29 July 2022

Bradda Head Lithium Ltd

("Bradda Head", "Bradda", or the "Company")

Audited Final Results for the Financial Year Ending 28 February 2022

 

Bradda Head Lithium Ltd (AIM: BHL), the North America-focused lithium development group, is pleased to announce its audited financial results for the year ending 28^th February 2022. A copy of these Final Results is available on the Company's website www.braddaheadltd.com.

 

Financial and Operational Highlights

·      Completed an over-subscribed AIM IPO in July 2021, raising gross proceeds of US$8.5 million, and followed this up with a fundraise completed during April 2022, raising gross proceeds of US$12.9 million

·      Completed a fast-tracked diamond core drilling programme at Basin East, resulting in an updated MRE released in March 2022, highlighting a current resource of 305kt of lithium carbonate equivalent at a 400ppm cut-off

·      SRK, the renowned independent geology consultancy group, identified an exploration target of between 1Mt to 6Mt of LCE, covering the claims at BN, BE, BEE and BW and BWE

·      Concluded a royalty agreement with the Lithium Royalty Corporation for a 2% Gross Overriding Royalty over the Company's sedimentary lithium claims in Central Arizona                                   

·      Commenced 30 hole exploration drilling on the Company's extensive pegmatite target at San Domingo, Arizona, in July this year, opening up two exploration fronts for the Company, being pegmatite and clay mineralisation targets

·      Work also underway at Wilson and Eureka, with a shallow drilling programme already commenced at Eureka in Q2 2O22 and a brine drilling  programme planned for Wilson in H2 2022

 

Ian Stalker, Chairman of Bradda Head Lithium, commented:

"The financial year has been both busy and very exciting, with the Company raising gross funds of over US$8 million as part of a successful AIM IPO. The funds have been strategically deployed to fast-track and complete our Basin East drilling programme, resulting in a 65% increase in the MRE to 305kt of lithium carbonate equivalent, and an exploration target of between 1Mt to 6Mt of LCE over the Company's Basin projects. We also significantly increased our landholding in Arizona, and strengthened our team members with key senior appointments. We also completed a maiden drill programme at our Wikiuep asset, with assay results pending, which may lead to a maiden MRE later in the year.

 

"Following a successful fundraise completed during April 2022, raising gross proceeds of US$12.9 million, the Company is well-funded to carry out its exploration plans, and to unlock the full potential of its projects."

Copies of the 2022 Audited Report and Financial Statements are being posted to shareholders and will shortly be available from the Company's website www.braddaheadltd.com.  

Contact:

Bradda Head Lithium Limited	+44 (0) 1624 639 396
Charlie FitzRoy, CEO Denham Eke, Finance Director
Beaumont Cornish (Nomad) James Biddle/Roland Cornish	+44 20 7220 1666
Peterhouse (Joint Broker)	+44 207 469 0930
Charles Goodfellow Duncan Vasey Lucy Williams
Shard Capital (Joint Broker)	+44 207 186 9927
Damon Heath Isabella Pierre
Red Cloud (North American Broker)	+1 416 803 3562
Joe Fars
Tavistock (PR)	+ 44 20 7920 3150
Nick Elwes Adam Baynes	[email protected]

 

 

 

 

 

 

 

 

The Company will announce the date and place for the Annual General Meeting and the Notice will be posted to Shareholders in due course.

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

Notes to Editors

Bradda Head Lithium Ltd. is a North America-focused lithium development group. The Company currently has interests in a variety of projects, the most advanced of which are in Central and Western Arizona: The Basin Project (Basin East Project, and the Basin West Project) and the Wikieup Project.

The Basin East Project has an Indicated Mineral Resource of 17.6Mt at an average grade of 912ppm Li and 3.4%K for a total of 86kt LCE and an Inferred Mineral Resource of 57.6Mt at an average grade of 717ppm Li and 3.3%K for a total of 220kt LCE. In the rest of the Basin Project SRK has estimated an Exploration Target of between 300 and 1,300Mt of material grading between 600 and 850ppm Li which is equivalent to a range of between 1 and 6Mt LCE.

The Group intends to continue to develop its three phase one projects in Arizona, whilst endeavouring to unlock value at its other prospective pegmatite and brine assets in Arizona, Nevada, and Pennsylvania.

All of Bradda Head's licences are held on a 100% equity basis and are in close proximity to the required infrastructure.

Bradda Head is quoted on the AIM of the London Stock Exchange with the ticker of BHL and on the US OTCQB market with a ticker of BHLIF.

 

 

Chairman's Statement

 

It is a pleasure to present the Annual Report and the Audited Financial Statements for Bradda Head Lithium Limited (the "Company" or "Bradda Head") for the year ended 28 February 2022.

 

First of all a big thanks to all our IPO investors and subsequent shareholders who have supported the Company and allowed management to develop Bradda Head to where we are today - a well-funded lithium exploration junior with approximately US$ 16.5 million in the Treasury currently, three great projects all located in the USA, covering each of the three lithium mineralisation types, and underpinned by a solid team of professional operators. Indeed, the team on the ground also deserves a big thank you as, without them, our programmes would not have progressed at the speed they have. For a junior exploration company to hit the ground running and then continue to maintain momentum is largely due to their hard work and dedication.

 

Since our AIM listing in July 2021, work has commenced on all three deposit types. This has resulted in a number of milestones, including an updated resource estimate from our Basin East lithium clay deposit released in March 2022. We increased the lithium carbonate equivalent ("LCE") content in our resource by 65% and yet only drilled +/- 1,000m to achieve this. Equally exciting and pleasing is that we now also have an exploration target of between 1 and 6Mt LCE over our various claims in this deposit mineralisation envelope, independently confirmed by SRK Consulting UK Limited. We anticipate further resource growth over 2022/2023 which, as appropriate, will feed into a technical study. We also expect to start drilling at our San Domingo pegmatite opportunity in the coming weeks, with 30 holes planned. Our initial shallow based drill programme at our Eureka brine assets in Nevada was completed in May and we look forward to reporting the results in due course. This effort has been undertaken against a backdrop of a very restricted drilling market in the US.

 

Last year has seen a very positive lithium macro backdrop. When Bradda Head listed, lithium carbonate prices were approximately US$12,000/t. As of the end of February this year, the price had increased by nearly 70% to over US$70,000/t. Whilst this is the spot price in China, this high level is having direct impact on the long-term contract prices of lithium chemicals and also an uplift in price forecasts from metals analysts. Although the 2025 forecast price of lithium carbonate is approximately US$20,000/t, Bradda Head's processing specialist, Dr Yatendra Sharma, is targeting operational processing costs at US$4,000/t at that date. We will continue to release updates on the development of our metallurgical testwork programmes.

 

All shareholders should be fully aware that Bradda Head has put Environmental, Social, and Corporate Governance ("ESG") at the top of its agenda. We appointed a seasoned USA ESG professional shortly after listing, and have been working with him closely to ensure we are setting a high standard as an exploration company. A key issue in Arizona and Nevada is water scarcity and, as a consequence, we have now implemented sonic drilling technology to minimise water use. We are also developing water use mitigation programmes with our local stakeholders, and have a number of community-based programmes and protocols that we will roll out during 2022 and 2023.

 

Shortly after listing, Bradda Head engaged two lithium specialists. Don Hains, an industrial minerals exploration and economic geologist with extensive experience in development, use and analysis of industrial minerals properties and materials, has been appointed as a Technical Consultant. Dr Yatendra Sharma, who holds a master's degree in industrial chemistry/metallurgy and a PhD degree in chemical process and electrometallurgy, with over 47 years of experience, has been appointed as a Lithium Processing Consultant. These experienced professionals, both with extensive technical and commercial knowledge, continue to assist in the design of our work programmes.

 

As disclosed in the Company's Admission document, the Group is currently engaged in correspondence with Arizona Lithium regarding the validity of some of the claims held at Wikieup. As of writing, discussions with Arizona Lithium are still ongoing.

 

I would like to also highlight and thank all participants in the fund raise we completed post February 2022 year end. We took advantage of the buoyant market in March and raised US$ 12.9 million in a combined North American and UK placement, that has given both North American and UK investors the opportunity to support Bradda Head in its plans for development of its US based portfolio of lithium assets.

Thank you for your support and we all look forward to a huge year for Bradda Head Lithium.

 

Ian John Stalker

Chairman

 

Chief Executive Officer's Operational Review

 

The financial year has been very exciting, with the most significant moment for the Company being the successful listing and admission of its shares to trading on the London AIM market.

 

Following the Company listing on 19 July 2021 ("IPO"), the development of the Company's lithium projects have progressed at a rapid pace. Bradda Head hit the ground running with the first drill programme already underway. On 19 August 2021, the Company engaged the services of geophysics contractor, Terravision Exploration Ltd, to conduct geophysical programmes at the Company's Basin (both East and West), Wikieup and San Domingo lithium projects, using their leading ground-penetrating radar technology, GPR Plus™. Encouraging results were received for the Basin, Wikieup and San Domingo projects and incorporated into subsequent drilling programmes.

 

Shortly after the IPO, the Company commenced and completed a successful claim-staking programme, which doubled the size of our Western Arizona landholding. About 24km² of new claims have been added, increasing that landholding by 105% to approximately 47km² of sedimentary lithium claims. The new claims are adjacent to the existing Basin East, Basin West, and Wikieup clay deposits, and complement Bradda Head's estate. The claims were placed where the Company's geologists have identified areas in which lithium-bearing clay, similar to that at the Wikieup and Basin assets, is likely exist under younger alluvium and/or volcaniclastic deposits.

 

In August 2021, shortly after listing,  Bradda Head made three key senior appointments which reflect the intent of the Company to be an Industry Leader in these areas. Adam Hawkins, an expert in ESG, has been appointed as ESG Officer. Don Hains, an industrial minerals exploration and economic geologist with extensive experience in development, use and analysis of industrial minerals properties and materials, has been appointed as a Technical Consultant. Dr Yatendra Sharma, who holds a master's degree in industrial chemistry/metallurgy and a PhD degree in chemical process and electrometallurgy, with over 47 years of experience, has been appointed as a Lithium Processing Consultant.

 

Following these appointments, the ESG Officer and communities team commenced work to identify and consult with stakeholders surrounding the Wikieup and Basin drill sites. This work included producing videos to help local stakeholders understand the footprint and scale of drilling activities in the area, with a key focus area for the Company being around water supply and protection of water resources, the protection of cultural resources, and working with the local tribes in the areas. Key for the Company is its commitment to ESG matters, by continuing to work on a comprehensive outreach plan, and an integrated media and community response plan for employees and contractors in the field.

 

On 22 September 2021, the Company changed its name from Bradda Head Holdings Limited to Bradda Head Lithium Limited, to better reflect the business and focus.

 

In November 2021, the Company completed its first diamond core drilling programme at the Basin East project. Bradda drilled 10 holes (7 new locations and 3 twinned) for a total of 1,100m metres. The drilling results confirmed the highest grade intercepts recorded to date at Basin East of over 2,000 ppm lithium, with the highest grade recorded in the upper clay zone at 2,150 ppm lithium. An updated Mineral Resource Estimate was released in March 2022 (it is important to note this was  based on only 1,110m of 2021 drilling), and highlights a current resource of 305kt of lithium carbonate equivalent at a 400ppm cut-off. This recent exploration drilling and core logging has also identified a high-grade zone within the resource of 58 kt at about 1,300 ppm lithium. This has significant benefit in identifying and locating the next round of drilling targets planned for Q2 2022. Importantly for future resource growth, the Mineral Resource remains open to the west and northwest of the drilled area where the Company has the adjacent Basin East Extension ("BEE") claim block and beyond into the Basin North ("BN"), Basin West ("BW") and Basin West Extension ("BWE") claim blocks where geological mapping and geophysical surveys suggest that similar clay strata are present.

 

SRK has determined an Exploration Target of between 1Mt to 6Mt of LCE covering the claims BN, BE, BEE and BW and BWE.  An extensive 30-hole drilling programme is planned for the remainder of 2022 at BEE and BN with permits in the process of being obtained and should start in Q2, also an additional 14-hole sonic drill programme has also been approved at BE.

 

In December 2021, the Company commenced drilling on its Wikieup project in Arizona, with the drill programme being conducted by Boart Longyear using sonic drilling techniques. The selection of the sonic drilling rigs is an indication of the Company's intent to undertake our business in an appropriate and environmentally sensitive way.

 

Sonic rigs are not only less impactful on the environment than diamond core drilling rigs, use less water than diamond core rigs, but they are also able to achieve superior core recoveries in soft sedimentary rocks. Permission has been granted to drill 28 holes, and Bradda expects the full assay results to be received in Q2 2022.

 

Also in December 2021, the Company exercised  its option to acquire 100% of portions of both the Basin East project area, and the Basin West project area, covering 2.4km² in total.  This exercise was based on the expectation of significant lithium mineralisation of economic value on these properties.

 

In addition to positive progress made on the Company's projects, the lithium clay-based projects Basin and Wikiuep received a major endorsement in December 2021, when the Company completed a royalty agreement with the Lithium Royalty Corporation. Further details are discussed below under Financing.

 

An initial metallurgical test-work programme was completed on the Company's Basin East lithium bearing clays in January 2022, utilising SGS Canada, a highly-regarded laboratory in Canada.  This programme built on existing metallurgical work from the Company's 2016 to 2018 programmes and utilised recent developments in lithium clay processing technology. Results received to date show an impressive 99% lithium extraction into leach, using acid leaching at atmospheric conditions. Important to note is that 85% of the lithium mineralisation in the clay at BE sits in the 11-micron fraction, which allows us to concentrate the clay by size fraction sorting before we even start to process. This analysis has made it possible for us to beneficiate Li in Li ore using Cyclone Classification. It was possible to concentrate our lithium content by 25.9% by rejecting 32% Li clay using Cyclone Classification. Having the ability to beneficiate our clay before processing will reduce capex and opex considerably. The capex may be reduced as the ability to concentrate our lithium content by c.30% may enable us to now only need leach equipment two-thirds the size and opex may be reduced by 25% because of the use of less reagents (such as sulfuric acid) and utilities consumption. The Company's primary aim is to develop a suitable process flowsheet with a minimum carbon footprint, whereby the target processing cost of Li extraction is less than US$4,000/t Lithium Carbonate Equivalent ("LCE"), allowing it to be competitive in a more challenging Lithium Carbonate pricing environment. As at the end of February spot prices were over US$70,000/t.

 

In January as part of the Company's efforts to market in North America, Bradda Head listed its shares on the OTCQB Market.

 

The Company received permission to commence a 23-hole drilling programme at its Eureka project in March this year. Prior to applying for the permit, Bradda Head commissioned two geophysical surveys (Magnetotellurics and GPR Plus™) over its Eureka project to understand more about how the lithium is contained there. Bradda had previously undertaken a surface sampling programme, indicating the presence of lithium at surface of up to 550ppm Li, and testing of hot springs at surface had indicated an anomalous lithium content in the water at surface. The geophysical results from both programmes demonstrate the potential presence of both brine and clay deposits at Eureka. These positive results have enabled us to go ahead with plans for a drilling programme to test the observed brine reservoir and a shallow drill programme to test the clay to maximise the resource's full potential whilst further exploring Eureka's lower basin.

 

The remainder of 2022 is going to be a significant year for the Company, with resource growth at its clay assets in Arizona with drill programmes planned at Basin East, Basin East Extension and Basin North. Excitingly, the Company has started its first drill programme at its San Domingo pegmatites district, results to follow in H2 2022. San Domingo was mined previously in the 1940's and 1950's for lithium and other minerals. Bradda has a 9km strike of known pegmatites, with some showing mineralisation at surface. Recent geophysics has demonstrated trends in the pegmatites, and Bradda Head has designed a 30-hole programme to be completed. This programme will test the thesis that San Domingo is similar in structure to other zoned pegmatite systems, like Kathleen Valley in Australia. Previous grab samples, chip and channel sampling has returned grades of up to 8% in places, and consistently between 0.5% and 2.5% Li2O across target zones.

 

Work is also underway at Wilson and Eureka, with a shallow drilling programme already commenced at Eureka in Q2 2O22 and a brine drilling  programme planned for Wilson in H2 2022.

 

Financial Review

For the year ended 28 February 2022, the Company recorded a net loss of US$ 3,554,468 (28 February 2021: US$ 721,949). Expenditures totalling US$ 1,022,837 are considered to be one-off items, as these related directly to the AIM stock exchange listing, completed on 19 July 2021.

 

As at year end, cash balance stood at US$ 7,327,303 (28 February 2021: US$ 86,972), capitalised deferred mining, exploration, licence and permit costs stood at US$ 5,732,820 (28 February 2021: US$ 2,458,739), and total assets were US$ 13,354,840 (28 February 2021: US$ 2,649,118).

 

Approach to Risk and Corporate Governance

 

"The Company's general risk appetite is a moderate, balanced one that allows it to maintain appropriate growth, profitability and scalability, whilst ensuring full corporate compliance."

 

The Group's primary risk drivers include: -

 

Strategic, Reputational, Credit, Operational, Market, Liquidity, Foreign Exchange, Capital and Funding, Compliance and Conduct.

 

Our risk appetite has been classified as high under an "impact" matrix defined as Zero, Low, Medium and High. Appropriate steps have been taken and adequate controls implemented to monitor the risks of the Company, and the appropriate committees and reporting structures have been established, and, will monitor risks facing the Company.

 

Financing

On 21 May 2021, the company completed a pre-IPO funding round, raising gross proceeds of US$ 1,028,199 from new and existing shareholders, issuing 21,420,824 new ordinary shares.

 

On 19 July 2021, the Company completed an over-subscribed AIM listing. The Company raised total gross proceeds of £6,200,000 or US$ 8,570,964, issuing 112,727,273 new ordinary shares to institutional and other investors. As mentioned above, listing related expenditures amounted to US$ 1,022,837 and these are considered to be non-recurring items.

 

Further endorsement in the confidence of our assets was received on 15 November 2021, with the Company entering into a royalty agreement with the Lithium Royalty Corporation ("LRC") for a 2% Gross Overriding Royalty ("GOR") over its sedimentary lithium claims in Central Arizona. The key terms being:

 

-     Total proceeds payable to Bradda Head of US$ 8 million, spread as follows:

o  US$ 2.5 million on closing

o  US$ 2.5 million once Bradda Head has obtained a 1 million tonne (Mt) lithium carbonate equivalent (LCE) resource with a minimum lithium grade of 800 parts per million ("ppm")

o  US$ 3 million once Bradda Head has obtained a 2.5Mt LCE resource with a minimum lithium grade of 800 ppm

-     LRC invested an additional US$ 2 million as a private placement on closing

-     LRC issued with 1,185,687 warrants at completion

 

This is another significant step towards our end-goal of becoming a battery-grade lithium provider to the lithium-hungry US market.

 

On 20 January 2022, the Company's shares commenced cross-trading on the OTCQB Board of the OTC Markets. Considering that all of the Company's projects are located in the USA, this was a logical step for the Company and provides efficient access for US-based investors to trade the Company's shares.

 

Strategy and Outlook

Under the Biden administration, clean energy production will be ramped up in the USA, with lithium considered to be a key resource. US$ 3 billion has been dedicated by the Biden administration to increase US-based battery production for electric vehicles. Grants will be made available to produce keys metals such as lithium. They are intended to reduce reliance of the US on countries such as China, which has been leading the way in lithium-ion batteries. The Company, with its portfolio of assets covering all three main lithium deposit types, is ideally positioned to take advantage of this demand growth. The projects held are in favourable location with respect to power, rail and road transport, electricity and gas infrastructure is easily accessible and in place, and multiple lithium end users are located in the Western states close to the Company's projects, most notably the Tesla Gigafactory.

 

With its current portfolio, a highly experienced and motivated team, the Board believes it is in a strong position to unlock value from its projects and create value for shareholders.

 

Charles FitzRoy

Chief Executive Officer

 

 

Directors' report

 

The Directors present their annual report and the consolidated financial statements for Bradda Head Lithium Limited (the "Company") for the year ended 28 February 2022.

 

Principal activity

Bradda Head Lithium Limited is a lithium exploration Group focused on developing its high-quality projects in the USA. On 14 September 2021, the Company changed its name from Bradda Head Holdings Limited to Bradda Head Lithium Limited.

 

Results and transfers to reserves

The results and transfers to reserves for the year are set out on pages 26 to 30 of the consolidated financial statements.

 

The Company made a total comprehensive loss attributable to equity shareholders for the year after taxation of US$ 3,554,468 (28 February 2021: US$ 721,949).

 

Dividend

The Directors do not propose the payment of a dividend for the year (2021: US$ Nil).

 

Policy and practice on payment of creditors

It is the policy of the Company to agree appropriate terms and conditions for its transactions with suppliers by means of standard written terms to individually negotiated contracts. The Company seeks to ensure that payments are always made in accordance with these terms and conditions.

 

Financial risks

Details relating to the financial risk management are set out in note 16 to the financial statements.

 

Directors

The Directors who served during the period and to date are:

Denham Eke
James Mellon
Ian Stalker
Euan Jenkins
Charles FitzRoy	Appointed 23 April 2021
Alex Borrelli	Appointed 7 June 2021

 

 

Directors' interests

As at 28 February 2022, the interests of the Directors and their families (as such term is defined in the AIM Rules for Companies) in the share capital of the Company are as follows:

 

	28 February 2022		28 February 2021
	Number	% of issued share capital	Number	% of issued share capital
James Mellon 1	64,145,176	20.21%	14,263,407	19.00%
Denham Eke	124,307	0.04%	124,307	0.16%
Ian Stalker 2	3,616,267	1.14%	819,861	1.09%
Charles FitzRoy	11,091	0.003%	-	-
Euan Jenkins	2,055,454	0.65%	-	-
Alex Borrelli	315,649	0.10%	-	-
	──────	──────	──────	──────
	70,267,944	22.143%	15,207,575	20.25%
	══════	══════	══════	══════
1 James Mellon's interest comprises of 64,145,176 (2021: 14,263,407) shares directly held by Galloway Limited, which is indirectly wholly owned by James Mellon. Denham Eke is a director of Galloway Limited.
2 Ian Stalker's interest comprises of 3,532,844 (2021: 819,861) shares directly held by Promaco Limited, which is wholly owned by Ian Stalker.The balance of 83,423 shares are held directly in his name.

 

 

Significant shareholdings

Except for the interests disclosed in this note, the Directors are not aware of any holding of ordinary shares as at 28 February 2022 representing 3% or more of the issued share capital of the Company:

 

	Number of ordinary shares	Percentage of total issued capital
James Mellon 1	64,145,176	20.21%
Zenith Minerals Limited	43,959,305	13.85%
Lithium Royalty Corporation	19,481,475	6.14%
RBC Trust Company (International) Limited	14,750,000	4.65%
Jason Macdonald 2	14,095,706	4.44%
Anthony Baillieu	14,088,723	4.44%
Raj Chawla	12,250,000	3.86%
1 James Mellon's interest comprises of 64,145,176 (2021: 14,263,407) shares directly held by Galloway Limited, which is indirectly wholly owned by James Mellon. Denham Eke is a director of Galloway Limited.
2 Jason Macdonald's interest comprises of 12,307,004 (2021: 12,307,004) shares directly held by the J&E Macdonald Trust, of which Jason Macdonald has a vested interest in. The balance of 1,788,702 (2021: 1,788,702) shares is held directly in his name.

 

 

Auditors

KPMG Audit LLC, being eligible, have expressed their willingness to continue in office.

 

By order of the Board

 

Denham Eke

Director                                                                                                                                                                                    

                                           

                                                                                                                                                                                                  

Corporate Governance Statement

 

The Board of Bradda Head Lithium Limited (the "Board") is committed to best practice in corporate governance throughout the Company (the "Company"). The Directors have agreed to comply with the provisions of the Quoted Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size Quoted Companies (2018) to the extent which is appropriate to its nature and scale of operations. This report illustrates how the Company complies with those principles.

 

QCA Principle 1: Establish a strategy and business model which promotes long-term value for shareholders

The strategy and business operations of the Company are set out in the Chairman's Statement and Chief Executive Officers operational review on pages 6 to 9.

 

The Company's strategy and business model and amendments thereto are developed by the Chairman and his senior management team and approved by the Board. The management team is responsible for implementing the strategy and managing the business at an operational level.

 

The Company operates in an inherently high-risk sector and this is reflected in the principal risks and uncertainties.

In executing the Company's strategy and operational plans, management will typically confront a range of day-to-day challenges associated with these key risks and uncertainties and will seek to deploy the identified mitigation steps to manage these risks as they manifest themselves.

 

QCA Principle 2: Seek to understand and meet shareholder needs and expectations

The Company via the Chairman seeks to maintain a regular dialogue with both existing and potential new shareholders in order to communicate the Company's strategy and progress and to understand the needs and expectations of shareholders.

 

Beyond the Annual General Meeting, the Chairman and, where appropriate, other members of the senior management team or Board will meet with investors and analysts to provide them with updates on the Company's business and to obtain feedback regarding the market's expectations of the Company.

 

The Company's investor relations activities encompass dialogue with both institutional and private investors. From time to time, the Company attends private investor events, providing an opportunity for those investors to meet with representatives from the Company in a more informal setting.

 

QCA Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Company is aware of its corporate social responsibilities and the need to maintain effective working relationships across a range of stakeholders. These include the Company's advisors, suppliers and investee companies. The Company's operations and working methodologies take account of the need to balance the needs of all of these stakeholders while maintaining focus on the Board's primary responsibility to promote the success of the Company for the benefit of its members as a whole. The Company endeavours to take account of feedback received from stakeholders, and where appropriate, ensures any amendments are consistent with the Company's longer-term strategy.

 

The Company takes due account of any impact that its activities may have on the environment and seeks to minimise this impact wherever possible.

 

QCA Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

 

The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. Internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through the activities of the Company Audit, Risk and Compliance Committee, the effectiveness of these internal controls is reviewed annually.

 

A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Company's results, compared with the budget, are reported to the Board on a monthly basis.

 

The Company maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Company. The insured values and type of cover are comprehensively reviewed on a periodic basis.

 

The senior management team meets at least quarterly to consider new risks and opportunities presented to the Company, making recommendations to the Board and/or Company Audit, Risk and Compliance Committee as appropriate.

 

QCA Principle 5: Maintain the board as a well-functioning, balanced team led by the chair

 

The Company's Board currently comprises three Non-Executive Directors and three Executive Directors.

All of the Directors are subject to election by shareholders at the first Annual General Meeting after their appointment to the Board and will continue to seek re-election at least once every three years.

 

The Board is responsible to the shareholders for the proper management of the Company and intends to meet at least four times a year to set the overall direction and strategy of the Company, to review operational and financial performance and to advise on management appointments. All key operational decisions are subject to Board approval.

Alex Borrelli and Euan Jenkins, all Non-Executive Directors, are considered to be independent. The QCA Code suggests that a board should have at least two independent Non-Executive Directors. The Board considers that the current composition and structure of the Board of Directors is appropriate to maintain effective oversight of the Company's activities for the time being.

 

Directors receive their fees in the form of a basic cash emolument. The current remuneration structure for the Board's Executive and Non-Executive Directors is deemed to be proportionate.

 

QCA Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Board considers that the Executive Directors and Non-Executive Directors are of sufficient competence and calibre to add strength and objectivity to its activities and bring considerable experience in the operational and financial development of the Company.

 

The Directors' biographies are detailed on the Company's website www.braddaheadltd.com.

The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing development of the Company.

 

The Chairman, in conjunction with the Finance Director, ensures that the Directors' knowledge is kept up to date on key issues and developments pertaining to the Company, its operational environment and to the Directors' responsibilities as members of the Board.

 

Directors' service contracts or appointment letters make provision for a Director to seek professional advice in furtherance of his or her duties and responsibilities, normally via the Company Secretary.

 

QCA Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Internal evaluation of the Board, the Committees and individual Directors is undertaken on an annual basis in the form of peer appraisal and discussions to determine their effectiveness and performance as well as the Directors' continued independence.

 

The results and recommendations that come out of the appraisals for the Directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets is also assessed where relevant.

 

QCA Principle 8: Promote a corporate culture that is based on ethical values and behaviours

 

The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group's operations. These values are enshrined in the written policies and working practices adopted by all employees and contractors in the Group. An open culture is encouraged within the Group, with regular communications to staff regarding progress and staff feedback regularly sought. The Executive Management regularly monitors the Group's cultural environment and seeks to address any concerns that may arise, escalating these to Board level as necessary.

 

The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area. The Group's health and safety policies and procedures are enshrined in the Group's documented quality systems, which encompass all aspects of the Group's day-to-day operations.

 

QCA Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision- making by the board

 

The Role of the Board

The Board is collectively responsible for the long-term success of the organisation. Its principal function is to determine the strategy and policies of the Company within an effective control framework which enables risk to be assessed and managed.

 

The Board ensures that the necessary financial and human resources are in place for the Company to meet its objectives and that business and management performance is reviewed. Furthermore, the Board ensures that the Company operates within its constitution, relevant legislation and regulation and that proper accounting records and effective systems of business control are established, maintained, documented and audited.

 

There are at least four formal Board meetings each year. All Board members have the benefit, at the Company's expense, of liability insurance in respect of their responsibilities as Directors and have access to independent legal or other professional advice if required. The Board has a formal schedule of matters which are reserved for its consideration and it has established three committees to consider specific issues in greater detail, being the Company Audit, Risk and Compliance, Remuneration and Nomination Committees. The Terms of Reference for each of these Committees are published on the Company's website.

 

The Chairman

The Chairman is responsible for leading the Board, ensuring its effectiveness in all aspects of its role, promoting a culture of openness of debate and communicating with the Company's members on behalf of the Board. The Chairman sets the direction of the Board and promotes a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors and ensuring constructive relations between Executive and Non-Executive Directors. The Chairman also ensures that Directors receive accurate, timely and clear information. In doing so, this fosters a positive corporate governance culture throughout the Company.

 

The Chief Executive Officer

The CEO is responsible for managing the Group's day to day business and operations within the parameters set by the Board.

 

Non-Executive Directors

The Non-Executive Directors are responsible for bringing independent judgement to the discussions held by the Board, using their breadth of experience and understanding of the business. Their key responsibilities are to constructively challenge and contribute to strategic proposals, and to monitor performance, resources, and standards of conduct, compliance and control, whilst providing support to executive management in developing the Company.

 

Board Committees

The Board has established a Company Audit, Risk and Compliance Committee ("ARCC"), and a Remuneration Committee with formally delegated duties and responsibilities.

 

Company Audit, Risk and Compliance Committee

The Company Audit, Risk and Compliance Committee (the "ARCC") meets at least two times each year and is chaired by Alex Borrelli. The external auditors attend by invitation. Its role is to be responsible for reviewing the integrity of the financial statements and the balance of information disclosed in the accompanying Directors' Report, to review the effectiveness of internal controls and risk management systems and recommend to the Board (for approval by the members) the appointment or re-appointment of the external auditor. The ARCC reviews and monitors the external auditor's objectivity, competence, effectiveness and independence, ensuring that if it or its associates are invited to undertake non-audit work it will not compromise auditor objectivity and independence.

 

Further information can be found within the Company Audit, Risk and Compliance Report contained within this Annual Report.

 

Remuneration Committee

The Remuneration Committee intends to meet at least once a year and comprises of two Non-Executive Directors. It is chaired by Euan Jenkins and is responsible for determining the remuneration of the Executive Directors, and other members of the management. Committee members do not take part in discussions concerning their own remuneration.

Further information can be found within the Remuneration Report contained within this Annual Report.

 

Re-election

The Company's Rules require that all Directors are submitted for election at the AGM following their first appointment to the Board. Thereafter all Directors will submit themselves for re-election at least once every three years, irrespective of performance.

 

Board and committee attendance

The number of formal scheduled Board and committee meetings held and attended by Directors during the year was as follows: -

 

Name	Board	ARCC	Remuneration
James Mellon	14/14	-	-
Denham Eke	14/14	-	-
Ian Stalker	14/14	0/4	-
Charles FitzRoy	13/14	-	-
Euan Jenkins	14/14	4/4	1/1
Alex Borrelli *	9/9	4/4	1/1

* Attendance since appointment on 7 June 2021

 

QCA Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

 

The Company places a high priority on regular communications with its various stakeholders and aims to ensure that all communications concerning the Company's activities are clear, fair and accurate. The Company's website is regularly updated, and users can register to be alerted when announcements or details of presentations and events are posted onto the website.

 

Notices of General Meetings of the Company can be found here: https://www.braddaheadltd.com/investor-centre/regulatory-news/

 

The results of voting on all resolutions in general meetings are posted to the Company's website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

 

Denham Eke

Finance Director

 

 

Audit, Risk and Compliance Committee Report

 

The Directors ensure the Company complies with the provisions of the Quoted Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size Quoted Companies (2018) to the extent which is appropriate to its nature and scale of operations.

This report illustrates how the Company complies with those principles in relation to its Audit, Risk and Compliance Committee (the "ARCC").

 

Membership

The members of the ARCC are Ian Stalker, Alex Borrelli ("AB") and Euan Jenkins ("EJ"), with AB and EJ being the independent Non-Executive directors, with Alex Borrelli being the Chairman. The composition of the Committee has been reviewed during the year and the Board is satisfied that the Committee members have the relevant financial experience and the expertise to resource and fulfil its responsibilities effectively, including those relating to risk and controls.

 

Meetings

The Committee meets at least two times a year, including the review of the interim and full year results. Other Directors and representatives from the external auditors attend by invitation.

 

Duties

The Committee carries out the duties below for the Company, as appropriate:

•    Monitors the integrity of the financial statements of the Company, including annual and half-yearly reports, interim management statements, and any other formal announcement relating to financial performance, reviewing significant financial reporting issues and judgements which they contain.

 

•    Reviews and challenges the consistency of the information presented within the financial statements, compliance with stock exchange or other legal requirements, accounting policies and the methods used to account for significant or unusual transactions.

 

•    Keeps under review the effectiveness of the Company's internal controls and risk management systems.

 

•    Oversee the relationship with the external auditors, KPMG Audit LLC, including meetings when considered appropriate to discuss their remit and review the findings and any issues with the annual audit. It will also review their terms of appointment, and plans to meet them once a year independent of management and will consider and make recommendations to the Board, to be put to the Company for approval at the Annual General Meeting, in relation to the appointment, re-appointment and removal of the Company's external auditor. There are no contractual restrictions in place in respect of the auditor choice.

 

•    The Committee is governed by a Terms of Reference and a copy of this is available on the Company's website.

 

2022 Annual Report

During the year, ARCC confirms that it has received sufficient, reliable and timely information from management and the external auditors to enable it to fulfil its responsibilities.

The Committee has satisfied itself that there are no relationships between the auditor and the Company which could adversely affect the auditor's independence and objectivity.

All internal control and risk issues that have been brought to the attention of ARCC by the external auditors have been considered and the Committee confirms that it is satisfied that management has addressed the issues or has plans to do so.

During the year, the Company identified that it had been victim of a sophisticated electronic wire impersonation fraud and is in the process of pursuing recovery of US$ 600,000 paid to an unidentified party. Following identification of this incident, the ARCC reviewed the Company's internal payments and approval policies, with changes being implemented to enhance the controls over the review, approval and processing of all payments.

 

The Company has a number of policies and procedures in place as part of its internal controls and these are subject to continuous review and as a minimum are reviewed by ARCC on an annual basis.

•    ARCC has reviewed and discussed together with management and the external auditor the Company's financial statements for the year ended 28 February 2022 and reports from the external auditor on the planning for and outcome of their reviews and audit. The key accounting issues and judgements considered relating to the Company's financial statements and disclosures were as follows:

 

o  Carrying amount of capitalised deferred mining and exploration costs, and capitalised licences and permits - US$ 5,732,820; and

o  Going concern - ARCC reviewed the going concern position of the Company, taking into account the 12-month cash flow forecasts. ARCC is satisfied that preparing the financial statements on a going concern basis is appropriate. Disclosures are included in note 2.

 

Alex Borrelli

Chairman ARCC

 

 

Report of the Remuneration Committee

 

As a BVI registered company there is no requirement to produce a Directors' Remuneration Report. However, the Board follows best practice and therefore has prepared such a report.

The Directors have agreed to comply with the provisions of the Quoted Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size Quoted Companies (2018) to the extent which is appropriate to its nature and scale of operations.

This report illustrates how the Company complies with those principles in relation to Directors' remuneration.

The Level and components of employee remuneration

The Remuneration Policy reflects the Company's business strategy and objectives as well as sustained and long-term value creation for shareholders. In addition, the policy aims to be fair and provide equality of opportunity, ensuring that:

•    the Company is able to attract, develop and retain high-performing and motivated employees in the competitive local and wider markets;

•    employees are offered a competitive remuneration package to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contribution to the success of the Company;

•    it reflects the Company's culture and values; and

•    there is full transparency of the Remuneration Policy.

In line with the Board's approach, which reflects that adopted within other comparable organisations, the Remuneration Policy provides for the reward of the employees through salary and other benefits.

 

Executive Director's Emoluments

The remuneration for the Executive Directors reflects their responsibilities. It comprises basic salary, eligibility to participate in an annual bonus scheme when this is considered appropriate, private healthcare and share option incentives.

Annual bonus scheme payments are not pensionable and are not contracted.

As with staff generally, whose salaries are subject to annual reviews, the basic salary payable to the Executive Directors are reviewed each year with reference to jobs carrying similar responsibilities in comparable organisations, market conditions generally and local employment competition in view of the Group's geographical position.

The Committee believes that share ownership by executives strengthens the link between their personal interests and those of shareholders. Options are granted to executives periodically at the discretion of the Remuneration Committee. The grant of share options is not subject to fixed performance criteria. This is deemed to be appropriate as it allows the Committee to consider the performance of the Group and the contribution of the individual executives and, as with annual bonus payments, illustrates the relative importance placed on performance-related remuneration.

 

The Group does not intend to contribute to the personal pension plans of Directors in the forthcoming year.

 

Executive Director's Contractual Terms

The service contract of the Executive Directors provides for a notice period of six months.

 

Non-Executive Directors' Remuneration

Non-Executive Directors do not receive any benefits other than their fees and travelling expenses for which they are reimbursed. The level of fees payable to Non-Executive Directors is assessed using benchmarks from a group of comparable organisations.

 

The Procedure for Determining Remuneration

The Remuneration Committee, comprising two Non-Executive Directors, is responsible for setting the remuneration of the Executive Directors. Committee members do not take part in discussions concerning their own remuneration. The basic Non-Executive Director fee is set by the Chairman. The Chairman of the Committee reports at the Board meeting following a Committee meeting.

It is the view of the Committee that Directors' remuneration awarded across the Company for the year has been in accordance with the Company's stated Remuneration Policy and, on behalf of the Committee I recommend that you endorse this report. An analysis of Directors' emoluments is as follows:

 

Directors' Emoluments

	Fees  £	Share based payment remuneration  £	2022 Total  £	2021 Total  £
Executive - salary
Denham Eke	40,956	-	40,956	-
Charles FitzRoy	149,233	395,750	544,983	-
Non-Executive - fees
Jim Mellon	30,000	-	30,000	-
Ian Stalker	120,000	900,494	1,020,494	81,496
Alex Borrelli	30,000	-	30,000	-
Euan Jenkins	40,000	-	40,000	40,000
Aggregate emoluments	410,189	1,296,244	1,706,433	121,496

 

Approval

The report was approved by the Board of directors and signed on behalf of the Board.

 

Euan Jenkins

Chairman of Remuneration Committee

 

 

 

Statement Of Directors' Responsibilities In Respect Of The Directors' Report And The Consolidated Financial Statements

The Directors are responsible for preparing the Directors' Report and the consolidated financial statements in accordance with applicable law. 

The Directors are required to prepare financial statements for each financial year.  They have elected to prepare the financial statements in accordance with International Financial Reporting Standards, and applicable law.

The Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of its profit or loss for that period.  In preparing each of the consolidated financial statements, the Directors are required to: 

·      select suitable accounting policies and then apply them consistently; 

·      make judgements and estimates that are reasonable and prudent; 

·      state whether applicable International Financial Reporting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; 

·      assess the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and 

·      use the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.  

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group.  They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

Independent Auditor's Report To The Members Of Bradda Head Lithium Limited

Our opinion is unmodified

We have audited the consolidated financial statements of Bradda Head Lithium Limited (the "Company") and its subsidiaries (together, the "Group"), which comprise the consolidated statement of financial position as at 28 February 2022, the consolidated statementS of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements:

Give a true and fair view, in accordance with International Financial Reporting Standards, of the financial position of the Group as at 28 February 2022, and of the Group's financial performance and cash flows for the year then ended;

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and the terms of our engagement letter. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Key audit matters: our assessment of the risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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 consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.  In arriving at our audit opinion above, the key audit matter was as follows:

	The risk	Our response
Impairment of deferred mining and exploration costs US$ 5,732,820 (Year ended 28 February 2021: US$ 2,458,739) Refer to page 16, Audit, Risk and Compliance Committee Report, note 3 significant accounting policies and notes 7 and 8 .	Estimation uncertainty The Group capitalises all expenditure incurred directly relating to exploratory activities as deferred mining or exploration costs once a license or permit has been obtained for exploratory activities. This requires judgement in determining whether future economic benefits will arise either from future exploitation or sale of mineral assets. The costs are capitalised to the extent that they do not exceed the estimated economically recoverable amount from mineral interests.	Our audit procedures included: Control evaluation: We tested the design and implementation of management's review control over the impairment of deferred mining and exploration costs. Evaluating experts engaged by management: Assessing the independence and competence of the experts engaged by management to assess mineral resource.

 

 

	The risk	Our response
Impairment of deferred mining and exploration costs (continued)	Estimation uncertainty (continued)	Our audit procedures included (continued):
	The costs relate to projects which are at an early stage of exploration and there is no certainty as to whether commercially viable quantities of mineral resources will be discovered, whether the Company will continue its exploration activities in each of its license areas or whether the Group will have sufficient funding to undertake the required exploration activities. Management reviews the carrying values of its deferred mining and exploration costs at least annually and whenever events indicate that their carrying values may exceed their estimated recoverable amounts an impairment loss is recognised.	Challenging managements' assumptions and inputs: Assessing the appropriateness of key assumptions and the viability of the mining projects determined by management through comparison to current resource evaluations by the management expert. Assessing the ability of the Group to meet its current exploration commitments and plans for its project areas. Confirming that the Group holds valid exploration permits by agreeing to supporting documentation. Assessing the mineral resource estimates produced during the year by the Company's management expert for contradictory information to the Group's plans and intentions. Our work included consideration of events which occurred subsequent to the year end up until the date of this report. Evaluating directors' intent: Evaluating the intentions of the directors to continue with proposed mining and exploration activities for the project areas. Assessing transparency: Assessing the adequacy of the Group's disclosures (note 7 and 8) in respect of capitalised costs.

 

Our application of materiality and an overview of the scope of our audit

Materiality for the consolidated financial statements as a whole was set at US$ 125,000, determined with reference to a benchmark of Group total assets of US$ 13,354,840, of which it represents approximately 0.9% (2021: 0.9%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the consolidated financial statements as a whole. Performance materiality for the Group was set at 75% (2021: 75%) of materiality for the consolidated financial statements as a whole, which equates to US$ 94,000. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding US$ 6,250, in addition to other identified misstatements that warranted reporting on qualitative grounds. 

Our audit of the Group was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above. 

The group team performed the audit of the Group as if it was a single aggregated set of financial information. The audit was performed using the materiality level set out above and covered 100% of total group revenue, total group loss before tax, and total group assets and liabilities.

Going concern

The directors have prepared the consolidated financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the consolidated financial statements (the "going concern period").

In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company's business model and analysed how those risks might affect the Group and the Company's financial resources or ability to continue operations over the going concern period. The risk that we considered most likely to affect the Group and the Company's financial resources or ability to continue operations over this period was the Group's ability to meet its operating costs and planned exploration activities in order to achieve its longer term aims, as it is currently incurring expenditure but not generating revenues.

We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from this risk against the level of available financial resources indicated by the Group's financial forecasts.

We considered whether the going concern disclosure in note 2 to the consolidated financial statements gives a full and accurate description of the directors' assessment of going concern.

Our conclusions based on this work:

·    we consider that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial statements is appropriate;

·    we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company's ability to continue as a going concern for the going concern period; and

·    we found the going concern disclosure in the notes to the consolidated financial statements to be acceptable.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group and the Company will continue in operation.

Fraud and breaches of laws and regulations - ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud ("fraud risks") we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

·    enquiring of management as to the Group's policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;

·    reading minutes of meetings of those charged with governance; and

·    using analytical procedures to identify any unusual or unexpected relationships.

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Group is not yet generating any revenue from its exploration activities. We did not identify any additional fraud risks.

We performed procedures including:

·    Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting documentation; and

·    incorporating an element of unpredictability in our audit procedures.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the consolidated financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Group's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.

The Group is subject to laws and regulations that directly affect the consolidated financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the consolidated financial statements, for instance through the imposition of fines or litigation or impacts on the Group and the Company's ability to operate. We determined the principal laws and regulations relevant to the Group and Company in this regard to be those arising from AIM listing rules and local mining and exploration licenses regulation applicable to the subsidiaries.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the consolidated financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the consolidated financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. 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.

We have nothing to report on other matters on which we are required to report by exception

Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out on page 20, the directors are responsible for: the preparation of the consolidated financial statements including being satisfied that they give a true and fair view; such internal control as

they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Company's ability to continue as a going concern,

disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. 

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. 

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

The purpose of this report and restrictions on its use by persons other than the Company's members, as a body

This report is made solely to the Company's members, as a body, in accordance with our terms of engagement as detailed in our letter of 8 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 opinion we have formed.

 

KPMG Audit LLC

Chartered Accountants

Heritage Court, 41 Athol Street

Douglas, Isle of Man IM1 1LA

 

 

 

Consolidated Statement of Comprehensive Income

for the year ended 28 February 2022

 

		Notes		Year ended 28 February 2022	Year ended 28 February 2021
				US$	US$
Gain on sale		5		2,383,003	-
Unrealised gain/(loss) on investment		13		30,225	(64,753)
				────────	────────
				2,413,228	(64,753)
Operating expenses
General and administrative		4		(3,459,272)	(452,860)
Exceptional cost		4		(600,000)	-
Foreign exchange losses				(231,613)	(52,524)
Share based payments		15		(1,433,749)	(63,051)
Impairment		8		(230,230)	-
Other income				20,000	-
				────────	────────
Loss before finance income				(3,521,636)	(633,188)
Finance income				-	1
Finance costs				(32,832)	(88,762)
				────────	────────
Loss before income tax				(3,554,468)	(721,949)
Income tax expense		6		-	-
				────────	────────
Total loss and total comprehensive loss for the year				(3,554,468)	(721,949)
				════════	════════
Loss attributable to:
Equity shareholders				(3,554,468)	(721,562)
Non-controlling interests				-	(387)
				────────	────────
				(3,554,468)	(721,949)
				════════	════════
Total comprehensive loss attributable to:
Equity shareholders				(3,554,468)	(721,562)
Non-controlling interests				-	(387)
				────────	────────
				(3,554,468)	(721,949)
				════════	════════
Basic and diluted loss per share (cents)		18		(2.855)	(1.113)

 

 

 

 

Consolidated Statement of Financial Position

as at 28 February 2022

 

	Notes			28 February 2022	28 February 2021
				US$	US$
Non-Current assets
Investment	13			53,957	23,732
Deferred mining and exploration costs	7			4,183,744	1,767,274
Exploration permits and licences	8			1,549,076	691,465
Plant and equipment	12			54,170	-
Advances and deposits	10			88,594	49,313
				───────	───────
Total non-current assets				5,929,541	2,531,784
				───────	───────
Current assets
Cash and cash equivalents				7,327,303	86,972
Prepayments and advances and deposits	10			97,996	30,362
				───────	───────
Total current assets				7,425,299	117,334
				───────	───────
Total assets				13,354,840	2,649,118
				═══════	═══════
Equity
Share premium	14			23,434,385	9,443,676
Retained deficit				(11,177,220)	(9,056,687)
Foreign currency translation reserve				-	186
				───────	───────
Total equity				12,257,165	387,175
				═══════	═══════
Non-Current liabilities
Related party balances	17			-	1,547,208
				───────	───────
Total non-current liabilities				-	1,547,208
				───────	───────
Current liabilities
Trade and other payables	11			1,097,675	214,735
Related party balances	17			-	500,000
				───────	───────
Total current liabilities				1,097,675	714,735
				───────	───────
Total equity and liabilities				13,354,840	2,649,118
				═══════	═══════

 

 

 

Denham Eke                                                                                                                   

Director