Tectonic Gold Plc - Unaudited Interim Results to 31 December 2022

Wednesday, 29 March 2023

Tectonic Gold Plc
Half-year Report to 31 December 2022

29 March 2023

TECTONIC GOLD PLC
(“Tectonic” or the “Company”)

Unaudited Interim Results to 31 December 2022

MANAGING DIRECTOR’S STATEMENT

Dear Shareholder,

The half year to December 2022 saw a significant milestone for the Company with the successful completion of our drilling campaign at Specimen Hill. After fires, floods and COVID over the past few years, access to drilling rigs and crew was limited, but we managed to secure a team to complete core testing of the continuity of mineralisation below the old Goldsmith’s Reef mine. Assays returned grades of over 8g/t gold and 5.99 g/t silver at 110 meters down hole, with additional intersections at 240 meters. Goldsmith’s Reef is approximately mid-way along the 4km+ strike that has delivered multiple discoveries for Tectonic between the Main Lodes historic mine in the northeast where we started field work and the Southern Copper discovery in the southwest which is our most recent rediscovery.

These grades are in line with the medium to high grade production reports from historic mining of Goldsmith’s Reef in the early 1900’s. The mine was operated on a small scale down to approximately 30 meters but was abandoned during World War I and never reworked. Tectonic’s advanced geophysical surveying program prior to COVID indicated that the textbook Intrusive Related Gold System (IRGS) structure at Goldsmith’s Reef plunged to over 500 meters depth. With positive gold and copper assays from diamond drilling now confirming continuity of mineralisation, we have been able to extend our database and attract parties into due diligence to discuss a farm out investment into the project. This is well underway and we hope to report progress in the coming weeks. Our objective is to have a well-funded group complete initial resource definition on Specimen Hill with a view to developing it as a copper-gold mining project. Tectonic will utilise all of the experience from Specimen Hill in prosecuting our next project area, Mt Cassidy. This is another textbook IRGS target which has historic workings and drilling. We have conducted our advanced geophysics reconnaissance and identified major structures below the old workings which we expect to see continuity of mineralisation at depth in. We are also in discussion to take our IRGS expertise into international gold exploration opportunities.

The half year saw the team supporting our partnership with London listed Kazera Global Plc (“Kazera”) (LSE:KZG) on the Heavy Mineral Sands (HMS) and Diamond project site in South Africa. Our joint venture with Kazera in HMS in was awarded a mining license.  This is the first and so far, only mining license inside Alexkor, the South African Government controlled and operated diamond fields at Alexander Bay.  Previous testing has returned exceptional grades of HMS and independent studies conducted for Kazera valued this project at £150 million. 

Tectonic holds a 40% economic interest in this project via a non-diluting 10% equity holding in Whale Head Minerals Pty Ltd (Whale Head) and a further 30% economic interest via a sale and loan agreement with a Black Economic Empowerment (BEE) consortium. In order to ensure compliance with South Africa’s BEE regulations requiring mining projects to have a 30% holding by qualifying local investors, when Tectonic sold 60% of Whale Head to Kazera, the Company sold a further 30% to a syndicate of local investors. Pricing for this 30% was based on the £150 million independent valuation conducted on behalf of Kazera. The BEE investor syndicate includes a South African private equity group headed by a highly respected business leader, two experienced South African entrepreneurs, a local community group and an employee group. Tectonic has financed this 30% syndicate with a share loan program under which 80% of the returns to the syndicate are paid to Tectonic until the £45 million in agreed loan value has been repaid.

Tectonic holds a 10% non-diluting interest in Deep Blue Minerals Pty Ltd, Whale Head’s sister company that operates an alluvial diamond concession in the Alexkor mine site. Diamond extraction is a regulated pre-requisite before the tailings containing heavy minerals can be processed by Whale Head. Kazera has announced that both Deep Blue and Whale Head are now funded to bring into production. This could be a significant source of cash flows for Tectonic to fund Mt Cassidy and new projects for the portfolio.

With success in our existing projects, real value being cemented in our joint ventures  and new opportunities to take our pioneering work in IRGS exploration offshore, Tectonic is very optimistic about the future for our shareholders.

RESULTS AND COMPARATIVE INFORMATION

The Group incurred a loss after tax for the reporting period of £105,569 (31 Dec 2021: £198,977 (loss)).

For and on behalf of the Board.

Brett Boynton, CFA

Managing Director 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2022

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

The accompanying notes form part of these financial statements.

These financial statements were approved by the Board of Directors on 28 March 2023.

Signed on behalf of the Board by:

Brett Boynton

Managing Director                                                                                                                           

 Company number: 05173250

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2022

 The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022

The accompanying notes form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022

1. GENERAL INFORMATION

Tectonic Gold Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The consolidated entity (the “Group”) consists of Tectonic Gold Plc (“Tectonic” or the “Company”) and the entities it controlled at the end of, or during, the six months ended 31 December 2022. The principal activity of the Group during the financial period was mineral exploration.

2. BASIS OF PREPARATION

These condensed interim consolidated financial statements (“the interim financial statements”) of the Group are for the six months ended 31 December 2022 and are presented in Sterling which is the Company’s presentational currency. These interim financial statements have not been reviewed or audited.

The interim financial statements have been prepared in accordance with the recognition and measurement principles of IFRS as adopted by the European Union (EU) and on the same basis and using the same accounting policies as applied in the Company’s 2022 Annual Report and statutory accounts for the year ended 30 June 2022.

The statutory accounts for the year ended 30 June 2022 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The interim financial statements have been prepared on a going concern basis under the historical cost convention. The Directors believe that the going concern basis is appropriate for the preparation of these interim financial statements as the Company is in a position to meet all its liabilities as they fall due.

The interim financial statements for the six months ended 31 December 2022 were approved by the Board on 28 March 2023.

3. DIVIDEND

The Board is not recommending the payment of an interim dividend for the period ended 31 December 2022.

4. LOSS PER SHARE

The basic earnings per share is based on the profit/(loss) for the year divided by the weighted average number of shares in issue during the reporting period. The weighted average number of ordinary shares for the reporting period assumes that all shares have been included in the computation based on the weighted average number of days since issue.

5. OTHER ASSETS

1. In 2018 the Company paid Titeline Drilling Pty Ltd ACN 096 640 201 (Titeline) for future drilling services in accordance with the heads of agreement dated 28 March 2018 between Titeline, Signature Gold and Tectonic Gold. Titeline has been engaged to complete 10,000 meters of diamond drilling to produce core samples for analysis, assay and metallogenic studies from the Company’s Biloela Project site. A review to be completed after 2,500 metres of drilling has been completed. However, as at the date of this report the completion program required to be mutually agreed prior to the credit being applicable to the remaining 7,500 metres has not been produced and until such time as this program has been produced, this credit may not be utilised. As at 30 June 2022, the balance of the prepayment to Titeline is £354,656 (A$625,386).

As at 31 December 2022, the balance of the prepayment to Titeline is £351,780 (A$625,386), (2021:£336,208 /A$625,386) remains prepaid to Titeline.

6. EVENTS AFTER THE REPORTING PERIOD

Other than as stated elsewhere in this report, Directors are not aware of any other matters or circumstances at the date of this report that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Company in subsequent financial years.

7. DISTRIBUTION

Copies of these interim financial statements is available on the Company's website (www.tectonicgold.com) or directly from the Company at its registered address.

For further information, please contact:

Ends