29 Apr Final Results for period to 29 December 2024
Kendrick Resources Plc
(“Kendrick” or the “Company”)
Final Results for period to 29 December 2024
Kendrick Resources Plc (LSE: KEN), the mineral exploration and development company building vanadium, nickel and copper battery metal projects in Scandinavia is pleased to announce its full year results for the year ended 29 December 2024.
The Annual Report and Financial Statements for the year ended 29 December 2024 will shortly be available on the Company’s website at https://www.kendrickresources.com. A copy of the Annual Report and Financial Statements will also be uploaded to the National Storage Mechanism where it will be available for viewing at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Please note that page references in the text below refer to the page numbers in the Annual Report and Financial Statements.
This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended).
For additional information please contact:
| Kendrick Resources Plc:
Chairman
|
Tel: +44 2039 616 086
Colin Bird |
| Novum Securities
Financial Adviser Joint Broker |
Tel: +44 207 399 9400
David Coffman / Anastassiya Eley Jon Bellis
|
| Shard Capital Partners LLP
Joint Broker |
Tel: +44 207 186 9952
Damon Heath / Isabella Pierre
|
Financial highlights:
· £3.4m loss before tax (2023: £1.1m)
· Approximately £18k cash at bank at the year end (2023: £200k).
· The basic and diluted loss per share of 1.40 pence (2023: loss 0.45 pence) has been calculated on the basis of the loss of £3,437,121 (2023: loss £1,099,162) and on 245,674,119 (2023: 242,565,645) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 29 December 2024.
· The net asset value as at year end was £1.32m (2023 (£4.58m).
CHAIRMAN’S STATEMENT
Dear Shareholder,
In the year under review the Company made a full assessment of the status and potential of its projects in the light of the current commodity markets, their relative prospectivity and the funding market for junior exploration companies.
Airijoki Project: The Airijoki Vanadium project in Sweden has demonstrated that it is a robust project with many options to bring it to account. The project area covers 39.41km2 and has an inferred mineral resource comprising of 44.3million tonnes of an in-situ grade with 5.9million tonnes of magnetite averaging 1.7% VTO5.
The exploration work to date indicates the potential to at least double the size of the Airijoki project and external metallurgical test work has demonstrated that increasing recovery, whilst maintaining concentrate grade, is a strong possibility.
In addition, we have identified potential for copper, nickel, cobalt, gold and palladium, which are coincident with underlying airborne geophysical anomalies. Thus, we have a multi-commodity project area, underpinned by the Vanadium project and, in a tight market for exploration companies, we have decided that in Scandinavia the Group will focus on the Airijoki Vanadium project and make an impairment provision against its other vanadium projects in Sweden and Finland due to their relative lack of prospectivity compared to the Airijoki project.
Nickel Projects: The Nickel projects in Sweden and Norway, all indicate scope for increased discovery with the Mjovattnet and Njuggtraskliden projects being open ended with a combined potential of 25km of strike (“Swedish Nickel Line Projects”). The Norwegian Nickel properties within the Espedalen Nickel complex have good potential for sulphide nickel and contain 10 untested targets (“Norwegian Nickel Projects”). However at the time of writing this report the nickel producing industry has been severely tested by the massive investment by the Chinese into Indonesia. Resulting flows of nickel from Indonesia have severely adversely affected the supply demand balance with a negative effect on the nickel price and the ability to raise funds for nickel exploration projects. Many nickel miners and exploration companies around the world have been forced to close and / or re-focus their operations. The Board does not anticipate that this situation will change in the short to midterm and are thus reluctant to commit to new nickel exploration programmes which are unlikely to produce new mines within a reasonable forecastable timeframe. Against this backdrop, the Board has decided to discontinue Nickel exploration in Scandinavia and make a full impairment provision against the Swedish Nickel Line and Norwegian Nickel Projects.
Results for the year: The Group reported a loss before taxation for the year of £3,437,121 (2023: £1,099,162) mainly due to administrative costs of £693,059 (2023: £580,287), including professional, consulting and directors’ fees and an impairment of £2,737,711 (2023: £448,904) against licences we have decided to relinquish to focus on our Airijoki, project. Net assets at 29 December 2024 amounted to £1,320,795 (2023: £4,577,999) including exploration and evaluation assets of £2,200,826 (2023: £4,756,879) and cash of £17,551 (2023: £199,992).
Outlook: The junior resource market has been depressed since July 2021 but is showing some signs of improving for the right projects but generally shows little prospect of a recovery in the short term. The exception is gold which is enjoying its day in the sun and copper is also showing positive signs of price increase. Lithium/nickel/zinc have all come under pressure and do not appear to be sharing any price increase forecast and thus remain under pressure.
The small cap resource market is more inclined to the prospect of immediate production and less supportive of pure exploration. This situation has been exacerbated by the uncertainty that the Trump government has created by impending tariffs and increase in global geo-political tension. Paradoxically many countries are developing strategies to protect their supply chains for copper and other critical metals essential for the production of batteries, electronics, renewable energy technologies, and various high-tech applications which requires investment in exploration to find and develop tomorrow’s mines.
Against this background the Board remain convinced that copper and other critical metals should be the focus for the Company and as such in addition to retaining the Airijoki Project are looking to restructure the portfolio to focus on these metals in jurisdictions they know, including Southern Africa, and have identified personnel to carry out the necessary technical evaluation of potential projects. The Board have identified a number of opportunities which are currently being evaluated for best contribution to the Group’s future. Our acquisition search will be dominated by copper and other critical metals in areas the Board has experience in order to be positioned in the right commodities at the right time when markets improve. We will keep shareholders posted on our progress and in the meantime will seek to minimise costs and cash outgoings.
AGM and Resolutions: The resolutions for the forthcoming Annual General Meeting will be contained in a separate Notice which will be made available to shareholders and on the website www.kendrickresources.com. The Directors will recommend shareholders to vote in favour of all the resolutions and a form of proxy will be dispatched to all shareholders for this purpose.
Colin Bird
Chairman
29 April 2025
Operational Financial Corporate and Strategy Reviews
INTRODUCTION
Kendrick Resources Plc was admitted to the Standard Segment of the Main Market of the London Stock Exchange (“Admission”) on 6 May 2022 and is currently listed on the FCA’s Official List (Equity Shares (transition)) its principal activity is that of mining exploration and development. The Company’s focus has been on vanadium, nickel, and copper battery metals projects in Scandinavia via its subsidiaries.
The Directors are required to provide a year-end report in accordance with the Financial Conduct Authorities (“FCA”) Disclosure Guidance and Transparency Rules (“DTR”). The Directors consider this Financial, Corporate and Operational Review along with the Chairman’s Report, the Strategic Review and the Directors’ Report provides details of the important events which have occurred during the period and which impact on the financial statements as well as the outlook for the Company and Group going forward.
The Company’s strategy is to enhance the value of its mineral resource projects through exploration and technical studies conducted by the Company or through joint venture or other arrangements with a view to establishing the projects can be economically mined for profit. The Group has been seeking to do this by building an energy metals production business focused on nickel, vanadium and copper mineral resources projects in Scandinavia. Having assessed the current funding market for nickel exploration and development companies and the operational and maintenance costs of its projects and their relative prospectivity the Board has decided to focus on its Airijoki vanadium energy storage project in Sweden notwithstanding the prospectivity of its other projects were they fully funded.
Given the Board’s extensive resource project experience in Southern Africa and the relative cost of developing projects in Southern Africa compared to Scandinavia the Board has decided that it is in the best interest of shareholders to seek new copper and critical metals project opportunities in areas the Board have expertise in, including Southern Africa, and will update shareholders when an appropriate projects(s) are identified and in the meantime the Group will seek to minimise costs.
Operational Review
Acquisition during the year
There were no acquisitions during the year.
Impairment Provision
Having assessed the current funding market for nickel focussed exploration and development companies and the operational and maintenance costs of its projects the Board has decided to focus on its Airijoki vanadium energy storage project in Sweden notwithstanding the prospectivity of its other projects were they fully funded.
In light of this assessment the decision has been made to make a full impairment provision in relation to the Simesvallen 100, Kullberget100, Sumasjon1, Mjovattent and Njuggtraskliden licences in Sweden, the Koitelainen licence in Finland and the Espedalen licences in Norway and some incidental costs incurred in early 2024 in relation to the Karhujupukka North licences in Finland and the Sigdal licence in Norway.
Summary of Retained Airijoki Project:
The Airijoki vanadium copper project in Sweden comprises seven contiguous exploration permits covering 39.41 km2 and is supported by an Inferred Mineral Resource comprising 44.3 Mt at an in-situ grade of 0.4% V2O5, containing 5.9 Mt of magnetite averaging 1.7% V2O5 (in magnetite concentrate) for 100,800 t of contained V2O5 based on a 13.3% mass recovery of magnetite concentrate and a 0.7% V2O5 cut-off grade, on a 100% equity basis (and net attributable basis).
The main field exploration focus since the acquisition of the Airijoki project was a 1,394 metre exploration drill program at the Airijoki vanadium copper project in Sweden conducted late in 2023 the results of which were announced on 8 February 2024.
The highlights of the drill results were:
· Results have been received for whole rock and vanadium magnetite concentrates produced from eight holes drilled north of the existing Airijoki vanadium JORC Mineral Resource containing 44.3 Mt @ 0.4% V2O5, in-situ, containing 5.9 Mt of magnetite averaging 1.7% V2O5.
· Seven out of eight holes drilled intersected Vanadium mineralisation.
· Notable intercepts included:
o 0.52% V2O5 – whole rock (1.77% V2O5 – magnetite concentrate) over 28.80m from 77.55m in hole AIR23-003, incl.
§ 0.72% V2O5 – whole rock (2.15% V2O5 – magnetite concentrate) over 12.00m from 89.50m
o 0.43% V2O5 – whole rock (1.44% V2O5 – magnetite concentrate) over 19.15m from 75.85m in hole AIR23-008
o 0.32% V2O5 – whole rock (1.42% V2O5 – magnetite concentrate) over 28.65m from 174.50m in AIR23-002
§ incl. 0.40% V2O5 – whole rock (1.75% V2O5 -magnetite concentrate) over 12 m from 186.5m
The combination of a JORC Mineral Resource, positive assay results and access to a further five contiguous exploration licences expected to generate additional vanadium (and copper) targets for follow up and possible future expansion of the current vanadium resource, support the prospectivity of the Airijoki Project.
The emphasis at Airijoki has been to switch from further drilling to expanding the Mineral Resource, to focusing on the development and implementation of an appropriate strategy to build a sustainable vanadium business, this does not preclude future ongoing exploration. But in the meantime we will be looking to build strategic alliances with both iron ore and vanadium miners and processors, together with an alignment with end users of vanadium, principally in the Vanadium Redox battery sphere. Operating to the highest possible standards, the Company aims to become a significant contributor to the supply of vanadium in the Scandinavian battery arena.
Financial Review
Financial highlights:
· £3.4m loss before tax (2023: £1.1m)
· Approximately £18k cash at bank at the year end (2023: £200k).
· The basic and diluted loss per share of 1.40 pence (2023: loss 0.45 pence) has been calculated on the basis of the loss of £3,437,121 (2023: loss £1,099,162) and on 245,674,119 (2023: 242,565,645) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 29 December 2024.
· The net asset value as at year end was £1.32m (2023 (£4.58m).
Fundraisings and issues of shares and options
The Company did not undertake any equity fundraising during the year but on 22 April 2024 announced that the Company had entered into an unsecured convertible loan funding facility (the “Facility”) for £500,000 with Sanderson Capital Partners Ltd (the “Lender”), a long term shareholder in the Company. The Facility is convertible at 0.75 pence per ordinary share (“Shares”) and can be drawn down in 4 tranches of £125,000 each (“Loan Tranches”). The Facility is a standby facility as a potential additional source of working capital for the Company in a period when the funding market for junior exploration companies is subject to market volatility. During the year a drawdown of £125,000 (“Tranche One Drawdown”) was made and paid under the Facility. During the year a second drawdown of £125,000 (“Tranche Two Drawdown” was made under the Facility but the Tranche Two Drawdown has not yet been paid.
On 18 September 2024 the Company announced that it had issued 6,365,385 ordinary shares to settle £46,000 of accrued fees due to suppliers.
The Company did not issue any share options during the period and issued 4,166,667 warrants exercisable for three years in relation to the drawdown of £125,000 under the Facility which was paid during the year.
Corporate Review
Company Board: The Board of the Company at the date of this report comprises Colin Bird, Executive Chairman, Martyn Churchouse Managing Director and Non- executive directors Kjeld Thygesen, Evan Kirby and Alex Borrelli.
Admission: The Company was admitted to the Official List on the now called FCA’s Official List (Equity Shares (transition) category) and its shares commenced trading on 6 May 2022.
Corporate Acquisitions
There were no corporate acquisitions during the period.
Lock Up and Orderly Market arrangements at IPO:
At Admission the Directors and their related parties, in aggregate, held 47,294,860 Ordinary Shares, representing 21.62% of the Enlarged Share Capital. The Directors agreed with the Company and Novum Securities Limited (“Novum”) its Joint Broker, except for certain standard exceptions, not to dispose of any interest in the Ordinary Shares held by them for a period of 12 months following Admission (Lock-In Period) and then for the following 12 months until 6 May 2024 not to dispose of their Ordinary shares without first consulting the Company and Novum in order to maintain an orderly market for the shares. The Directors and their related parties did not dispose of any Ordinary Shares during the year.
Strategy Review
The Group’s strategy is to enhance the value of its mineral resource projects through exploration and technical studies conducted by the Group or through joint venture or other arrangements with a view to establishing the projects can be economically mined for profit. The Group has been seeking to do this by building an energy metals production business focused on nickel, vanadium and copper mineral resources projects in Scandinavia. Having assessed the current funding market for nickel exploration and development companies and the operational and maintenance costs of its projects and their relative prospectivity the Board has decided to focus on its Airijoki vanadium energy storage project in Sweden notwithstanding the prospectivity of its other projects were they fully funded.
Given the Board’s extensive resource project experience in Southern Africa and the relative cost of developing projects in Southern Africa compared to Scandinavia the Board has decided that it is in the best interest of shareholders to seek new copper and critical metals project opportunities in areas where the Board has experience in, including Southern Africa, and will update shareholders when an appropriate projects(s) are identified and in the meantime the Group will seek to minimise costs.
Outlook
There is current volatility as markets seeks to understand and anticipate the effects of a second Trump administration, a new era of higher tariffs, and the ongoing conflicts in Ukraine and the Middle East. At a macro level there is a supply shortage for copper and critical metals and gold is around all-time highs. Funding markets for exploration companies continued to be depressed in 2024 but are showing some signs of improving for the right projects. The objective of the Board is to work to enhance the value of the Group’s Airijoki vanadium project in Sweden and to seek new copper and base and critical metals project opportunities in Southern Africa that can be cost effectively advanced.
STRATEGIC REPORT
The Directors present their strategic report for the year ended 29 December 2024.
PRINCIPAL ACTIVITIES
The Company’s principal activity is to enhance the value of its mineral resource projects through exploration and technical studies conducted by the Company or through joint venture or other arrangements with a view to establishing the projects can be economically mined for profit. The Group has been seeking to do this by building an energy metals production business focused on nickel, vanadium and copper mineral resources projects in Scandinavia. Having assessed the current funding market for nickel exploration and development companies and the operational and maintenance costs of its projects and their relative prospectivity the Board has decided to focus on its Airijoki vanadium energy storage project in Sweden notwithstanding the prospectivity of its other projects were they fully funded.
Given the Board’s extensive resource project experience in regions outside Scandinavia including Southern Africa and the relative cost of developing projects in Southern Africa compared to Scandinavia the Board has decided that it is in the best interest of shareholders to seek new copper and critical metals project opportunities in areas the Board has expertise in including Southern Africa and will update shareholders when an appropriate project(s) are identified and in the meantime the Group will seek to minimise costs and cash out goings.
GOING CONCERN
As disclosed in Note 3, the Group currently has no income and meets its working capital requirements through raising development finance. In common with many businesses engaged in exploration and evaluation activities prior to production and sale of minerals the Group will require additional funds and/or funding facilities in order to fully develop its business plan.
Ultimately the viability of the Group is dependent on future liquidity in the exploration period and this, in turn, depends on the Group’s ability to raise funds to provide additional working capital to finance its ongoing activities. Management has successfully raised funds in the past, but there is no guarantee that adequate funds will be available when needed in the future.
As at 29 December 2024, the Group had net assets of £1.32m and cash and cash equivalents of £18k. An operating loss is expected in the year subsequent to the date of these financial statements and as a result the Group will need to raise funding to provide additional working capital to finance its ongoing activities.
On 22 April 2024 the Company announced it had entered into an unsecured convertible loan funding facility (the “Facility”) for £500,000 with Sanderson Capital Partners Ltd (the “Lender”), a long term shareholder in the Company. The Facility is convertible at 0.75 pence per ordinary share (“Shares”) and can be drawn down in 4 tranches of £125,000 each (“Loan Tranches”). The Facility is a standby facility as a potential additional source of working capital for the Group in a period when the funding market for junior exploration companies is subject to market volatility. During the year a drawdown of £125,000 (“Tranche One Drawdown”) was made and paid under the Facility. During the year a second drawdown notice of £125,000 (“Tranche Two Drawdown”) was issued under the Facility but the Tranche Two Drawdown has not yet been paid (see Note 17 for further details).
The Board acknowledges the Disclaimer of opinion in the independent auditors’ report in respect of the Company’s and Group’s ability to continue as a going concern. Based on its current reserves and the Board’s assessment that the Group will be able to raise additional funds, as and when required, to meet its working capital and capital expenditure requirements, the Board have concluded that they have a reasonable expectation that the Company and Group can based on a cash flow forecast to 30 April 2026 continue in operational existence for the foreseeable future and at least for a period of 12 months from the date of approval of these financial statements.
For these reasons the financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.
ENERGY CONSUMPTION
The Company consumed less than 40MWh during the period and as such is a Low Energy User as defined in the Environmental Reporting Guidelines Including streamlined energy and carbon reporting guidance March 2019 (Updated Introduction and Chapters 1) and as such is not required to provide detailed disclosures of energy and carbon information. Task Force on Climate-related Financial Disclosures are contained in the Corporate Governance Statement.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members, as required by s172 of the Companies Act 2006 as detailed below.
The requirements of s172 are for the Directors to:
– Consider the likely consequences of any decision in the long term;
– Act fairly between the members of the Company;
– Maintain a reputation for high standards of business conduct;
– Consider the interests of the Company’s employees;
– Foster the Company’s relationships with suppliers, customers, and others; and
– Consider the impact of the Company’s operations on the community and the environment.
Our Board of Directors remain aware of their responsibilities both within and outside of the Group. Within the limitations of a Group with so few employees we endeavour to follow these principles, and examples of the application of the s172 are summarised and demonstrated below.
The Company operates as a mining exploration and development company which is speculative in nature and at times may be dependent upon fund-raising for its continued operation. The nature of the business is well understood by the Company’s members, employees and suppliers, and the Directors are transparent about the cash position and funding requirements.
The Company is investing time in developing and fostering its relationships with its key suppliers.
As a mining exploration company with future operations based in Scandinavia, the Board takes seriously its ethical responsibilities to the communities and environment in which it works. Task Force on Climate-related Financial Disclosures are contained in the Corporate Governance Statement.
The interests of future employees and consultants are a primary consideration for the Board, and we have introduced an inclusive share-option programme allowing them to share in the future success of the Company. Personal development opportunities are encouraged and supported.
KEY PERFORMANCE INDICATORS
Key performance indicators for the Group as a measure of financial performance are as follows:
| Year ended | Year ended | |
| 29 December 2023 | 29 December | |
| 2024 | 2023 | |
| £ | £ | |
| Total assets | 2,267,173 | 5,006,709 |
| Net assets | 1,320,795 | 4,577,999 |
| Cash and cash equivalents | 17,551 | 199,992 |
| Trade and other payables | (821,378) | (428,710) |
| Loss before tax for the year | (3,437,121) | (1,099,162) |
Results for the year: The Group reported a loss before taxation for the year of £3,437,121 (2023: £1,099,162) mainly due to administrative costs of £693,059 (2023: £580,287), including professional, consulting and directors’ fees and an impairment of £2,737,711 (2023: £448,904) against licences we have decided to relinquish to focus on our Airijoki, project. Net assets at 29 December 2024 amounted to £1,320,795 (2023: £4,577,999) including exploration and evaluation assets of £2,200,826 (2023: £4,756,879) and cash of £17,551 (2023: £199,992).
As explained under the Principal Activities section of this report, the Board has decided the Group should focus on its Airijoki vanadium project in Sweden and is seeking new copper and critical metals projects in areas where the Board has expertise in, including Southern Africa.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is subject to various risks similar to all exploration companies operating in overseas locations relating to political, economic, legal, industry and financial conditions, not all of which are within its control. The Group identifies and monitors the key risks and uncertainties affecting the Group and runs its business in a way that minimises the impact of such risks where possible.
The following risks factors, which are not exhaustive, are particularly relevant to the Group’s current and future business activities:
Licensing and title risk
Governmental approvals, licences and permits are, as a practical matter, subject to the discretion of the applicable governments or government offices. The Group must generally and specifically in relation to future projects comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations by the permitting authorities. New laws and regulations, amendments to existing laws and regulations, or more stringent enforcement could have a material adverse impact on the Group’s result of operations and financial condition. The Group’s exploration activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitation.
There is a risk that negotiations with the relevant government in relation to the renewal or extension of a licence may not result in the renewal or grant taking effect prior to the expiry of the previous licence and there can be no assurance as to the terms of any extension, renewal or grant. This is a risk that all resource companies are subject to, particularly when their assets are in emerging markets. The Group continually seeks to do everything within its control to ensure that the terms of each licence are met and adhered to.
Dependency on key personnel
Management comprises a small team of experienced and qualified executives. The Directors believe that the loss of any key individuals in the team or the inability to attract appropriate personnel could impact the Group’s performance.
Although the Group has entered into contractual arrangements to secure the services of its key personnel, the retention of these services and the future costs associated therewith cannot be guaranteed.
Royalty arrangement and the Kabwe plant
Prior to the Company Listing on 6 May 2022 and acquiring the Nordic Projects the Company had an interest in the Kabwe Project which has been fully provided against. As reported in the 2020 accounts Jubilee Metals Group PLC (“Jubilee”) is the sole operator of the Kabwe Project and has full control of the execution methodology. In addition, Jubilee has agreed to fund the Kabwe Project by way of debt finance without dilution to Kendrick’s shareholding which amounted to a fixed 11% and has been converted to an 11% royalty. Jubilee is currently actively engaged in copper refining through its purpose-designed refinery at Kabwe. The zinc price has been extremely volatile and the zinc tailings at Kabwe may be metallurgically complex, giving way to copper production, being the best alternative to the refinery. Against the aforementioned, the Board has no expectation of any royalty income in the midterm but are negotiating with Jubilee to sell the royalty back to Jubilee.
Legal risk
The legal systems in the countries in which the Group’s operations are currently and prospectively located are different to that of the UK. This could result in risks such as: (i) potential difficulties in obtaining effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation, or in an ownership dispute; (ii) a higher degree of discretion on the part of governmental authorities; (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulation, decrees, orders and resolutions; and (v) relative inexperience of the judiciary and courts in such matters.
In certain jurisdictions the commitment of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be more uncertain. In particular, agreements in place may be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance that joint ventures, licences, licence applications or other legal arrangements will not be adversely affected by the actions of government authorities or others and the effectiveness of and enforcement of such arrangements in these jurisdictions cannot be assured.
Liquidity and financing risk
Although the Directors consider that the Company and Group has sufficient funding in place, there can be no guarantee that further funding will be available and on terms that are acceptable to the Company should additional costs or delays arise. Nor can there be any guarantee that the additional funding will be available to allow the Company to obtain and develop additional projects in the necessary timeframe.
The Directors review the Company’s and Group’s funding requirements on a regular basis, and take such action as may be necessary to either curtail expenditures and / or raise additional funds from available sources including asset sales and the issuance of debt or equity.
Governmental approvals, licences and permits
Governmental approvals, licences and permits are, as a practical matter, subject to the discretion of the applicable governments or government offices. The Group must comply with known standards and existing laws and regulations, any of which may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations by the permitting authorities. Delays in granting such approvals, licences and permits, new laws and regulations, amendments to existing laws and regulations, or more stringent enforcement could have a material adverse impact on the Group’s result of operations and financial condition. The Group’s activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitation.
There is a risk that negotiations with the relevant government in relation to the renewal or extension of a licence may not result in the renewal or grant taking effect prior to the expiry of the previous licence and there can be no assurance as to the terms of any extension, renewal or grant.
Liability and insurance
The nature of the Group’s business means that the Group may be exposed to potentially substantial liability for environmental damages. There can be no assurance that necessary insurance cover will be available to the Group at an acceptable cost, if at all, nor that, in the event of any claim, the level of insurance carried by the Group now or in the future will be adequate.
The Group’s operations are also subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with these and similar future regulations could be substantial and the risk of accidental contamination or injury from hazardous materials with which it works cannot be eliminated. If an accident or contamination were to occur, the Group would likely incur significant costs associated with civil damages and penalties or criminal fines and in complying with environmental laws and regulations. The Group’s insurance may not be adequate to cover the damages, penalties and fines that could result from an accident or contamination and the Group may not be able to obtain adequate insurance at an acceptable cost or at all.
Currency risk
The Company expects to present its financial information in sterling although part or all of its business may be conducted in other currencies. As a result, it will be subject to foreign currency exchange risk due to exchange rate movements which will affect the Group’s transaction costs and the translation of its results. The majority of the payments were in Euros and SEK (Swedish Krona), but while there were significant fluctuations in the year the payments were not significant at this early stage as there were limited operations.
Economic, political, judicial, administrative, taxation or other regulatory factors
The Group may be adversely affected by changes in economic, political, judicial, administrative, taxation or other regulatory factors, in the territories in which the Group will operate particularly in the Scandinavian region.
Taxation
Any change in the Company’s tax status or the tax applicable to holding Ordinary Shares or in taxation legislation or its interpretation, could affect the value of the investments or assets held by the Company, which in turn could affect the Company’s ability to provide returns to Shareholders and/or alter the post-tax returns to shareholders. Statements in this document concerning the taxation of the Company and its investors are based upon current tax law and practice which may be subject to change.
Approved by the Board of Directors and signed on behalf of the Board.
C Bird
Chairman
29 April 2025
The full Kendrick Resources PLC Accounts for 2024 are available here.