the related costs will be written off to the Statement of Comprehensive Income.

 

The recoverability of these costs is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposal of recoverable reserves.

 

l.       Significant accounting judgements, estimates and assumptions

Critical Accounting Estimates and Judgements

The preparation of financial statements using accounting policies consistent with IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of income and expenses. The preparation of financial statements also requires the Directors to exercise judgement in the process of applying the accounting policies. Changes in estimates, assumptions and judgements can have a significant impact on the financial statements.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively from the period in which the estimates are revised. The following are the key estimate and assumption uncertainties that have a significant risk of resulting in a material adjustment within the next financial year:

 

In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset, unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). 

 

(i)         Valuation of exploration, evaluation and development expenditure

Exploration and evaluation assets held as intangible fixed assets on the statement of financial position comprises all costs which are directly attributable to the exploration of a project area. The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure capitalised as exploration and evaluation assets relates to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Factors considered include Factors considered in the impairment of exploration, evaluation and development expenditure are set out in Note (1) (r).

 

In the current year, exploration and evaluation assets include amounts arising from asset acquisitions - for the related considerations, see Note (1) (g)

 

(ii)         Valuation of Casa Royalty

There are a number of key factors which affect the valuation of the Casa Royalty which has a face value of US$ 45m (GBP 40m). These include (a) development and construction timeframe; (b) appropriate discount factor; (c) availability of construction financing; (d) political stability (e) gold price and (f) ability to control timing of receipt.

 

Given these uncertainties the Company has elected to assign nil value to the Royalty. The Company will reassess this carrying value in future as the Misisi Project progresses along the development curve.    

 

Further information can be found in Note 15

(iii)        Valuation of short term investments

Short term investments are measured initially, and subsequently revalued at reporting dates, at fair value through profit or loss. Similarly, changes in fair value are recognised through profit and loss. There were no short term investments in the current financial year.

 

(iv)        Investment in associate

The investment in associate arose as a result of the partial disposal in 2023 of Handa Resources Limited (Handa) as a subsidiary. The investment shareholding decreased from 66% (a subsidiary) to 30% (an associate). The assessment that Unico lost control was based on a series of five contractual arrangements entered into for the purposes of the Joint Venture (JV) agreement with Anglo American BV. Consequently, judgement was required in determining that the series of contractual arrangements should be accounted for as a single transaction resulting in the loss of control and recognition of an investment in associate. See Note 13 for details of this agreement).

 

In the current financial year, Anglo American BV withdrew from the JV Agreement. The Arc group consequently obtained control of Handa Resources Limited on the date of withdrawal (effective 16 October 2025). The investment in associate is therefore only for the period 1 January 2025 until 15 October 2025. See Note 13 for further information.

 

(v)        Valuation of share-based payments

The fair value of share options and Restricted Stock Units ("RSUs") is determined using recognised valuation techniques requiring management to make assumptions including expected share price volatility and the probability of achieving market-based vesting conditions. Changes in these assumptions could materially affect the share-based payment expense recognised. Further details are provided in Note 19.

 

m.     Equity

Equity comprises the following:

·      "Share capital" represents the nominal value of the Ordinary shares;

·      "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;

·      "Share based payment reserve" represents stock options awarded by the group;

·      "Warrant reserve" represents warrants granted by the group;

·      "Foreign exchange reserve" represents the translation differences arising from translating the financial statement items from functional currency to presentational currency and foreign exchange differences arising on the elimination of intercompany loans forming part of the investment of subsidiaries;

·      "Retained earnings" represents retained losses.

·      "Non-controlling interest" represents the interests of minority shareholders in the assets and liabilities of the Group.

 

n.      Cash and cash equivalents

Cash and cash equivalents comprise current balances with banks and similar institutions and liquid investments generally with maturities of 3 months or less. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value.

 

o.      Trade and other receivables

Receivables are recognised initially at amortised cost, being their initial fair value. These are classified as loans and receivables and so are subsequently carried at amortised cost using the effective interest method. The Directors are of the view that such items are collectible and that no provisions are required.

 

Included in trade and other receivables is restricted cash which is temporarily unavailable for use for the Group. This is explained further in Note 14.

 

p.      Financial instruments

(i)         Classification

The Group classifies its financial assets at amortised cost and at fair value through the profit or loss or OCI. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

 

(ii)         Recognition and measurement

 

Amortised cost

Regular purchases and sales of financial assets are recognised on the trade date at cost - the date on which the Group commits to purchasing or selling the asset. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership. 

 

Fair value through the profit or loss

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL.

 

Financial assets at FTVPL, are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. Fair value is determined by using market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):

 

- Level 1: Quoted prices in active markets for identical items (unadjusted)

- Level 2: Observable direct or indirect inputs other than Level 1 inputs

- Level 3: Unobservable inputs (i.e. not derived from market data).

 

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

 

Listed investments are valued at the closing. For measurement purposes, financial investments are designated at fair value through the income statement. Gains and losses on the realisation of investments are recognised in the income statement for the period. The difference between the market value of financial instruments and book value to the Company is shown as a gain or loss in the income statement for the period.

 

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original Effective Interest Rate ("EIR"). The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

 

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

 

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

 

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.

 

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

 

(iii)        Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

 

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. This is the same treatment for a financial asset measured at FVTPL.

 

q.      Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans.

 

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

 

Trade and other payables

After initial recognition, trade and other payables are subsequently measured at amortised cost using the Effective Interest Rate ("EIR") method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.

 

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.

 

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

 

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

 

Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.

 

Fair value measurement

IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value but rather provides guidance on how to measure fair value under IFRS when fair value is require or permitted. The resulting calculations under IFRS 13 affected the principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.

 

r.       Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.  If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. 

 

An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use. This is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, and the asset's value in use cannot be estimated to be close to its fair value.  In such cases, the asset is tested for impairment as part of the cash-generating unit to which it belongs.  When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, it is considered impaired and is written down to its recoverable amount.

 

In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset, unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). 

 

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased.  If such indication exists, the recoverable amount is estimated.  A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised.  If that is the case, the carrying amount of the asset is increased to its recoverable amount.  That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.  Such reversal is recognised in the Statement of Comprehensive Income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.  After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 

 

s.      Share-based payments

The Group provides benefits to senior personnel, consultants and advisors of the Group in the form of share-based payments, whereby such parties render services in exchange for shares or rights over shares (equity-settled transactions). 

 

The cost of these equity-settled transactions with such parties is measured by reference to the fair value of the equity instruments at the date at which they are granted.  The fair value is determined by using a Black-Scholes model. 

 

In valuing equity-settled transactions, no account is taken of any performance or milestone conditions, other than conditions linked to the price of the shares of Arc Minerals Limited (market conditions) if applicable. 

 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant party become fully entitled to the award (the vesting period). 

 

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(i)         the extent to which the vesting period has expired, and;

(ii)         the Group's best estimate of the number of equity instruments that will ultimately vest.

No adjustment is made for the likelihood of market performance conditions being met, as the effect of these conditions is included in the determination of fair value at grant date.  The charge to the Income Statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. 

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. Upon expiry, the associated portion of the share option reserve is derecognised and recorded against retained losses.

 

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings) per share. 

 

t.       Earnings per share

Basic EPS is calculated as profit attributable to equity holders of the parent for the period, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Fully-diluted EPS adjusts Basic EPS to reflect the impact if all share purchase warrants and options were exercised.

 

2.  Segmental analysis

 

Segment information has been determined based on the information reviewed by the Board for the purposes of allocating resources and assessing performance.  No revenue is currently being generated.

 

Head office activities are administrative in nature whilst the activities in Zambia and Botswana relate to exploration and development work.

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocate on a reasonable basis.

 

31 December 2025	BVI	Zambia	Botswana	Total
	£ 000's	£ 000's	£ 000's	£ 000's
Result
Gain / (loss) from continuing operations	(8,989)	(76)	(9)	(9,074)
Gain / (loss) before Income Tax	(8,989)	(76)	(9)	(9,074)
Other information
Non-controlling interest	2,332	-	(165)	2,167
	2,332	-	(165)	2,167
Assets
Non-current Assets	-	-	2,371	2,371
Investment in associate		-	-	-
Current assets excluding cash and cash equivalents	143	1,047	-	1,190
Cash and equivalents (see Note 10)	631	1	3	635
Consolidated total assets	774	1,048	2,374	4,196
Liabilities
Non-current liabilities	-	-	(102)	(102)
Current liabilities	(1,536)	(2)	-	(1,538)
Consolidated total liabilities	(1,536)	(2)	(102)	(1,640)

 

 

31 December 2024	BVI	Zambia	Botswana	Total
	£ 000's	£ 000's	£ 000's	£ 000's
Result
Gain / (loss) from continuing operations	(455)	(1,546)	(69)	(2,070)
Gain / (loss) before Income Tax	(455)	(1,546)	(69)	(2,070)
Other information
Non-controlling interest	190	-	(18)	172
	190	-	(18)	172
Assets
Non-current Assets	-	6,413	2,370	8,783
Investment in associate		912	-	912
Current assets excluding cash and cash equivalents	1,836	-	-	1,836
Cash and equivalents	1,613	-	22	1,635
Consolidated total assets	3,449	7,325	2,392	13,166
Liabilities
Non-current liabilities	-	-	(103)	(103)
Current liabilities	(1,528)	(6)	(133)	(1,667)
Consolidated total liabilities	(1,528)	(6)	(236)	(1,770)

 

3.   Expenses by nature

		31 Dec 2025	31 Dec 2024
	Note	£ 000's	£ 000's
Directors' fees	6	453	608
Office expenses		109	103
Travel and subsistence expenses		37	48
Professional fees - legal, consulting, exploration		403	350
AIM related costs including Public Relations		188	276
Auditor's remuneration - audit		58	75
Gain on disposal of investment	16	-	(28)
Long term Anglo receivable - unwinding of present value		(323)	(401)
Share based payments		250	111
Other expenses		(6)	3
Loss on settlement of receivable from Regency Mining	14	475	-
Copala administration costs		77	13
Alvis-Crest administration costs		9	69
Gains and losses on foreign exchange		569	(175)
Total operating expenses		2,299	1,052

 

Auditors Remuneration

During the year, the Group obtained the following services from the Company's auditor:

	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Fees payable to the auditor for the audit of the consolidated financial statements - current financial year	58	60
Fees payable to the auditor for the audit of the consolidated financial statements - prior financial year (not accrued in prior year)	-	15
Total	58	75

 

Employee information

The average number of persons employed in the Group through payroll was nil (2024 - nil) at a cost of nil (2024 - nil). See Note 6 for details of key management remuneration.

4. Taxation

			31 Dec 2025 £'000	31 Dec 2024 £'000
Current income tax charge			-	-
Deferred tax charge/ (credit)			-	-
Total taxation charge/ (credit)			-	-

Taxation reconciliation

The charge for the year can be reconciled to the loss per the consolidated statement of comprehensive income:

	31 Dec 2025	31 Dec 2024
	£'000	£'000
(Income)/Loss before income tax	9,074	2,070
Tax on loss at the weighted average Corporate tax rate of 0.27% (Dec 2024: 6.2%) Effects of: Permanent differences Tax losses carried forward Losses not subject to corporation tax	(25)   - - 25	(479)   - - 479
Total income tax expense	-	-

 

The weighted average applicable tax rate of 0.27% (2024: 6.2%) used is a combination of the 0% corporation tax in the BVI (2024: 0%), 30% corporation tax in Zambia (2024: 30%) and 22% corporation tax in Botswana (2024: 22%).

 

A deferred tax asset has not been provided for in accordance with IAS 12 due to uncertainty as to when profits will be generated against which to relieve any such asset. The Group does not have a material deferred tax liability at the year end.

 

The tax rate used is the weighted average rate of the British Virgin Islands, the Republic of Botswana and the Republic of Zambia. Unused taxable losses available in Botswana approximate BWP 1.723M (£98) at 31 December 2025 (31 December 2024 - BWP 1.563M (£91k)).

 

5.         Distribution

 

There were no distributions in the current financial year. In the prior year, Unico distributed to its shareholders £789k of which 67% (£528k) was distributed to the Company on 27 November 2024. The net difference of £261k was the distribution to Unico's minority shareholder.

 

6.         Key management remuneration

	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Key management remuneration	1,599	1,572

 

31 December 2025		Short term benefits	Bonus	Share based payments	Total
		£ 000's	£ 000's	£ 000's	£ 000's
Executive Directors
Nicholas von Schirnding		313	-	114	427
					-
Non-Executive Directors					-
Brian McMaster		48	-	-	48
Valentine Chitalu(ii)		28	-	11	39
Rémy Welschinger(i)		48	-	11	59
Abyudi James Shonga(iii)		16	-	-	16
Key Management Personnel
Ian Lynch (CFO)		135	-	57	192
Vassilios Carellas (COO)		168	-	57	225
		756	-	250	1,006

 

 

 

31 December 2024		Short term benefits	Bonus(iv)	Share based payments	Total
		£ 000's	£ 000's	£ 000's	£ 000's
Executive Directors
Nicholas von Schirnding		310	-	-	310
Non-Executive Directors
Brian McMaster		48	-	-	48
Valentine Chitalu		48	-	-	48
Rémy Welschinger(i)		202	-	-	202
Key Management Personnel
Ian Lynch (CFO)		135	-	-	135
Vassilios Carellas (COO)		164	-	-	164
		907	-	-	907

 

(i) Includes contractual notice with respect to R Welschinger's former office as Finance Director. Mr Welschinger is considered an executive director effective 1 January 2026 pursuant to his appointment as chief executive officer from that date.

(ii) Valentine Chitalu resigned effective 30 July 2025.

(iii) Abyudi James Shonga was appointed on 5 September 2025.

(iv) Whilst no bonuses were declared or accrued in 2024, bonuses totalling £665k were paid in 2024 being the remaining 50% of the bonuses that were declared in 2023 on a deferred basis.

 

 

7. Earnings (loss) per share

 

The calculation of Earnings per share is based on the loss attributable to equity holders divided by the weighted average number of shares in issue during the year. 

	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Loss	(9,074)	(1,907)
Weighted average number of ordinary shares (000s)	1,448,108	1,398,572
Potential diluted weighted average number of shares (000s)	1,784,337	1,654,661
Basic earnings per share (expressed in pence)	(0.47)	(0.16)
Net Profit (loss) per share - Diluted(i)	n/a	n/a

 

^{(i) Due to the loss incurred in 2025 and 2024, the effect of options and warrants in calculating a diluted loss per share would be anti-dilutive and was therefore not calculated.}

 

8. Long term payables

	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Minority shareholder loans	102	103
	102	103

 

(i)       The minority shareholder loans are payable to the minority shareholder Alvis-Crest (Proprietary) Limited in the amount of BWP 1,797,430 (GBP 102k), as at 31 December 2025 (31 December 2024: BWP 1,797,430 (GBP 103k)). The loans are unsecured and loan holders have agreed to roll forward the loans until a liquidity event occurs.

(ii)      The minority shareholder loans rank equally with Arc's working capital loan to Alvis-Crest of BWP 25,477,214 (GBP 1.447M) (31 December 2024: BWP 23,231,411 (GBP 1.327M)), which is eliminated on consolidation. The loans are unsecured and loan holders have agreed to roll forward the loans until a liquidity event occurs.

 

9. Intangible assets

	Deferred Exploration Assets	Total
	Alvis-Crest
	£ 000's	£ 000's
At 1 Jan 2025	2,370	2,370
Additions	9	9
Transfer of intangibles	-	-
Currency gain/(loss)	(8)	(8)
Net book value as at 31 Dec 2025	2,371	2,371

 

 

	Deferred Exploration Assets	Total
	Alvis-Crest
	£ 000's	£ 000's
At 1 Jan 2024	1,699	1,699
Additions	671	671
Transfer of intangibles	-	-
Currency gain/(loss)	-	-
Net book value as at 31 Dec 2024	2,370	2,370

 

 

The Group's Intangible assets are comprised of evaluation and exploration rights and exploration expenses with respect to the licences in Botswana and Zambia.

 

The exploration project in Botswana is at an early stage of development and there is no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates available to enable value in use calculations to be prepared.

 

The exploration project in Zambia arises from the step-acquisition of Handa Resources Limited. See Note 13 for further information.

 

The Directors have undertaken a review to assess whether circumstances exist which could indicate the existence of impairment This review included but was not limited to the following considerations:

 

·      The Group no longer has title to mineral leases.

·      A decision has been taken by the Board to discontinue exploration due to the absence of a commercial level of reserves.

·      Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and participation.

 

Following their assessment, the Directors concluded that no impairment indicators exist which would require a formal impairment assessment and therefore that no impairment has been recognised.

 

10. Cash and cash equivalents

Cash and cash equivalents consist of the following cash:

	Group	Group
	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Arc Minerals Ltd	631	1,613
Alvis-Crest (Pty) Ltd	3	22
Foreland Minerals Ltd	1	-
Total	635	1,635

 

There are no cash and cash equivalent balances in Unico Minerals Ltd, Afrimin Resources Ltd, and Copala Holdings Ltd.

 

11. Investment in subsidiaries  

 

At 31 December 2025, the Company held interests in the share capital of the following subsidiary companies.

Company	Place of Business	Ownership Held (%)	Direct/ Indirect Ownership	Nature of business
Alvis-Crest (Proprietary) Limited	Republic of Botswana	75%	Direct	Mineral Exploration
Unico Minerals Limited	British Virgin Islands	67%	Direct	Holding Company
Handa Resources Limited	Republic of Zambia	100%	Direct	Mineral Exploration
Zaco Investments Limited	Republic of Zambia	99%	Direct	Mineral Exploration
Afrimin Resources Limited	Republic of Zambia	99%	Direct	Mineral Exploration
Copala Holdings Limited	British Virgin Islands	100%	Direct	Holding Company
Foreland Minerals Limited	Republic of Zambia	100%	Direct	Mineral Exploration

_{-    Unico Minerals Limited registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, VG 1110.}

_{-    Handa Resources Limited registered office at Plot No. 1266, Haile Selassie Avenue, Longacres, Lusaka, Zambia - Handa was an associate until 16 October 2025 when the Arc group obtained control as part of the withdrawal of Anglo American Exploration BV in the joint venture agreement - see Note 13.}

_{-    Zaco Resources Limited registered office at Plot No. 1266, Haile Selassie Avenue, Longacres, Lusaka, Zambia -  this is a subsidiary of Handa Resources Limited. The Arc group obtained control of this subsidiary as part of the withdrawal of Anglo American Exploration BV in the joint venture agreement - see Note 13}

_{-    Afrimin Resources Limited registered office at Plot No. 1266, Haile Selassie Avenue, Longacres, Lusaka, Zambia - this is a subsidiary of Handa Resources Limited. The Arc group obtained control of this subsidiary as part of the withdrawal of Anglo American Exploration BV in the joint venture agreement - see Note 13}

_{-    Alvis Crest (Proprietary) Limited is registered at Desert Secretarial Services (Pty) Limited, Plot 64518, Deloitte House, Fairground, PO Box 211008, Bontleng, Gaborone, Botswana.}

_{-    Copala Holdings Limited registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, VG 1110.}

_{-    Foreland Minerals Limited registered office at Plot No. A5562, Chamba Valley, Lusaka, Zambia.}

 

The non-controlling interest shown within the primary statement arises as a result of the Group owning less than 100% of a subsidiary company. The movement during the year primarily reflects the minority interest in the losses recognised following the Group obtaining control of the Handa group.

 

12. Investment in Associate

					Handa Group	Handa Group
					31 Dec 2025	31 Dec 2024
					£ 000's	£ 000's
Opening balance					912	2,458
Share of losses					(41)	(1,546)
Derecognition of associate upon Arc gain control on 16 Oct 2025 (see Note 13).					(871)
At 31 Dec 2025					-	912

The Investment in Associate comprises the investment in the Handa Resources Limited ("Handa") group, being the vehicle for the joint venture with Anglo American BV ("Anglo"). In the current financial year, Anglo withdrew from the joint venture and relinquished all interests and rights, including the deemed surrender of Anglo's equity interests in Handa. In accordance with the terms of the joint venture agreement and withdrawal notice, Anglo surrendered its interest in Handa, resulting in Unico becoming the sole shareholder of Handa and the Group obtaining control with effect from 16 October 2025. The investment in associate is therefore only with respect to the period 1 January 2025 until 15 October 2025. As Anglo's accounting policy was to expense exploration expenditure through profit and loss as incurred, the share of losses recognised in this note includes the Group's share of exploration expenditure incurred during that period.

 

13. Obtaining control of Handa Resources Limited

 

On 12 May 2022 the Company announced that it, together with its partners, had entered into an agreement with Anglo American with the intention to form a joint venture in respect of its Zambian copper interests.  The key commercial terms of the Joint Venture were that, upon signing of a binding Joint Venture Agreement ("JV Agreement"), Anglo American would have an initial ownership interest of 70% with Arc and its partners holding the balance via Unico Minerals Ltd ("Unico") in which Arc will have a 67% interest. On 20 April 2023, the JV Agreement was signed subject to completing certain conditions precedent including a restructuring of the Group's assets, obtaining approvals from relevant government and regulatory authorities and other customary conditions. For this period, the company accounted for investment as an investment in an associate. See Note 12 for details of the investment in associate.

 

On 20 October 2025 the Company announced that the JV agreement has by mutual agreement been terminated, and Anglo American has accordingly withdrawn from the joint venture and surrendered its interests, which were held through the joint venture company, Handa Resources Limited ("Handa"). The withdrawal results in Unico obtaining control of Handa through its shareholding being 67%, on 16 October 2025. Handa has been consolidated as a subsidiary from the acquisition date onwards.

 

The related financial information is set out below:

 

a)  Carrying value of the investment in associate 

			Oct 2025
			£ 000's
Carrying value on 1 January 2025			912
Share of losses for the period up to the acquisition date			(41)
Carrying value on 16 October 2025			871

 

b)  Assets acquired and liabilities assumed on 16 October 2025:

					Oct 2025
					£ 000's
Assets					(1,045)
Liabilities					-
Net Asset Value on 16 October 2025					(1,045)

 

c)  Loss on remeasurement of investment in associate on 16 October 2025

		Oct 2025
		£ 000's
Carrying value of investment in associate		871
Less:
Fair value of net assets of Handa (1,045 at 30%)		(313)
Loss recognised in profit and loss		558

 

d)  Gain on obtaining control of Handa

		Oct 2025
		£ 000's
Fair value of net assets of Handa		313
Less:
Net assets of Handa as at acquisition date		(1,045)
Gain recognised in profit and loss		(732)

 

The net loss recognised on obtaining control of Handa of £6.733 million comprised the derecognition of the Anglo deferred consideration receivable in Note 14 (£6.9M), offset by a loss on remeasurement of the previously held interest (£558k) and a gain on obtaining control (£732k).

14.  Receivables       

Long-term receivables	Group	Group
	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Receivable - Anglo JV (2024 USD 7.84M)	-	6,261
Total	-	6,261

 

The Anglo JV long-term receivable component of £6.261M has been de-recognised as a result of the mutual separation. After taking into account discounting of the receivable, the present value of this receivable amounted to £6.9M on the date that control of Handa was obtained. The present value of the receivable on the date that control of Handa was obtained, was written off.

 

 

Trade and other receivables	Group	Group
	31 Dec 2025	31 Dec 2024
	£ 000's	£ 000's
Receivable - Anglo JV (USD 1M)	-	798
Receivable - Casa Sale (USD 1.25M)	-	999
Restricted cash - Handa Group	1,041	-
Other Receivables	143	191
Handa group receivables	6	-
Total	1,190	1,988

 

Restricted cash - Handa Resources and Zaco Investments

 

Included as restricted cash in trade and other receivables above are balances of £1,039k and £2k being cash and cash equivalents held by Handa Resources Ltd ("Handa"), and Zaco Investments Ltd ("Zaco"), respectively, which were subject to temporary restrictions at the reporting date affecting account access and information requests. Whilst access to these accounts was restricted, the Group retained legal ownership of the underlying funds. However, these balances have been presented outside of cash and cash equivalents in line with relevant account standards and regulatory expectations to clearly separate these from cash and cash equivalents that were available for use at the reporting date. Further details are provided in Note 25.

 

Receivable - Casa Sale

 

As announced on 29 April 2022, Regency Mining Ltd ("Regency") acquired a 73.5% interest in the Misisi gold project ("Misisi Project") from Golden Square Equity Partners Limited ("Golden Square"), replacing Rackla Metals Inc. as the acquiror of Misisi. The terms of the transaction were that Arc would be paid USD 250,000 in cash and the equivalent of USD 1,250,000 in shares in a publicly listed company in Canada ("Consideration Shares"). The agreement also provided Arc with a royalty agreement on the same terms as the previous royalty agreement announced on 5 May 2021.

 

On 30 June 2023, the Company received the first cash payment of USD 125,000 towards the USD 1,500,000 receivable from the disposal of its Casa interests. On 12 September 2023, the Company received the second cash payment of USD 125,000, bringing the aggregate cash payments received by the Company to date to USD 250,000. The balance of USD 1,250,000 is to be settled by the issuance of listed stock which has been delayed due to corresponding delays in the listing process of the underlying entity. Management continues to follow up on progress and the directors consider the balance recoverable.

 

On 11 July 2025, the company announced that it had entered into a binding settlement agreement in relation to this outstanding receivable. Pursuant to this agreement, Arc received USD 625k in full and final settlement of this receivable, as announced on 3 November 2025, resulting in a loss on settlement of USD 625k recognised in the loss for the year.

 

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

	Group	Group
	31 Dec 2025	31 Dec 2023
Current trade and other receivables	£ 000's	£ 000's
UK Pounds	143	191
US Dollars	-	1,409
Zambian Kwacha	6	-
Botswana Pula	-	-
Total	149	1,600

 

15. Royalties

 

Net Smelter Royalty - Casa Mining Ltd

On 18 March 2020 the Company announced the sale of its shareholding in Casa Mining Limited in return for a USD 5,000,000 interest-free note originally payable on 19 March 2021 and a 3% Royalty calculated on net smelter production capped at USD 45,000,000. The USD 5m loan note was subsequently extended and, as announced in the RNS dated 29 April 2022, satisfied in full.

 

There were a number of key factors which affect the valuation of the Casa Royalty which has a face value of USD 45,000,000. These include (a) development and construction timeframe; (b) appropriate discount factor; (c) availability of construction financing; (d) political stability and (e) gold price.

 

Given these uncertainties the Company has elected to assign nil value to the Royalty. The Company will reassess this carrying value in future as the Misisi Project progresses along the development curve.

 

16. Short-term Investments Held at Fair Value Through Profit and Loss

 

The Group's investments held at fair value through profit and loss consist of investments publicly traded on the London Stock Exchange and the Over-The-Counter (OTC) market. These investments are valued at the mid-price as at year end.

		Level 1	Level 2	Level 3	Total
		£ 000's	£ 000's	£ 000's	£ 000's
At 1 January 2025		-	-	-	-
Additions		-	-	-	-
Profit on disposal		-	-	-	-
Disposals		-	-	-	-
Foreign exchange		-	-	-	-
At 31 December 2025		-	-	-	-

 

		Level 1	Level 2	Level 3	Total
		£ 000's	£ 000's	£ 000's	£ 000's
Gains on short-term investments held at fair value through profit and loss
Profit on disposal		-	-	-	-
Realised loss on impairment of investments		-	-	-	-
At 31 December 2025		-	-	-	-

 

		Level 1	Level 2	Level 3	Total
		£ 000's	£ 000's	£ 000's	£ 000's
At 1 January 2024		68	-	-	68
Additions		-	-	-	-
Profit on disposal		28	-	-	28
Disposals		(96)	-	-	(96)
Foreign exchange		-	-	-	-
At 31 December 2024		-	-	-	-

 

		Level 1	Level 2	Level 3	Total
		£ 000's	£ 000's	£ 000's	£ 000's
Gains on short-term investments held at fair value through profit and loss
Profit on disposal		28	-	-	28
Realised loss on impairment of investments		-	-	-	-
At 31 December 2024		28	-	-	28

 

17.  Trade and other payables

Included in trade and other payables are the following:

	Group 31 Dec 2025	Group 31 Dec 2024
Current trade and other payables	£ 000's	£ 000's
Surrendered share options payable	886	1,181
Minority shareholder loans	53	53
Deferred fees	240	-
Trade payables, other payables and accruals	359	433
	1,538	1,667

18.  Share capital

Authorised					£ 000's
Unlimited ordinary shares of no par value
Called up, allotted, issued and fully paid	Number of shares	Nominal Value		Average price per share (pence)		Gross Consideration Value GBP'000
As at 1 January 2024	1,232,318,465					8,944
Issued to creditors in lieu of payment	2,840,664	-		1.902		54
Issued pursuant to placing	235,488,880	-		1.800		4,239
Cancelled pursuant to the Share Buy-back(i)	(22,539,746)	-		(1.800)		(408)
As at 31 December 2024	1,448,108,263					12,829
As at 1 January 2025	1,448,108,263					12,829
As at 31 December 2025	1,448,108,263					12,829

 

Share issue costs in the amount of £nil (31 December 2024 - £249k) were incurred in the year and set off against the share premium account.

 

^{(i) The Company announced on 26 March 2024 that it had executed an off-market share buyback agreement pursuant to which it had acquired 22,539,746 ordinary shares of no par value each (the "Buyback Shares") from Sveriges Lärare (formerly Lärarnas Riksförbund) for a total consideration of £405,715.43 (the "Share Buyback"). Each Buyback Share was acquired for 1.8 pence per Buyback Share (being the same price paid by investors in the Company's placing as set out in the Placing Announcements).}

19.  Share based payments and Warrants

Share Based Payments

During the year the following share based payments were issued and valued using the Black Scholes method:

	Weighted Avg Price (pence)	Number	Exercise Price (pence)	Share price at grant (pence)	Weighted Avg Term (years)	Value (000s) **
1 January 2024	4.56	8,933,334	-	-	0.52	126
Expired		(8,933,334)	-	-	-	(126)
Exercised during the year		-	-	-	-	-
Granted		-	-	-	-	-
31 December 2024	-	-			-	-
1 January 2025		-	-	-	-	-
Expired		-	-	-	-	-
Exercised during the year		-	-	-	-	-
Granted - Share Options		36,427,488	2.50	1.45	5.00	114
Granted - RSUs		43,712,988	-	1.45	5.00	136
31 December 2025	1.14	80,140,476			4.27	250

 

On 7 April 2025, the Company announced that the Board had approved the issuance of a combination of Restricted Stock Units ("RSUs") and Share Options.

 

The RSUs granted on 7 April 2025 vest in three equal tranches subject to the achievement of share price targets of 2.5p, 4p and 6p over a three-year period, and included certain performance-based acceleration milestones, as announced on 7 April 2025. These acceleration milestones included a milestone linked to Anglo American exercising its option to accelerate Phase 1 of the joint venture. Following Anglo's withdrawal from the joint venture during 2025, this acceleration milestone is no longer capable of being achieved and accordingly has ceased to have any practical effect on the vesting of the RSUs.

 

The Share Options have an exercise price of 2.5p, vest equally over three years and are exercisable at any time after vesting and during the term of five years.

 

Options can be settled in cash and RSUs are issued as fully paid shares subject to and in accordance with the terms of relevant vesting conditions and performance-based milestones. Share Based Payments are typically granted for a term of between three and five years at the discretion of the Board of Directors upon recommendation by the Remuneration Committee.

 

There are 36,427,488 Share Options and 43,712,988 RSUs outstanding at 31 December 2025 (31 December 2024: none).

 

** Under IFRS 2 "Share-based Payments", the Company determines the fair value of options issued to Directors, Employees and other parties as remuneration and recognises the amount as an expense in the Statement of Comprehensive Income with a corresponding increase in equity.

The fair value at grant date is independently determined using an adjusted form of the Black Scholes Model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations and volatilities of the peer group companies. In addition to the inputs in the table above, further inputs as follows:

 

The model inputs for the Share Options granted on 7 April 2025:

(a)   36,427,488 units.

(b)   expiry date: 7 April 2030.

(c)   share price at grant date: 1.45 pence.

(d)   expected price volatility of the company's shares: 73%.

(e)   risk-free interest rate: 0%.

The model inputs for the RSUs granted on 7 April 2025:

(a)   43,712,988 units.

(b)   expiry date: 7 April 2030.

(c)   share price at grant date: 1.45 pence.

(d)   expected price volatility of the company's shares: 70%.

(e)   risk-free interest rate: 0%.

 

In 2024 8,933,334 share options expired unexercised. The value attributed to these expired share options was determined by reference to a pro-rata allocation of the opening share-based payment reserve.

The charge incurred during the year in relation to share based payments was £250k (31 December 2024 - £nil).

 

Warrants

Grant date	Number	Exercise Price (pence)	Term (years)	Share Price at grant pence
1 January 2025	256,088,879	3.00	2.23
Exercised during the year	-
Granted during the year	-
Expired during the year	-
TOTAL 31 December 2024	256,088,879
Weighted Average		3.00	1.23(i)

 

^{(i) Remaining term as at 31 December 2025}

The charge incurred during the year in relation to warrants was £nil (31 December 2024 - £111k).

 

Grant date	Number	Exercise Price (pence)	Term (years)	Share Price at grant pence
1 January 2024	11,815,063
Exercised during the year	-
Granted during the year	256,088,879	3.00	2.23	1.80
Expired during the year	(11,815,063)
TOTAL 31 December 2024	256,088,879
Weighted Average		3.00	2.23(i)

 

^{(i) Remaining term as at 31 December 2024}

 

20.  Share premium

	31 Dec 2025	31 Dec 2024
	£ 000s	£ 000s
Opening Balance	68,508	64,464
Total Additions	-	4,293
Share issue costs	-	(249)
As at 31 December	68,508	68,508

See Note 18 for a breakdown of shares issued during the year.

21.  Financial instruments and capital risk management

 

Categories of financial instruments

The categories of financial assets and liabilities included in the statement of financial position are as follows:

	2025	2024
	£000	£000
Financial assets at amortised cost:
Long-term receivable	-	6,649
Trade and other receivables	1,190	1,600
Cash and cash equivalents	635	1,635
Financial assets at carrying value using equity method
Investment in associate	-	912
	1,825	10,796

 

	2025	2024
	£000	£000
Financial liabilities at amortised cost:
Trade and other payables	1,485	1,667
Long-term payables	53	103
	1,538	1,770

Financial Risk Management

Financial Risk Factors

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

 

Risk management is carried out by the Board of Directors under policies approved at Board meetings. The Board frequently discusses principles for overall risk management including policies for specific areas such as foreign exchange. 

​

a) Market Risk

 

i) Foreign Exchange Risk

 

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the pound sterling, US dollar ("USD"), Zambian kwacha ("ZMW") and Botswanan pula ("BWP"). Foreign exchange risk arises from recognised monetary assets and liabilities, where they may be denominated in a currency that is not the Group's functional currency.

 

The Zambian kwacha appreciated by approximately 15% (depreciated by 7% in 2024). The Group's exposure is through the Handa group from 16 October 2025, and the Foreland Minerals Limited subsidiary.

 

The Botswanan pula appreciated by approximately 4% (depreciated by 2% 2024), Whilst less volatile than the ZMW, the pula risk is similarly mitigated to that of the kwacha by the fact that the Group's Botswanan entity would only have one month's cash requirement on hand at any one time.

 

On the assumption that all other variables were held constant, and in respect of the Group and the Company's expenses the potential impact of a 20% increase/decrease in the GBP:ZMW foreign exchange rate on the Group's loss for the year and on equity is as follows:

 

Potential impact on Zambian kwacha and Botswanan pula expenses: 2024
	Group (BWP)	Group (ZMW)
Increase/(decrease) in exchange rates	£ 000's	£ 000's
20%	(11)	-
-20%	18	-
Potential impact on Zambian kwacha and Botswanan pula expenses: 2025
Increase/(decrease) in exchange rates
20%	(7)	(82)
-20%	11	55

 

b) Credit Risk

 

Credit risk arises from cash and cash equivalents.

 

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.  The Group will only keep its holdings of cash and cash equivalents with reputable institutions.

 

The Group considers that it is not exposed to major concentrations of credit risk.

 

The Group holds cash as a liquid resource to fund its obligations.  The Group's cash balances are held primarily in USD.  The Group's strategy for managing cash is to assess opportunity for interest income whilst ensuring cash is available to match the profile of the Group's expenditure. This is achieved by regular monitoring of interest rates and monthly review of expenditure forecasts. Short term interest rates on deposits remained very unattractive during the fiscal year and management employed short-term investment strategies to protect working capital reserves.

 

The Group has a policy of not hedging and therefore takes market rates in respect of foreign exchange risk; however, it does review its currency exposures on an ad hoc basis. Currency exposures relating to monetary assets held by foreign operations are included within the foreign exchange reserve in the Group Balance Sheet. 

 

The currency profile of the Group's cash and cash equivalent is as follows:

	Dec 2025	Dec 2024
Cash and cash equivalents	£ 000's	£ 000's
Sterling	219	1,024
US Dollars	412	589
Zambian Kwacha (ZMK)	1	-
Botswana Pula (BWP)	3	22
At end of year	635	1,635

 

On the assumption that all other variables were held constant, and in respect of the Group's cash position, the potential impact of a 20% increase in the GBP:USD foreign exchange rate would not have a material impact on the Group's cash position and as such is not disclosed.

 

c) Liquidity Risk

 

To date the Group has relied upon equity funding to finance operations. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.

 

The Group ensures that its liquidity is maintained by a management process which includes projecting cash flows and considering the level of liquid assets in relation thereto, monitoring Balance Sheet liquidity and maintaining funding sources and back-up facilities.

 

Listed securities

 

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

Level 1: quoted (unadjusted) prices in active markets for identical assets.

Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market such as industry knowledge and experience of the Directors.

Risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Company's investment objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate.

 

As at year end, the Company held no investments in companies that are listed on stock markets.

 

Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to position as a going concern and to continue its exploration and evaluation activities. The Group has capital, defined as the total equity and reserves of the Group, of £2,758,000 (December 2024: £11,448,000).

 

The Group monitors its level of cash resources available against future planned exploration and evaluation activities and issues new shares in order to raise further funds from time to time.

 

22.  Commitments

​

Alvis-Crest committed exploration expenditure

Pursuant to the shareholders agreement in relation to Alvis-Crest, until a decision to mine is reached, the Group is committed to spending, during any consecutive three-year period, not less than USD 200,000 per year, on average, on the Virgo Project.

 

Exploration commitments

Ongoing exploration expenditure is required to maintain title to the Group's mineral exploration permits. No provision has been made in the Group financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of the operations of the Group.

 

23.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There were no other transactions with related parties during the reporting year, except as disclosed below:

 

Remuneration of Key Management Personnel

The remuneration of the Directors and PDMRs is set out in Note 6.

Of the amounts set out in Note 6:

£168k (2024 - £164k) was incurred with VC Resources Ltd, a PSC owned by Vassilios Carellas, as remuneration for his position as Chief Operating Officer.

£135k (2024 - £135k) was incurred with HFS Consulting Ltd, a company owned by Ian Lynch, as remuneration for his position as Chief Financial Officer.

 

24.  Ultimate controlling party

There is no ultimate controlling party in the opinion of the Board.

 

25.  Events after the reporting date

 

Zambian settlement agreement

On 27 May 2026, the Company announced that the Settlement Agreement, entered into between the Company, Handa Resources Limited ("Handa"), Unico Minerals Limited ("Unico") and Kopara Investments Limited ("Kopara") (together "Party A") and Zambia Mineral Exchange Corporation Limited ("ZAMEX"), Lunda Resources Limited (formerly Zamsort Limited) ("Lunda") and Mumena Mushinge (together, "Party B"), terminates eight sets of ongoing proceedings across multiple Zambian courts and tribunals and accordingly resolves all ongoing litigation impacting Arc in Zambia. Procedurally, the requisite consent judgements are being filed with the relevant Zambian courts and the Company will make a further announcement upon completion of this process.

 

One of the legal matters (as announced on 21 July 2025), which was settled per above, involved an attempt at placing Handa into receivership. To protect Handa's bank accounts against wrongful access and potential abuse, Handa's shareholders requested that an investigation be carried out and restrictions be placed on Handa's bank accounts. As a result of this request, the bank accounts of Handa and its subsidiary, Zaco Investments Ltd, were restricted from access and information requests. The underlying funds remained the property of Handa and Zaco throughout this period. Following the Settlement Agreement per above and the discontinuance of the related legal action, the Company requested that the investigation be closed and full access to the bank accounts be restored. The necessary administrative processes have already been commenced, and the Company expects access to be restored imminently.

 

Financing

As announced on 24 April 2026, the Company raised gross proceeds of £3 million through a placing and subscription of 750,000,000 new ordinary shares at a price of 0.4 pence per share ("Fundraise"). In addition, approximately £1 million of outstanding liabilities owing to certain directors, officers and contractors were settled through the issue of 261,479,051 new ordinary shares at the same price ("Creditor Subscription"). Warrants were issued in the ratio of one warrant for every one new share issued in connection with the Fundraise and Creditor Subscription.

 

Annual General Meeting

The Company expects to make a separate announcement regarding the notice of Annual General Meeting shortly.

 

ENDS

 

For further information visit www.arcminerals.com or contact:

 

Arc Minerals Ltd	Rémy Welschinger, CEO	E: [email protected]
Zeus Capital Ltd Nominated Adviser & Joint Broker	Katy Mitchell / Harry Ansell	T: +44 (0) 20 3829 5000
Shard Capital Partners LLP Joint Broker	Damon Heath	T: +44 (0) 20 7186 9952
St Brides Partners Ltd Financial PR	Isabel de Salis / Susie Geliher	E: [email protected]

 

Notes

Arc Minerals Ltd (LSE: ARCM) is an AIM-quoted copper exploration company focused on advancing high-potential copper assets in two of Africa's premier copper jurisdictions. The Company's portfolio includes the Virgo Project in Botswana's Kalahari Copper Belt and the Kabompo West Project in Zambia's Central African Copperbelt, both offering significant exploration upside. Led by an experienced team with expertise across mining, capital markets and African operations, Arc is progressing a clear value creation strategy through targeted geophysical programmes and drilling campaigns designed to unlock the potential of its highly prospective asset base.