TIDMARG
RNS Number : 3727Z
Argos Resources Ltd
18 September 2020
18 September 2020
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
2020 Interim Financial Results
Argos Resources Limited (AIM: ARG.L), the Falkland Islands based
company focused on the North Falkland Basin, is pleased to announce
its interim financial results for the six months ended 30 June
2020.
Highlights
-- $192 thousand loss for the period (H1 2019: loss of $176 thousand);
-- $560 thousand cash reserves at 30 June 2020 (YE 2019: $768 thousand);
-- The current Second Phase of the Licence expires in May 2021.
The Company intends to request an extension to the Licence
period.
For further information:
Argos Resources Limited (+500 22685) Cenkos Securities plc
(Nomad & Broker)
www.argosresources.com Derrick Lee (+44 131 220 9100)
Ian Thomson, Chairman Neil McDonald (+44 131 220 6939)
John Hogan, Managing Director
Chairman's Statement
During the reporting period of the first half of the year, Brent
crude oil prices plummeted from over $65/bbl at year-end 2019 to a
low of $20/bbl in April 2020, before recovering somewhat to around
$42/bbl by the end of June. The fall in prices was driven initially
by competition from OPEC for market share and then exacerbated
later in the period by the significant drop in global energy demand
as a result of the Covid-19 pandemic supressing oil and gas
consumption globally.
The industry has been hit hard by this unexpected sharp drop in
demand and commodity prices, and has responded by reducing costs,
cutting capital expenditure and delaying projects. Acknowledging
this slowdown in activity, the Company intends to request an
extension to the Licence term, which currently runs to 1(st) May
2021, as more time will be required to recover from this
downturn.
Despite the above, the Company continues to seek partners to
participate in drilling on its Licence and is currently engaged
with a number of counterparties who have expressed interest. Given
the current challenging environment the Company believes it may be
some time before any expressions of interest are translated into
commitments.
Financial overview
The Group loss for the six months to 30 June 2020 was $192
thousand (2019: loss of $176 thousand) giving an undiluted loss per
share of 0.09 cents (2019: 0.08 cents loss per share).
Administrative expenses were $148 thousand compared to $175
thousand for the same period in 2019.
Net assets of $29.3 million reflect a decrease of $192 thousand
since December 2019 as a result of the loss for the period.
Financial outlook
The industry slowdown has meant that some costs which were
expected to be incurred in the current year have been delayed and
the Group has sufficient cash resources to continue for a period of
at least 12 months from the date these financial statements were
signed. In order to continue as a going concern beyond that the
Company will need to raise further finance. The going concern
comments in Note 1 on pages 7 and 8 contain further
information.
Ian Thomson OBE
Chairman
Consolidated statement of comprehensive income
Period ended 30 June 2020
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
unaudited unaudited audited
Note $'000 $'000 $'000
Administrative expenses (148) (175) (433)
Finance income 1 2 4
Foreign exchange (losses)/gains (45) (3) 28
------------------------------------- ------ ----------- ----------- -------------
(Loss) from operations attributable
to owners of the parent (192) (176) (401)
------------------------------------- ------ ----------- ----------- -------------
Total comprehensive income
for the period
attributable to owners of
the parent (192) (176) (401)
------------------------------------- ------ ----------- ----------- -------------
(Loss) per share (cents):
Basic and diluted 2 (0.09) (0.08) (0.18)
------------------------------------- ------ ----------- ----------- -------------
Consolidated statement of financial position
As at 30 June 2020
As at As at As at
30 June 30 June 31 December
2020 2019 2019
unaudited unaudited audited
Note $'000 $'000 $'000
Assets
Non-current assets
Capitalised exploration expenditure 28,776 28,752 28,737
Current assets
Other receivables 48 195 86
Cash and cash equivalents 560 784 768
---------------------------------------------- ----------- ----------- -------------
Total current assets 608 979 854
---------------------------------------------- ----------- ----------- -------------
Total assets 29,384 29,731 29,591
---------------------------------------------- ----------- ----------- -------------
Liabilities
Total and current liabilities
Other payables (43) (39) (58)
Total net assets 29,341 29,692 29,533
---------------------------------------------- ----------- ----------- -------------
Capital and reserves attributable
to
equity holders of the company
Share capital 6,696 6,696 6,696
Share premium 30,071 30,071 30,071
Retained losses (7,426) (7,075) (7,234)
---------------------------------------------- ----------- ----------- -------------
Total shareholders' equity 29,341 29,692 29,533
---------------------------------------------- ----------- ----------- -------------
Consolidated statement of cash flows
Period ended 30 June 2020
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
unaudited unaudited audited
$'000 $'000 $'000
Cash flows from operating activities
(Loss) for period (192) (176) (401)
Adjustments for:
Finance income (1) (2) (4)
Foreign exchange 47 2 (28)
Share based remuneration expense - - 89
Net cash (outflow) from operating
activities
before changes in working capital (146) (176) (344)
(Increase)/Decrease in other receivables (1) 197 377
(Decrease) in other payables (15) (22) (3)
------------------------------------------ ----------- ----------- -------------
Net cash (outflow)/inflow
from operating activities (162) (1) 30
------------------------------------------ ----------- ----------- -------------
Investing activities
Interest received 1 2 4
Exploration and development expenditure - (3) (82)
Net cash inflow/(outflow)
from investment activities 1 (1) (78)
------------------------------------------ ----------- ----------- -------------
Net (decrease) in cash and cash
equivalents (161) (2) (48)
Cash and cash equivalents at beginning
of period 768 788 788
Exchange (losses)/gains on cash
and cash equivalents (47) (2) 28
------------------------------------------ ----------- ----------- -------------
Cash and cash equivalents at end
of period 560 784 768
------------------------------------------ ----------- ----------- -------------
Consolidated statement of changes in equity - unaudited
Period ended 30 June 2020
Retained
Share earnings/ Total
Share
capital premium (deficit) equity
$'000 $'000 $'000 $'000
At 1 January 2019 6,696 30,071 (6,899) 29,868
Total comprehensive
income for period to
30 June 2019 - - (176) (176)
At 30 June 2019 6,696 30,071 (7,075) 29,692
------------------------------------ ---------- --------- ------------ ---------
Total comprehensive
income for period to
31 December 2019 - - (225) (225)
Share based income expense - - 89 89
Share based income adjustment
for expired options - - (23) (23)
At 31 December 2019 6,696 30,071 (7,234) 29,533
------------------------------------ ---------- --------- ------------ ---------
Total comprehensive
income for period to
30 June 2020 - - (192) (192)
At 30 June 2020 6,696 30,071 (7,426) 29,341
------------------------------------ ---------- --------- ------------ ---------
Notes to the interim report - unaudited
Period ended 30 June 2020
1 Accounting policies
General information
Argos Resources Limited is a limited liability company
incorporated and domiciled in the Falkland Islands under
registration number 10605. The address of its registered office is
Argos House, H Jones Road, Stanley, Falkland Islands.
This consolidated interim report was approved for issue by the
directors on 17 September 2020.
Basis of preparation
The financial information included within this interim report
has not been reviewed nor audited and is based on the consolidated
financial statements of Argos Resources Limited and its subsidiary
Argos Exploration Limited ("the Group"). The consolidated financial
statements are prepared in compliance with the recognition and
measurement requirements of International Financial Reporting
Standards as adopted by the European Union (IFRSs) and
interpretations of those standards as issued by the International
Accounting Standards Board (IASB). They do not include all
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the
2019 annual report. These accounts have been prepared in accordance
with the accounting policies that are expected to be applied in the
report and accounts of Argos Resources Limited for the year ending
31 December 2020.
The comparative financial information for the year ended 31
December 2019 has been derived from the full statutory financial
statements for that period which were prepared in compliance with
IFRSs. The Independent Auditors' Report on the annual report and
financial statements for 2019 was unqualified but did draw
attention to note 1 of these financial statements which explains
that the Group and Parent Company's ability to continue as a going
concern is dependent on the finding of an exploration partner and
obtaining further funding. As stated in note 1, these conditions
indicate the existence of a material uncertainty which may cast
significant doubt over the Group's and Parent Company's ability to
continue as a going concern. The audit opinion was not however
modified in respect of this matter.
The IASB has issued some new and revised standards, amendments
and interpretations to existing standards, which are effective for
the financial year ending 31 December 2020. The directors have made
an assessment of the impact of these standards and they are not
expected to have a material impact on the financial statements.
Going concern
The interim report has been prepared on the going concern basis
as, in the opinion of the directors, there is a reasonable
expectation that the Group and the Company will continue in
operational existence for the foreseeable future.
Following the withdrawal of Noble and Edison the Licence was
re-assignment to Argos in February 2019 and the Falkland Islands
Government agreed to extend the Licence to 1 May 2021.
Notes to the interim report - unaudited
Period ended 30 June 2020
1 Accounting policies (continued)
The Company's ability to achieve its long term strategy of
developing its exploration projects is dependent on finding an
exploration partner. The advent of Covid-19 caused an unexpected
sharp drop in energy demand, suppressing commodity prices, and the
industry responded by reducing costs, cutting capital expenditure
and delaying projects.
The Company continues to seek partners to participate in
drilling on its Licence and is currently engaged with a number of
counterparties who have expressed interest. However, given the
current challenging environment the Company believes it may be some
time before any expressions of interest are translated into
commitments, which will necessitate an extension to the current
Licence term, which expires on 1 May 2021.
The industry slowdown has meant that some costs which were
expected to be incurred in the current year have been delayed and
the Group has sufficient cash resources to continue for a period of
at least 12 months from the date these financial statements were
signed. In order to continue as a going concern beyond that the
Company will need to raise further finance, either through a
farmout partner or by raising funds in an equity issue.
As described above, the Company continues to seek partners to
participate in drilling on its Licence and is currently engaged
with a number of counterparties who have expressed interest. The
Company is also discussing fund raising options and will seek a
Licence extension. However, there are currently no binding
agreements in place. Should the Directors be unable to raise
sufficient funds, find an exploration partner, or negotiate a
Licence extension the Company may be unable to realise its assets
and discharge its liabilities in the normal course of business.
These factors indicate the existence of a significant material
uncertainty which may cast doubt over the Group's and Company's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group or
Company were unable to continue as a going concern.
Significant accounting judgements, estimates and assumptions
T he Group makes certain estimates and assumptions regarding the
future in relation to intangible assets and impairment of these
assets. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial period are discussed as follows:
Intangible assets - capitalised exploration expenditure,
impairment and royalty interests
Evaluation and exploration (E&E) expenditure
The Group believes that the most appropriate method of
accounting for E&E expenditure is to capitalise any costs
incurred, including appropriate technical and administrative
expenses but not general overheads, as intangible assets pending
determination of feasibility of the project, as permitted under
IFRS 6.
Notes to the interim report - unaudited
Period ended 30 June 2020
1 Accounting policies (continued)
If an exploration project is successful, the related
expenditures are transferred to tangible assets and amortised over
the estimated life of the commercial reserves. Where a licence is
relinquished, a project is abandoned, or is considered to be of no
further value to the Group, the related costs are written off.
Impairment
E&E assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed the
recoverable amount.
In accordance with IFRS 6 the Group firstly considers the
following facts and circumstances in their assessment of whether
the Group's exploration and evaluation assets may be impaired:
-- whether the period for which the Group has the right to
explore in a specific area has expired during the period or will
expire in the near future, and is not expected to be renewed;
-- whether substantive expenditure on further exploration for
and evaluation of mineral resources in a specific area is neither
budgeted nor planned;
-- whether exploration for and evaluation of hydrocarbons in a
specific area have not led to the discovery of commercially viable
quantities of hydrocarbons and the Group has decided to discontinue
such activities in the specific area; and,
-- whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be
recovered in full from successful development or by sale
If any such facts or circumstances are noted the Group must
perform an impairment test in accordance with the provisions of IAS
36, assessing the recoverable amount of the E&E assets together
with all development and production assets, as a single cash
generating unit (CGU). The aggregate carrying value is compared
against the expected recoverable amount of the CGU. The recoverable
amount is the higher of value in use and the fair value less costs
to sell.
Any E&E impairment loss would be recognised in the income
statement and separately disclosed.
2 (Loss) per share
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
unaudited unaudited audited
Number Number Number
Shares in issue brought forward
(2 pence shares) 220,713,205 220,713,205 220,713,205
Shares in issue carried forward
(2 pence shares) 220,713,205 220,713,205 220,713,205
------------------------------------- ------------- ------------- -------------
Options not exercised brought
forward 6,705,818 8,080,818 8,080,818
Options expired during the period - - (1,375,000)
------------------------------------- ------------- ------------- -------------
Options not exercised carried
forward 6,705,818 8,080,818 6,705,818
------------------------------------- ------------- ------------- -------------
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
unaudited unaudited audited
(Loss) for the period ($'000) (192) (176) (401)
Weighted average number of ordinary
shares in issue during the period 220,713,205 220,713,205 220,713,205
------------------------------------- ------------- ------------- -------------
(Loss) per ordinary share (cents)
Basic and diluted (0.09) (0.08) (0.18)
------------------------------------- ------------- ------------- -------------
Basic loss per share has been computed by dividing the loss by
the weighted average number of shares in issue during the
period.
In accordance with IAS 33 as the Group is reporting a loss for
this period, the preceding interim period and the year to 31
December 2019 the share options are not considered dilutive because
the exercise of share options would have the effect of reducing the
loss per share.
3 Events after the reporting date
There were no reportable events occurring after the balance
sheet date.
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