Notes to the condensed interim financial statements

1.        General information

The principal activity of the Company and its subsidiaries (the Group) is in mineral exploration and the development of appropriate exploration projects. The Company's registered office is at Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF.  Its shares are listed on the Main Market of the London Stock Exchange under the Standard Segment of the Official List under the ticker "LSE:CMRS".

2.        BASIS of PREPARATION

These condensed interim financial statements are for the six months ended 30 June 2021 and have been prepared in accordance with the accounting policies adopted in the Group's most recent annual financial statements for the year ended 31 December 2020, except for the new accounting policy noted below.

Share-based compensation

The Group issued warrants in the period which were accounted for as equity settled share based payment transactions with employees.  The fair value of the employees services received in exchange for these warrants is recognised as an expense in the profit and loss account with a corresponding increase in equity in the Warrants Reserve.  As there are no vesting conditions for these warrants the expense was recognised immediately and will not be subsequently revisited.    Fair value is determined using Black-Scholes option pricing models.

Share-based payments

The Group has two types of share based payments other than employee compensation.

Warrants issued for services rendered which are accounted for in accordance with IFRS 2 recognising either the cost of the services if it can be reliably measured or the fair value of the warrants (using Black-Scholes option pricing models).

Warrants issued as part of share issues have been determined as equity instruments under IAS 32.  Since the fair value of the shares issued at the same time is equal to the price paid, these warrants, by deduction are considered to have been issued at nil value.

The Group have chosen to adopt IAS 34 "Interim Financial Reporting" in preparing this interim financial information.  They do not include all the information required in annual financial statements, and  they should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020 and any public announcements made by Caerus Mineral Resources Plc ("CMR") during the interim reporting period.

The business is not considered to be seasonal in nature.

The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it operates.  The functional currency of the parent company CMR is Pounds Sterling (£) as this is the currency that finance is raised in.  The functional currency of NCC, TDL and PRL is the Euro as this is the currency that mainly influences labour, material and other costs of providing services. The Group has chosen to present its consolidated financial statements in Pounds Sterling (£), as the Directors believe it is a more convenient presentational currency for users of the consolidated financial statements.   Foreign operations are included in accordance with the policies set out in the Annual Report and Accounts.

The condensed interim financial statements have been approved for issue by the Board of Directors on 27 September 2021. 

New standards, amendments and interpretations adopted by the Group.

During the current period the Group adopted all the new and revised standards, amendments and interpretations that are relevant to its operations and are effective for accounting periods beginning on 1 January 2021.  This adoption did not have a material effect on the accounting policies of the Group.

New standards, amendments and interpretations not yet adopted by the Group.

The standards and interpretations that are relevant to the Group, issued, but not yet effective, up to the date of these interim Financial Statements have been evaluated by the Directors and they do not consider that there will be a material impact of transition on the financial statements.

Going concern

The condensed interim financial statements have been prepared on the assumption that the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the twelve months from the date of approval of the condensed interim financial statements.

Following the review of ongoing performance and cash flows, the Directors have a reasonable expectation that the Group has adequate resources to continue operational existence for the foreseeable future. The Board have also considered the consequences of Covid-19 and other events and conditions, and it has determined that they do not create a material uncertainty that casts significant doubt upon the entity's ability to continue as a going concern.

Risks and uncertainties

The Directors continuously assess and monitor the key risks of the business. The key risks that could affect the Group's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's most recent annual financial statements for the year ended 31 December 2020.

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Group's most recent annual financial statements for the year ended 31 December 2020.  The nature and amounts of such estimates have not changed during the interim period.

3.        ADMINISTRATIVE EXPENSES

Current period expenses include legal costs of £86,849, audit fees of £32,830, regulatory fees of £25,351, foreign exchange costs of £19,747, Directors fees of £77,669 and share based payment charges for warrants of £69,388.  These costs were significantly increased due to the process of Listing.

4.        INTANGIBLE ASSETS

The intangible assets held by the Group increased primarily as a result of the acquisition of PR Ploutonic Resources Limited.   See note 5 for further information.

5.        ACQUISITION OF SUBSIDIARY

On 11 June 2021 CMR acquired 100% of the issued share capital in PR Ploutonic Resources Ltd ("PRL"), an exploration and production of copper, gold and other minerals company, for consideration of £750,000.  The acquisition provides CMR with the opportunity to expand its mineral exploration programme.

On acquisition, the Company paid a purchase price of £750,000 which was satisfied by the issue of consideration shares. The consideration shares were fair valued, at the Volume Weighted Average Price ("VWAP") based on 30 trading days following the announcement of the acquisition on 6 April 2021.

The amounts recognised in respect of the identifiable assets acquired and liability assumed as a result of the acquisition are as follows:

Under IFRS 3, a business must have three elements: inputs, processes and outputs.  PRL is an early stage exploration company and has no mineral reserves and no plan to develop a mine.  PRL does have titles to mineral properties but these could not be considered inputs because of their early stage of development.  PRL has no processes to produce outputs and has not completed a feasibility study or a preliminary economic assessment on any of its properties and no infrastructure or assets that could produce outputs.  Therefore, the Directors conclusion is that the transaction is an asset acquisition and not a business combination.  The fair value adjustment to intangible assets of £670,482 represents the excess of the purchase consideration of £750,000 over the excess of the net assets acquired (net assets of £79,518) and a deferred tax liability of £83,810.

During the period since acquisition,  PRL contributed a loss of £nil to the Group. If the acquisition had occurred on 1 January 2020, consolidated pro-forma loss for the half-year ended 30 June 2021 would have been £80,166.

6.            SHARE CAPITAL AND SHARE PREMIUM

On 19 March 2021, the Company completed a placing of 21,000,000 new Ordinary shares at 10p, a Subscription Agreement for an aggregate 1,500,000 new Ordinary Shares at 10p and issued a further 4,000,000 shares to EV Metals Limited in return for a further £400,000 investment in the Company.

On 11 June 2021, the Company issued 3,311,258 new Ordinary shares of £0.01 each at a deemed price of £0.23 per share to the owners of PRL as part of the consideration for the acquisition of said company.  

7.            WARRANTS

The Group has issued the following warrants, which are still in force at the balance sheet date.

The Founder and Seed/Investor warrants have been determined as equity instruments under IAS 32 and as such have been issued at nil cost.

The Broker warrants have been fair valued at £17,797 in accordance with IFRS 2 and are measured at the fair value of the services received. This amount is attributable to the cost of shares issued and therefore has been accounted for in the Share Premium reserve.

The remaining warrants are valued in accordance with IFRS 2, as equity settled share based payment transactions.  £51,158 has been recognised as the fair value of employee compensation and £18,230 as the fair value of Broker Introduction services received during the period.

8.            EARNINGS PER SHARE

The calculation for basic earnings per Ordinary Share is based on the profit after income tax attributable to equity Shareholder for the period and is as follows:

Earnings per Ordinary share are calculated using the weighted average number of Ordinary shares in issue during the period.  A loss was made during the period and diluted EPS are therefore equal to undiluted EPS.

9.         RELATED PARTY TRANSACTIONS

During the half-year ended 30 June 2021, CMR acquired PRL, one of the owners of this company is the Director Andrew Daniels who was issued 1,931,457 shares, fair valued at £444,235 for his 58.33% ownership in this company.

10.       SUBSEQUENT EVENTS

On 9 August 2021, the Company announced the completion of its acquisition of GC Gold Mines (Cyprus) Ltd ("GMCL").  This was acquired for a total cash consideration of £300,000, which was funded through the disposal of the Black Pine nickel-cobalt project and associated licences as announced on 29 July 2021.

On 22 September 2021, the Company announced a proposed Placing of up to 7.2 million shares at a price of 20p per ordinary share to raise £1.44m.  A parallel subscription of 300k shares to raise £60k has also been completed with a single subscriber under the same terms and condition as the Placing.  For every 2 Placing and Subscription shares a warrant will be issued, exercisable for two years from completion at a price of 30p per new ordinary share.