ALBA MINERAL RESOURCES PLC-Final Results

ALBA MINERAL RESOURCES PLC-Final Results

Final Results

Alba Mineral Resources plc (AIM: ALBA) is pleased to announce its Final Results for the year ended 30 November 2022.

OVERVIEW

Positive outlook for Clogau-St David's Gold Mine

·    Submitted updated version of Report to Inform a Habitat Regulations Assessment ('HRA'), renewed applications for a water discharge permit, and a European Protected Species licence ('EPSL') to Natural Resources Wales ('NRW').

·    Most recently, received narrow set of comments from NRW on EPSL, including relating to noise mitigation and biosecurity.  Following generation of further baseline data, that dataset and a full set of responses have now been submitted to the regulator.

·    Remain hopeful that NRW will decide shortly on the grant of the permits so that dewatering activities at the primary target within the Lower Llechfraith workings may proceed as soon as possible.

·    Anticipate that the HRA will provide a framework for a more streamlined and efficient process for future permitting applications.

·    Encouraging site visit assisted by local member of the UK Parliament, Liz Savile Roberts MP.

Developing plans to excavate further from Clogau's historic Waste Tip

·    Current estimations of the higher-grade portion of the Waste Tip indicate up to 4,000 tonnes of fine material could be available for processing for gold.

·    Intend to push forward with permitting and technical activities as soon as the Lower Llechfraith dewatering permitting has been secured.

Laying groundwork at Gwynfynydd Gold Mine & Dolgellau Gold Exploration Project

·    Advancing plans for more exploration work to define resources in previously unmined areas.

·    Plans to fly a high-resolution UAV aeromagnetic geophysical survey in July to refine targets for follow up groundwork.

Surrendered Limerick Base Metals Project

·    Exploration drilling could not be progressed during 2022 as planned due to landowner access issues.

Investee company GreenRoc Mining plc fast-tracking development of advanced graphite and ilmenite projects

·    Near threefold increase in the Resource for the key Amitsoq Island Deposit, with the total graphite content rising from 1.63Mt to 4.71Mt.

·    Confirmed that graphite concentrate from Amitsoq is "very suitable" for the processes by which spherical graphite is produced for the EV sector.

·    Further ecological and other studies in the field at the Thule Black Sands Ilmenite Project, which will feed into the development of an EIA for the project.

·    Appointed Danish geologist and Greenland expert Stefan Bernstein as CEO.

·    Feasibility studies underway at Amitsoq as GreenRoc moves towards a Mining Licence application and seeks to progress discussions with interested industry and offtake partners in the coming months.

Ongoing advances at Horse Hill Developments Ltd investee company

·    Formal consent for the recompletion of the Horse Hill-2z well into a water reinjection well.

·    Plans for a 3D seismic survey and possible drilling of a new well in a proposed new farm-in arrangement.

Notable corporate activities

·    Chairman increased holding to +48 million ordinary shares in Alba and indicated plan to make further investments in the coming year.

·    Appointed gold supply chain expert, Vivien Johnston Glass, to maximise the commercial opportunities presented by exceptional Welsh gold project.

·    Completed the acquisition of the remaining 10% of the Clogau Project not owned by Alba, taking ownership to 100%.

·    Successful placing in November 2022, raising £500,000 before issue costs.

·    Remain focused on securing one or more additional complementary assets to help drive serious value and growth for shareholders into the future.

CHAIRMAN'S STATEMENT 

Our overall objective is to unearth hidden value from previously drilled or mined projects and to this end we are advancing multiple projects in the UK including the Clogau-St David's Gold Mine ("Clogau" or the "Clogau Project"), the Gwynfynydd Gold Mine and the Dolgellau Gold Exploration Project. Additionally, we hold significant stakes in two investee companies: GreenRoc Mining plc ("GreenRoc"), a Greenland-dedicated listed vehicle, spun out of Alba to fast-track the development of its advanced graphite and ilmenite projects; and Horse Hill Developments Ltd ('Horse Hill'), a UK based oil producer 

Our share price performance this year has certainly been hit by the ongoing delays in securing the environmental permits we need at Clogau so that we can proceed with our planned work activities at our primary exploration and development target in the Lower Llechfraith workings.  We first applied for these permits in early 2021, and so it is inevitable that a delay of now more than two years would cause some disquiet in the market. 

After we took Clogau over in 2018, we had a very good run for two to three years of securing on a timely basis the ongoing permits required for our exploration work.  This enabled us to undertake substantial drilling programmes both from surface and underground, to roll out extensive regional exploration programmes over several miles of the Dolgellau Gold Field and to carry out two successful pitting and sampling campaigns over the historic waste tip at Clogau.  Unfortunately, since then our exploration activities, the objective of which has always been to discover sufficient resources of gold to justify making a decision to reopen Clogau for commercial production, have been on hold as the competent regulator has determined that a full Habitat Regulations Assessment (or "HRA") of the entire mining project at Clogau would be required before any further permits could be considered. However, we hope that we are now entering the final straight of this process and that we will be able to get on with our work activities again in the near future.

In January 2022, I purchased over 10 million ordinary shares in the Company on market at an average price of 0.1475p, paying consideration of around £15,000.  Following these purchases, which were made into an ISA, I now hold over 48 million ordinary shares in Alba, representing around 0.68 per cent of its issued share capital. Although Alba management's ability to invest in Alba shares is restricted for large parts of the year by the prevalence of "close periods" for share dealings, I hope to be able to make further investments in the coming year to demonstrate my steadfast belief in the inherent value of the Company's assets and prospects.

This year we have continued to focus on Clogau, where our objective remains to identify sufficient grades and quantities of gold to support the restart of commercial operations at the mine and take advantage of the strong gold price.  Welsh gold occupies a unique place in the gold market, putting us in a good position to pursue commercialisation opportunities such as entering into a joint venture with a luxury international brand for the production of bespoke or high-end jewellery products or producing Welsh gold coins or bars for the investment market. To that end, we have been working with a gold supply chain expert, Vivien Johnston Glass, as we seek to maximise the commercial opportunities presented by this exceptional project.  Vivien has a strong commitment to ethics and sustainability and a great deal of experience in the establishment of a robust chain of custody.  These elements will be key to our ability to prove the unique provenance of our gold and thereby justify the high prices we expect to be able to secure for our products.

During the year, we completed the acquisition of the remaining 10% of the Clogau Project not owned by Alba, taking our ownership to 100%. This is a measure of our confidence in the long-term prospects for Clogau. The 10% minority stake had been free carried to commercial production and the vendors also held a 4% net smelter return royalty over the Project, so acquiring both the free carried interest as well as buying back 75% of the royalty greatly improves the economic viability of the project for Alba.

Since mid-2018, we have undertaken circa 3,500 metres drilling from surface and underground at Clogau resulting in the identification of several high-priority development targets. New discoveries include the Upper Lode in the Llechfraith Payshoot and the New Branch Lode in the Main Lode System.  As shareholders will be aware, the competent regulator Natural Resources Wales ('NRW') turned down our permit applications in 2021 which sought permission to dewater the Llechfraith Shaft and associated workings. Considerable ecological work by our technical team and ecological advisers has continued during 2022 both to address ongoing issues raised by NRW during its review of our applications and to feed into the overarching HRA for Clogau, which NRW notified us in 2021 that it wished to undertake.

With the kind assistance of our local member of the UK Parliament, Liz Savile Roberts MP, we held a site visit at the mine in September 2022. This was attended by Liz along with our Welsh Parliament (Senedd Cymru) representative, Mabon ap Gwynfor MS, a number of representatives from NRW as well as local Councillors and other interested parties.  Following that very positive meeting, in October 2022 we submitted to NRW an updated version of our Report to Inform a Habitat Regulations Assessment, together with renewed applications for a water discharge permit and a European Protected Species licence ("EPSL") in respect of the proposed dewatering exercise and subsequent safety and exploratory works at the Company's primary target within the Lower Llechfraith workings at Clogau. As reported in late March, the Company received comments from NRW covering a relatively narrow set of points relating to the EPSL including noise mitigation measures, biosecurity and the duration of the proposed exclusion measures for bats.  Following the generation of some further baseline data in respect of noise, we have now submitted that data and a full set of responses to NRW's comments.  The Company is hopeful, therefore, that NRW will be able to proceed to a decision shortly on the grant of the permits so that our dewatering activities may proceed as soon as possible.

At the same time, we are developing plans to excavate further from Clogau's historic waste tip (the "Waste Tip"). The Phase 2 programme at the Waste Tip achieved strong concentrate grades of up to 1,000 g/t, with an average across the five pits of 503 g/t.  What is more, independent assaying has confirmed that the overall head grade of the fine material taken from the Waste Tip averages 1.7 g/t, which is a significant upgrade on the average grade achieved from sampling the same material prior to the processing stage. This is unsurprising given what we know about the nuggety effect of the gold at Clogau, and it bodes well for the commercial viability of mining the Waste Tip.  Current estimations of the higher-grade portion of the Waste Tip indicate an in-situ tonnage of approximately 11,000 tonnes, of which up to 4,000 tonnes of fine material (<20mm) could be available for processing for gold. As reported in March, as soon as the Lower Llechfraith dewatering permitting has been secured and the HRA completed, we intend to push forward with our permitting and technical activities in relation to the Waste Tip.

At our other exploration licences, which host the Gwynfynyndd Gold Mine located north of Clogau and the wider 188 km² Dolgellau Gold Exploration Project ("DGEP"), we are laying the groundwork to advance plans for more exploration work to define resources in previously unmined areas. These include the new high-grade regional gold target, Hafod Owen, which we identified in July 2021, with grab samples grading up to 24 g/t. 

We plan to fly a high-resolution UAV (unmanned aerial vehicle) aeromagnetic geophysical survey over key targets within the DGEP to pinpoint the bedrock sources of geochemical anomalies and refine targets for follow up groundwork, including drilling.  The timing for the survey was delayed in 2022 due to a backlog of applications to the Civil Aviation Authority ("CAA"). At the time of writing, the latest estimated timetable from our contractor UAVE Ltd is that they are hopeful the CAA approvals will be through in time for the carrying out of the survey operations in July of this year.

Just after the year end, we surrendered our Limerick Base Metals Project.  Located in the Irish Ore Field, targets identified for exploration drilling could not be progressed during 2022 as planned, due to landowner access issues. Alternative drill collar locations proved not to be economically viable and, as the Group could not progress its exploration activities further, under the terms of the licence we were obliged to surrender the licence.

In late 2021 we successfully spun out our portfolio of Greenlandic assets into GreenRoc Mining plc, a new AIM-quoted company which raised a gross amount of £5.1 million on its IPO and which now owns 100% of those Greenland assets. Our strategy of creating a Greenland-focused vehicle has been validated by the excellent progress made by GreenRoc throughout 2022.  Highlights have included:

-      A highly successful follow-up drilling campaign in the summer of 2022, which culminated in the announcement of a near threefold increase in the Resource for the Amitsoq Island Deposit, with the total graphite content rising from 1.63Mt to 4.71Mt.

-      A revised average Resource grade of 20.41% C(g) that puts Amitsoq in a very select group of just two advanced graphite projects globally which have average grades of more than 20% C(g), the other one being the Vittangi deposit owned by Talga Group (ASX: TLG), which has a market cap of circa £360 million. 

-      The completion of advanced test work by specialist consultants which confirmed that graphite concentrate from Amitsoq is "very suitable" for micronisation and spheronisation, those being the processes by which spherical graphite is produced for the electric vehicle (or "EV") sector.

-      At the Thule Black Sands ("TBS") Ilmenite Project, the completion of further ecological and other studies in the field which will feed into the development of an Environmental Impact Assessment ("EIA") for the project, a key component for a future Mining Licence application. 

-      The appointment of Stefan Bernstein as GreenRoc's CEO. A Danish geologist with a comprehensive understanding of the Greenland's geological landscape and decades-long experience in Greenland's mining sector, Stefan is ideally equipped to drive GreenRoc forward and to achieve its goal of achieving commercial production from one of more of its assets, with the focus very much being on GreenRoc's flagship asset, Amitsoq.

The substantially upgraded Resource for Amitsoq will underpin the feasibility studies GreenRoc will be carrying out this year as it moves towards a Mining Licence application and seeks to progress discussions with interested industry and offtake partners in the coming months.

At the year end, Alba had a 54% stake in GreenRoc such that GreenRoc is fully consolidated in these results. Since year end, funding requirements to push the Amitsoq project forward have meant a dilution in Alba's stake in GreenRoc to 44.67%, but we remain by some distance the largest shareholder and remain heavily involved in the strategic direction and development of the company. 

News from the Horse Hill oil field, in which we have an investment of 11.675% via our holding in Horse Hill Developments Limited ("HHDL"), included formal consent for the recompletion (i.e., conversion) of the Horse Hill-2z well into a water reinjection well.  More recently, plans have been announced for a 3D seismic survey, and possible drilling of a new well, at Horse Hill in a proposed new farm-in arrangement. The proposed transaction is stated to be subject to the satisfaction of a number of conditions, including the consent of all HHDL's shareholders, including Alba, and as such we intend to consider closely the merits of the proposed transaction for Alba and its shareholders.

At the balance sheet date, we reviewed the valuation of Alba's investment in HHDL and judged that the asset value should be written down to £2.6 million, which aligns with the valuation attributed to its own interest by HHDL's majority shareholder.

Financial Review

The results as reported for 2022 include both Alba Mineral Resources plc and GreenRoc Mining plc, as Alba's 54% shareholding at the year end requires that company to be consolidated as part of the Alba Group. GreenRoc Mining plc reports separately on its own financial results, which can be found on its website www.greenrocmining.com.

We achieved a successful placing in November 2022, raising £500,000 before issue costs. For a detailed financial review, see the Strategic Report which follows this statement.

Outlook

We continue to be very bullish about the prospects for our 100% owned Welsh gold assets.  Although the ongoing hiatus in the planned in-mine work activities at Clogau has been frustrating, we believe that we are finally approaching a conclusion to the current ecological permitting process and that the HRA, once concluded, can provide a framework for a more streamlined and efficient process for future permitting applications.

In terms of our non-operating assets, most importantly our investment in GreenRoc, substantial progress has been made at the flagship Amitsoq graphite project over the past 12 months which is shaping up to be a truly world-class asset. I can personally testify to the immense interest in it from potential international strategic investors and industry partners with whom I have engaged in my capacity as GreenRoc Chairman over the past several months.  In this way, our decision to spin out our Greenland assets into a new, Greenland-focused listed vehicle has already shown its worth, and all that is needed now is for the market to properly recognise what, to me, is a greatly undervalued asset.

At the same time as developing our existing assets and supporting our investee companies, we are also focused on securing one or more additional complementary assets for Alba which will help drive serious value and growth for shareholders into the future.

Finally, I would like to take this opportunity to thank the Board and our management team for their continued hard work and dedication over the course of the year and to thank our shareholders for their ongoing support.  I look forward to continuing our work in the year ahead and delivering on our overriding objective, which is to generate significant value for all our shareholders.

George Frangeskides

Executive Chairman

4 May 2023

EXTRACTS FROM THE STRATEGIC REPORT

FINANCIAL REVIEW

Income Statement

Group operating losses of £1,623,000 (before impairments) compared to £1,067,000 in 2021 reflects a full year of admin expenses for GreenRoc Mining plc, meaning that Alba Group results show the costs of two AIM-listed companies, with their necessary costs - fees, professional advisers and Boards. Alba company's operating loss remained at a similar level of ~£800,000 year on year.

GreenRoc Mining plc publishes its own Report and Accounts, available on their website and via RNS, with further detail. The impairment charge for the year relates to the Greenlandic project Inglefield Land (£199,000) plus the write down of the Company's investment in Horse Hill Developments Limited by £785,000.

Balance sheet

Group net assets have decreased from £12.9 million to £11.3 million. The drop reflects the impairment of Inglefield Land by £0.2m, the investment in HHDL by £0.8m and the relative increase in costs in the income statement of £0.6 million.

The increase in group intangible assets from £6.1 million to £8.5 million is direct cash spend on projects of £2.4 million.

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