CONSOLIDATED STATEMENT OF CASHFLOWS

AS AT 30 SEPTEMBER 2023

Significant non-cash transactions during the year

During the year, the Group acquired intangible assets, either directly or indirectly via subsidiary undertakings and investments in subsidiaries, totalling £1,146k via the issue of ordinary shares.

Power Metal disposed of its investment in Kanye Resources Pty Ltd during the year, which was previously held for sale. In consideration, the Company received shares and warrants in Kavango Resources PLC to the value of £1,114k.

On 10 May 2023, Golden Metal Resources PLC ("GMET") listed on the AIM market of the London Stock Exchange, resulting in a dilution of POW's shareholding leading to a disposal of the subsidiary investment during the year. On the IPO date, Power Metal disposed of the subsidiary investment and recognised a financial asset, including an uplift in fair value.

NOTES TO THE CONSOLODATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2023

1.            Reporting entity

Power Metal Resources PLC is a public company limited by shares which is incorporated and domiciled in England and Wales. The address of the Company's registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT. The consolidated financial statements of the Group as at and for the year ended 30 September 2023 include the Company and its subsidiaries. The Group is primarily involved in the exploration and exploitation of mineral resources in Africa, Australia, Canada and the US.

2.            Going concern

The financial statements are prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Directors have considered all relevant available information about the current and future position of the Group, including current level of resources, additional funding raised during the year and post-year-end, and the required level of spending on exploration and drilling activities. As part of their assessment, the Directors have also taken into account the ability to raise new funding whilst maintaining an acceptable level of cash flows for the Group to meet all commitments.

The Directors have stress tested the Group's cash projections, which involves preserving cash flows and adopting a policy of minimal cash spending for a period of at least 12 months from the date of approval of these financial statements. The Directors believe the measures they have put in place will result in sufficient working capital and cash flows to continue in operational existence, assuming that all exploration and drilling activities are managed carefully and curtailed if necessary. For the Group to carry out the desired levels of exploration and drilling activities, the Directors believe that it needs to secure further funding either from a strategic partner or subsequent equity raisings in the next financial year, which the Group has succeeded in completing over recent years. The Group also has the ability to partially dispose of equity investments if required. Taking these matters in consideration, the Directors continue to adopt the going concern basis of accounting in the preparation of the financial statements.

The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.

3.             Intangible assets - Prospecting and exploration rights

Rights acquired with subsidiaries are recognised at fair value at the date of acquisition. Other rights acquired and development expenditure are recognised at cost. 

Exploration and evaluation costs arising following the application for the legal right, are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. When a project is deemed not feasible, related costs are expensed as incurred. Costs incurred include any costs pertaining to technical and administrative overheads. Administration costs that are not directly attributable to a specific exploration area are expensed as incurred, and subsequently capitalised if it is reasonably certain that a resource will be defined. Capitalised development expenditure will be measured at cost less accumulated amortisation and impairment losses.

4.            Operating expenses

5.            Intangible assets 

During the year, the Group's direct interest in the Garfield, Stonewall, Golconda Summit & Pilot Mountain Projects was disposed of. The Group acquired additional intangible assets in Molopo Farm and North Wind, see below:

The Directors regularly assess the carrying value of the Group's assets, including its prospecting and exploitation rights, and write off any exploration expenditure that they believe to be irrecoverable.

Athabasca Uranium Project

As at 30 September 2023, the Group held 17 properties covering 1000km² in the Athabasca Region of Saskatchewan, Canada. This is the largest ground footprint in the Athabasca Region held by a UK listed company.

The conditional disposal of two properties held at the Athabasca project were announced previously; Reitenbach, in August 2022 and E-12 in November 2022. Work is still in process to complete the transaction through a listing on the London capital markets for the proposed holding vehicle, Teathers Financial PLC, to be renamed Uranium Energy Exploration PLC ("UEE"). The two properties were moved to assets held for sale in the statement of financial position as at 30 September 2022. Since then, considerable progress has been made on the structure of the transaction and the advancement of the assets, a key component of which has been the successful completion of a pre-IPO financing which was announced on 13 December 2023.

Authier North Project

In July 2023, Power Metal announced the early completion of its earn-in to a 100% interest in Authier North. The Authier North Property consists of 15 mineral claims covering an area of approximately 560 hectares and is prospective for lithium pegmatites and base metal mineralisation.

Canadian Graphite Project

In January 2023, Power Metal announced the acquisition of the 4,222-hectare Doerksen Bay Graphite Project located in Saskatchewan, Canada. Power Metal transferred its interest into newly formed 100% subsidiary ION Battery Resources Limited ("ION"). The project gives exposure to the exciting graphite space, a key component in new age battery technology.  The Project is centred around five Saskatchewan Mineral Deposit Index graphite occurrences including the Ben, Ben North, Bear Bones, Brabant Lake and Doerksen Bay showings.

Tati Gold-Nickel Project

In September 2022, the Company announced the completion of 490m of RC drilling over 9 holes and the successful intersection of quartz reef in all holes drilled, with multiple holes intersecting multiple sub-parallel quartz reef structures. Further 2023 geochemical soil sampling assay results confirmed two significant gold-in-soil geochemical anomalies and continuity within the 8km gold trend at Tati. Six unique additional target areas have been identified for detailed soil sampling which is expected to include a total of c. 450 individual soil samples for follow on accredited laboratory gold assay testing. Further sampling at this target area will be focussed on in-fill as well as step-out sampling to better understand the size and orientation of this priority zone.

Garfield, Stonewall, Golconda Summit and Pilot Mountain Projects

On 10 May 2023, Golden Metal Resources PLC ("GMET") listed on the AIM market of the London Stock Exchange, relating in a dilution of POW's shareholding leading to a disposal of the subsidiary investment during the year. POW's interests in the projects were therefore disposed of, and the investment in GMET was subsequently recognised as a financial asset.

Wallal Project, Ripon Hills, Braeside Project and Selta Project

First Development Resources Pty Ltd ("FDR Pty"), a 100% subsidiary of First Development Resources PLC ("FDR"), holding the Wallal licences, located in the Paterson Province of Western Australia. The Wallal project covers an area of 572km² and is the Group's primary focus in the region. It is of particular interest due to a number of geophysical anomalies which have been identified following the completion of an in-depth study which included the reprocessing of historic seismic data along with the analysis of historic magnetic and gravity geophysical surveys.

Pardoo Resources Pty Ltd ("Pardoo") and RH Resources Pty Ltd ("RH Pty"), both 100% subsidiaries of FDR, hold the fully licenced Ripon Hills and Braeside West Projects which cover a combined area of approximately 300km². The tenements are located approximately 250 km southeast of Port Hedland on the western edge of the Paterson Province in Western Australia. The projects are located on the western and eastern limbs of the Oakover Syncline. The area is primarily prospective for manganese, similar to the nearby Woodie Woodie manganese mine, as well as base-metal and gold mineralisation associated with deep seated north to north-westerly trending fault structures. These fault structures have the potential to be conduits for various styles of hydrothermal mineralisation as evidenced by recent exploration conducted by ASX listed Rumble Resources Limited on land adjacent to the Braeside West tenement.

URE Metals Pty Ltd ("URE") a 100% subsidiary of FDR PLC, holds the Selta Project. The Selta Project in the Northern Territory is located in an area considered highly prospective for uranium and Rare Earth Element mineralisation along with base and precious metal mineralisation. Numerous companies are actively exploring within the region. The Selta project is comprised of three granted exploration licences and covers a total land area of almost 1,600km². The project borders ASX listed Prodigy Gold and Canadian listed Megawatt Lithium and Battery Metals Corporation; and is less than 70km northwest of Arafura's Resources high-grade, world-class Nolans Bore REE deposits

Molopo Farms Complex Project

In November 2022, Power Metal acquired an additional 58.7% equity stake in private company Kalahari Key Mineral Exploration Pty Limited ("KKME"), taking the Company's holding to 87.71%. KKME is a Botswana registered exploration company with a 100% interest in the 1,723km² Molopo Farms Complex Project ("MFC"). 

At the MFC, Power Metal is targeting a district-scale nickel and platinum group element discovery. On 6 October 2023 the Company announced that its recently completed geophysical inversions led to the identification of the highest priority conductor to date at the Project within target area T1-14. The Company has further advanced plans to drill test the target at T1-14 with follow up analysis determining up to two areas to optimally test this conductor.

North Wind Project

The North Wind Lithium project was originally staked by Power Canada Inc. in November 2022, the project transferred to ION, both companies are 100% subsidiaries of Power Metal. The project is targeting a significant lithium discovery; the Group is currently awaiting assay results from 2023 field exploration.

6.                            Trade and other receivables

7.                            Share capital

All ordinary shares rank equally with regard to the Company's residual assets.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Both classes of deferred shares (Deferred and Deferred A), do not entitle the holders thereof to receive notice of or attend and vote at any general meeting of the Company or to receive dividends or other distributions or to participate in any return on capital on a winding up unless the assets of the Company are in excess of £1,000,000,000,000. The Company retains the right to purchase the deferred shares from any shareholder for a consideration of one penny in aggregate for all that shareholder's deferred shares. As such, the deferred shares effectively have no value.  Share certificates will not be issued in respect of the deferred shares.

Issue of ordinary shares

In November 2022, the Company acquired an additional 58.7% interest in Kalahari Key Mineral Exploration Pty Limited. The consideration of £807,348 was payable through the issue of 46,134,171 new ordinary shares of 0.1p each in the Company at a price of 1.75p per new ordinary share and warrants over 46,134,171 new Ordinary Shares at a 3.5p exercise price.

In January 2023, the Company acquired 100% of the Canadian Graphite Project for £37,500. Consideration was payable through the issue of 2,500,000 Power Metal new ordinary shares of 0.1p each at an issue price of 1.5p per share.

In January 2023, the Company raised £900,000 before expenses through the issue of 64,285,714 new ordinary shares of 0.1p each ("Financing Shares") at an issue price of 1.4p per share. Each Financing Share has an attaching warrant to subscribe for one new ordinary share of 0.1p each in the Company at an exercise price of 2.0p per share with a 24-month term from 30 January 2023 creating 64,285,714 financing warrants.

In March 2023, the Company issued 11,458,872 ordinary shares at an issue price of 2.25p for settlement of the drill contract with Mindea Exploration & Drilling Services (Pty) at the Molopo Farms Complex Project.

In May 2023, the Company raised £2.175m before expenses through the issue of 319,388,235 new ordinary shares of 0.1p each ("Placing Shares") at an issue price of 0.85p per share. Each Placing Share has an attaching warrant to subscribe for one new ordinary share of 0.1p each in the Company at an exercise price of 2.0p per share with a 5-year term expiring 9 May 2028.

In May 2023, the Company received notice to exercise warrants over 6,250,000 new ordinary shares of 0.1p each at an exercise price of 0.7p per warrant share, raising an additional £43,750 for the Company. 

In July 2023, the Company issued 9,208,951 ordinary shares at an issue price of 0.71p per share in lieu of fees incurred with advisors. 3,541,904 shares were issued to SP Angel Corporate Finance LLP, the Company's nominated adviser and joint broker, in lieu of fees to the value of £25,000. The remaining 5,667,047 shares were issued to another corporate adviser in lieu of fees for a total value of £40,000.

In July 2023, the Company negotiated early completion of its Authier North Lithium Project Earn-In, acquiring 100% interest in the Project. Consideration of CAD$75,000 (£43,941) was settled through the issue of 6,225,392 new ordinary shares of 0.1p at an issue price of 0.71p.

8.            Earnings per share

Basic and diluted loss per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

The basic and diluted earnings per share are the same given the loss for the year, making the outstanding share options and warrants anti-dilutive.

9.                            Trade and other payables

10.          Subsequent events

On 3 October 2023, the Company issued 1,293,103 new ordinary shares of 0.1 pence, at a price of 0.725 pence per share ("Fee Shares") to SP Angel Corporate Finance LLP, the Company's nominated adviser and joint broker, in lieu of fees incurred to the value of £9,375. A further 2,068,965 Fee Shares were issued to a professional services provider in lieu of fees incurred to the value of £15,000.

On 6 November 2023, Power Metal announced the disposal of its entire holding of 69,500,000 shares of Kavango Resources Plc ("Kavango"), at a price of 0.8p per share, raising cash of £556,000 for the Company. Power Metal retained its 60,000,000 warrants to subscribe for new Kavango shares with 30,000,000 warrants at an exercise price of 4.25p and 30,000,000 warrants at an exercise price of 5.5p, both with an expiry date of 8 January 2025. In addition, Power Metal holds a 1% net smelter return royalty ("NSR") in respect of the project licence footprint in the Kalahari Copper Belt and Ditau Camp projects previously held in joint venture with Kavango.

On 16 January 2024, Owain Morton, Non-Executive Director, stepped down from the board with immediate effect.

On 31 January 2024, Power Metal announced the issuance of 130,000,000 new ordinary shares of 0.1 pence each at an issue price of 1.0 pence per ordinary share, representing a premium of approximately 3.09 per cent. The share issue resulted in a total raise of £1.3 million.

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

For further information please visit https://www.powermetalresources.com/ or contact:

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa and Australia.

Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint ventures until a project becomes ready for disposal through outright sale or separate listing on a recognised stock exchange thereby crystallising the value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the Company's growth or may be returned to shareholders through share buy backs, dividends or in-specie distributions of assets.