Company Registration No. 06242518 (England and Wales)
South Crofty Limited
Unaudited financial statements
for the year ended 31 January 2023
Pages for filing with the registrar
South Crofty Limited
Contents
Page
Statement of financial position
1 - 2
Notes to the financial statements
3 - 12
South Crofty Limited
Statement of financial position
As at 31 January 2023
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
5
20,119,256
12,153,070
Tangible assets
4
5,104,077
2,989,436
25,223,333
15,142,506
Current assets
Debtors
6
543,159
156,378
Cash at bank and in hand
89,327
17,124
632,486
173,502
Creditors: amounts falling due within one year
7
(10,868,239)
(7,211,666)
Net current liabilities
(10,235,753)
(7,038,164)
Net assets
14,987,580
8,104,342
Capital and reserves
Called up share capital
8
14,774,106
7,814,137
Revaluation reserve
9
560,381
560,381
Profit and loss reserves
(346,907)
(270,176)
Total equity
14,987,580
8,104,342

The directors of the company have elected not to include a copy of the income statement within the financial statements.true

For the financial year ended 31 January 2023 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

Page 1
South Crofty Limited
Statement of financial position (continued)
As at 31 January 2023
The financial statements were approved by the board of directors and authorised for issue on 13 October 2023 and are signed on its behalf by:
Owen Mihalop
Director
Company Registration No. 06242518
Page 2
South Crofty Limited
Notes to the financial statements
For the year ended 31 January 2023
1
Accounting policies
Company information

South Crofty Limited is a private company limited by shares incorporated in England and Wales. The registered office is Osprey House, Malpas Road, Truro, TR1 1UT.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence based on the support of the parent company for the foreseeable future. As such, the directors have adopted the going concern basis of accounting in preparing the financial statements.

 

The directors are aware that the company is in a net current liabilities position, however, they have received a letter of support from the ultimate parent, Cornish Metals Inc, which confirms their support of the company for at least twelve months from the signing of the financial statements.

1.3
Intangible fixed assets other than goodwill

Exploration and evaluation assets are capitalised under intangible assets on an individual prospect basis until such time as an economic ore body is defined or the prospect is abandoned. When it is determined that such costs will be recouped through development and exploitation, the capitalised expenditure is transferred to tangible assets and depreciated over the expected productive life of the asset. Costs for a producing prospect are amortised on a unit-of-production method based on the estimated life of the ore reserves, while costs for the prospect abandoned are written off.

 

An impairment review for deferred exploration and evaluation assets is carried out on a project by project basis, with each project representing a single cash generating unit. An impairment review is undertaken when indicators of impairment arise by typically when one or more of the following circumstances apply:

 

Page 3
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies (continued)

The recoverability of the amounts capitalised for the undeveloped exploration and evaluation assets is dependent upon the determination of economically recoverable ore reserves, confirmation of the company's interest in the underlying mineral claims, the ability to farm out its exploration and evaluation assets, the ability to obtain the necessary financing to complete their development and future profitable production or proceeds from the disposition thereof.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land
Not depreciated
Plant and equipment
5 years straight line
Fixtures and fittings
10 years straight line
Computer equipment
3 years straight line
Motor vehicles
4 years straight line
Water treatment plant
Asset not available for use so not depreciated

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Impairment of fixed assets
Page 4

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies (continued)
Page 5

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.7
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies (continued)
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

1.8
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.9
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Page 6
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies (continued)

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.10
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.12
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Page 7
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
2
Critical accounting judgements and key sources of estimation uncertainty (continued)
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Exploration and evaluation assets

Recorded costs of exploration and evaluation assets are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty and it is reasonably possible, based on existing knowledge, that changes in future conditions could require a material change in the recognised amount.

3
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Total
25
16

Employee costs that are directly attributable to the exploration and evaluation of the South Crofty mine are capitalised as intangible assets.

Page 8
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
4
Tangible fixed assets
Land and buildings
Plant and machinery etc
Water treatment plant
Total
£
£
£
£
Cost
At 1 February 2022
859,000
238,876
2,055,296
3,153,172
Additions
-
0
631,783
1,900,002
2,531,785
Disposals
-
0
(33,500)
-
0
(33,500)
Transfers
-
0
-
0
(327,214)
(327,214)
At 31 January 2023
859,000
837,159
3,628,084
5,324,243
Depreciation and impairment
At 1 February 2022
-
0
163,736
-
0
163,736
Depreciation charged in the year
-
0
89,930
-
0
89,930
Eliminated in respect of disposals
-
0
(33,500)
-
0
(33,500)
At 31 January 2023
-
0
220,166
-
0
220,166
Carrying amount
At 31 January 2023
859,000
616,993
3,628,084
5,104,077
At 31 January 2022
859,000
75,140
2,055,296
2,989,436

The water treatment plant is still under construction and therefore has not been depreciated as per the accounting policy. Certain costs from prior years included in plant and machinery have been reclassified to intangible fixed assets to ensure consistency in categorisation. Included in plant and machinery are £323,830 of assets which are being commissioned and are not currently depreciated. Depreciation will commence once these assets are complete and available.

 

Page 9
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
5
Intangible fixed assets
Exploration and evaluation asset
£
Cost
At 1 February 2022
12,153,070
Additions
7,638,972
Transfers
327,214
At 31 January 2023
20,119,256
Amortisation and impairment
At 1 February 2022 and 31 January 2023
-
0
Carrying amount
At 31 January 2023
20,119,256
At 31 January 2022
12,153,070

The exploration and evaluation assets are in relation to the South Crofty Tin Project and associated mineral rights in Cornwall, UK. The company holds the rights to the South Crofty underground mine permission area, plus additional mineral rights located in various parts of Cornwall.

 

The associated development costs of evaluating the technical feasibility and commercial viability of the mine have been capitalised.

 

6
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
28,748
-
0
Other debtors
514,411
156,378
543,159
156,378
Page 10
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
7
Creditors: amounts falling due within one year
2023
2022
£
£
Amounts owed to parent undertaking
9,524,721
6,959,969
Trade creditors
977,893
189,869
Taxation and social security
29,429
10,994
Other creditors
4,996
4,851
Accruals and deferred income
331,200
45,983
10,868,239
7,211,666

Amounts owed to parent undertakings are interest free and repayable on demand.

8
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 10p each
147,741,065
78,141,370
14,774,106
7,814,137

During the year 69,599,695 ordinary shares were issued at par value in exchange for the settlement of the intercompany payable due to the immediate parent undertaking, Cornish Metals Limited, as at 31 January 2022.

9
Revaluation reserve
2023
2022
£
£
At the beginning and end of the year
560,381
560,381

Assets were revalued at deemed cost for £560,381 on the date the company was bought out of administration. The revaluation reserve is considered to be non-distributable.

10
Related party transactions

Related party transactions with other wholly owned group entities have not been disclosed in accordance with the exemption available under Section FRS 102 33.1a.

Page 11
South Crofty Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
11
Parent company

The company is controlled by Cornish Metals Limited whose ultimate owner is Cornish Metals Inc., a company incorporated in Canada. Their registered office is Suite 960-789 West Pender Street, Vancouver, British Columbia, Canada, V6C 1HC.

Page 12
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