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Erris Resources PLC - Final Results

RNS Number : 8132I
Erris Resources PLC
06 April 2020
 

Erris Resources plc / EPIC: ERIS.L / Market: AIM / Sector: Mining

6 April 2020

Erris Resources plc

("Erris Resources" or the "Company")

Final Results

 

Erris Resources plc, the European focused mineral exploration company, is pleased to announce its final audited results for the year ended 31 December 2019.

 

The Company's Annual Report and Financial Statements for the year ended 31 December 2019 will be posted to shareholders today and will be available on the Company's website at https://www.errisresources.com/annual-interim-reports.

 

Overview

·    Cautious approach that saw the Company carefully husband its resources whilst actively seeking new opportunities

·    Abbeytown Project, Ireland

High-grade extensive mineralisation confirmed, and positive preliminary metallurgical test results received

Seeking a partner to advance the project

·    Galway Project, Ireland

Encouraging results from historic data review combined with new regional aeromagnetic data and soil results

Marketing the project to major companies

·    Finland and Sweden / Centerra Gold Strategic Alliance

Centerra spent US$250,000 on generative exploration work for the year

Targets for gold exploration in Finland identified but reservation permits surrendered as too small for Centerra

Seven permits in Sweden, of which five make up the Brännberg Gold Project, which has some significant intersections of gold mineralisation - 100% owned by Erris Resources

Centerra terminated strategic alliance in December 2019

·    Norway

Granted several exploration licences in 2019 including the Gautelis permits in northern Norway where ground truthing work has confirmed the gold mineralisation potential

Ongoing target evaluation identified Varden where high-grade zinc was sampled historically, and limited drilling encountered sporadic low grades of zinc and gold mineralisation

Post period end, in February 2020, three 10 km2 permits covering the Haugfjell and Varden Ridge prospects were granted to Erris Resources - currently assessing true potential

·    Scotland

Joint-venture agreed in December with option to acquire 80% of the Loch Tay gold and associated base metals project in Perthshire through defining a minimum inferred resource of 250,000 oz gold

Highly prospective project, which lies within the Grampian Gold Belt that hosts several gold deposits

Identified two priority target areas where prospecting and mapping followed by soil sampling is planned to outline future drill targets and identify other gold targets

·    Board and Management changes agreed to maximise financial and personnel resources

·    Disciplined approach to expenditure - well funded for the remainder of 2020 with a €1.4 million cash position as at 31 December 2019

·    Currently impacted by the Covid-19 pandemic and all necessary steps taken to protect the well-being of staff, stakeholders and local communities

 

Chairman's Statement

 

The global backdrop for the resources industry was challenging in 2019, necessitating a cautious approach by Erris Resources that saw us carefully husband our resources whilst actively seeking new opportunities.  Accordingly, new exploration ground was staked in Norway and, in December, the Company entered into a joint-venture and option agreement relating to the Loch Tay Gold Project in Scotland. Our team continues to seek and evaluate new projects that fit the Erris Resources model.

 

Ireland           

Erris Resources holds five prospecting licences ("PLs") at its 100% owned brownfield Lead-Zinc Abbeytown Project in Ireland covering a total of 136km2, these have been held since 2013 and were successfully renewed in Q3 2019 for a further six years.

 

In January 2019, the Company reported the final results from an extensive underground drilling and sampling programme. The underground work involving mapping, channel sampling and drilling resulted in a much better understanding of the controls and distribution of mineralisation in the project area and confirmed that mineralisation is continuous between the mine and the location of surface drilling south of the mine. The best intersection in surface drilling was located furthest from the mine where hole ERAB005 intersected 15.63% Zn+Pb combined and 90.68 g/t Ag over 4.1m. Mineralisation is open to the south. East-west orientated normal faults are now recognised as important for controlling mineralisation and results have demonstrated that where these intersect north-northeast trending structures is typically where the highest-grade mineralisation is developed. With these new observations, the Company expanded tight-spaced soil sampling and identified new target areas extending the possible footprint of mineralisation further south from the workings and the area drilled 300m south of the mine.

 

Close-spaced soil sampling confirmed the presence of strong anomalies over interpreted structures visible in the airborne geophysics data close to the Ox Mountains Fault.  Results for 527 closely spaced samples were released in March 2019. One sample yielded 10.65ppm silver (Ag), 1,585 ppm lead (Pb) and 2,530ppm zinc (Zn) and represents a priority drill target. A total of 470 samples including QAQC samples were also taken along seven lines at Skreen. These and adjacent results confirm the importance of the Ox Mountains Fault as a first order control on mineralisation in the district, which is also evident south of Abbeytown itself.

 

Also in March 2019, the Company reported results of a preliminary metallurgical study involving a bench flotation test and bond mill test on material collected from the underground pillars and western workings, which indicated that production of a good quality, saleable concentrate can be achieved based on a straightforward, standard flotation process.

 

The results for all work to date at Abbeytown have been positive and a high level of success has been achieved with drilling. Further drilling is required to outline the potential of new targets south of the mine and near the Ox Mountains Fault. The Company has been seeking a partner to advance the Abbeytown project and will continue to do so in 2020. Difficult market conditions in the zinc sector has impacted interest in zinc projects but, as there are no immediate expenditure commitments required for Abbeytown, the value of the project can be preserved until interest recovers.

 

Erris Resources was granted 18 PLs in Co. Galway in August 2018 covering an area of 673km2. During 2019, the Company conducted data reviews, reprocessed the new free regional aeromagnetic and EM data released by the Geological Survey and digitised historic soil and drill data for the project area. Preliminary prospecting and soil sampling was carried out to confirm two of these higher priority historic soil anomalies.

 

While the results of the historic data review combined with new regional aeromagnetic data and soil results are very encouraging, the targets are likely at depths of greater than 300-400m and drill testing such early stage targets would be considered risky for Erris Resources in the current market. We have been marketing the project to major companies and will continue to do so. Boliden, in joint venture with Minco Exploration, recently carried out a seismic survey on adjacent contiguous PLs to the north which represents a major investment while a new major entrant into Ireland, South32, recently signed an earn-in agreement for early stage zinc-lead exploration projects with Adventus in the south of Ireland.

 

Finland and Sweden / Centerra Gold Strategic Alliance

Erris Resources continued its strategic alliance with Centerra Gold ('Centerra') during 2019 with Centerra committing to spend US$250,000 on generative exploration work for the year. In January 2019, the Company expanded into Finland with applications for two reservation permits submitted. Erris Resources was granted the 99sq km Sakiatieva reservation permit in the Central Lapland Greenstone belt, North Finland, in February 2019 and the 641.9sq km Pirunkoukku reservation permit in Central Finland in April 2019. The priority project was Sakiatieva and work, fully funded by Centerra,  involved compilation of historic data, purchase and reprocessing of airborne magnetic and EM data, a remote sensing and structural interpretation study, a drone magnetic survey, mapping, prospecting, a soil survey and re-logging of historic drill core. Targets for gold exploration were identified, however, the footprint and style of mineralisation suggested that the target would be too small for Centerra to justify further exploration on the project. Prospecting was also carried out across the larger Pirunkoukku reservation permit but no targets that warranted further exploration were identified. Post period end, Erris Resources has taken action to close down its Finnish operations and surrender the reservation permits.

 

In Sweden, the Company currently has seven permits of which five make up the Brännberg Gold Project in the Skellefte Mining District of North Sweden. The other permits are Enåsen and Storkullen in Central Sweden. The combined area of the Brännberg project is now 3,469 Ha and the permits are 100% owned by Erris Resources. In 2018, Centerra funded drilling of 14 holes totalling 2,681.7m to test the down dip and along-strike continuations of mineralisation intersected in historic drilling by Beowulf Mining. The project reverted to Erris Resources following the termination of the earn-in by Centerra for the Brännberg Designated Project Area in December 2018. The project has some significant intersections of gold mineralisation, which remain open at depth including hole BB004 with 17.2m @ 1.93g/t Au and 0.26% Cu. Drilling to date has only tested approximately 900m along a single corridor within the 3,469Ha permit block with results confirming that there is a gold system at Brännberg that warrants further work. The project is only 10.8km from the active Maurliden Mine (Boliden) and 6.2km from a closed mine (Mensträsk). Erris Resources has decided to retain the project and seek investment from other parties.

 

Following four years of identifying and testing targets, Centerra announced in December 2019 that it had terminated its strategic alliance with Erris Resources. During this time, the total expenditure on Centerra projects was approximately US$3.4 million on which Erris Resources earned consultancy fees of 10% for managing the exploration work. The work resulted in the discovery of several new mineralised zones in outcrop and some significant intersections in drilling. However, drilling did not outline exploration targets meeting the minimum criteria for Centerra to continue funding. In addition, Erris Resources and Centerra reviewed several third-party opportunities, however, none were attractive to either party.

 

Erris Resources is grateful for the consulting and exploration partnership with Centerra over the past four years, which from our experience is a typical duration for such joint ventures. While we are disappointed that it has ended, we will continue to pursue this type of partnership with other mining partners having demonstrated our consulting expertise in delivering cost-effective exploration.

 

Norway

Erris Resources applied for and was granted a number of exploration licences in Norway in 2019. Of these, the Gautelis permits in northern Norway are the most prospective and were renewed in December 2019 following ground truthing work which confirmed the gold mineralisation potential.  At Gautelis, several mineralised occurrences are known including intersections in carbonates of 3m grading 6.66g/t Au from 50-53m and 3m grading 3.3 g/t Au from 44-47m in hole 2-85. The upper 26m of hole 4-84 returned 26m grading 0.58 g/t Au suggesting potential for broad zones of mineralisation in the carbonates.

 

Results from initial samples taken at the Mauken Project in Northern Norway were disappointing and therefore the permit was surrendered in December 2019. Ongoing target evaluation identified another project, Varden, 45km north of Gautelis where high-grade zinc was sampled historically and limited drilling encountered sporadic low grades of zinc and gold mineralisation. Three styles of mineralisation are known in the area: bedding parallel Fe and Zn-Pb sulphide mineralisation, shear-zone-hosted Cu-Au-As mineralisation, including remobilisation of Zn-Pb and quartz-vein-hosted Cu-Au mineralisation. The style of mineralisation and setting has been compared to that at the Cobar ore field in Australia by a well-respected geologist, Dave Coller who wrote a historic exploration report on the project in 2004. Post period end, in February 2020, three 10 km2 permits covering the Haugfjell and Varden Ridge prospects were granted to Erris Resources. The data is currently being compiled and ground truthing visits will be warranted to assess the true potential of the project.

 

Scotland

On 10 December 2019, Erris Resources entered into a joint-venture and option agreement with GreenOre Gold plc giving us the option to acquire 80% of the Loch Tay gold and associated base metals project (the Loch Tay Project") in Perthshire, Scotland subject to satisfactory conclusion of a due diligence review.  We completed our due diligence review on 15 January 2020 and now have four years from that date to define a minimum inferred resource of 250,000 oz gold in order to earn an 80% interest in the project.

 

The project area is highly prospective and lies within the Grampian Gold Belt, which hosts a number of gold deposits including Curraghinalt in Northern Ireland and Cononish in Scotland, just 43 km away from the Loch Tay Project area, where Scotgold is expected to commence production during 2020.

 

The team has already identified two priority target areas, Lead Trial and Glen Almond, based on the presence of historic workings, mineralised outcrops and alluvial gold occurrences.  The Company intends to commence prospecting and mapping followed by soil sampling at the Lead Trial prospect as soon as the weather allows with the aim of outlining future drill targets and identifying other gold targets within the license area.

 

Board and Corporate

With effect from 2 March 2020 the Company announced changes to its Board and Management Team to best maximise financial and personnel resources.  Jeremy Martin stepped down from his role as Chairman, but shall remain a Non-Executive Director; I, Anton du Plessis, stepped down from my role as CEO to become Non-Executive Chairman; and David Hall, who has been a consultant to the Company since it was admitted to trading on AIM in 2017, becomes the new CEO in a non-board capacity.  Having entered into the Loch Tay Project option arrangement and as the Company focuses on exploration activities to advance this and its other projects, it was felt that David's vast experience as an exploration geologist would be best served in the CEO position.

 

Financial Overview

The Company maintains a disciplined approach to expenditure and as such is well funded for the remainder of 2020 with a €1.4 million cash position as at 31 December 2019. In line with current market conditions, the Company has been reducing its costs across all areas.

 

Outlook

We are fully aware that the share price performance of the Company since IPO has been challenging.  Much of this has been beyond the Company's control linked to macro events and a generally weak market for junior exploration companies. However, with our strong cash position of around €1.2m at the end of March and team with a proven track record of discovery and value creation, I am confident that the Company will deliver to shareholders.

 

Erris is also currently impacted, like all companies, by the Covid-19 pandemic and has taken all necessary steps to protect the well-being of its staff, stakeholders and local communities.   There has been no impact on Abbeytown, as no new work was planned for the coming months.  We do not yet know the impact on our projects in Sweden and Norway, as field trips were only planned for the summer months and we do not yet know what restrictions will remain in place.  We have now suspended field work in Scotland but were able to complete the submission of 121 rock samples to the ALS Laboratories in Ireland and will update the market as soon as we have results.

 

I would like to thank our shareholders for their continued support, including industry major, Osisko Gold Royalties, and I look forward to providing further updates on our progress.

 

Anton du Plessis

Non-Executive Chairman

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

 


31 December


31 December



2019


2018


Continuing operations

Notes





Revenue

4


17,527


165,216


Cost of sales


(104,102)


(129,569)








Gross (loss)/profit


(86,575)


35,647



Exploration projects impairment


-


(317,396)

Administrative expenses


(475,592)


(696,083)

Share based payments charge

23


-


(124,901)








Operating loss

6


(562,167)


(1,102,733)


Finance income

9


-


1,289









Loss before taxation


(562,167)


(1,101,444)


Tax on loss

10


30,648


-









Loss for the financial year

26


(531,519)


(1,101,444)


Other comprehensive income


-


-









Total comprehensive loss for the year


(531,519)


(1,101,444)








Earnings per share from continuing operations attributable to the owners of the parent company

11


Basic (cents per share)


(1.71)


(3.54)

Diluted (cents per share)


(1.71)


(3.54)


Total loss and comprehensive loss for the year is attributable to the owners of the parent company.


 

 

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

 


31 December 2019


31 December 2018



Notes





Non-current assets


Intangible assets

12


2,002,334


1,745,118









Current assets


Trade and other receivables

17


36,030


59,334


Cash and cash equivalents


1,497,277


2,366,893










1,533,307


2,426,227









Total assets


3,535,641


4,171,345









Current liabilities



Current tax liabilities


-


30,648


Trade and other payables

19


43,130


112,873


Amounts owed to Strategic Alliance partner

20


-


3,794










43,130


147,315









Net current assets

1,490,177


2,278,912









Total liabilities


43,130


147,315









Net assets


3,492,511


4,024,030









Equity


Share capital

24


351,133


351,133


Share premium



4,151,045


4,151,045


Other reserves

25


811,077


827,376


Retained earnings

26


(1,820,744)


(1,305,524)








Total equity


3,492,511


4,024,030









 

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

 


Share capital

Share premium account

Other reserves

Retained earnings

Total



Notes



Balance at 1 January 2018


351,133

4,151,045

759,687


(261,292)

5,000,573















Year ended 31 December 2018:


Loss and total comprehensive income for the year


-

-

-


(1,101,444)

(1,101,444)














Total comprehensive income for the year

-

-

-


(1,101,444)

(1,101,444)














Credit to equity for equity settled share-based payments

23

-

-

124,901

-

124,901


Transfer of lapsed share options


-

-


(57,212)

57,212

-















Total transactions with owners recognised directly in equity


-

-

67,689

57,212

124,901















Balance at 31 December 2018 and 1 January 2019

351,133

4,151,045

827,376


(1,305,524)

4,024,030















Year ended 31 December 2019:


Loss and total comprehensive income for the year


-

-

-


(531,519)

(531,519)














Total comprehensive income for the year

-

-

-


(531,519)

(531,519)














Transfer of lapsed share options


-

-


(16,299)

16,299

-















Total transactions with owners recognised directly in equity

-

-


(16,299)

16,299

-















Balance at 31 December 2019

351,133

4,151,045

811,077


(1,820,744)

3,492,511














 

 

GROUP STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

 


Year ended 31 December 2019


Year ended 31 December 2018



Notes



Cash flows from operating activities



Cash used in operations

31


(607,875)


(704,956)








Net cash outflow from operating activities


(607,875)


(704,956)


Cash flows from investing activities


Exploration expenditure


(257,214)


(1,014,729)


Exploration expenditure utilising funds from Strategic Alliance Agreement


(222,154)


(1,493,877)


Interest received

-


1,289









Net cash used in investing activities


(479,368)


(2,507,317)


Cash flows from financing activities


Proceeds from issue of shares

-


56,319


Funds received from Strategic Alliance Agreements

217,627


1,432,704









Net cash generated from financing activities


217,627


1,489,023









Net decrease in cash and cash equivalents


(869,616)


(1,723,250)


Cash and cash equivalents at beginning of year


2,366,893


4,090,143









Cash and cash equivalents at end of year


1,497,277


2,366,893








 

 

Notes to the financial statements can be found in the Company's Annual Report and Financial Statements on the Company's website at https://www.errisresources.com/annual-interim-reports.

 

*ENDS*

 

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

 

David Hall/Aiden Lavelle

Erris Resources plc

+353 (0) 94 902 8481

David Hart/Liz Kirchner

Allenby Capital (Nominated Adviser)

+44 (0) 20 3328 5656

Erik Woolgar

Shard Capital (Joint Broker)

+44 (0) 20 7186 9952

Zoe Alexander/Andy Thacker

Turner Pope Investments (TPI) Ltd (Joint Broker)

+44 (0) 20 3657 0050

Isabel de Salis/Beth Melluish

St Brides Partners (Financial PR)

+44 (0) 20 7236 1177

 

Notes

Erris Resources plc (EPIC: ERIS.L) is an AIM quoted, European focused, discovery driven consulting and exploration company, supported by the Canadian mining major, Osisko Gold Royalties, which has a 18.9% interest in the Company. The Company has a portfolio of gold projects in Scotland, Sweden and Norway and zinc and base metals assets in Ireland, which it is looking to further build on. Led by a highly qualified team with extensive corporate and sector experience, Erris's strategy is to create shareholder value through commercial discovery of base or precious metal assets in proven mineral districts and in favourable European jurisdictions. 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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