REGISTERED NUMBER: |
REPORT OF THE DIRECTOR AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
REGISTERED NUMBER: |
REPORT OF THE DIRECTOR AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Page |
Company Information | 1 |
Report of the Director | 2 |
Statement of Director's Responsibilities | 4 |
Report of the Independent Auditors | 5 |
Statement of Comprehensive Income | 9 |
Balance Sheet | 10 |
Statement of Changes in Equity | 11 |
Notes to the Financial Statements | 12 |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
DIRECTOR: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
55 Baker Street |
London |
W1U 7EU |
BANK: |
13 Library Place |
St. Helier |
Jersey |
JE4 8NE |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
REPORT OF THE DIRECTOR |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The director presents his report with the financial statements of the company for the year ended 31 December 2023. |
PRINCIPAL ACTIVITY |
The principal activity of Euromax Resources (Macedonia) UK Limited ("Company") is as an investment holding company that holds a 15% interest in Euromax Resources DOO Skopje ("EoX DOO Skopje") and also provides intergroup funding to allow EoX DOO Skopje to continue its exploration and development of the Ilovica-Shtuka gold-copper project in Macedonia ("Ilovica-Shtuka Project"). EoX DOO Skopje holds 100% interest of the Ilovica-Shtuka Project. |
The Company is a private company limited by shares. |
REVIEW OF BUSINESS |
The Company is a 100% subsidiary undertaking of Euromax Resources Ltd, a company registered in British Columbia, Canada. |
The Company was incorporated on 20 November 2012, as an investment holding company and since incorporation its principal activity has been an investment holding company that has provided funding to EoX DOO Skopje. |
On 20 October 2014, the Company entered into a Gold Purchase and Sale Agreement ("GPSA") with Royal Gold, AG ("Royal Gold"), under which the Company and EoX DOO Skopje agreed to sell an equivalent of 25% of future gold production from the Ilovica-Shtuka Project to Royal Gold to a maximum of 525,000 ounces and then 12.5% gold produced thereafter. In consideration, Royal Gold will pay US$175 million to the Company as an advance payment on the purchase of Ilovica-Shtuka Project's future gold production. No funds were received under the GPSA since 2016, while during 2015, the Company received US$11.25 million from the initial tranche and the first anniversary tranche. In addition, the Company will enter a "back-to-back" gold streaming agreement with EoX DOO Skopje prior to commencement of production from the Ilovica-Shtuka Project. |
The Company has continued performing its principal activities up to the date of this directors' report and the Company's directors anticipate that this will continue into the future. |
The directors have reviewed the going concern status of the Company and have determined that for these financial statements they should be prepared on a going concern basis, however, there is a material uncertainty with respect to the Company's ability to continue as a going concern as described in Note 1 to the financial statements. |
The functional and presentational currency of the Company is Euros. |
DIVIDENDS |
The Company incurred a loss for the year after tax of €392,201 (2022: €356,734). The directors do not recommend the payment of a dividend. |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTOR |
The directors who held office during the year were as follows: |
- Timothy Morgan-Wynne |
The director benefited from qualifying third party indemnity provisions in place during the year and at the date of this report. |
POLITICAL DONATIONS AND EXPENDITURE |
The Company made no political or charitable donations nor incurred any political expenditure during the period. |
POLICY AND PRACTICE ON PAYMENT OF CREDITORS |
It is the Company's policy to settle all amounts owing to creditors in accordance with the terms of credit agreed with each supplier. |
At 31 December 2023, all creditors were paid off (2022: there were 213 days purchase in trade creditors). |
STRATEGIC REPORT |
The Company has taken the small companies' exemption available under s.414B of the Companies Act 2006, to not prepare a strategic report for the year ended 31 December 2022. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
REPORT OF THE DIRECTOR |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
AUDITORS |
Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and BDO UK LLP will therefore continue in office. |
ON BEHALF OF THE BOARD: |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
STATEMENT OF DIRECTOR'S RESPONSIBILITIES |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including Financial Reporting Standard 101 "Reduced Disclosure Framework". Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. |
In preparing these financial statements, the directors are required to: |
- select suitable accounting policies and then apply them consistently; |
- make judgements and accounting estimates that are reasonable and prudent; |
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
Opinion |
We have audited the financial statements of Euromax Resources (Macedonia) UK Limited (the 'company') for the year ended 31 December 2023 which comprise the Income Statement, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 'Reduced Disclosure Framework' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Material uncertainty related to going concern |
We draw attention to Note 1 to the financial statements, which indicates that the Company is reliant on the Euromax Resources Limited ("Group") for financial support. The Group consolidated financial statements included a material uncertainty related to going concern which has a direct impact on the Group's ability to financially support the Company. As stated in Note 1, these events or conditions, along with other matters set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. |
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The director is responsible for the other information. The other information comprises the information in the Report of the Director and the Statement of Director's Responsibilities, but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Report of the Director has been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Director. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of director's remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit; or |
- | the director was not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption from the requirement to prepare a Strategic Report. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on page four, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Non-compliance with laws and regulations |
Based on: |
- Our understanding of the Company and the industry in which it operates; |
- Discussion with management and those charged with governance; and |
- Obtaining and understanding of the Company's policies and procedures regarding compliance with laws and regulations. |
we considered the significant laws and regulations to be the Companies Act 2006, the applicable accounting framework, the UK Bribery Act 2010, and the UK tax legislation. |
Our procedures in respect of the above included: |
- Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; |
- Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations; |
- Review of financial statement disclosures and agreeing to supporting documentation; |
- Involvement of tax specialists in the audit; and |
- Review of legal expenditure accounts to understand the nature of expenditure incurred. |
Fraud |
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: |
- Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; |
- Obtaining an understanding of the Company's policies and procedures relating to: |
- Detecting and responding to the risks of fraud; and |
- Internal controls established to mitigate risks related to fraud; |
- Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; |
- Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; |
- Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and |
- Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. |
Based on our risk assessment, we considered the area's most susceptible to fraud to be management override of controls through inappropriate journal entries, and bias in key estimates and judgements. |
Our procedures in respect of the above included: |
- Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation; |
- Performing a detailed review of the Company's year-end adjusting entries and investigated any that appear unusual as to nature or amount and agreeing to supporting documentation; and |
- Assessing significant judgements and estimates as stated in Note 1 to the financial statements made by management for bias. |
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. |
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
55 Baker Street |
London |
W1U 7EU |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
STATEMENT OF COMPREHENSIVE |
INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2023 | 2022 |
Notes | € | € |
TURNOVER | 3 |
Administrative expenses |
OPERATING LOSS and |
LOSS BEFORE TAXATION | 6 | ( |
) | ( |
) |
Tax on loss | 7 |
LOSS FOR THE FINANCIAL YEAR | ( |
) | ( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
( |
) |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
BALANCE SHEET |
31 DECEMBER 2023 |
2023 | 2022 |
Notes | € | € | € | € |
FIXED ASSETS |
Investments | 8 |
CURRENT ASSETS |
Debtors | 9 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 10 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CAPITAL AND RESERVES |
Called up share capital | 11 |
Retained earnings | ( |
) | ( |
) |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the director and authorised for issue on |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
€ | € | € |
Balance at 1 January 2022 | ( |
) |
Changes in equity |
Issue of share capital | - |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 31 December 2022 | ( |
) |
Changes in equity |
Issue of share capital | - |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 31 December 2023 | ( |
) |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | STATUTORY INFORMATION |
Euromax Resources (Macedonia) UK Limited is a private company limited by shares incorporated on 20 November 2012 under the Companies Act and is domiciled in the United Kingdom. The Company's registered office is 5-9 Eden Street, Kingston-Upon-Thames, Surrey KT1 1BQ, United Kingdom. |
The Company has chosen the presentation currency of the financial statements as Euros. The functional currency is also Euros given it is the currency of the primary economic environment in which the Company operates. |
These financial statements are separate financial statements. The Company is exempt from the preparation of consolidated financial statements because it is included in the consolidated financial statements of Euromax Resources Ltd and its controlled entities ("Group"). The consolidated financial statements of the Group are available to the public. |
2. | ACCOUNTING POLICIES |
Basis of preparation |
As permitted by FRS 101, exemptions from applying the following requirements have been adopted: |
a) IFRS 7 'Financial Instruments: Disclosures'; |
b) IFRS 13 'Fair Value Measurement' paragraphs 91 to 99; |
c) IAS 1 'Presentation of Financial Statements' paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136, as well as paragraph 38 for presenting the comparative information in respect of 79(a) of IAS 1; |
d) IAS 7 'Statement of Cash Flows'; |
e) IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' paragraphs 30 and 31; |
f) IAS 24 'Related Party Disclosures' paragraphs 17 and 18A; and |
g) IAS 36'Impairment of Assets' paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c). |
The Company has also taken advantage of the exemption from the requirements of IAS 24 'Related Party Disclosures' to disclose related party transactions entered into between two or more members of the Group where those party to the transaction are wholly owned by a member of the Group. |
The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below. |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Significant judgements and estimates |
In preparing these accounts in accordance with accounting standards, the director's consider there to be no critical accounting judgements that have a significant effect on the amounts recognised in these financial statements. The directors have identified the following key area of estimation as significant to these financial statements. |
Loss allowance for the expected losses on financial assets |
The Company applies IFRS 9 Financial instruments (IFRS 9) which requires recognising a loss allowance for the expected losses on a financial assets. |
At 31 December 2023 the Company had provided three loan facilities (2022: three) in total of €16,614,118 (2022: €16,012,241) and receivable of €5,988,116 (2022: €5,988,116) for paid services performed for the Ilovica-Shtuka Project. Based on the provisions of IFRS 9, management made assumptions that the expected credit losses on a financial asset at 31 December 2023 was still assessed at 20% of the gross carrying amount of the asset (2022: 20%). Therefore, an additional loss allowance of €199,000 (2022: €143,003) was recognized during 2023. |
These financial assets will ultimately be recovered through the successful development of the Ilovica-Shtuka Project. The Group has a Feasibility Study for the Ilovica-Shtuka Project, announced on 6 January 2016, which demonstrates a post-tax NPV (5%) of US$440 million which demonstrates a potential economic return which would allow recovery of these financial assets. |
Carrying value of investment (Note 9) |
The Company reviews the carrying value of its investment in the Ilovica-Shtuka Project to determine whether there is any indication that the asset should be impaired which includes whether there are plans for further activity and exploration. The calculated recoverable amount may be based on assumptions about future events or circumstances and estimates and assumptions may change if new information becomes available. If, after expenditures are capitalised, information becomes available suggesting that the recovery of the expenditures is unlikely, the amount invested is impaired with a corresponding charge to profit or loss in the period in which the new information becomes available. |
Based on the assumption of a positive resolution of the local legal disputes regarding to the termination of the exploitation concession for Ilovica 6 ("Termination of Ilovica 6"), which would secure the legal title over exploitation concession for Ilovica 6, and therefore would provide opportunity for further progressing the Ilovica-Shtuka Project, the Company believes that as at December 31, 2013 there is no need for impairment of the investment in the Ilovica-Shtuka Project. |
Non-derivative financial instruments |
Non-derivative financial instruments are initially measured at fair value adjusted by any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method less any provision for impairment. |
Taxation |
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. |
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by IAS 12. |
Foreign currencies |
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the contracted rate or the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the profit and loss account. |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Going concern |
These financial statements have been prepared on a going concern basis which assumes the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. |
As at 31 December 2023, the Company had net assets of €12,111,380 (2022: €11,156,081), net current liabilities of €10,195,673 (2022: €10,748,095) and cash at bank and in hand of €1,582 (2022: €1,845). The Company incurred a loss of €392,201 (2022: €356,734). |
The Company's going concern is dependent on its receivables from the entities within the Group being settled as per the cashflow forecast produced by the Directors and therefore its going concern has been assessed at a Group level. The Group consolidated financial statements included a material uncertainty related to going concern as explained below which would have a direct impact on the Group's ability to repay the Company. |
As at December 31, 2023, the Group had net liabilities of C$5.3 million (2022: C$8.9 million) and a net working capital deficiency of C$43.5 million (2022: C$46.5 million). The Group's C$43.5 million working capital deficiency as at December 31, 2023 largely results from: |
- Convertible loans of C$27.7 million (2022: C$26.2 million) with EBRD and with CCI, which are classified as current; and |
- Gold purchase advance payments of C$14.9 million (2022: C$15.2 million) received from Royal Gold which are repayable within 60 days of receiving a termination notice to the Gold Purchase and Sale Agreement. |
These two items were classified as at December 31, 2023 as current liabilities, however, subsequent to the year end, the convertible loans' maturity date was extended to February 28, 2025. Both convertible loans are convertible into Euromax Resources Ltd's common shares at the election of EBRD and CCI on or before their maturity. As at the date of these financial statements no termination or repayment notice has been received from Royal Gold. |
On January 24, 2023 the Group closed a non-brokered private placement for gross proceeds of US$3 million, and following that, both convertible notes of US$1.25 million, issued in the year ended December 31, 2022, were converted into Euromax Resources Ltd's common shares on January 26, 2023. |
Subsequent to December 31, 2023, during May 2024 the Group closed the 2024 Private Placement for gross proceeds of US$0.913 million |
The Group's board of directors has reviewed the Group's forecasts for the period ended December 31, 2025, in which are included all committed costs for maintaining the Ilovica-Shtuka Project, and are prepared based on the following major assumptions: |
- the convertible loans which have potential contractual cash outflows at February 28, 2025 of C$30.2 million will either be converted into Euromax Resources Ltd's common shares or further extended to mature beyond the forecast period; and |
- neither termination nor repayment notices will be received from Royal Gold for the period ended December 31, 2025. |
Based on these forecasts, the directors have identified that further funding will be required to: |
- cover the committed costs for maintaining the Ilovica-Shtuka Project from September 2024 and going forward, including covering the local legal costs for the ongoing and potential administrative processes until the final approval of the request for the Merger; |
- cover any costs associated with international arbitration (should management pursue this), in respect of recovering the investment in the Ilovica-Shtuka Project; |
- repay the gold purchase advance payments, if termination or repayment notice is received from Royal Gold; |
- repay both convertible loans, if neither are further extended in 2025 or converted into the Euromax Resources Ltd's common shares; |
- ultimately construct and bring the Ilovica-Shtuka Project into commercial production. |
The Group's directors note that the level of funding required is dependent on both the outcome and duration of the administrative process for getting approval of the Merger. |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Given the above factors, the Group will need to raise additional funds from September 2024 either through equity (supported by existing shareholders or new shareholders) or by further debt. |
These events are outside of the Group's control, and as such, a material uncertainty exists which may cast significant doubt about the Group's continued ability to operate as a going concern and its ability to realise its assets and discharge its liabilities in the normal course of business. |
The uncertainty regarding the Group's ability to operate as a going concern directly impacts the repayment due to the Company by the Group and the Company's ability to continue as a going concern, and therefore this represents a material uncertainty to the Company which may cast significant doubt over the Company's ability to continue as a going concern and its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments that would arise if the Company were unable to continue as a going concern. |
Cash at bank and in hand |
Cash comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market. |
Interest income |
Interest income is recognised on a time proportion basis using the effective interest rate method. |
Share capital |
Share capital is the amount subscribed for share capital at the nominal value. |
Accumulated losses/ retained earnings |
This reserve shows accumulated profit/loss and net gains and losses. |
Investments |
Investments in subsidiary are stated at cost. |
Receivables |
The Company applies IFRS 9 Financial instruments (IFRS 9), whereby IFRS 9 provides a revised model for recognition, measurement and impairment of financial instruments. |
3. | TURNOVER |
The Company did not generate any turnover during the year. |
4. | EMPLOYEES AND DIRECTORS |
The Company had no employees during the year (2022: no employees). |
5. | DIRECTORS' EMOLUMENTS |
During the period no director emoluments or long term incentive plans were paid by the Company. |
These were borne by Euromax Resources UK (Services) Limited, another group company. |
6. | LOSS BEFORE TAXATION |
The loss before taxation is stated after charging/(crediting): |
2023 | 2022 |
€ | € |
Foreign exchange differences | ( |
) |
Expected credit loss on financial assets | 199,000 | 143,003 |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
6. | LOSS BEFORE TAXATION - continued |
Auditor's remuneration: |
The audit fees for the Company were borne by Euromax Resources UK (Services) Limited, another group company. No non-audit fees were incurred during the year. |
7. | TAXATION |
Analysis of tax expense |
No liability to UK corporation tax arose for the year ended 31 December 2023 nor for the year ended 31 December 2022. |
Factors affecting the tax expense |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2023 | 2022 |
€ | € |
Loss before income tax | ( |
) | ( |
) |
Loss multiplied by the standard rate of corporation tax in the UK of |
(74,518 |
) |
(67,779 |
) |
Effects of: |
Expenses not deductible for tax purposes | 37,810 | 27,170 |
Losses carries forward | 36,708 | 40,609 |
Tax expense |
At 31 December 2023, the Company has unrecognised tax losses amounting to €2,149,085 or £1,862,827 (2022: €1,914,514 or £1,694,709). |
8. | INVESTMENTS |
Shares in |
group |
undertakings |
€ |
COST |
At 1 January 2023 |
and 31 December 2023 | 4,303,890 |
NET BOOK VALUE |
At 31 December 2023 | 4,303,890 |
At 31 December 2022 | 4,303,890 |
9. | DEBTORS |
2023 | 2022 |
€ | € |
Amounts falling due within one year: |
Prepayments |
Amounts falling due after more than one year: |
Amounts owed by group undertakings |
Aggregate amounts |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
9. | DEBTORS - continued |
At 31 December 2023, the Company has provided two loan facilities to Euromax Resources DOO Skopje in total of €16,598,397 (2022: €15,998,271), reduced by accumulated assessed allowance for expected credit loss of €3,398,654 (2022: €3,199,654). Based on the provisions of IFRS 9, management made assumption that the expected credit losses on a financial asset at 31 December 2023 was still assessed at 20% of the gross carrying amount of the asset (2022: 20%), and therefore an additional expense of €199,000 for loss allowance was recognised in 2023 (2022: €258,203). |
These financial assets will ultimately be recovered through the successful development of the Ilovica-Shtuka Project. |
The first loan facility has a maximum facility of US$15 million and €11,660,397 or US$12,868,881 (2022: €12,055,271 or US$12,868,881) were used under that facility, and allowance of €2,411,054 was recognised at 31 December 2023 (2022: €2,411,054). The first loan facility is non-interest bearing and is repayable on demand. The movement of the loan balance as presented in Euros, during 2023 and 2022, is due to the foreign exchange difference between US dollar and Euro |
The second loan facility has a maximum facility of €10 million and €4,938,000 (2022: €3,943,000) were used under that facility, and allowance of €987,600 was recognised at 31 December 2023 (2022: €788,600). The second loan facility is non-interest bearing and is repayable on demand. |
For both loan facilities, the Company has contractual right to call on demand such that the asset has not been discounted to reflect the interest free nature. Given the intent to hold the loan until term and likely inability of the counterparty to pay the loan on demand, the receivable is presented as a non-current asset. |
Third loan of €15,721 (2022: €13,970) has been provided to Euromax Resources UK (Services) Limited. This loan facility has a maximum facility of €2 million, and it is non-interest bearing fully repayable on 30 September 2024. However, given the nature of the funding is for supporting of the Group's activities toward developing of a long-term asset (Ilovica-Shtuka Project), it is unlikely that these receivables will be called in the next 12 months. Therefore, for 31 December 2023, these receivables have been classified as a non-current asset which reflects in the period in which these assets will be realised in line with the requirements of FRS 101. Based on the provisions of IFRS 9, management made assumption that the expected credit losses on a financial asset at 31 December 2023 was still assessed at 20% of the gross carrying amount of the asset (2022: 20%), and therefore no additional expense for loss allowance was recognised in 2023 in addition to the recognised accumulated allowance for expected credit loss of €2,794 (2022: €2,794) (2022: €115,200 of the recognised expected credit loss on this financial asset was reversed due to the repayment of the loan in 2022). |
The Company had paid €5,988,116 (2022: €5,988,116), as at 31 December 2023, for the services performed for the Ilovica-Shtuka Project. These funds are going to be refunded from Euromax Resources DOO Skopje, once the Ilovica-Shtuka Project commence with its production. Based on the provisions of IFRS 9, the management made assumption that the expected credit losses on a financial asset at 31 December 2023 was still assessed at 20% of the gross carrying amount of the asset (2022: 20%), and therefore the accumulated allowance for expected credit loss on this financial asset at 31 December 2023 was €1,197,623 (2022: €1,197,623). No additional loss allowance was recognised in 2023 (2022: no additional loss allowance was recognised). |
10. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
€ | € |
Trade creditors |
Gold purchase advance payments |
Accrued expenses |
EUROMAX RESOURCES (MACEDONIA) UK LIMITED (REGISTERED NUMBER: 08300380) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
10. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR - continued |
On 20 October 2014, the Company entered into a US$175 million GPSA with Royal Gold under which the Group via its wholly-owned subsidiaries agreed to sell an equivalent of 25% of future gold production from the Ilovica-Shtuka Project to Royal Gold up to a maximum of 525,000 ounces and then 12.5% gold produced thereafter. In consideration, Royal Gold will pay US$175 million to the Group as an advance payment on the purchase of the Ilovica-Shtuka Project's future gold production. |
Under the GPSA, Royal Gold will purchase the gold delivered for a cash purchase price of 25% of the London PM gold fixing price as quoted by the London Bullion Market Association on the date of delivery for each ounce delivered and shall apply the balance as a reduction against the US$175 million advance payment. |
Upon expiry of the 40 year term of the GPSA any balance remaining unpaid relating to the advance payment shall be refunded to Royal Gold. No interest shall be payable on the advance payments. |
The repayment of the advance payments is currently secured by share pledges over the Group's shares in a number of its wholly-owned subsidiaries together with security of specific intergroup transactions and balances. |
During 2015, under the GPSA, the Company received US$11.25 million from the initial tranche and the first anniversary tranche. Following to that, there were no additional funds received under GPSA, and the balance of US$11.25 remains same since 2015. |
All advance payments received under the GPSA are classified as current liabilities until all conditions precedent for the third tranche have been satisfied. |
The balance of trade payables of €5,000 at 31 December 2023 (2022: €212,500) is related to legal fees from international legal advisor that is engaged for preparation of the legal case as an option for recovering the investment in the Ilovica-Shtuka Project by initiating potential international arbitration. |
11. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | € | € |
Ordinary | €1.00 | 19,078,755 | 17,731,255 |
No restrictions, equal rights and preferences are attached on the issued ordinary shares. |
12. | ULTIMATE PARENT COMPANY |
The Company is a subsidiary undertaking of Euromax Resources Ltd which is the ultimate parent company incorporated in British Columbia, Canada. |
The results of the Company are consolidated by Euromax Resources Ltd, incorporated in British Columbia, Canada. |
The consolidated financial statements of Euromax Resources Ltd are available to the public and may be obtained from its website (www.euromaxresources.com). |
13. | COMMITMENTS AND CONTINGENCIES |
As at 31 December 2023 the Company had no contractual commitments or contingencies. |
14. | POST BALANCE SHEET EVENTS |
Subsequent to 31 December 2023, the following subsequent events have occurred in the Group that are relevant for the Company: |
- On February 28, 2024 both EBRD convertible loan and CCI convertible loan were extended to February 28, 2025. |
- During May 2024 the Group closed a non-brokered private placement (the "2024 Private Placement") for gross proceeds of US$0.913 million. |
- During June 2024 the Group closed a non-brokered private placement for gross proceeds of C$0.066 million. |