Announcement PDF RNS Number : 2036F Fulcrum Metals PLC 23 September 2024 The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain. Fulcrum Metals plc / EPIC: FMET / Market: AIM / Sector: Mining 23 September 2024 Fulcrum Metals plc ("Fulcrum"or the "Company" or the "Group") Unaudited interim results for the six months to 30 June 2024 Fulcrum Metals plc (LON: FMET), a company focused on mineral exploration and development in Canada, announces its unaudited consolidated interim results for the six months to 30 June 2024. Corporate and Operational Highlights: · Continued the strategic shift of the Company into a sustainable gold tailings processing business. · Commenced phased programme at the Teck-Hughes gold tailings project to evaluate the efficiency of the Extrakt Processing Solutions LLC ("Extrakt") technology in recovering gold and other by-products: o Phase 1 results achieved exceptional gold recovery rates of up to 59% by using Extrakt's technology. o Optimisation underway to achieve targeted recovery rates above 60%. · Entered into option agreement to acquire 100% of the Sylvanite gold tailings project in Kirkland Lake, Ontario, with an estimated 67,000 ounces of gold in tailings. o Commenced phased programme at the Sylvanite gold tailings project to evaluate the efficiency of Extrakt's technology in recovering gold and other by-products. · Tully Gold project now permitted with drill ready exploration targets. Financial Highlights: · For the six months to 30 June 2024("H1 2024") the Company reported a pre-tax loss of £514,654 (the six · The Company's cash balance as at 30 June 2024 was £113,582 (H1 2023: £1,268,202). · Basic loss per share of 0.010p (H1 2023: loss of 0.030p per share). · The Company generated no revenue during the period. months to 30 June 2023 ("H1 2023"): pre-tax loss of £1,167,903). Post Period End Events: · Closed option agreement for the sale of the Group's uranium projectsfor a value of up to CA$3.36 million. · Announced new equity financing commitments of approximately £800,000 at 8p per share including investor subscriptions of approximately £643,500, conversion of supplier fees of £42,000 and proposed Directors' subscriptions totalling £114,500. Ryan Mee, Chief Executive Officer of Fulcrum, commented: "Our journey over the last six months has been transformative as we focus on unlocking the untapped potential within mining tailings in Canada. The promising results from the first phase of our programme at Teck-Hughes highlights the potential effectiveness of Extrakt's technology and sets the stage for sustainable gold recovery and long-term value creation for the Group's shareholders. By strategically expanding our portfolio and divesting non-core assets, we are accelerating our path to revenue and positioning Fulcrum as a leader in environmentally responsible mining practices. This acceleration has resulted in a need to access the capital markets for additional financing. We are pleased to have raised the additional equity financing to advance the Group's updated tailings strategy, which includes proposed subscriptions of £114,500 from Directors, to take us to the next stage of our development. I am excited for the future and confident in our ability to deliver material value for our shareholders." Chairman's Statement I am pleased to present our interim results for the period ending 30 June 2024; a transformative period for Fulcrum as we continue to evolve our business model from a pure exploration and development company to a strategic focus on tailings processing that will utilise innovative technology to extract metals in a sustainable way. Notwithstanding the strategic shift, the Group's focus remains on the development of mineral resources in Ontario, Canada. The Group's goal is to create a sustainable and profitable solution to one of mining's most persistent environmental challenges: the management and remediation of historical mining tailings, whilst recovering the valuable metals and minerals they often contain. Strategic Shift and Rationale Historically, Fulcrum has been dedicated to the exploration and development of mineral resources; a journey that often spans over a decade before generating revenue. While our exploration projects, including the uranium projects in Saskatchewan, which we successfully divested post the period end, have considerable potential, the Board of Fulcrum recognised the need to accelerate the Company's path to revenue generation which led to our strategic decision to pivot towards the reclamation and processing of mining tailings in order to extract value from what has long been considered waste. To this end, we announced mining option agreements to acquire 100% of the Teck-Hughes gold tailings project ("Teck-Hughes) in November 2023, and the Sylvanite gold tailings project ("Sylvanite") in April 2024. The projects contain millions of tons of tailings from the significant former producing Teck-Hughes and Sylvanite mines, which are strategically located just 3km apart and within the prolific Kirkland Lake gold camp, Ontario, Canada. Since announcing the acquisition of Teck-Hughes in November 2023 we have been advancing discussions with Extraktto license its proprietary non-toxic separation technology which extracts metals from tailings without the use of cyanide. The licencing of the Extrakt technology is usually agreed on a project basis following the completion of phased testing and study agreements. We entered into these phased testing and study programs with Extrakt on Teck Hughes in January 2024 and Sylvanite in June 2024. The initial Extrakt leaching test work at Teck-Hughes has achieved excellent initial gold recovery rates of 59.4%, which is far beyond previous cyanide leach testing recovery rates of approximately 30% at Sylvanite. This demonstrates the applicability of the Extrakt technology to our projects and our wider aspirations. The company is continuing term sheet stage discussions with Extrakt on a framework for gold tailings licence exclusivity for the major Timmins and Kirkland Lake gold camps that has produced in excess of 110 million ounces of gold to date. The environmental and social benefits of remediating historical tailings as well as the considerable size of the market opportunity were also key drivers in our decision to change strategy. Tailings management is a major challenge in the mining industry, with significant environmental implications. In Canada alone it is estimated that the Government is faced with a growing liability of over CA$10 billion to clean-up active and historic mine waste. Meanwhile, Natural Resources Canada estimates that there is approximately CA$10 billion of precious metals contained in tailings. An important outcome from reprocessing tailings is the removal of heavy metals and the cleaning up and reclamation of the tailings areas to provide positive opportunities for land to be repurposed. By seeking to transform waste into a valuable resource, we are not only addressing a critical environmental issue but also positioning Fulcrum as a leader in sustainable mining practices. In line with our evolved strategy, we have successfully divested our Saskatchewan uranium assetsfor a value of up to CA$3.36 million, allowing us to focus more resources on the tailings opportunity and our other gold exploration projects. Importantly, we have retained an option to benefit from any future upside potential in the uranium assets which ensures that our shareholders remain positioned to capture additional value from this divestment, whilst retaining two drill ready gold projects in Big Bear and Tully, which are ready for growth, discovery and expansion when funding allows, or possible joint ventures or divestment if appropriate opportunities arise. Ourentry into the tailings business diversifies our portfolio and reduces the inherent risks associated with longterm exploration projects. By entering into joint venture partnerships over our current portfolio of assets and, where applicable, divesting our non-core assets, we further mitigate these risks while enhancing our capabilities and market reach. The Company remains in advanced discussions with Extrakt with regards to the terms of the exclusive licencing agreement of its gold tailings processing technology in Timmins and Kirkland Lake, two significant gold producing regions in Canada. Discussions on plans to establish an Extrakt technology testing facility in Timmins, which would provide important localised testing capability for any tailing project and possible commercial opportunities, are also ongoing. Finally, I would like to thank Clive Garston, who stepped down as Non-Executive Chairman in June 2024, for his contribution to Fulcrum. Clive played an important role at Fulcrum, helping the company successfully navigate to a quoted company on AIM and oversaw the company evolving from a junior exploration company to a junior exploration and development company. The Company has identified a proposed replacement Non-Executive Chairman and will update the market on this appointment in due course. The Company has worked resolutely to set in motion an ambitious and exciting pathway for all shareholders and I thank all stakeholders of the Company for their support and dedication. Alan Mooney Interim non-executive Chairman CEO Statement Operational Highlights · Teck-Hughes: Significant progress was made at the Teck-Hughes gold tailings project, where the phased evaluation of Extrakt's proprietary non-toxic separation technology delivered exceptional initial results. Phase 1 demonstrated gold recovery rates of up to 59%, with ongoing optimisation aimed at exceeding 60% recovery. This marks a critical step in validating the commercial viability of our tailings processing approach. · Sylvanite Gold: In April 2024, Fulcrum entered into an option agreement to acquire 100% of the Sylvanite gold tailings project, which contains an estimated 67,000 ounces of gold in tailings. A phased evaluation programme is now underway to assess the efficiency of Extrakt's technology, further expanding our presence in the prolific Kirkland Lake gold camp. · Uranium Project Divestment: Post-period, Fulcrum successfully completed the sale of its Saskatchewan uranium assets, generating funds to support the Company's strategic pivot towards tailings processing. This divestment has eliminated a significant cost base while maintaining potential upside through a retained interest in future developments. · Big Bear and Tully Gold Exploration Projects: These projects continue to offer significant exploration potential and remain an important part of our longer-term growth strategy. The Tully Gold project is now fully permitted and drill-ready for expansion of the existing 107k ounce 43-101 compliant gold resource in the significant Timmins-Porcupine gold camp that has produced in excess of 70Moz gold. At Big Bear we have established high priority geophysical exploration targets in addition to an open 3km gold corridor and delineated initial drill targets for discovery in the Schreiber-Hemlo greenstone belt that hosts the significant 21Moz+ Hemlo gold deposit. Future plans for the Company's gold projects will largely depend on funding being available or possible strategic partnerships. · Focus on Sustainable Operations: In alignment with our commitment to sustainability, and the exceptional gold recovery rates demonstrated by the Extrakt technology, we are currently discussing terms on exclusivity of the licencing of the Extrakt technology for gold tailings in Timmins and Kirkland Lake in addition to exploring plans to establish an Extrakt technology testing laboratory in Timmins. Completion of either or both initiatives would substantially increase the presence and capability in scaling opportunities for Fulcrum; and would position Fulcrum at the forefront of the application and adoption of Extrakt's technology in the Timmins and Kirkland Lake gold tailings. It would also provide an additional commercial opportunity through local testing capability for Fulcrum non-operated projects. By its very nature, remediating historical tailings has the potential to clean up and repurpose otherwise polluted land. By seeking to transform mining waste into a valuable resource, we are not only addressing a critical environmental issue but also positioning Fulcrum as a leader in sustainable mining practices. These milestones reflect Fulcrum's focus on operational excellence, strategic growth, and the development of sustainable mining solutions. Financing Post period on 13 September 2024, Fulcrum announced successful equity financing commitments of approximately £800,000 at 8p, including investor subscriptions of approximately £643,500, conversion of supplier fees of £42,000, proposed Director subscriptions of £89,761 and proposed conversion of accrued Director salaries of £24,731. The proceeds will primarily be used to accelerate testing and onsite evaluation programmes at the Teck-Hughes and Sylvanite gold tailings projects and for the Group's working capital needs. Outlook As we move forward, our focus is on executing our tailings processing strategy. We are committed to developing Fulcrum as a revenue generating business while upholding our values of sustainability and innovation. The divestment of non-core assets, like the Saskatchewan uranium project, has provided us with greater financial flexibility to invest in our refined strategy and to pursue opportunities that align with our vision. We believe this strategic pivot will create long-term value for our shareholders by accelerating our path to profitability and positioning Fulcrum as a leader in the reclamation and processing of mining tailings in Canada. The progress we have made so far gives us confidence in our ability to deliver on these goals, and we are excited about the future of the Company. I would like to take the opportunity to thank management and shareholders for their support and shared vision of what we are seeking to achieve and look forward to updating them on our progress. Ryan Mee Chief Executive Officer For more information, please visitwww.fulcrummetals.comor contact the following: Fulcrum Metals plc Ryan Mee, Chief Executive Officer Allenby Capital Limited Via St Brides Partners Limited (Nominated +44 (0) 203 328 5656 Adviser) Nick Athanas / George Payne Clear Capital Markets Limited (Broker) +44 (0) 203 869 6081 Bob Roberts St Brides Partners Ltd (Financial PR) Ana Ribeiro / Paul Dulieu +44 (0) 207 236 1177 UNAUDITED INTERIM FINANCIAL INFORMATION ON FULCRUM METALS PLC Consolidated Income Statement of Comprehensive Income for the six months ended 30 June 2024 Notes Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June '24 30 June '23 31 Dec '23 £ £ £ - - - (469,730) (496,660) (985,684) - (646,708) (646,708) Operating Loss (469,730) (1,143,368) (1,632,391) Finance Cost (44,924) (82,007) (138,162) - 57,472 56,131 (514,654) (1,167,903) (1,714,423) - - - (514,654) (1,167,903) (1,714,423) 2,681 (15,248) (7,514) Turnover Administration expenses Exceptional item 2 Finance Income Loss before taxation Tax on loss Loss for the financial period Foreign currency translation of foreign subsidiaries Total comprehensive loss for the financial period Earnings per share 10 (511,973) (0.010) (1,183,151) (1,721,937) (0.030) (0.037) Basic and diluted loss per share (pence per share) Consolidated Statement of Financial Position as at 30 June 2024 Unaudited Notes Assets Non-current assets Exploration & evaluation assets 3 Property, plant and equipment Current assets Trade and receivables Cash and equivalents other cash Current liabilities Convertible loan notes Trade and other payables 4 7 5 Net current assets Total assets less current liabilities Non-current liabilities 6 Unaudited Audited 30 June '24 £ 30 June '23 £ 31 Dec '23 £ 4,035,126 2,925,161 3,883,651 760 1,284 1,040 4,035,886 2,926,445 3,884,691 44,435 53,014 42,948 113,582 1,268,202 620,924 158,017 1,321,216 663,872 (103,600) (87,274) (134,941) (103,600) (87,274) (134,941) 54,417 1,233,942 528,931 4,090,303 4,160,387 4,413,622 (921,305) - (732,651) 4,160,387 3,680,971 499,609 5,367,516 288,122 (134,678) 498,592 5,349,710 274,343 (161,445) 499,609 5,367,516 288,122 (134,678) (14,002) (2,837,569) (24,417) (1,776,396) (16,683) (2,322,915) 3,168,998 4,160,387 3,680,971 Unaudited Audited 3,168,998 Net assets Equity & Liabilities Shareholders' Equity Called up share capital Share premium account Share option reserve Other reserves Foreign exchange translation reserve Retained earnings 9 9 8 Total Equity Consolidated Statement of Cash flows for the six months ended 30 June 2024 Unaudited 6 months ended 6 months ended Year ended 30 June '24 30 June '23 31 Dec '23 £ £ £ (514,654) (1,167,903) (1,714,423) Depreciation 256 262 520 Impairment - - 153,732 Cash flows from operating activities Loss for the period Adjustments for: Finance expense 44,924 82,007 138,162 Finance income - (57,484) (56,131) 115,979 61,924 7,605 - 45,594 45,594 (1,487) 477,629 487,695 (4,271) (572,530) (447,110) (359,253) (1,130,501) (168,107) (414,244) (1,321,053) 14,424 - - (153,683) (414,244) - 2,900,000 2,900,000 - - 520,000 Share issue costs - (174,000) (174,000) Interest paid - (16,250) (16,250) Net cash from financing activities - 2,709,750 3,229,750 (512,936) 1,165,005 524,341 620,924 96,985 96,985 5,594 6,212 (402) 113,582 1,268,202 620,924 Currency Translation Share Option Expense (Increase)/decrease in trade and other receivables Decrease in trade and other payables Net cash used in operating activities Cash flows from investing activities Acquisition of intangible exploration assets Proceeds from option agreement Net cash used in investing activities Cash flows from financing activities Proceeds on the issue of share capital Proceeds on the issue of convertible loan notes Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at start of period Exchange losses on cash and cash equivalents Cash and cash equivalents at end of period Consolidated Statement of Changes in Equity (1,384,356) (1,321,053) for the six months ended 30 June 2024 Share Option Reserves Other Reserves Foreign exchange translation Reserve £ £ Unaudited Share Capital £ Share Premium £ £ Retained Earnings £ Total Equity £ Balance at 1 Jan 2023 190,992 710,200 448,357 (161,445) (9,169) (658,031) 520,904 Loss for the financial period - - - Foreign currency retranslation Total comprehensive loss for the period - - - - - (1,167,903) (1,167,903) - (15,248) - (15,267) - - - - (15,248) (1,167,903) (1,183,170) 307,600 - 4,886,270 - - - - 5,193,870 - 274,343 - - - 274,343 - 49,539 (398,818) Transactions with owners Issue of new shares Issue of options and warrants (448,357) Cancellation of options and warrants Cost of shares issued Total transactions with owners Balance at 30 June 2023 (unaudited) - (246,760) - - - - (246,760) 307,600 4,639,510 (174,014) - - 49,539 4,822,635 498,592 5,349,710 274,343 (161,445) (24,417) (1,776,396) 4,160,385 Audited 190,992 710,200 448,357 (161,445) (9,169) (658,031) 520,904 Loss for the financial year - - - - - (1,714,423) (1,714,423) Foreign currency retranslation - - - - (7,514) - (7,514) - - - (7,514) (1,714,423) (1,721,937) 308,617 4,904,074 - - - - 5,212,691 - - - 26,767 - - 26,767 - - 288,122 - - - 288,122 - 49,539 (398,818) Balance at 1 January 2023 Total comprehensive loss for the year Transactions with owners Issue of new shares Recognition of equity component of convertible loan notes Issue of options and warrants (448,357) Cancellation of options and warrants - (246,758) - - - - (246,758) Total transactions with owners 308,617 4,657,316 (160,235) 26,767 - 49,539 4,882,004 Balance at 31 December 2023 499,609 5,367,516 288,122 (134,678) (16,683) (2,322,915) 3,680,971 499,609 5,367,516 288,122 (134,678) (16,683) Loss for the period - - - - - (514,654) (514,654) Foreign currency retranslation - - - - 2,681 - 2,681 Total comprehensive loss for the period - - - - 2,681 (514,654) (511,973) 499,609 5,367,516 288,122 (134,678) (14,002) (2,837,569) 3,168,998 Cost of shares issued Unaudited Balance at 1 Jan 2024 Balance at 30 June 2024 (unaudited) (2,322,915) 3,680,971 Notes to the interim financial information for the six months ended 30 June 2024 1. Presentation of accounts and accounting policies (a) Reporting Entity Fulcrum Metals plc (the "Company") and its subsidiaries (together, the "Group") explore for and develop mineral reserves in Canada. The Company is a public limited company, incorporated, domiciled, and registered in England and Wales. The registered number is 14409193. The company's registered office and principal place of business is Unit 58, Basepoint Business Centre Isidore Road, Bromsgrove Enterprise Park, Bromsgrove, Worcestershire, B60 3ET, England. (b) Basis of preparation The interim financial statements of Fulcrum Metals Plc are unaudited consolidated financial statements for the six months ended 30 June 2024 which have been prepared in accordance with UK adopted international accounting standards. They include unaudited comparatives for the six months ended 30 June 2023 together with audited comparatives for the year ended 31 December 2023. The interim financial statements do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2023 have been reported on by the company's auditors and have been filed with the Registrar of Companies. The report of the auditors is unqualified and contained a material uncertainty relating to going concern. Aside from the material uncertainty relating to going concern paragraph above, the auditor's report did not contain any statement under section 498 of the Companies Act 2006. The interim consolidated financial statements for the six months ended 30 June 2024 have been prepared on the basis of accounting policies expected to be adopted for the year ended 31 December 2024. These are anticipated to be consistent with those set out in the Group's latest financial statements for the year ended 31 December 2023. These accounting policies are drawn up in accordance with adopted International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. (c) Basis of consolidation The consolidated interim financial information includes the results of Fulcrum Metals plc and its subsidiary undertakings. The financial statements of all group companies are adjusted, where necessary, to ensure the use of consistent accounting policies. The Group was formed after the Company, prior to its IPO and listing on AIM, completed a share for share transaction with Fulcrum Metals Limited. The Board has taken the view that the most appropriate way to account for this in line with IFRS is to deem the share for share exchange as a group reconstruction. This has been accounted for under the basis of merger accounting given that the ultimate ownership before and after the transaction remained the same. There is currently no specific guidance on accounting for group reconstructions such as this transaction under IFRSs. In the absence of specific guidance, entities should select an appropriate accounting policy and IFRS permits the consideration of pronouncements of other standard-setting bodies. This group reconstruction as scoped out of IFRS 3 has therefore been accounted for using predecessor accounting principles resulting in the following practical effects; (i) The net assets of the Company and the predecessor group, Fulcrum Metals Limited and its subsidiary undertakings (the "Predecessor Group"), are combined using existing book values, with adjustments made as necessary to ensure that the same accounting policies are applied to the calculation of the net assets of both entities; (ii) No amount is recognised as consideration for goodwill or negative goodwill; (iii) The consolidated profit and loss account includes the profits or losses of the company and the Predecessor Group for the entire period, regardless of the date of the reconstruction, and the comparative amounts in the consolidated financial statements are restated to the figures presented by the Predecessor Group; and (iv) The retained earnings reserve includes the cumulative results of the Company and the Predecessor Group, regardless of the date of the reconstruction, and the comparative amounts in the statement of financial position are restated to those presented by the Predecessor Group. (d) Significant accounting policies The Group has presented below key extracts of its accounting policies. (e) Intangible Assets Exploration and evaluation assets The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets, relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Exploration and evaluation assets are recorded and held at cost. Exploration and evaluation assets are assessed for impairment annually or when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. IFRS 6 permits impairments of exploration and evaluation expenditure to be reversed should the conditions which led to the impairment improve. The Group continually monitors the position of the projects capitalised and impaired. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement. Impairment Exploration and evaluation assets are reviewed regularly for indicators of impairment and costs are written off where circumstances indicate that the carrying value might not be recoverable. In such circumstances, the exploration and evaluation asset is allocated to development and production assets within the same cash generating unit and tested for impairment. Any such impairment arising is recognised in the income statement for the period. Where there are no development and production assets, the impaired costs of exploration and evaluation are charged immediately to the income statement. (f) Judgements and key sources of estimation uncertainty The preparation of the Group 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 date of the financial statements 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 estimates and assumptions include, but are not limited to: Impairment of exploration and evaluation costs Exploration and evaluation costs have a carrying value at 30 June 2024 of £4,035,126 (30 June 2023: £2,925,161; 31 December 2023: £3,883,651). The Group has a right to renew exploration permits and the asset is only depreciated once extraction of the resource commences. Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note (f). Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration the expected costs of extraction, long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside, a decision will be made to discontinue exploration. The directors concluded that no impairment charge was required as of 30 June 2024. Valuation of convertible loan notes The Group's convertible loan notes are classified as compound financial instruments as at 31 June 2024. Compound financial instruments require the company to assess the