Consolidated Statement of Financial Position

As at 30 June 2021

Consolidated Statement of Cash Flows

for the six months ended 30 June 2021

Notes to the Interim Financial Statements

For the six months ended 30 June 2021

1.    Accounting Policies

Reporting entity

Ascent Resources plc ('the Company') is a company domiciled in England. The address of the Company's registered office is 5 New Street Square, London EC4A 3TW. The unaudited consolidated interim financial statements of the Company as at 30 June 2021 comprise the Company and its subsidiaries (together referred to as the 'Group').

Basis of preparation

The interim financial statements have been prepared using measurement and recognition criteria based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU. The interim financial information has been prepared using the accounting policies which were applied in the Group's statutory financial statements for the year ended 31 December 2020.

New Standards adopted as at 1 January 2021

Accounting pronouncements which have become effective from 1 January 2021 are:

·      IFRS 3 Business Combinations - definition of a business

·      IAS 1 and IAS 8 - definition of material

·      IFRS 9, IFRS 7 and IAS 39 - interest rate benchmark

·      IFRS 7 - Insurance contracts

These accounting pronouncements do not have a significant impact on the Group's financial results or position.

All amounts have been prepared in British pounds, this being the Group's presentational currency.

The interim financial information for the six months to 30 June 2021 and 30 June 2020 is unaudited and does not constitute statutory financial information. The comparatives for the full year ended 31 December 2020 are not the Group's full statutory accounts for that year. The information given for the year ended 31 December 2020 does not constitute statutory financial statements as defined by Section 435 of the Companies Act. The statutory accounts for the year ended 31 December 2019 have been filed with the Registrar and are available on the Company's web site www.ascentresources.co.uk. The auditors' report on those accounts was unqualified. It did not contain a statement under Section 498(2)-(3) of the Companies Act 2006.

Going Concern

The Financial Statements of the Group are prepared on a going concern basis.

COVID-19 has had limited direct impact on Ascent's assets in Slovenia but there may be delays in obtaining the necessary governmental approvals and processes. Production operations in Slovenia have been unaffected to date.

The forecasts are sensitive to the timing and cash flows associated with the continuing situation in Slovenia, and discretionary spend incurred with executing on the ESG Metals Strategy through acquisition and advancing the Cuban initiative, including deferred consideration that would become payable if the Company elects to enter a PSC for Block 9b. As such, the Company will need to raise new capital within the forecast period to fund such discretionary spend.

Based on historical and recent support from new and existing investors the Board believes that such funding, if and when required, could be obtained through new debt or equity issuances.

However, there can be no guarantee over the outcome of these options and as a consequence there is a material uncertainty of the Group's ability to raise the necessary finance, which may cast doubt on the Group's ability to operate as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

Principal Risks and Uncertainties:

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 11-12 of the Annual Review 2020, a copy of which is available on the Company's website at www.ascentresources.co.uk. 

2.    Operating loss is stated after charging

3.    Earnings per share

4.    Property, plant & equipment and Exploration and Evaluation assets

5.    Trade & other receivables

6.    Trade & other payables

7.    Borrowings

The non-current borrowings relate to the loan arrangement with Riverfort Global opportunities that was refinanced in February 2020. The outstanding loan of £375,020 as at February 2020 was re-negotiated to a two-year coupon free bullet with conversion rights for the lender at 7.5 pence per share. No conversion can occur until the share price exceeds 10 pence per share for five consecutive days. The Group made convertible loan note repayments in the year of £105,000 to Riverfort Global opportunities, resulting in an ending convertible loan note balance of £270,000, comprising £197,000 recognised as the debt component and a further £73,000 recognised in Equity Reserve.

The current borrowings relate to the loan facility arrangement with Align Research. The outstanding loan of £307,500, of which £57,500 was received subsequent to the period end.

8.    Contingent consideration due on acquisitions

The fair value of contingent consideration was based on the present value of cash flows and the market value of the shares to be issued.

9.    Share Capital

The deferred shares have no voting rights and are not eligible for dividends.

Shares issued during the year

Issuance of equity throughout the year:

·      On 6 January 2021, the Company issued 208,991 ordinary shares ('Consultancy Shares'), to a supplier for financial modelling and business development services rendered in the months of November and December, at an average issue price of 5.74 pence per share being calculated as the monthly volume weighted average price calculations for the respective months in which the services were rendered.

·      On 11 January 2021, the Company received a Warrant Exercise notice over 833,333 new ordinary shares for a consideration of £62,500.  The Warrants are being exercised by Align Research in consideration for surrendering an equivalent value of loan notes. Additionally, the Company has agreed to issue 66,667 new shares at 7.5 pence, being the coupon conversion price, in lieu of the 8% cash coupon that is incurred on the converted loan amount.

·      On 4 February 2021, the Company received a warrant exercise notice over 1,000,000 new ordinary shares for a consideration of £55,000.

·      On 4 February 2021, the Company received a Warrant Exercise notice over 833,333 new ordinary shares for a consideration of £62,500.  The Warrants are being exercised by Align Research in consideration for surrendering an equivalent value of loan notes. Additionally, the Company has agreed to issue 66,667 new shares at 7.5 pence, being the coupon conversion price, in lieu of the 8% cash coupon that is incurred on the converted loan amount.,

·      On 4 February 2021, the Company received a Warrant Exercise notice over 900,000 new ordinary shares for a consideration of £67,500.  The Warrants are being exercised by Align Research and the Company has therefore today issued 900,000 new shares.

·      On 10 February 2021, the Company received a warrant exercise notice over 187,500 new ordinary shares for a consideration of £7,500.

·      On 11 February 2021, the Company issued 9,997,032 new ordinary shares of 0.5p at a price of 10.1p through an oversubscribed placing, raising gross proceeds of £1,009,700.

10.  Share based payments

The Company has provided the Directors, certain employees and institutional investors with share options and warrants ('options').  Options are exercisable at a price equal to the closing market price of the Company's shares on the date of grant.  The exercisable period varies and can be up to seven years once fully vested after which time the option lapses.

Details of the share options outstanding during the year are as follows:

The value of the options is measured by the use of a binomial pricing model.  The inputs into the binomial model made in 2020 were as follows. 

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 5 years.  The expected life is the expiry period of the options from the date of issue.

Options outstanding at June 2020 have an exercise price in the range of 2.9p and 778p (and a weighted average contractual life of 4.5 years.

Details of the warrants outstanding during the year are as follows:

11.  Events after the reporting period

There have been no significant events subsequent to the reporting period.