Mila Resources Plc / Index: LSE / Epic: MILA / Sector: Natural Resources

21 December 2021

Mila Resources Plc

("Mila" or "the Company")

Final Results

Mila Resources Plc, a London listed natural resources company, is pleased to present its final results for the year ended 30 June 2021.

Dear Shareholder

We have pleasure in presenting the financial statements for the year ended 30 June 2021.

During the period under review, our primary focus was on the successful conclusion of the acquisition of an initial 30% interest in the Kathleen Valley gold project ("Project") in Western Australia from Trans Pacific Energy Group Pty Ltd ("TPE"). The acquisition, which was successfully delivered post year end in November 2021, will be followed by a staged earn-in process based on success milestones.  We believe that with the initial interest now secured, and a defined development plan being executed to precipitate the transfer of the balance of ownership, Mila is in a strong position to deliver on its objective to become a post-discovery exploration accelerator.

To support this objective, concurrently to the acquisition, Mila completed an oversubscribed fund raise and raised £3.5m before costs. The Company now intends to continue to drill intensively and develop the mineral resource at the Project using funds raised from its shareholders and from the recent placing.

The Mila Board was also further bolstered in November 2021 to reflect our transition into an operating company.  We expanded our team with the inclusion of two experienced executives, Mr Neil Hutchison (Chief Technical Officer) and Mr Lindsay Mair (Non-executive Director). Please join me in welcoming them to the Mila Team. Together, we now believe we have the right management team in place to see the Company to the next stage in its development.

Kathleen Valley Gold Project in Western Australia

The project is located in the prolific Wiluna-Norseman gold belt which hosts several world-class mines owned by a number of premier Australian gold companies including Northern Star and St Barbara.

The Kathleen Valley gold project has been discovered next door and on strike to recent discoveries by ASX listed Bellevue Gold, a company that has made substantial discoveries in the region particularly with the Deacon and Viago extensions of the historic Bellevue mine located 7km south of the Project. In June 2020, Bellevue made a discovery at its Government Well prospect, which is on the western boundary of our Kathleen Valley Project. Bellevue has grown substantially in the last year, and now has a market capitalisation of over A$1.1 billion. In May 2019, TPE commenced drilling at the Project and made its first discovery holes. TPE carried out further drilling in September 2020 with peak gold grades of 13.95 g/t.

Further details on the Kathleen Valley Project can be found in the prospectus on the Mila Resources website http://www.milaresources.com.

Fund Raise - post year end

Concurrently with the acquisition of the Kathleen Valley Project the Company concluded a £3.5m fund raising (before costs) by issuing 145,833,333 new ordinary shares ("Investor Shares") at 2.4p each. The shares carry equal voting rights and rank pari passu for the distribution of dividends and repayment of capital. The Investor Shares each come with a 5-year warrant attached with has an exercise price of 4.8p.

Further details on the Fund Raise can be found in the prospectus on the Mila Resources website http://www.milaresources.com and in Note 24 Subsequent Events in the Notes to the accounts.

Appointment of New Directors - post year end

Neil Hutchison (51 years old) (Chief Technical Officer)

Neil has more than 25 years' experience in the mining industry, working throughout Australia and overseas. He has a track record of mineral discovery, resource and reserve definition, project development, evaluations and acquisitions. Neil was Exploration Superintendent at the Cosmos Nickel Project with Jubilee Mines and was part of the team that discovered the Alec Mairs, Prospero and Tapinos deposits which led to the AUD$3.1 billion takeover of Jubilee Mines by Xstrata in 2007. Neil graduated with First Class Honours in Geology from the University of Southern Queensland and is a member of the Australian Institute of Geoscientists (AIG). He is also a non-executive director of ASX listed Kairos Minerals, a company with a gold project in Western Australia, and Estrella Resources Limited.

Lindsay Mair (63 years old) (Non-Executive Director)

Lindsay is an experienced investment banker with a 30-year career in the City. He qualified as a chartered accountant with Touche Ross (now Deloitte) in 1987. He then worked in the corporate finance departments of various City firms, most recently at SP Angel (which has a broad range of clients in the mining sector). From 2017 until 2019, he was a non-executive director of Kin Group plc, which acquired Bidstack Limited in a reverse takeover, where he assisted with the takeover and a number of fundraisings. He is the Chief Financial Officer of Low 6 Limited, which operates a B2B gamification platform for sports franchises.

For those readers who appreciate more detail, below I have reproduced an extract from the RNS - Readmission to Trading & First Day of Dealings (Issued on the 23^rd November 2021). It is an excellent summation of the transaction; apologies for any repetition from above.

Extract from - Readmission to Trading & First Day of Dealings  (Issued via RNS 23^rd November 2021)

Further to the announcement of 22 November 2021, the board of Mila is pleased to announce the readmission of its entire share capital, being 306,331,057 ordinary shares of £0.01 each ("Ordinary Shares") to the Official List (by way of a Standard Listing under Chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's Main Market for listed securities (the "Readmission"). The Company's Readmission follows the acquisition of an initial 30% interest in the Kathleen Valley gold project and the exploration licence E36/876 in the Kathleen Valley (satisfied by the issue of 83,543,197 Ordinary Shares at a price of £0.024 per Ordinary Share,£300,000 in cash consideration, the issue of 15,448,370 Ordinary Shares to Diversified Minerals Pty Ltd ("DM") pursuant to the DM loan agreement dated 4 February 2021, and by novating the £229,393 Series 3 Loan Notes from New Generation Minerals Limited to the Company which converts to 12,744,032 Ordinary Shares on Readmission.). In addition, the Company has granted 242,264,111 warrants, on the terms and as set out in the Prospectus dated 29 October 2021 to, the directors, certain advisors, investors and shareholders, all of which are due to expire on 31 December 2026.

Overview

Readmission to the Official List following the acquisition, by way of a reverse takeover, of an initial 30% interest in exploration licence E36/876 in the Kathleen Valley (the "Licence") and the Kathleen Valley gold project (the "Project") (collectively the "Acquisition") in Western Australia - with the intention to acquire an additional 50% interest in the Licence and the Project in two further tranches:

·               Maiden gold discovery 2019 at Kathleen Valley

·              'Tip of the iceberg': initial 21,000oz gold JORC Inferred resource defined and 145,000-280,000oz gold JORC Exploration Target from only 2,160m RC drilling to date

·               The Project is located in the Wiluna-Jundee belt and adjacent to Bellevue Gold

·               The region hosts some of the largest gold projects in Australia

·              Abundance of mining infrastructure in vicinity that may provide a number of commercial development routes without the requirement to build a stand-alone processing plant

·               World class province for mining investment

·               First drill programme of 11,000m - intended to provide a pipeline of high impact news flow

·               Independent valuation of approximately £15,000,000 (based on a 100% interest in the Project)

·             Raised gross proceeds of £3,500,000 through a Placing and Subscription at an offer price of 2.4p        per share to support a comprehensive exploration and drilling programme at the Project, including the proposed first drill programme of 11,000m, and for further working capital

·             Appointment of two new directors to execute the Company's operational and corporate objectives - Neil Hutchison as Chief Technical Officer and Lindsay Mair as Non-Executive Director

Further Information

The Company was established to undertake an acquisition of a company or project in the natural resources sector. The Company was admitted to listing on the Official List of the FCA by way of a Standard Listing and to trading on the London Stock Exchange plc's Main Market on 7 October 2016 ("Initial IPO").

On 16 November 2020, the Company announced it had signed a non-binding Heads of Terms with New Generation Minerals Limited ("NGM"), a mining exploration company with mining exploration projects in Western Australia and Argentina.

The Company subsequently entered into a conditional agreement (the "Acquisition Agreement") to acquire an initial 30% interest in the Kathleen Valley gold project ("Kathleen Valley Project" or the "Project") and the exploration licence E36/876 in the Kathleen Valley ("Kathleen Valley Licence") from Trans Pacific Energy Group Pty Ltd ("TPE"), a wholly owned subsidiary of NGM, for consideration of £2,812,500 by way of issuing 83,543,197 new Ordinary Shares at a price of £0.024 per Ordinary Share in the Company (the "Initial Consideration Shares") to TPE, £300,000 in cash consideration, by allotting and issuing 15,448,370 new Ordinary Shares to Diversified Minerals Pty Ltd ("DM") pursuant to the DM Loan Agreement, and by novating the £229,393 Series 3 Loan Notes from NGM to the Company which will convert to 12,744,032 new Ordinary Shares on Readmission. On Readmission, the Company will list the Initial Consideration Shares and the Ordinary Shares issued pursuant to the Series 3 Loan Notes and the DM Loan Agreement.

Post-Readmission, and conditional on the successful completion of 11,000 metres drilling at Kathleen Valley, the Company will have a right to purchase a further 25% interest in the Kathleen Valley Project and the Kathleen Valley Licence from TPE for consideration of £2,343,750 by way of issuing 97,656,750 new Ordinary Shares at a price of £0.024 per Ordinary Share in the Company (the "Second Consideration Shares") to TPE. The Company will then seek to list the Second Consideration Shares.

Finally, and conditional on a second spend by the Company of not less than £1,500,000, the Company will have a right to acquire the remaining 25% interest in the Kathleen Valley Project and Kathleen Valley Licence from TPE for consideration of £2,343,750 by way of issuing 97,656,750 new Ordinary Shares in the Company at a price of £0.024 per Ordinary Share (the "Third Consideration Shares") to TPE. On completion of the allotment, the Company will also seek to list the Third Consideration Shares. There is no guarantee that the Company will issue the Second Consideration Shares and/or the Third Consideration Shares, as they are dependent on the aforementioned conditions being met in relation to the Project and pursuant to the Acquisition Agreement.

Kathleen Valley

Kathleen Valley lies approximately 20 kilometres south of BHP's Mount Keith nickel mine and within the Mount Keith-Kathleen Valley-Leinster minerals belt. Kathleen Valley is located close to the main goldfield highway and the electrical grid, and there are several gold processing plants in the district. It is approximately 30 kilometres north of the town of Leinster, and close to pending and historical mines of BHP, Western Areas (nickel), Bellevue Gold (gold/copper) and Liontown Resources (lithium/tantalum).

Gold has been mined in the area since the 1890s, with most of the early production coming from the Kathleen Valley (4km north of the Kathleen Valley Project area) and Sir Samuel (Bellevue) (5km south

of the Kathleen Valley Project area) mining centres.

A review of historic exploration work completed within the project area has indicated that the majority of exploration has been for gold and nickel. The most comprehensive work was completed by Barrick Gold and joint venture partners between 1992 and 2003. This exploration work largely focused on gold and included rock chip sampling, widespread auger soil sampling and RC drilling testing of some gold targets.

TPE has so far completed 12 RC drillholes. Drilling commenced in April 2019 with an initial two holes completed which included a discovery hole of 4g/t of gold. TPE recommenced drilling in September 2020 with a further 10 holes drilled. A total of 2,160m was drilled. The first two holes were drilled by Jarrahfire and the remaining 10 by Ausdrill Ltd. Rig samples were collected on one-metre intervals after going through a rig mounted cyclone and cone splitter.

Areas where no mineralisation was identified were sampled with four-metre composites. Areas of interest were sampled on one-metre intervals. Four-metre composites were re-sampled, if required, by spear sampling the appropriate one-metre sample.

Strategy and Work Programme

The strategy of the Company is to deploy existing cash resources and the net proceeds of the placing and subscription towards exploration work at the Kathleen Valley Project. The Company intends to commence with an exploration drilling programme immediately following Readmission on the current target and proposes to drill new targets in the Northern portion of the Project (further details are outlined in the CPR in Part V of the Prospectus which can be found on the Company's website at www.milaresources.com).

The Company intends to seek to establish an updated JORC Mineral Resource following the drilling programme assuming further gold has been discovered. The overall strategy of the Company is to identify mineral resources sufficient to develop the Project into production. The Board believes that there are a number of development routes given the abundance of mining infrastructure locally, therefore, it does not envisage the requirement to build its own plant to process the mineral ore but rather proposes to enter into arrangements including joint ventures, toll treatment or the disposal of the Project to a mining company in the region.

The Company's initial target in the Kathleen Valley tenement will be to drill test the Inferred Mineral Resource Estimate and JORC Exploration Target. To further define the potential of the Inferred Mineral Resource Estimate and JORC Exploration Target, with the aim of attempting to progress the Inferred Mineral Resource in size and confidence level in the Mineral Resource Estimate, the Board and CSA Global (the consultant that completed the Competent Persons Report on Kathleen Valley) recommend the following:

·    To drill approximately 25 to 35 suitably spaced new holes with reserves circulation drilling and diamond tails where appropriate, with 8 to 10 of the new holes drilled to a depth of 400 meters. The new holes should both:

·    infill within the existing Inferred Mineral Resource Estimate and JORC Exploration Target to increase confidence levels in the continuity of mineralising;

·    seek to extend the mineralising outside the current Inferred Mineral Resource Estimate and JORC Exploration Target area;

·    To complete DHEM on selected holes to assist in guiding the deeper and extensional drilling; and

·    To conduct specific gravity measurements and metallurgical test work on the diamond drilling core to educate any potential future Mineral Resource Estimate.

Furthermore, the 2019 regolith shallow auger sampling campaign identified two additional structural gold trends in the north west and north of the Exploration Target. CSA Global recommends that these should also be explored and could cost efficiently be done in conjunction with the work above.

CSA Global recommends NGM complete the following:

·    Drill approximately 6 to 10 suitably spaced new holes with reverse circulation drilling to a depth of 200 metres; and

·    DHEM be completed on selected holes to identify below-surface anomalies.

The second-stage investigation of the Project will focus on more detailed geological and Geochemical studies of targets for both mineralisation styles defined during the first stage, and on drilling (both percussion and diamond) to more fully define the potential for viable mineralisation.

The mineral property held by the Company is considered to be an "exploration project" that is intrinsically speculative in nature. The Project is at the "advanced exploration" stage. CSA Global considers, however, the Project to be of sound technical merit and to be sufficiently prospective, subject to varying degrees of exploration risk, and to warrant further exploration and assessment of its economic potential, consistent with the proposed programme.

The Company has prepared staged exploration and evaluation programmes, specific to the potential of the Project, which are consistent with the budget allocations, and warranted by the exploration potential of the Project. CSA Global considers that the relevant areas have sufficient technical merit to justify the proposed programmes and associated expenditure.

Financial
Funding

At the year end the Company was funded through investment from its Shareholders following the Company's successful Standard Listing IPO onto the London Stock Exchange in 2016, raising £1.05 million before costs. During the year the Company raised £0.3m, before costs, via convertible loan notes. Post year end the Company completed an equity raise £3.5m (before Costs). It did this concurrently with the Kathleen Valley acquisition. The new funding will allow the Company to fund operations and meet its current exploration plans for at least the next 12 months.

Expenditure

During the year, the Company has continued its fiscal discipline with the Company continuing to maintain low overheads. Any monies spent on business development opportunities has only occurred after a particular project has passed our initial technical review.

Current Assets

At 30 June 2021, the Company was not owed any money (2020: £85,849). During the year ended 30 June 2020, the Company was the holder of a secured loan provided to an RTO target E-Tech Metals Limited ('E-Tech'), which was fully repaid in November 2020.

Liquidity, cash and cash equivalents

At 30 June 2021, the Company held £329,628 (2020: £186,316) of cash and cash equivalents, all of which are denominated in pounds sterling.

Mark Stephenson

Executive Director

21 December 2021

Strategic Report

Understanding our business

The Company was incorporated on 3 June 2015, with the view of pursuing an initial public offering of its securities onto the London Stock Exchange through a Standard Listing to raise the necessary funds required for the execution of the business strategy, which is to acquire a business or asset. More specifically, the strategy is to act as a post discovery accelerator, where the Company identifies target(s) that have already had an early-stage geological discovery. Additional targets will be sought, however, the current priority is to develop and unlock the potential in the Kathleen Valley Gold Project.

This IPO was completed during 2016, with the Company successfully raising £1,050,000 before costs with Admission to the Main Market of the London Stock Exchange in October 2016. Since the IPO the Company has been engaged in searching for and evaluating specific targets (business or asset) that were compatible with the Company's Business Strategy. During this time suitable businesses and assets were initially identified, however, prior to the recently completed transaction on Kathleen Valley, these other proposed transactions were abandoned for specific reasons relating to each individual proposed transaction.

The impact of the Covid-19 pandemic on global supply chains is a well-documented phenomenon which has affected many industries globally, including the gold exploration sector in Western Australia. As a result, the lead times for the equipment and consumables required have lengthened over the last 12 months. To manage this risk, it is important that key equipment and materials are ordered on a timely basis to minimise the potential for supply chain disruption to drilling operations. The directors are confident that with the forward planning already place the current and future impacts of supply disruption can be held to a minimum.

Key performance indicators

It is the Board's intention, in the near term,  to identify appropriate key performance indicators following the recent successful acquisition of the Kathleen Valley Gold Exploration Project in Western Australia. The transaction was completed and ratified by the Mila shareholders on Monday the 22^nd of November 2021. Further details on the transaction can be found in Statement from the Board.

Business review

For a review of developments in the year, please see page 4, the "Statement from the Board".

Principal risks and uncertainties

The principal risks currently faced by the Company relate to:

Acquiring Less than Controlling Interests

The Company may acquire either less than whole voting control of, or less than a controlling equity interest in, a target, which may limit the Company's operational strategies and reduce its ability to enhance Shareholder value.

Inability to Fund Operations Post-Acquisition

The Company may be unable to fund the operations post acquisition of the target business if it does not obtain additional funding, however, the Company will ensure that appropriate funding measures are taken to ensure minimum commitments are met. The current global pandemic, Covid-19, may make obtaining of sufficient funds more challenging.

The Company's Relationship with the Directors and Conflicts of Interest

The Company is dependent on the Directors to identify potential acquisition opportunities and to execute an acquisition.

The Directors are not obliged to commit their whole time to the Company's business; they will allocate a portion of their time to other businesses which may lead to the potential for conflicts of interest in their determination as to how much time to assign to the Company's affairs. Following the successful transaction, it has been proposed that the Company establishes a Conflicts Committee. The role of the Conflicts Committee is to assist the Board in monitoring actual and potential conflicts of interest under the definitions of the Companies Act 2006. Under the Companies Act 2006 Directors are responsible for their individual disclosures of actual or potential conflict. To follow best practice, the Conflicts Committee holds discussions where appropriate, with the Company's UK lawyers.

Risks Inherent in an Acquisition

Although the Company and the Directors will evaluate the risks inherent in a particular target, they cannot offer any further assistance that all of the significant risk factors can be identified or properly assessed. Furthermore, no assurance can be made that an investment in Ordinary Shares in the Company will ultimately prove to be more favourable to investors then a direct investment, if such an opportunity were available, in a target business.

Reliance on External Advisors

The Directors expect to rely on external advisors to help identify and assess potential and future acquisitions and there is a risk that suitable advisors cannot be placed under contract or that such advisors that are contracted to fail to perform as required.

Reliance on Income from the Acquired Activities

Following an acquisition, the Company may be dependent on the income generated by the acquired business or from the subsequent divestment of the acquired business to meet the Company's expenses. If the acquired business is unable to provide the sufficient amounts to the Company, the Company may be unable to pay its expenses or make distributions and dividends on the Ordinary Shares.

For the further commentary on the Company's risk management policies.

Gender analysis

A split of our employees and directors by gender and average number during the year is shown below:

Corporate social responsibility

We aim to conduct our business with honesty, integrity and openness, respecting human rights and the interests of our shareholders and employees. We aim to provide timely, regular and reliable information on the business to all our shareholders and conduct our operations to the highest standards.

We strive to create a safe and healthy working environment for the wellbeing of our staff and create a trusting and respectful environment, where all members of staff are encouraged to feel responsible for the reputation and performance of the Company.

We aim to establish a diverse and dynamic workforce with team players who have the experience and knowledge of the business operations and markets in which we operate. Through maintaining good communications, members of staff are encouraged to realise the objectives of the Company and their own potential.

The Board would like to take this opportunity to thank our shareholders, Board and advisors for their support during the year.

Section 172 Statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's stakeholders, however it should be noted that because Mila is a small "shell" company; with only two directors; no employees and the impacts of its activities is limited. This statement forms part of the strategic report. However, following the successful transaction in November 2021 this will be reconsidered during the current year.

When making decisions the Company takes into account the impact of its activities on the community, the environment and the Company's reputation for good business conduct. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term.

The Directors are fully aware of their responsibilities to promote the success of the Company in accordance with section 172 of the Companies Act 2006. The Board continuously reflects on how the Company engages with its stakeholders and opportunities for enhancement in the future. As required, the Company's external lawyers and the Company Secretary will provide support to the Board to help ensure that enough consideration is given to issues relating to the matters set out in s172(1)(a)-(f).

The Board regularly reviews the Company's principal stakeholders and how it engages with them. This is achieved through information provided by management via Regulatory News Service announcements, Corporate Presentations, and Shareholder Meetings and teleconferences and also by direct engagement with stakeholders themselves.

We aim to work responsibly with our stakeholders, including suppliers. The key Board decisions made in the year and post year end are set out below:

The Directors are monitoring the environmental position as the project continues and will provide disclosure when appropriate.

Finally, to you, our shareholders, thank you for your trust and support. I hope you stay safe and well and I look forward to meeting you face to face at a Company event when our world returns to what will be a 'new normal'.

This report was approved by the board on 21 December 2021 and signed on its behalf.

Mark Stephenson

Chief Executive Officer

Statement Of Comprehensive Income

For The Year Ended 30 June 2021

The above results relate entirely to continuing activities.

The accompanying notes form part of these financial statements.

Statement Of Financial Position

For The Year Ended 30 June 2021

The accompanying notes form part of these financial statements.

These financial statements were approved by the Board of Directors on 21 December 2021 and were signed on its behalf by:

______________________________

Lee Daniels

Executive Director

Company number: 09620350