27 Sep Interim Results
Kendrick Resources Plc
(“Kendrick” or the “Company”)
Interim Results for the Six Months Ended 30 June 2024
Kendrick Resources Plc the Scandinavian focused new age mineral exploration and development company with nickel and vanadium projects in Norway, Sweden and Finland, announces its unaudited interim results for the six months ended 30 June 2024.
OPERATIONAL, FINANCIAL CORPORATE and STRATEGY REVIEWS
Operational Review
During the period the Company’s exploration activities focussed on its Espedalen nickel project in Norway, the Swedish Nickel Projects and its Airijoki vanadium project in Sweden. The Espedalen and Airijoki assets are the Company’s two most advanced projects.
Technical review of Projects: Following Admission to the Main Market of the London Stock Exchange in May 2022 and having acquired its projects in Sweden, Finland and exercised its option in relation to its Norwegian projects, the Group commenced technical reviews and / or programmes on its portfolio. The primary metal in the Swedish and Finnish projects is vanadium and nickel for the Norwegian projects. Since their acquisition the group commenced technical reviews of its Swedish Nickel Projects.
Summary of Projects:
The Projects are a portfolio of early to advanced stage exploration projects covering a combined area of 658 km2 in Scandinavia. The most advanced of these Projects are the Airijoki and Koitelainen vanadium projects in Sweden and Finland respectively and the Espedalen nickel copper project in Norway. The other projects are:
· Sweden – the Njuggtraskliden and Mjovattnet exploration (“Swedish Nickel Projects”)
· Sweden – the Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively the “Central Sweden Project”)
The Airijoki vanadium copper project in Sweden comprising seven contiguous exploration permits covering 39.41 km2 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 Koitelainen vanadium copper project in Finland comprising a single granted exploration licence covering 13.72 km2 with an Inferred Mineral Resource has been defined at the Koitelainen Vosa Prospect comprising 116.4Mt, containing 5.8 million tonnes of magnetite @ 2.3% V2O5 (in magnetite concentrate), for 131,000 tonnes of V2O5 based on 5.0% Mass Recovery of magnetite concentrate and a cut-off of 0.5% V. The Inferred Mineral Resource was estimated in accordance with JORC (2012), utilising data from 3,784m of drilling from 27 historical drill holes.
The Espedalen nickel-copper project in Norway comprising 16 contiguous exploration permits covering a combined area of 139.89 km2 and currently contains the following two nickel deposits with associated Mineral Resource estimates together with other prospects and was the subject of a successful drill programme during 2023:
· Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co and classified as Inferred in accordance with JORC (2012)
· Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and classified as Inferred in accordance with JORC (2012)
Norway Projects:
Our review has led us to identify significant opportunities with the nickel projects in Norway. Our thorough review of historic exploration data combined with nickel price forecasting results in Kendrick being extremely well positioned with our Norwegian nickel assets. Our priority Norwegian nickel target, the Espedalen Project (1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co) and more specifically the Stormyra prospect was drilled in March 2023 with 19 holes completed for a total of 1,650 metres of drilling over an initial 1,200m of strike length. The results of the programme were announced on 20 April 2023, 4 May 2023 and 24 May 2023 including several drill intercept highlights:
· Hole ES2302 – 6.85% Ni Eq. over 1.25m from 38.20m
· Hole ES2303 – 2.64% Ni Eq. over 3.75m from 44.45m
o incl. 9.28% Ni Eq. over 0.75m from 47.45m
o and 1.53% Ni Eq. over 5.80m from 51.80m
o incl. 5.33% Ni Eq. over 0.9m from 56.7m
· Hole ES2305 – 1.30% Ni Eq. over 4.60m from 76.70m
o incl. 2.59% Ni Eq. over 2.10m from 79.20m
· Hole ES2306 – 0.71% Ni Eq. over 10.6m from 96.50m
o Incl. 2.18% Ni Eq. over 1.70m from 99.20m
§ and 1.03% Ni Eq. over 2.65m from 104.45m
§ Hole ESP2308 – 3.39% Ni Eq. over 11.60m from 52.40m including 5.80% Ni Eq over 4.9m from 59.1m
· Hole ESP2307 – 2.59% Ni Eq. over 3.65m from 37.80m including 4.85% Ni Eq. over 1.80m from 38.50m
· Hole ESP2312 – 2.29% Ni Eq. over 4.15m from 92.35m
· Hole ESP2313 – 1.98% Ni Eq. over 3.55m from 79.60m including 3.86% Ni Eq. over 1.70m from 79.60m
· Hole ESP2317 – 2.18% Ni Eq. over 3.50m from 61.50m
· Hole ESP2318 – 0.41% Ni Eq. over 9.20m from 31.50m incl. 1.15% Ni Eq. over 0.90m from 35.20m
· Hole ESP2319 – 2.43% Ni Eq. over 2.10m from 53.60m incl. 5.53% Ni Eq. over 0.65m from 54.35m and 1.33% Ni Eq. over 2.70m from 62.20m
Geophysics and interpretation of drilling indicates a further extension to known mineralisation of approximately 500m along the southern limit of the current orebody which is expected to increase the mineral resource.
The drill programme over Stormyra was very successful with impressive peak intercepts having provided all the motivation the Company needs to both extend the Stormyra mineralised trend and assess with further drilling multiple other targets (some of which have been drilled and intersected Ni mineralisation) across the Espedalen project area.
On 7 February 2024 the Company announced the delineation of new nickel drill targets at Stormyra based upon positive findings from ground magnetic and electromagnetic (“EM”) surveys conducted at the Company’s Espedalen Nickel Complex (the “Complex”).
Highlights
· Ground magnetic survey identifies two prospective areas with a magnetic signature similar to the near-surface main zone of the known mineralisation.
· The survey confirms an extra 500 metre of untested south easterly extension of the Stormyra orebody that can be drilled with the objective of increasing the existing in-house resource tonnage.
· In addition, a transient electromagnetic (“TEM”) survey identified a strong conductive body at depth further to the southeast which could potentially represent deeper mineralisation reflecting the source of nickel-bearing fluids in the Complex.
· The geophysical anomalies represent viable drill targets likely to add to the existing mineral resource.
· A further 10 drill-defined anomalies remain to be thoroughly tested within the Complex.
Thanks to our local team, we have managed to build a healthy relationship with the local stakeholders and we will continue to communicate with interested and affected parties and we are sufficiently confident of the continuity of mineralisation to formally engage external engineering advice for the review of future plant design.
Swedish & Finnish Projects: The main focus for the company is its Airijoki vanadium project and the Swedish Nickel Projects at Njuggtraskliden and Mjovattnet.
In reviewing the Airijoki project we have identified significant magnetic geophysical and copper in soil anomalies and we have modelled the occurrences for future testing. The various exploration programmes have confirmed:
· Four new exploration targets identified outside the main vanadium trend.
· New targets are anomalous for copper, nickel, cobalt, gold, and palladium and are coincident with underlying airborne geophysical anomalism.
· Two of the copper, nickel, cobalt, gold, palladium targets have been prioritised for immediate follow-up once weather permits.
· Two targets have estimated minimum strike lengths of approximately 2km and 1km.
· The Airijoki licences remain highly prospective for vanadium.
Additional metallurgical test work has been undertaken and further tests will follow using fresh drill core from the most recent drill programme in 2023.
On 8 February 2024 the Company announced
New vanadium assay results from its diamond drill programme over the Airijoki Vanadium Deposit in Vittangi, Sweden. The combination of a JORC Mineral Resource, new positive assay results and access to a further 5 contiguous exploration licences expected to generate additional vanadium (and copper) targets for follow up and possible future expansion of the current vanadium resource, has initiated the next step in the development of the Company’s vanadium programme.
The immediate emphasis will be 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.
Highlights
· 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
· Endorsement by the Board of the development of a strategy aimed at building a sustainable vanadium business in Scandinavia to deliver into future vanadium demand for battery production.
In August 2023 the company acquired EV Metals AB and its two Swedish Nickel Projects Mjovattnet and Njuggtraskliden highlights of which are:
Mjovattnet Licence
· 2 drill-defined zones of mineralisation (Mjovattnet and Brannorna Prospects)
· 15km of prospective strike
· PGE value historically overlooked
· Mjovattnet in-house non-JORC compliant drill-defined resource of 0.17Mt @ 1.29% Ni, 0.19% Cu & 0.02% Co
· Open at depth
· Peak shallow drill intercepts for the Brannora Prospect include:
| Hole
(Brannorna) |
From
(m) |
To
(m) |
Width
(m) |
Ni
(%) |
| BRA-75015 | 65.80 | 77.40 | 11.60 | 0.82 |
| BRA-07001 | 59.00 | 84.73 | 25.73 | 0.58 |
| BRA-77024 | 40.30 | 68.00 | 27.70 | 0.64 |
| BRA-07002 | 29.30 | 105.48 | 76.18 | 0.60 |
Njuggtraskliden Licence
· Historic non-JORC compliant mineral Resource of 0 575 Mt @ 0.71% Ni, 0.26% Cu & 0.04% Co
· 10km of prospective strike
· Mineralised system remains open at depth
· Drill-defined nickel sulphide mineralisation developed along more than 10km of strike extent
· Peak shallow drill intercepts at Njuggtraskliden include:
| Hole | From
(m) |
To
(m) |
Width
(m) |
Ni
(%) |
Cu
(%) |
Pt
(ppm) |
Pd
(ppm) |
Au
(ppm) |
| NJU07001 | 63.40 | 87.75 | 24.35 | 1.01 | 0.51 | 1.08 | 0.56 | 0.14 |
| NJU79016 | 15.90 | 21.69 | 5.79 | 1.06 | 0.31 | 0.11 | 0.11 | 0.05 |
| NJU79031 | 66.55 | 89.56 | 23.01 | 1.04 | 0.60 | 0.51 | 0.23 | 0.02 |
| NJU82003E | 156.75 | 161.62 | 4.87 | 0.65 | 0.31 | 0.15 | 0.88 | – |
| NJU90006 | 44.00 | 56.30 | 12.30 | 0.90 | 0.79 | 0.30 | 5.34 | 0.24 |
· Swedish Geological Survey report suggests extensions to mineralisation at depth and along strike at all prospects on both licences
· Both prospects host significant massive sulphide mineralisation not typical of other nickel deposits in the region indicating scope for further accumulations of locally massive sulphide located in a nickel-rich district, analogous to the Thompson nickel Belt in Manitoba, Canada
· 100km by sea from Boliden’s Kokkola nickel smelter in Finland
Financial Review
Financial highlights:
· £239K loss after tax (2023: £244K)
· Approximately £126k cash at bank at the period end (Dec 2023: £200k).
· The basic and diluted losses per share are summarised in the table below
| Loss per share (pence) | 2024 | 2023 | |
| Basic & Diluted | Note 3 | (0.10)p | (0.10)p |
· The net asset value as at 30 June 2024 was £4.30m (31 December 2023 £4.58m)
Fundraisings and issues of shares during the period
No shares were issued during the period. On 22 April 2024 the Company announced that 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 Company in a period when the funding market for junior exploration companies is subject to market volatility.
Working Capital Facility Agreement
The Facility is for £500,000 in total, is unsecured, interest free and can be drawn down in four tranches as follows:
· £125,000 to be drawn down within 6 months of 7 May 2024 (“Tranche One”);
· £125,000 to be drawn down within 6 months of 7 July 2024 (“Tranche Two”);
· £125,000 to be drawn down within 6 months of 7 September 2024 (“Tranche Three”); and
· £125,000 to be drawn down within 6 months of 7 November 2024 (“Tranche Four”)
Tranche One has been drawndown with £100,000 received in the period and £25,000 received post the period end. The maturity date for Tranche One is 23 August 2025.
Corporate Review
Company Board: The Board of the Company comprises Colin Bird: Executive Chairman, Martyn Churchouse: Managing Director, and Non- executive directors Kjeld Thygesen, Evan Kirby and Alex Borrelli.
Listing: On 29 July 2024, the Listing Rules were replaced by the UK Listing Rules (“UKLR”) under which the existing Standard Listing category was replaced by the Equity Shares (transition) category under Chapter 22 of the UKLR. Consequently with effect from that date the Company is admitted to Equity Shares (transition) category of the Official List under Chapter 22 of the UKLR and to trading on the London Stock Exchange’s Main Market for listed securities.
Corporate Transactions: There were no corporate acquisitions or disposals during the period.
Strategy Review
The Group is looking to build a long-term energy metals business in Scandinavia which delivers energy metals to Europe to help enable its renewable energy transformation by building a top tier energy metals production business focused on quality vanadium and nickel mineral resources in Scandinavia. The Group’s short to medium term strategic objectives are to enhance the value of its mineral resource projects through exploration and technical studies conducted by the Company or in conjunction with other parties with a view to establishing these projects can be economically mined for profit. With a positive global outlook for both base and precious metals,
The Group may in the future, if such opportunity arises, acquire other mineral resource projects whose value can similarly be enhanced. Further projects may be considered where assets in strategic commodities are either: (i) geologically prospective but undervalued; (ii) where technical knowledge and experience could be applied to add or unlock upside potential; (iii) where the assets may be synergistic to the current portfolio; or (iv) where project diversification will add strategic growth opportunities within an appropriate time frame.
Outlook
There appears a new realisation that if clean energy targets are to be met then critical mining has to take place. Indeed, the southern coast of Norway is becoming known as the “Battery Coast” by industry pundits and the Board believes we have a good portfolio in the much sought after commodities at a time when Scandinavia may well undergo a mining renaissance.
Post Period Events
There have been no significant events post the period end.
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management Report in accordance with the Financial Conduct Authorities (“FCA”) Disclosure Guidance and Transparency Rules (“DTR”). The Directors consider the preceding Operational, Financial, Corporate and Strategy Review of this Half Yearly Financial Report provides details of the important events which have occurred during the period and their impact on the financial statements as well as the outlook for the Company for the remaining six months of the year ended 31 December 2024.
The following statement of the Principal Risks and Uncertainties, the Related Party Transactions, the Statement of Directors’ Responsibilities and the Operational, Financial, Corporate and Strategy Review constitute the Interim Management Report of the Company for the six months ended 30 June 2024.
Principal Risks and Uncertainties
The principal risks that are specific to the Company were detailed under this heading in Part 1 Summary of the Company’s prospectus which was published on 29 April 2022 (the “Prospectus”) which is available on the Company’s website at https://www.kendrickresources.com/. Part II Risk factors of the Prospectus provides more details of risk factors specific and material to the Group and to the Natural Resources Sector. The Strategic Report in the 2023 Annual Accounts also provided a detailed summary of the principal risks and uncertainties faced by the Company, a copy of the 2023 Annual Accounts are available on the Company’s website at https://www.kendrickresources.com/.
The Board are of the opinion that these risk factors will continue to remain unchanged for the forthcoming six month period.
The principal risks and uncertainties facing the group are as follows:
· There are significant risks associated with any exploration project and the ability of the Company to explore, develop and generate operational cashflows from its projects requiring the Company to rely on fundraisings to fund its operational costs
· No assurances can be given that minerals will be discovered in economically viable quantities at the Company’s projects
· Adverse foreign exchange fluctuations
· Volatility in financial markets and commodity markets
The Board has also reviewed emerging risks which may impact the forthcoming six-month period. The ongoing impact of the Ukraine war and related sanctions and escalation of conflicts in the Levant area of the Middle East may affect the macro-economic situation but not have a direct impact on the Company as it does not have assets in or do have business activities or suppliers in either Ukraine. Russia or the Levant areas of the Middle East. As a result of the Ukraine war Finland joined NATO in 2023 and Sweden have announced their intention to join NATO.
Related Party Transactions during the period
1. Directors’ Letters of Appointment and Service Agreements as disclosed in the Prospectus
(a) Pursuant to an agreement dated 29 April 2022 the Company renewed the appointment of Colin Bird as a Director. The appointment continues unless terminated by either party giving to the other three months’ notice in writing. Colin Bird is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Colin Bird is not entitled to any pension, medical or similar employee benefits. The agreement replaces all previous agreements with Colin Bird in relation to his appointment as a director of the Company.
(b) Pursuant to a consultancy agreement dated 29 April 2022, the Company has, with effect from the date of the IPO, appointed Colin Bird as a consultant to provide technical advisory services in relation to its current and future projects including, but not limited to, assessing existing geological data and studies, existing mine development studies and developing exploration programs and defining the framework of future geological and mine study reports (the “Colin Bird Services”). The appointment continues unless terminated by either party giving to the other three months’ notice in writing. Colin Bird is entitled to fees of £2,500 per month for being a consultant to the Company plus reasonable and properly documents expenses incurred during the performance of the Colin Bird Services.
(c) Pursuant to an agreement dated 29 April 2022, renewed the appointment of Kjeld Thygesen as a non-executive Director. The appointment continues unless terminated by either party giving to the other three months’ notice in writing. Kjeld Thygesen is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Kjeld Thygesen is not entitled to any pension, medical or similar employee benefits.
(d) Pursuant to an agreement dated 29 April 2022, Alex Borrelli was appointed as a nonexecutive Director. The appointment continues unless terminated by either party giving to the other three months’ notice in writing. Alex Borrelli is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Alex Borrelli is not entitled to any pension, medical or similar employee benefits.
(e) Pursuant to an agreement dated 29 April 2022, Evan Kirby was appointed as a non-executive Director. The appointment continues unless terminated by either party giving to the other three months’ notice in writing. Evan Kirby is entitled to director’s fees of £18,000 per annum for being a director of the Company plus reasonable and properly documented expenses incurred during the performance of his duties. Evan Kirby is not entitled to any pension, medical or similar employee benefits.
(f) The Company entered into a licence agreement dated 1 February 2022 with Lion Mining Finance Limited (a company controlled by Colin Bird, a director of the Company). Pursuant to this agreement, the Company has been granted a licence to use the premises at 7-8 Kendrick Mews, London, SW7 for a period of 12 months with effect from 1 December 2021 for a licence fee of £1,000 per month. In addition, Lion Mining Finance Limited provides basic administrative and support services as required by the Company from time to time.
Related Party transactions described in the annual report to 31 December 2023
Other than disclosed above there have been no changes in the related parties transactions described in the annual report for the year ended 31 December 2023 that could have a material effect on the financial position or performance of the Company in the first six months of the current financial year
Responsibility Statement
The Directors, whose names and functions are set out in this report under the heading Company Board, are responsible for preparing the Unaudited Interim Condensed Consolidated Financial Statements in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority (‘DTR’) and with International Accounting Standard 34 on Interim Financial reporting (IAS34). The Directors confirm that, to the best of their knowledge, this Unaudited Interim Condensed Consolidated Report, which has been prepared in accordance with IAS34, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the interim management report includes a fair review of the information required by DTR 4.2.7 R and by DTR 4.2.8 R, namely:
· an indication of key events occurred during the period and their impact on the Unaudited Interim Condensed Consolidated Financial Statements and a description of the principal risks and uncertainties for the second half of the financial year; and
· material related party transactions that have taken place during the period and that have materially affected the financial position or the performance of the business during that period.”
For and on behalf of the Board of Directors
Colin Bird
Executive Chairman
27 September 2024
| Kendrick Resources Plc:
Chairman
|
Tel: +44 2039 616 086
Colin Bird |
| Novum Securities
Financial Adviser Joint Broker |
Tel: +44 7399 9400
David Coffman / George Duxberry Jon Bellis
|
| Shard Capital Partners LLP
Joint Broker |
Tel: +44 207 186 9952
Damon Heath / Isabella Pierre
|
or visit https://www.kendrickresources.com/
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 (“UK MAR”).
The full Kendrick Resources PLC Interim Results for the Six Months Ended 30 June 2024 are available in our Financial Reports section here.