Jangada Mines plc / EPIC: JAN.L / Market: AIM / Sector: Mining

29 March 2021

Jangada Mines plc

Annual Results for the 18 Months Ended 31 December 2020

Jangada Mines plc ('Jangada' or 'the Company'), a natural resources company, is pleased to announce its audited financial results for the 18-month period ended 31 December 2020. The Company is today posting its Annual Report & Accounts and Notice of AGM to Shareholders, which will also shortly be available on the Company's website.

REVIEW OF THE BUSINESS

Pitombeiras Vanadium Project

During the period under review, the Company continued to develop its 100% owned Pitombeiras Vanadium Project ('Pitombeiras' or 'the Project'), located in the state of Ceará, Brazil and I am pleased to confirm that we have made great progress in this regard.

Consistent vanadium-titanium-iron grades and widths confirmed; new drilling targets delineated; an initial National Instrument 43-101 ('NI 43-101') compliant resource estimate of 5.70Mt released; and post period end, a Preliminary Economic Assessment ('PEA') defining robust economics and remarkable potential for further growth delivered.  We are rapidly ticking boxes as we look to fast-track the exciting Pitombeiras Vanadium Project ('Pitombeiras' or 'the Project') in Brazil to production, realise its potential and, in the process, generate value for all our shareholders.

The 18-month period under review saw us embark on a plethora of activity at Pitombeiras including drilling programmes, metallurgical tests, and airborne magnetic surveys to delineate vanadium titanomagnetite ('VTM') drilling targets.  The positive data generated from these activities enabled us to report an initial National Instrument 43-101 ('NI 43-101') compliant resource estimate for the Project mid 2020:

·      Total Resource estimate of 5.70Mt at an average grade of 0.51% vanadium pentoxide ('V2O5'), 10.09% titanium dioxide ('TiO2') and 50.42% of ferric oxide ('Fe2O3') for a contained resource of 28,990 tonnes V2O5

·      Indicated Resource estimate of 1.47Mt at an average grade of 0.50% V2O5, 9.85 % TiO2 and 49.78% of Fe2O3 for a contained resource of 7,297 tonnes V2O5

·      Inferred Resource estimate of 4.23Mt at an average of 0.51% V2O5, 10.17% TiO2 and 50.64% of Fe2O3 for a contained resource of 21,693 tonnes V2O5

Post period end, using this estimate, we were delighted to deliver an initial PEA that confirmed our own confidence in the economic viability of the Project and its excellent potential to become a profitable producer of Ferro-Vanadium concentrate (62%/65% iron ('Fe'), plus V2O5 credit). 

The PEA, prepared by GE21 Consultoria Mineral ('GE21') and compliant with National Instrument 43-101 ('NI 43-101'), projected a $9.5m initial capital cost and post-tax payback period of 3 months.  It also reported an estimated post-tax NPV (at a 8% discount rate) and IRR of $106.5 million and 317.8%, respectively. 

Notably, the PEA suggests a simple processing route providing opportunity to a fast-track approach to production and cash flow.  Furthermore, the total resource considered in the PEA is based on just two out of 20 known targets selected based on a ground magnetic survey.

ValOre Metals Corp

Our investment in ValOre Metals Corp (TSX-V:VO) ('ValOre') has yielded positive results. 

As previously advised, in August 2019, we divested our 100% interest in our former subsidiary, Pedra Branca Brasil Mineracao Ltda, the entity that held the advanced palladium, platinum, and nickel project, the Pedra Branca Project in Brazil ('Pedra Branca'), to ValOre whilst retaining a strategic upside exposure through a significant shareholding in ValOre.  The consideration received on the divestment was CAD$3,000,000 alongside the issue of 25,000,000 ValOre common shares to Jangada (of which 22,000,000 shares were received on completion and 3,000,000 deferred consideration shares over 3 years).  The divestment resulted in a reported profit on disposal of $6.2 million for the reporting period.

During the period, we have sold down part of the investment in ValOre to support the Company's working capital requirements, allowing us to substantially progress the development of Pitombeiras, including the PEA and identification of the JORC resource.

At the end of the reporting period, the Company had a 17.23% interest in ValOre's share capital.  As Brian McMaster and Luiz Azevedo are both on the board of directors of ValOre, it is considered an associate for the purposes of preparing these financial statements.

ValOre continues to generate notable results from Pedra Branca.  With a reported maiden NI 43-101 compliant inferred resource of 1,067,000 ounces PGE+Au at an average grade of 1.22 g/t PGE+Au, ValOre's focus in 2020 was to increase the resource and undertake discovery drilling.  To this end, a 6,000 metre two phase diamond drill programme was undertaken with the bulk aimed at expanding specific zones, which form part of the inferred resource, namely Trapia (Trapia 1 and Trapia 2) and Santo Amaro.   Results reported so far indicate that the "ore body thickens at depth and that mineralisation remains open in all directions". 

Furthermore, work related to mineralogy, processing and metallurgy has provided very positive initial results and some additional options which warrant immediate follow up.  We are expecting continued newsflow throughout the year as ValOre continues with a property-wide exploration programme at Pedra Branca.

Fodere Titanium Limited

By channelling capital in a responsible way towards companies that innovate and address global challenges to create a more sustainable world, investing can make a difference.  With this in mind, the decision was made to take a 3.6% interest in Fodere Titanium Limited ('Fodere'), a company that is making great strides towards commercialising the production of titanium dioxide and vanadium from waste materials.

Fodere is rapidly advancing the commercialisation of its environmentally sustainable and highly innovative technology to extract high value metals from the titanium, vanadium, iron, and steel industries.  Fodere is currently in discussion with industrial offtakers as it moves toward building an initial plant to commence production. One of the Company's Non-Executive Directors, Nick von Schirnding, is Chairman of Fodere.

COVID-19

The directors note that COVID-19 has had a significant negative impact on the global economy during 2020 with disruption felt globally. The Group has thankfully seen its inherent value significantly increase from its value in 2019 because of our successful exploration programme and project development initiatives. On a wider level COVID-19 has highlighted to the world the importance of sustainability across every aspect of life.  With a portfolio of assets and investments that support the drive towards greater sustainability, Jangada is well placed to contribute to the world's needs without compromising the ability of future generations to meet their own needs.

Financial Results

The progress during the financial year of advancing the Pitombeiras project resulted in the Group incurring an operating Loss from Continuing Operations of $1.6 million (2019: $1.6 million). As stated above, the reported profit on the disposal of the Pedra Branca project was $6.2 million (2019: loss of $0.09 million). 

Overall and pleasingly, the reported Total Comprehensive Profit attributable to the Group for the 18-month reporting period was $3.9 million (2019: loss of $1.7 million).

B K McMaster

Director

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 18 MONTHS PERIOD ENDED 31 DECEMBER 2020

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2020

COMPANY BALANCE SHEET

AS AT 31 DECEMBER 2020

The profit for the year dealt with in the accounts of the parent company, Jangada Mines plc, was $4,518,000 (2019: loss of $1,594,000). As permitted under Section 408 of the Companies Act 2006, no Income Statement or Statement of Comprehensive Income is presented for the parent company.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE 18 MONTHS PERIOD ENDED 31 DECEMBER 2020

COMPANY CASH FLOW STATEMENT

FOR THE 18 MONTHS PERIOD ENDED 31 DECEMBER 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 18 MONTHS PERIOD ENDED 31 DECEMBER 2020

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE 18 MONTHS PERIOD ENDED 31 DECEMBER 2020

NOTES TO THE FINANCIAL STATEMENTS

For the 18 month period ended 31 December 2020

The Company is a public limited company limited by shares, incorporated in England and Wales on 30 June 2015 with the registration number 09663756 and with its registered office at 20 North Audley Street, London W1K 6WE.

The nature of the Company's operations and its principal activities are set out within the Annual Report in the Strategic Report and the Report of the Directors on pages 4 and 13 respectively.

Basis of preparation and going concern basis

These financial statements have been prepared on a historical cost basis in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union and in accordance with applicable UK Law. The adoption of all of the new and revised Standards and Interpretations issued by the IASB and the IFRIC of the IASB that are relevant to the operations and effective for annual reporting periods beginning on 1 July 2019 are reflected in these financial statements.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The consolidated financial information is presented in United States Dollars ($).

The functional currency of the subsidiary, VTF Mineração Ltda is Brazilian Real. The functional of the Company is British Pounds Sterling (GBP). Amounts are rounded to the nearest thousand ($'000), unless otherwise stated.

During the period, the Group changed its accounting reference date from 30 June to 31 December and consequently the current period covers the 18 months period ended 31 December 2020. The comparative period covers the year ended 30 June 2019.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result of new information or more experience. Such changes are recognised in the period in which the estimate is revised.

The Group's business activities together with the factors likely to affect its future development, performance and position are set out on pages 4 to 12 within the Annual Report. In addition, note 4 to the Financial Statements includes the Group's objectives, policies, and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit and liquidity risk.

The Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating revenues and an operating loss has been reported from its continued operations, the Directors consider that the Group has sufficient funds to undertake its operating activities for a period of at least the next 12 months including any additional expenditure required in relation to its current exploration projects. The Group has cash reserves which are considered sufficient by the Directors to fund the Group's committed expenditure both operationally and on its exploration project for the foreseeable future. However, as additional projects are identified and the Pitombeiras project moves towards production, additional funding will be required.

As discussed in the Directors' report, the directors do not consider there to be a material uncertainty, which may cast doubt about the Group and Company's ability to continue as a going concern. Given the proceeds from the sale of the Pedra Branca project and based on the Group's planned expenditure on the Pitombeiras vanadium deposit and the Group's working capital requirements, the Directors have a reasonable expectation that the Group will have adequate resources to meet its capital requirements for the foreseeable future. For that reason, the Directors have concluded that the financial statements should be prepared on a going concern basis.

The financial information in this announcement has been extracted from the audited Group Financial Statements for the period ended 31 December 2020 and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group Financial Statements for the period ended 31 December 2020 will be delivered to the Registrar of Companies in due course. The auditor's report on the Group Financial Statements was unqualified and unmodified and was signed on 26 March 2021. The Group Financial Statements and this announcement were approved by the Board of Directors on 26 March 2021.

Changes in accounting principles and adoption of new and revised standards

In the period ended 31 December 2020, the Directors have reviewed all the new and revised Standards. The only relevant new standard that is effective for this year's financial statements is IFRS 16 "Leases", but this does not have a material impact on the financial statements.

Standards issued and relevant to the Group, but not yet effective at the date of these Group financial statements are listed below.

The standards discussed are those that the Group reasonably expects to be applicable to the financial statements in the future, and therefore do not include those standards or interpretations that the directors consider will not be relevant to the Group. The Group intends to adopt these standards when they become effective. The directors do not expect that the adoption of these standards will have a material impact on the Group's financial statements either in the period of initial application or thereafter. An assessment of the impact of each relevant standard is included below.

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2020:

•      IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material).

•      IFRS 3 Business Combinations (Amendment - Definition of Business).

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

There are no standards in issue but not yet effective which could have a material impact on the financial statements.

Basis of Consolidation

Subsidiaries

The subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated until the date that such control ceases.  The Company has control over a subsidiary if all three of the following elements are present:

·      Power over the investee,

·      exposure to variable returns from the investee, and

·      the ability of the investor to use its power to affect those variable returns.

Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The financial information of the subsidiary is prepared for the same reporting year as the parent company, using consistent accounting policies and is consolidated using the acquisition method. Intra-group balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

During the period, the Group changed its accounting reference date from 30 June to 31 December allowing the Parent Company to report in line with VTF Mineração Ltda's statutory year end which is 31 December.

Business combinations

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a business is the fair value of the assets transferred, liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits. A business consists of inputs and processes applied to those inputs that have the ability to create outputs that provide a return to the Company and its shareholders.

A business need not include all of the inputs and processes that were used by the acquiree to produce outputs if the business can be integrated with the inputs and processes of the Company to continue to produce outputs. If the integrated set of activities and assets is in the exploration and development stage, and thus, may not have outputs, the Company considers other factors to determine whether the set of activities and assets is a business. Those factors include, but are not limited to, whether the set of activities and assets:

·      Has begun planned principal activities;

·      Has employees, intellectual property and other inputs and processes that could be applied to those inputs;

·      Is pursuing a plan to produce outputs; and

·      Will be able to obtain access to customers that will purchase the outputs.

Foreign currency

Transactions entered into by the Group in a currency other than the currency of its primary economic environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur.  Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences are taken to the Statement of Comprehensive Income.

Financial instruments

Financial instruments are measured as set out below. Financial instruments carried on the statement of financial position include cash and cash equivalents, trade and other receivables, trade and other payables and loans to group companies.

Financial instruments are initially recognised at fair value when the group becomes a party to their contractual arrangements. Transaction costs directly attributable to the instrument's acquisition or issue are included in the initial measurement of financial assets and financial liabilities, except financial instruments classified as at fair value through profit or loss (FVTPL). The subsequent measurement of financial instruments is dealt with below.

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual provisions of the instrument.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities, for which fair value is measured or disclosed in the Financial Statements, are categorised within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 - valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly or indirectly observable; and

Level 3 - valuation techniques for which the lowest-level input that is significant to the fair value measurement is unobservable.

Financial assets

All of the Group's financial assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost.

Group's financial assets include cash and cash equivalents, Company's financial assets include cash and other receivables. The Group assesses on a forward-looking basis the expected credit losses, defined as the difference between the contractual cash flows and the cash flows that are expected to be received.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.

For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit and loss (FVTPL) or as other financial liabilities. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged or cancelled, or they expire.

Financial liabilities are classified at FVTPL when the financial liability is either held for trading or it is designated at FVTPL. A financial liability is classified as held for trading if it has been incurred principally for the purpose of repurchasing it in the near term or is a derivative that is not a designated or effective hedging instrument.

Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Exploration and evaluation assets

Costs capitalised in respect of the Group's development and production assets are required to be assessed for impairment under the provisions of IAS 36. Such an estimate requires the Group to exercise judgement in respect of the indicators of impairment and also in respect of inputs used in the models which are used to support the carrying value of the assets. Such inputs include costs of exploration work, studies, field costs, government fees and the associated support costs. The directors concluded there were no impairment indicators in the current period. Therefore, no impairment to the carrying value of the Pitmobeiras asset was considered necessary.

Costs incurred prior to obtaining the legal rights to explore an area are expensed immediately to the Statements of Profit or Loss and Other Comprehensive Income. Only material expenditures incurred after the acquisition of a licence interest are capitalised.

Interests in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and operating policies.

The results and assets and liabilities of associates are incorporated using the equity method of accounting. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Company's share of profit or loss and other comprehensive income of the associate.

Share Options - estimates and assumptions

The fair value of options and warrants granted to directors and others in respect of services provided is recognised as an expense in the Statement of Comprehensive Income with a corresponding increase in equity reserves.

Taxation

The charge for current tax is based on the taxable income for the period. The taxable result for the period differs from the result as reported in the statement of comprehensive income because it excludes items which are not assessable or disallowed and it further excludes items that are taxable and deductible in other years. It is calculated using tax rates that have been enacted or substantially enacted by the statement of financial position date.

Investments

Investments are carried at fair value.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the audited consolidated balance sheet differs from its tax base. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The preparation of the Financial Statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant items subject to such judgements and estimates include, but are not limited to:

Judgements

ValOre is considered an associate despite Jangada holding less than 20% shareholdings due to 2 directors of the Company (Messrs McMaster and De Azevedo) being on the board of ValOre during the financial period.

The Directors have considered the criteria of IFRS 6 regarding the impairment of exploration and evaluation assets and have decided based on this assessment that there is no basis to impair the carrying value of its exploration assets in respect to the Pitmobeiras project (2020: $550,000, 2019: $41,000) at this time.

Estimates and assumptions

Share based payments

Share options issued by the Group relates to the Jangada Plc Share Option Plan. The grant date fair value of such options is calculated using a Black-Scholes model whose input assumptions are derived from market and other internal estimates.

The key estimates include volatility rates and the expected life of the options, together with the likelihood of non-market performance conditions being achieved. Refer note 19.

On exercise or cancellation of share options and warrants, the proportion of the share based payment reserve relevant to those options and warrants is transferred from other reserves to the accumulated deficit. On exercise, equity is also increased by the amount of the proceeds received. The fair value is measured at grant date charged in the accounting period during which the option and warrants becomes unconditional.

The fair value of options and warrants are calculated using the Black-Scholes model, taking into account the terms and conditions upon which the options and warrants were granted. Vesting conditions are non-market and there are no market vesting conditions. These vesting conditions are included in the assumptions about the number of options and warrants that are expected to vest. At the end of each reporting period, the Company revises its estimate of the number of options and warrants that are expected to vest. The exercise price is fixed at the date of grant and no compensation is due at the date of grant. Where equity instruments are granted to

persons other than employees, the statement of comprehensive income is charged with the fair value of the goods and services received. Please refer to note 19.

Company - Application of the expected credit loss model prescribed by IFRS 9

IFRS 9 requires the Parent company to make assumptions when implementing the forward-looking expected credit loss model. This model is required to be used to assess the intercompany loan receivables from the company's Brazilian subsidiaries for impairment.

Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan receivables, the possible credit losses that could arise and the probabilities for these scenarios. The following was considered; the exploration project risk for Pitombeiras, positive NPV of the Pitombeiras project as demonstrated by the Feasibility Study, ability to raise the finance to develop the projects, ability to sell the projects, market and technical risks relating to the project. The Directors therefore considered that there was no impairment of the subsidiary loan (2020: nil, 2019: $1,067,000).

The Company is exposed through its operations to the following financial risks:

·    Credit risk;

·    Foreign exchange risk; and

·    Liquidity risk.

Credit risk

Credit risk arises from cash and cash equivalents and outstanding receivables. The Group maintains cash and short-term deposits with a variety of credit worthy financial institutions and considers the credit ratings of these institutions before investing in order to mitigate against the associated credit risk.

The Group's exposure to credit risk amounted to $1,067,000 (2019: $132,000). Of this amount, $513,000 represents the Group's cash holdings (2019: $117,000).

The directors monitor the utilisation of the credit limits regularly and at the reporting date does not expect any losses from non-performance by the counterparties.

Liquidity risk

In keeping with similar sized mining exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Group monitors its cash and future funding requirements through the use of cash flow forecasts.

The Company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. 

In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. 

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Brazilian Real, US Dollar and the Pound Sterling.

Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations that are denominated in a foreign currency. The Group holds a proportion of its cash in GBP and Brazilian Reals to hedge its exposure to foreign currency fluctuations and recognises the profits and losses resulting from currency fluctuations as and when they arise. The volume of transactions is not deemed sufficient to enter into forward contracts.

The potential impact of a 10% movement in the exchange rate of the currencies to which the Group is exposed is shown below:

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to provide returns for shareholders and to enable the Group to continue its exploration and evaluation activities. The Group has only short-term trade payables and accruals at 31 December 2020 and defines capital based on the total equity of the Group. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares to raise further funds from time to time.

There were no changes in the Company's approach to capital management during the period. The Company is not subject to externally imposed capital requirements.

General objectives, policies and processes

The board of directors has overall responsibility for the determination of the Company's risk management objectives and policies. The overall objective of the board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility.

                Principal financial instruments

The principal financial instrument used by the Company, from which financial instrument risk arises, is related party borrowings.

The Company evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS 8. In the Directors' opinion, the Group only operates in one segment being mining services. All non-current assets have been generated in Brazil.

On 14 August 2019, the Company completed the disposal of Pedra Branca do Brasil Mineracao S/A ('Pedra Branca') to ValOre Metals Corp ('ValOre' or the 'Purchaser') pursuant to the share purchase agreement dated 16 July 2019 ('Share Purchase Agreement'). The subsidiary was reported in the annual report for the year ended 30 June 2019 as a discontinued operation.  Financial information relating to the discontinued operation for the period to the date of disposal is set out below.

a)    Consideration received or receivable

The financial performance and cash flow information presented reflects the operations for the period ending 14 August 2019.

The Company received the final cash payment of CAD$1,000,000 (USD $751,944) and 500,000 Deferred Consideration Shares on 10 February 2020 with a further 500,000 deferred Consideration Shares received on 14 August 2020. As at 31 December 2020, the Company was due to receive the remaining 2,000,000 ValOre common shares over the next 2 years (Deferred Consideration Shares). As at 31 December 2020 the fair value of the Deferred Consideration Shares was determined to be $471,000.

b)    Financial performance and cash flow information

The financial performance and cash flow information presented reflects the operations for the period ending 14 August 2019.

c)    Net assets as at date of sale

The carrying amounts of assets and liabilities as at the date of sale on 14 August 2019 were:

Factors that may affect future tax charges 

Apart from the losses incurred to date, there are no factors that may affect future tax charges.

At the period end, $4,424,000 (2019: $2,870,000) of cumulative estimated unrelieved tax losses arose in Brazil and the United Kingdom, which could be utilised in the foreseeable future.

There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.

Staff costs, including directors' remuneration, were as follows:

Excluding directors, there were no members of staff during the period ended 31 December 2020 (2019: 5). Excluding directors remuneration, staff costs during the period were salaries $nil (2019: $30,381), social security $nil (2019: $8,480), other benefits $nil (2019: $2,409).

The Company acquired shares in the share capital of Fodere Titanium Limited during the financial period for $600,000 (2019: $nil). Fodere Titanium Limited is a United Kingdom registered minerals technology company which has developed innovative processes for the titanium, vanadium, iron and steel industries.

On 14 August 2019 pursuant to the Share Purchase Agreement following the completion of the disposal of Pedra Branca to ValOre, the Company received the initial Consideration Shares in ValOre, totalling 22,000,000 common shares, equating to the Company owning 25.87% of ValOre's then enlarged share capital. As at 31 December 2020 the Company held 17.23% of ValOre's share capital.

ValOre is a Vancouver based company with a portfolio of high-quality uranium and precious metal exploration projects in Canada and Brazil that is listed on the Toronto Stock Exchange ("TSX") Venture Exchange.

During the period, the Company received both the first and second tranche of 500,000 Deferred Consideration Shares in February 2020 and August 2020. The Company will receive the remaining Deferred Consideration Shares totalling 2,000,000 payable in four equal tranches of 500,000. Post the balance sheet date, in February 2021, the third tranche of 500,000 Deferred Consideration Shares was received by the Company. Refer to Note 22.

At the reporting date, the Company held 17.23% interest in ValOre's share capital, however, as Messrs McMaster and De Azevedo are both on the board of directors of ValOre, ValOre is considered an associate. ValOre is a Canadian domiciled company with a reporting period ending on 30 September.

The Company recently changed its accounting reporting period from 30 June to 31 December to align its financial year end to that of its Brazilian subsidiary VTF Mineração Ltda.  Whilst the Company's reporting period differs to that of ValOre, the share of losses from continuing operations of ValOre have been calculated based on the period from acquisition through to 31 December 2020. The quoted market price of ValOre as at 31 December 2020 was CAD $0.30 (US$0.23).

Summarised financial information in respect of ValOre Metals Corp are shown below. ValOre results are reported in Canadian Dollars and have been translated into US Dollars using the appropriate exchange rates.

Accrued income totalling $471,000 relating to the disposal of Pedra Branca being 2,000,000 Deferred Consideration Shares in ValOre with fair value determined to be $471,000 at the balance sheet date.

Under the terms of the Share Purchase Agreement ValOre Metals Corp paid $180,000 upon signing of the binding letter of agreement.

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a meeting of the Company.

In December 2019, as part of the new award of the Director/Consultant Options, all of the individuals concerned, together with the other Directors of the Company who were not receiving new share options surrendered their existing holdings of share options, which in total aggregated 8,000,000 share options. These share options were awarded at the time of the Company's IPO on AIM in June 2017, with an exercise price of 5.5 pence per share option (6.5 US cents), and an expiry date of 31 December 2019. Other carried forward options outstanding in the Company, which in total aggregated 7,250,000, were on the same terms and expired unexercised on 31 December 2019.

Warrants issued in October 2018 of 34,999,996 new ordinary shares and to Consulmet Metals (Pty) Ltd for the consultancy work undertaken of 4,798,091 shares lapsed on 15 October 2020.

Share options granted during the 18-month period ended 31 December 2020 have the following expiry date and exercise prices:

The fair value at grant date is independently determined using an adjusted form of the Black Scholes Model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations and volatilities of the peer group companies. In addition to the inputs in the table above, further inputs as follows:

The model inputs for options granted during the period included:

(a)      options are granted for no consideration and vested options are exercisable for a period of five years after the grant date: 1 December 2019.

(b)      expiry date: 30 November 2024.

(c)      share price at grant date: 1.75 pence.

(d)      expected price volatility of the company's shares: 50%.

(e)      risk-free interest rate: 1.0%.

The details of the subsidiaries of the Company, which have been included in these consolidated financial statements are:

During the period the Company entered into the following transactions with related parties.

Garrison Capital Partners Limited is a related party to the Company due to having directors in common. The balance owed as at 31 December 2020 was $nil (2019: $62,000) as disclosed in note 16.

Lauren McMaster is a related party to the Company due to being married to the Chairman.  At the year-end the amount owed was $nil (2019: $8,000).

FFA Legal Ltda is a related party to the Group due to having a director in common with Group companies. At the year-end they were owed $nil (2019: $nil).

Directors' remuneration is disclosed within note 10.

a)    Deferred consideration shares

On 15 February 2021, the company received the third tranche of 500,000 common shares in ValOre under the terms of the Share Purchase Agreement.

b)    Share placing

On 19 February 2021, Jangada raised £1.25 million (USD$1.75 million) via a placing of 13,888,888 new Ordinary shares of £0.0004 each in the Company at a price of £0.09 per Placing Share through Brandon Hill Capital. As part payment for Brandon Hill Capital's services in relation to the Placing, it has been issued with 694,444 warrants to subscribe for new Ordinary Shares, exercisable at the Placing Price, for a period of three years.

c)     Share disposal

On 24 February 2021, the Company disposed of 2 million of its common shares in ValOre at a price of CAD$0.30 per share, providing Jangada with gross proceeds of CAD$600,000 (USD$477,779). On 5 March 2021, the Company disposed of a further 3.875 million of its common shares in ValOre at a price of CAD$0.30 per share, providing Jangada with gross proceeds of CAD$1,162,500 (USD$917,300). Jangada now holds a total of 10,305,000 ValOre common shares, representing 8.6 per cent of ValOre's current share capital.

The Directors consider that the Company has no single controlling party.

ENDS

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information please visit www.jangadamines.com or contact: