213800TBL26T6GO88M13-2022-12-31-en.xhtml

YEAR ENDED 31 DECEMBER 2022

ANNUAL REPORT AND CONSOLIDATED

FINANCIAL STATEMENTS

Pembridge Resources plc

Contents

Strategic Report 2

Chairman’s and Chief Executive’s Statement 2

Principal Risks and Uncertainties and Key Performance Indicators 4

Corporate and Social Responsibility Report 7

Board of Directors and Senior Management 8

Directors’ Report 9

Governance Report 11

Directors’ Remuneration Report 14

Directors’ Responsibilities 17

Independent Auditor’s Report to the Members of Pembridge Resources Plc 18

Consolidated Financial Statements 24

Statement of Comprehensive Income 24

Consolidated Statement of Financial Position 25

Company Statement of Financial Position 26

Consolidated Statement of Changes in Equity 27

Company Statement of Changes in Equity 28

Consolidated Cash Flow Statement 29

Company Cash Flow Statement 30

Notes to the Financial Statements 31

Company Information 48

Pembridge Resources plc

Strategic Report

We are pleased to present the report and Consolidated

Financial Statements of Pembridge Resources Plc

(“Pembridge” or “the Group”) and the company

Financial Statements of Pembridge Resources Plc

(“the Company”) for the year ended 31 December 2022.

Strategy

On 17 January 2022, the Company announced its

strategic plans for the future. The Company sees a

number of opportunities in the de-carbonisation of the

energy market. To that extent during 2022 a number of

projects in the solar power generation field have been

reviewed. In mining, the Strategy sets out preference for

projects that are in production or close to production

stage and have technical reports confirming resources

and/or reserves. The key investment criteria approved

in the Company’s strategy are for equity stakes acquired

to be above 10% in projects with an IRR above 12% and

preference for projects with NPV8% above $30 million.

The objective is to complete one investment in a project

that meets the criteria set out in the Company Strategy.

Minto Metals Corp.

Since the listing of Minto Metals Corp (“Minto”) on the

Toronto Stock Exchange (TSXV) in 2021, Pembridge

continues to be represented on the Board of Minto,

with its Chairman and CEO, Gati Al-Jebouri, a director of

Minto and chairman of its Audit Committee. Because

Minto is a listed company whose shares are all voting

shares, Pembridge’s 11.1% holding does not give

the Company control or substantial influence over

Minto Metals. As a result, Pembridge accounts for

its investment in Minto as a financial asset, which is

revalued on a mark-to-market basis.

The Company lent a total of CAD 4 million to Minto to

fund Minto’s surety account during 2019 and 2020. The

loan carries interest at 8% and was due to be repaid in

full via quarterly instalments each of C$1 million during

2022, with the final interest payment in early 2023. The

first two instalments were repaid in March and June

2022 and the third instalment, which was due originally

at the end of September, has now been repaid fully

with the last C$250,000 received in December 2022.

The third instalment was partly deferred under an

agreement between Minto and Pembridge, announced

by Pembridge on 13 October 2022, to aid Minto in

funding increased reclamation security payments,

and Minto made payments in accordance with that

agreement. To continue its support to Minto in funding

its reclamation security payments, Pembridge agreed

with Minto in early January 2023 to spread the fourth

instalment of C$1 million over the first half of 2023

with payments of C$500,000 due on 31 March and

30 June with the interest accumulated, which will be

approximately C$1m in addition to the C$1m principal,

due at the end of September 2023.

Negotiations are ongoing between Capstone Copper

Corp (“Capstone”), Minto and Pembridge in respect

of the timing of both the USD 5 million final payment

due to Capstone and of Minto repaying the last surety

funding due to Pembridge, being the remaining

principal of CAD 1 million and accumulated interest

including the amount that was due on 31 March 2023.

Pembridge’s management expect these negotiations to

reach a constructive conclusion in the near term.

Cost saving measures

Since 31 December 2022, Pembridge has introduced

cost saving measures, the main ones being that its

CEO and Chairman has agreed to defer his salary

effective from March until September 2023 and the

company’s CFO has agreed to move to a part-time

basis with a corresponding cost saving effective from 1

April. In addition, because of Pembridge’s limited cash

resources, it has agreed with Gati Al-Jebouri that the

interest that became payable on its loan from him on

31 March 2023 will be added to the loan principal.

Renegotiation of loan from Chairman and CEO

Between 2019 and 2021, Gati Al-Jebouri lent a total of

£3,575,000 to Pembridge under an agreement that was

to mature at the end of 2022, under which drawdown

fees and interest accrued on the loan were not paid to

Mr Al-Jebouri but added to the loan principal. On 18

November 2022 the Company announced that it had

made a repayment of £280,261 and extended the term

of the loan’s remaining balance of £4,673,773 under a

new loan agreement. The key terms of the new loan are:

• Repayment of loan by 31 December 2025

• 14% interest rate per annum

• Company’s right to dispose of any of its assets is

subject to lender’s prior approval

Chairman and Chief Executive’s Statement

“The Company sees a

number of opportunities

in the de-carbonisation

of the energy market”

Convertible Loan Notes

In June 2021 Pembridge raised debt of USD$3 million

using 14% Convertible Loan Notes, which was used

exclusively for the purchase of additional newly issued

shares in Minto Metals Corp. (“Minto”) when it became

listed on the Toronto Stock Exchange at the IPO price

of CAD$2.60 per share, giving Pembridge an overall

equity stake in Minto of 11.1%. The Convertible Loan

Notes had a maturity date of 31 May 2023. Since 31

December 2022, Pembridge has reached agreement

with the Convertible Loan Note holders to extend the

repayment period to May 2025, with interest payments

being made at the same 14% per annum each year

on or around 31 May of each year, with Pembridge

having the right to defer payment of interest until

May 2025 if the cash position of Pembridge does not

permit the payment of interest. In return, Pembridge

has agreed that the accrued interest up to 31 January

2023 is to be settled at the time of the new terms being

accepted by each Convertible Loan Note investor and

for the conversion price to be reduced from £0.08

to £0.0375 per share, expressed as 4.65 USD cents

at the exchange rate of GBP1:USD1.24 when the

arrangement was proposed.

Pembridge Resources Bulgaria LLC

On 6 April 2022, a new subsidiary was formed in

Bulgaria, called Pembridge Resources Bulgaria LLC.

This company acts as a regional office to evaluate

possible local projects. It is owned 80% by Pembridge

Resources plc and its results since formation are

included in these results. The new subsidiary had one

employee at 31 December 2022.

Share capital

The share capital issued in 2022 comprised 3,200,000

shares issued in January 2022 at 5p per share in

exchange for cash of £160,000 and the conversion of

the convertible loan note for £80,000 issued to Gati

Al-Jebouri in December 2021, for which the cash was

received in 2021, into equity at 5p per share.

Financials

During the year the Group made a loss of $8,013,000

(2021 – profit of $20,580,000). The operating loss

for the year of $7,076,000 comprised a loss on mark-

to-market revaluation of the Company’s investment

in Minto of US$6,215,000, reflecting Minto’s share

price on 31 December 2022 in accordance with IFRS

requirements for valuation of financial assets, and

administrative costs of $816,000.

The operating profit for 2021 of $21,225,000

comprised exceptional gains of $18,571,000 resulting

from the assumption of the Capstone liability by

Minto Metals Corp. as part of the reverse takeover

process, a gain on mark-to-market revaluation of the

Company’s investment in Minto of US$3,800,000 and

administrative costs of $1,146,000.

Pembridge Resources plc

Strategic Report

Principal Risks and Uncertainties

Directors have identified the following as the principal risks and uncertainties facing the Group and Company.

Nature of Risk How we manage it

Funding Risk

The Company may need to secure additional funding

to cover working capital need or to make investments.

Impact

Shortage of cash for operational costs.

The Company has liquid investments in the

form of its shares in Minto Metals Corp, expects

to receive cash from Minto in the form of debt

repayments and future dividends and has the

capability to raise funds through equity and

loans from shareholders and other sources.

Investment Risk

The investments the Company makes may fail to

generate value, or an inability to find investment

opportunities at a suitable price may hold

the Company back in achieving its aims.

Impact

The Company may not be able to fulfil its aims,

or investments may have to be impaired.

Pembridge has a comprehensive investment

policy and strategy, as outlined in its Financial

Prospects Policy (“FPP”) procedures, that will

assist in prudent measures being made to

identify and perform due diligence on the

investments that the Company makes.

Pembridge Resources plc

Strategic Report

Principal Risks and Uncertainties

Nature of Risk How we manage it

Copper Price Risk

Because the Company’s main asset is its investment

in a copper mine, the value of the Company is

dependent partly on the market value of copper.

Impact

A high copper price will make it easier for the

Company to raise funds and a lower copper

price will lead to a lower share price.

Demand for copper is widely considered to be a

growth area for the medium term. In addition,

management are considering other areas of

investment to enable diversification of risk.

Regulatory Risk

As a listed company, Pembridge has to comply

with relevant laws and listing rules.

Impact

Failure to comply with regulations can result in penalties.

The Company has appointed experienced

management and has advisors whose

knowledge of the regulatory environment

enables them to ensure compliance.

Human Resources Risk

The achievement of the Company’s objectives

will be dependent on the Company attracting

and retaining qualified and motivated staff.

Impact

The efficiency of a particular aspect of the

Company’s operations could be affected

leading to reduced profitability.

The Company has attracted and will retain

a qualified team by providing a competitive

remuneration policy, which includes

financial performance incentives so as to

align the team with its shareholders.

Pembridge Resources plc

Strategic Report

Principal Risks and Uncertainties

Business Review & Development

A review of the business and its operations

can be found in the Chairman’s and Chief

Executive’s statement on page 2.

Section 172(1) statement

The Board of Pembridge Resources plc is aware that

the decisions we make may affect the lives of many

people. The Board makes a conscious effort to try and

understand the interests of our stakeholders, and to

reflect them in the choices we make in creating

long-term sustainable success for the business.

The Board views engagement with our shareholders

and wider stakeholder groups as essential work. We

are aware that we need to listen to each stakeholder

group, so that we can understand specific interests,

and foster effective and mutually beneficial

relationships. By understanding our stakeholders, we

can build their needs into the decisions we take.

Throughout this Annual Report, we

provide examples of how we:

• Consider the likely consequences of

long-term decisions;

• Foster relationships with stakeholders;

• Understand our impact on our local community

and the environment; and

• Demonstrate the importance of behaving responsibly.

This section serves as our section 172 statement

and should be read in conjunction with the Strategic

Report and the Company’s Corporate Governance

Statement. Section 172 of the Companies Act 2006

(CA) requires Directors to act in a way that they

consider, in good faith, would most likely promote

the success of the Company for the benefit of

its members as a whole, taking into account the

following factors (among others) listed in S172:

(a) the likely consequences of any decision in the

long term,

(b) the interests of the company’s employees,

relationships with suppliers, customers and others,

(d) the impact of the company’s operations on

the community and the environment,

(e) the desirability of the company maintaining

a reputation for high standards

of business conduct, and

(f) the need to act fairly as between members of

the company.

The Directors continue to have regard to the

interests of the Company’s employees and other

stakeholders, including the impact of its activities on

the community, the environment and the Company’s

reputation, when making decisions. Acting in good

faith and fairly between members, the Directors

consider what is most likely to promote the success

of the Company for its members in the long term.

The Board regularly reviews our principal stakeholders

and how we engage each group. The relevance of

each stakeholder group may increase or decrease

depending on the matter or issue in question,

so the Board seeks to consider the needs and

priorities of each stakeholder group during its

discussions and as part of its decision making

Minto

Since the listing of Minto Metals Corp (“Minto”) on the

Toronto Stock Exchange (TSXV) in 2021, Pembridge

continues to be represented on the Board of Minto,

with its Chairman and CEO, Gati Al-Jebouri, a director

of Minto and chairman of its Audit Committee.

Gati Al-Jebouri

Chairman and Chief Executive Officer

27 April 2023

Pembridge Resources plc

Corporate and Social Responsibility Report

Pembridge is committed to complying with all

Health and Safety, environmental and social

legislation and protecting the health and general

wellbeing of its employees. It is committed to

preserving the environment.

Environment

As a company focused on mining and renewable

energy, concern for the environment is of utmost

importance to Pembridge. It is our policy to

reduce to a minimum the potential environmental

impact of our activities and have a positive

impact on the areas in which we operate.

Health, Safety and Security

The health, safety and security of the personnel

and communities in which we operate takes priority

in the management of our operations. Our goal

is to prevent injury and ill health to employees by

providing a safe and healthy working environment

and by minimising risks associated with occupational

hazards. The Company requires the same

standards in the businesses in which it invests.

Business Ethics

Pembridge is committed to carrying out all its

operations with high moral and legal standards.

Pembridge has an anti-corruption and anti-bribery

policy which are in line with the requirements

of the UK Bribery Act and equivalent legislation

in other countries where it operates. Staff and

contractors are made aware of their obligations

both on recruitment and by periodical updates.

Gati Al-Jebouri

Chairman and Chief Executive Officer

27 April 2023

Corporate and Social Responsibility Report (CSR)

Pembridge Resources plc

Board of Directors and Senior Management

David James, Chief Financial Officer and Company Secretary

Mr. James is a Chartered Accountant, having qualified with KPMG in 1995. David has had

a varied career including time spent in Budapest, Hungary and in blue chip multinational

groups, followed by 10 years running his own business as a consolidation and reporting

specialist, providing financial reporting services mainly to multinational listed companies,

before joining the Company full time in February 2020.

Board of Directors and Senior Management

Gati Al-Jebouri, Chairman and Chief Executive Officer

Mr Al-Jebouri, who was born in Bulgaria in 1969, graduated from the University of

Bristol with a Civil Engineering degree in 1990 and became a member of the Institute of

Chartered Accountants in 1994. In 2001 he was appointed Deputy Minister of Energy

of Bulgaria and in 2002 Bulgaria’s First Deputy Minister of Finance. His varied career

has included working for the accountancy firm KPMG in London and Bulgaria until

being recruited to LUKOIL, where he soon became Director of investment and Finance

in the London office. In 2003 he became Chief Financial Officer of LITASCO (LUKOIL

International Trading and Supply Company), where he rose to Chief Executive Officer

two years later. In 2010 he became Executive Director for Finance and Marketing of

LUKOIL Mid East Ltd and in 2016 was promoted to Vice President LUKOIL and Head of

Middle East Upstream. He has been a Non-Executive Director since 2017 and became

Chairman and Chief Executive Officer on 19 September 2019

Frank McAllister, Non-Executive Director

With over 50 years’ industry experience, Mr. McAllister has held various senior and

Board positions in a number of metals and mining companies. He worked with ASARCO

Incorporated for 33 years during which he became Chief Financial Officer in 1982 and

then Executive Vice President of Copper Operations in 1993. Eventually he became

ASARCO’s President and Chief Operating Officer before becoming Chairman and Chief

Executive Officer in 1999. In 1996 he became an Independent Director of Cliffs Natural

Resources Inc and its Lead Director from 2004 to 2013. During the same period, he was

also Chairman, CEO and a Director at Stillwater Mining Co, and served as President of

the National Mining Association during 2012 and 2013. Francis holds an MBA from New

York University, Bachelor of Science in Finance from the University of Utah and attended

the Advanced Management Program at Harvard Business School.

Guy Le Bel, Non-Executive Director

Mr. Le Bel has more than 35 years of international experience in strategic and financial

mine planning. Most recently, he was CEO of Aquila Resources Inc. Previously, he was

CEO and CFO of Golden Queen Mining Ltd. and formally, Vice President Evaluations

for Capstone Mining Corp., and Vice President, Business Development at Quadra/FNX

Mining Ltd. He also held business advisory, strategy and planning, business valuation

and financial planning management roles at BHP Billiton Base Metals Ltd., Rio Algom Ltd.

and Cambior Inc., together with independent consultation mandates across the industry.

Mr. Le Bel holds a Finance MBA from École des Hautes Études Commerciales, a Master’s

in Applied Sciences, Mining Engineering from the University of British Columbia, and a

B.Sc. in Mining Engineering from Laval University. Mr. Le Bel has held board positions in

numerous junior exploration and mining companies since 2007 and currently serves on

the Board of Pembridge Resources plc. and Kintavar Exploration Inc. He is a member of

Ordre des Ingénieurs du Québec.

Pembridge Resources plc

Directors’ Report

The Directors present their report and the audited Financial

Statements for the year ended 31 December 2022.

General information about the Company is provided in

note 1 to the Financial Statements.

Principal activity

The principal activity of Pembridge is to operate as a

base and precious metals focussed holding Company.

Business review and future development

A review of the business and future developments of

the Company is included within the Chairman and Chief

Executive’s statement on pages 2 to 3, which forms part

of the Strategic Report.

Results and dividends

During the year the Group made a loss of $8,013,000

(2021: profit of $20,580,000). The operating loss for the

year of $7,076,000 comprised a loss on mark-to-market

revaluation of the Company’s investment in Minto of

US$6,215,000, reflecting Minto’s share price on

31 December 2022 in accordance with IFRS

requirements for valuation of financial assets, and

administrative costs of $816,000.

The operating profit for 2021 of $21,225,000 comprised

exceptional gains of $18,571,000 resulting from the

assumption of the Capstone liability by Minto Metals Corp.

as part of the reverse takeover process, a gain on mark-to-

market revaluation of the Company’s investment in Minto

of US$3,800,000 and administrative costs of $1,146,000.

The closing cash and cash equivalents balance is

$617,000 (2021: $280,000). No dividends were paid

during the year and the Directors do not recommend

payment of a final dividend (2021: $nil).

Going concern

The Financial Statements have been prepared on a

going concern basis, which assumes that the Company

will continue operating in the foreseeable future and will

be able to service its debt obligations, realise its assets

and discharge its liabilities as they fall due.

The Company and Group have a planning, budgeting

and forecasting process to determine the funds

required to support their operations and expansionary

plans. The budget for 2023 assumes repayments from

Minto during 2023 and cost saving measures that are

mentioned in the Strategic Report.

Negotiations are ongoing between Capstone Copper

Corp (“Capstone”), Minto and Pembridge in respect

of the timing of both the USD 5 million final payment

due to Capstone and of Minto repaying the last surety

funding due to Pembridge, being the remaining

principal of CAD 1 million and accumulated interest

interest including the amount that was due on 31

March 2023. The Group’s ability to continue as a

going concern is dependent on the outcome of these

negotiations. Pembridge’s management expect these

negotiations to reach a constructive conclusion but,

because there can be no assurance of their outcome, a

material uncertainty exists which may cast doubt on the

Group’s ability to continue as a going concern.

In June 2021 Pembridge raised debt of USD 3 million

using 14% Convertible Loan Notes, which was used

exclusively for the purchase of additional newly issued

shares in Minto Metals Corp. (“Minto”) when it became

listed on the Toronto Stock Exchange at the IPO price

of CAD 2.60 per share, giving Pembridge an overall

equity stake in Minto of 11.1%. The Convertible Loan

Notes had a maturity date of 31 May 2023. Since 31

December 2022, Pembridge has reached agreement

with the Convertible Loan Note holders to extend the

repayment period to May 2025, with interest payments

being made at the same 14% per annum each year on or

around 31 May of each year, with Pembridge having the

right to defer payment of interest until May 2025 if the

cash position of Pembridge does not permit the payment

of interest. In return, Pembridge has agreed that the

accrued interest up to 31 January 2023 is to be settled

at the time of the new terms being accepted by each

Convertible Loan Note investor and for the conversion

price to be reduced from £0.08 to £0.0375 per share,

expressed as 4.65 USD cents at the exchange rate of

GBP1:USD1.24 when the arrangement was proposed.

Pembridge does not presently plan to sell its holding in

Minto, but Minto is now a publicly listed company so this

can be done if necessary to raise funds. A restriction on

pre-existing owners selling shares means that, as at 31

December 2022, Pembridge could sell 60% of its shares,

with the restriction on the remaining 40% lifting on 25

May 2023, so that it would be possible to sell these

shares if the cash proceeds were needed.

Having prepared forecasts based on current resources,

assessing methods of obtaining additional finance, the

Directors believe the Company and Group has sufficient

resources to meet its obligations for a period of 12

months from the date of approval of these Financial

Statements. Taking these matters into consideration,

the Directors continue to adopt the going concern basis

of accounting in preparing these Financial Statements.

The Financial Statements do not include the

adjustments that would be required should the going

concern basis of preparation no longer be appropriate.

Post reporting date events

These are set out in note 26 to the financial statements.

Directors’ Report

Pembridge Resources plc

Directors’ Report

Directors

The Directors who served during the year ended

31 December 2022 and up to the date of signing the

Financial Statements were as follows:

Gati Al-Jebouri Chairman and Chief Executive Officer

Francis McAllister Non-Executive Director

Guy Le Bel Non-Executive Director

Substantial shareholders

As at 31 December 2022, the total number of issued

ordinary shares with voting rights in the Company was

96,965,156. Details of the Company’s capital structure

and voting rights are set out in Note 20 to the

Financial Statements.

The Company has been notified of the following

interests of 3 per cent or more in its issued share capital

on the date these Financial Statements were approved

by the Board.

Party Name

Number of

Ordinary Shares

% of Share

Capital

Gati Al-Jebouri 21,250,117 21.9%

Jonathan Armstrong 6,012,121 6.2%

Francis McAllister 4,663,540 4.8%

Guy Le Bel 3,073,545 3.2%

Richard Calleri 6,756,837 7.0%

Ruggero Maman 5,424,242 5.6%

UBS Group AG

Investment Bank

5,130,255 5.3%

Capital structure

The Company’s capital consists of ordinary shares which

rank pari passu in all respects and are traded on the

Standard segment of the Main Market of the London

Stock Exchange. There are no restrictions on the transfer

of securities in the Company or restrictions on voting

rights and none of the Company’s shares are owned or

controlled by employee share schemes. There are no

arrangements in place between shareholders that are

known to the Company that may restrict voting rights,

restrict the transfer of securities, result in the appointment

or replacement of Directors, amend the Company’s articles

of association or restrict the powers of the Company’s

Directors, including in relation to the issuing or buying back

by the Company of its shares or any significant agreements

to which the Company is a party that take effect after,

or terminate upon, a change of control of the Company

following a takeover bid, or arrangements between the

Company and its Directors or employees providing for

compensation for loss of office or employment (whether

through resignation, purported redundancy or otherwise)

that may occur because of a takeover bid.

Directors’ indemnities

Pembridge maintained liability insurance for its Directors

and officers during the period and also as at the date of

approval of the Directors’ Report.

Financial instruments

The financial risk management policies and objectives

are set out in detail in Notes 22 and 24 of the

Financial Statements.

Information on exposure to risks

Principal risks and uncertainties are discussed in the

Strategic Report on page 5, while liquidity risks are

covered in Note 22.

Greenhouse gas emissions

The Company consumed less than 40,000 KWh of

energy in the United Kingdom during the period for

which the Directors’ Report is prepared.

Corporate Governance

The Governance Report is presented on pages 11 to 13.

Statement as to disclosure of information

to auditor

The Directors who were in office on the date of approval

of these Financial Statements have confirmed, as

far as they are aware, that there is no relevant audit

information of which the auditors are unaware. Each

of the Directors have confirmed that they have taken

all the steps that they ought to have taken as Directors

in order to make themselves aware of any relevant

audit information and to establish that it has been

communicated to the auditor.

Auditor

The auditors, PKF Littlejohn LLP, have expressed their

willingness to continue in office and a resolution that they

be re-appointed will be proposed at the general meeting.

By order of the Board

Gati Al-Jebouri

Chairman and Chief Executive Officer

27 April 2023

Directors’ Report

Pembridge Resources plc

Governance Report

Introduction

Pembridge Resources Plc recognises the importance

of, and is committed to, high standards of Corporate

Governance. At the date of this Report, and whilst the

Company is not formally required to comply with the

UK Corporate Governance Code, the Company will try

to observe, where practical, the requirements of the

UK Corporate Governance Code. The UK Corporate

Governance Code can be found at frc.org.uk/our-work/

publications/Corporate-Governance.

The Company will comply with QCA Code, as published

by the Quoted Companies Alliance, to the extent they

consider appropriate in light of the Company’s size,

stage of development and resources.

The Company is currently a small company with a

modest resource base. The Company has a clear

mandate to optimise the allocation of limited

resources to support its development plans. As such,

the Company strives to maintain a balance between

conservation of limited resources and maintaining

robust corporate governance practices. As the

Company evolves, the Board is committed to enhancing

the Company’s corporate governance policies and

practices deemed appropriate for the size and maturity

of the organisation.

Set out below are the Company’s corporate governance

practices for the year ended 31 December 2022.

Leadership

The Company is headed by an effective Board which

is collectively responsible for the long-term success of

the Company.

The role of the Board - The Board sets the Company’s

strategy, ensuring that the necessary resources are

in place to achieve the agreed strategic priorities, and

reviews management and financial performance. It

is accountable to shareholders for the creation and

delivery of strong, sustainable financial performance

and long-term shareholder value. To achieve this, the

Board directs and monitors the Company’s affairs

within a framework of controls which enable risk to be

assessed and managed effectively. The Board also has

responsibility for setting the Company’s core values

and standards of business conduct and for ensuring

that these, together with the Company’s obligations

to its stakeholders, are widely understood throughout

the Company.

Board Meetings - The core activities of the Board

are carried out in scheduled meetings of the Board.

These meetings are timed to link to key events in the

Company’s corporate calendar and regular reviews

of the business are conducted. Additional meetings

and conference calls are arranged to consider matters

which require decisions outside the scheduled meetings.

During the year, the Board met on 3 occasions.

Outside the scheduled meetings of the Board, the

Directors maintain frequent contact with each other to

discuss any issues of concern they may have relating

to the Company or their areas of responsibility, and to

keep them fully briefed on the Company’s operations.

Matters reserved specifically for Board - The Board has

a formal schedule of matters reserved that can only be

decided by the Board. The key matters reserved are the

consideration and approval of;

- The Company’s overall strategy;

- Financial Statements and dividend policy;

- Management structure including succession

planning, appointments and remuneration; material

acquisitions and disposal, material contracts, major

capital expenditure projects and budgets;

- Capital structure, debt and equity financing and

other matters;

- Risk management and internal controls;

- The Company’s corporate governance and

compliance arrangements; and

- Corporate policies.

Summary of the Board’s work in the year – During the

year, the Board considered all relevant matters within

its remit, but focused in particular on the liquidity and

financial stability of both the Company. Certain other

matters are delegated to the Board Committees,

namely the Audit and Remuneration Committees

Attendance at meetings:

Member Meetings attended

Francis McAllister 3

Guy Le Bel 3

Gati Al-Jebouri 3

All Directors attended 100% of Board meetings they were

entitled to attend during the period. The Board is pleased

with the high level of attendance and participation of

Directors at Board and committee meetings.

The Chairman sets the Board Agenda and ensures

adequate time for discussion.

Governance Report

Pembridge Resources plc

Governance Report

Non-executive Directors - The non-executive

Directors bring a broad range of business and

commercial experience to the Company and have a

particular responsibility to challenge independently

and constructively the performance of the Executive

management (where appointed) and to monitor the

performance of the management team in the delivery

of the agreed objectives and targets.

Non-executive Directors are initially appointed for a

term of three years which may, subject to satisfactory

performance and re-election by shareholders, be

extended by mutual agreement.

Other governance matters - All of the Directors are

aware that independent professional advice is available

to each Director in order to properly discharge their

duties as a Director. In addition, each Director and

Board Committee has access to the advice of the

Company Secretary.

The Company Secretary - The Company Secretary role is

carried out by the Chief Financial Officer.

Effectiveness

The Board comprises of a combined Chairman and

Chief Executive Officer and two independent non-

executive Directors. Biographical details of the Board

members are set out on page 8 of this report. The

Directors are of the view that the Board and its

committees consist of Directors with an appropriate

balance of skills, experience, independence and diverse

backgrounds to enable them to discharge their duties

and responsibilities effectively.

Independence - The extensive commercial experience

of the non-executive Directors, particularly in the

mining industry, makes them competent to evaluate

projects and performance and a useful resource to

the Board on high level and strategic decisions as

well as in general matters of governance. They both

have significant shareholdings and share options in

the Company, which align their interests with those of

other shareholders, and they are not reliant financially

on the Company so are in a position to challenge

constructively the performance of the Executive

management. Because of these factors, the Board

considers each of the non-executive Directors to be

independent in character and judgement.

Appointments – the Board is responsible for reviewing

and the structure, size and composition of the Board

and making recommendations to the board with

regards to any required changes.

Commitments – All Directors have disclosed any

significant commitments to the Board and confirmed

that they have sufficient time to discharge their duties.

Induction – All new Directors received an induction as

soon as practical on joining the Board.

Conflicts of interest - A Director has a duty to avoid a

situation in which he or she has, or can have, a direct or

indirect interest that conflicts, or possibly may conflict with

the interests of the Company. The Board had satisfied

itself that there is no compromise to the independence

of those Directors who have appointments on the Boards

of, or relationships with, companies outside the Company.

The Board requires Directors to declare all appointments

and other situations which could result in a possible

conflict of interest.

Board performance and evaluation – The company

has a policy of appraising Board performance

annually. Having reviewed various approaches to

Board appraisal, the Company has concluded that for

a Company of its current scale, an internal process

of regular meetings is most appropriate, in which

all Board members discuss any issues as and when

they arise in relation to the Board or any individual

member’s performance.

Although the Board consists of only male Directors,

the Board supports diversity in the Boardroom and the

Financial Reporting Council’s aims to encourage such

diversity. The following table sets out a breakdown by

gender at 31 December 2022:

Male Female

Directors 3 -

Senior Managers 1 -

Accountability

The Board is committed to providing shareholders

with a clear assessment of the Company’s position and

prospects. This is achieved through this report and as

required other periodic financial and trading statements.

Going concern - The Company’s business activities,

together with factors likely to affect its future

operations, financial position, and liquidity position are

set out in the Directors’ Report and the Principal risks

and Uncertainties sections of the Strategic Report. In

addition, the notes to Financial Statements discloses

the Company’s financial risk management practices

with respect to its capital structure, liquidity risk, foreign

exchange risk, and other related matters.

Governance Report

Pembridge Resources plc

Governance Report

The Directors, having made due and careful enquiry,

are of the opinion that the Company has adequate

working capital to execute its operations and has the

ability to access additional financing, if required, over

the next 12 months. The Directors, therefore, have

made an informed judgement, at the time of approving

Financial Statements, that there is a reasonable

expectation that the Company has adequate resources

to continue in operational existence for the foreseeable

future. As a result, the Directors have continued

to adopt the going concern basis of accounting in

preparing the annual Financial Statements.

Internal controls - The Board of Directors reviews the

effectiveness of the Company’s system of internal

controls in line with the requirement of the Code. The

internal control system is designed to manage the risk

of failure to achieve its business objectives. This covers

internal financial and operational controls, compliance

and risk management. The Company has necessary

procedures in place for the year under review and

up to the date of approval of the Annual Report and

Financial Statements. The Directors acknowledge their

responsibility for the Company’s system of internal

controls and for reviewing its effectiveness. The

Board confirms the need for an ongoing process for

identification, evaluation and management of significant

risks faced by the Company. The Directors carry out a

risk assessment before signing up to any commitments.

The Audit Committee is made up of the two non-

executive directors and regularly reviews and reports to

the Board on the effectiveness of the system of internal

control. Given the size of the Company and the relative

simplicity of the systems, the Board considers that

there is no current requirement for an internal audit

function. The procedures that have been established

to provide internal financial control are considered

appropriate for a Company of its size and include

controls over expenditure, regular reconciliations and

management accounts.

The Directors are responsible for taking such steps

as are reasonably available to them to safeguard the

assets of the Company and to prevent and detect fraud

and other irregularities.

Remuneration

A Remuneration Committee was established during

2019 and is made up of the two non-executive

directors. Remuneration paid to Directors in the

period under review is disclosed in the Directors’

Remuneration Report.

Nomination

Currently due to the size of the Company there is no

Nomination Committee.

Shareholder relations

Communication and dialogue – Open and transparent

communication with shareholders is given high priority

and there is regular dialogue with institutional investors,

as well as general presentations made at the time of the

release of the annual and interim results. All Directors

are kept aware of changes in major shareholders in the

Company and are available to meet with shareholders

who have specific interests or concerns. The Company

issues its results promptly to individual shareholders

and also publishes them on the Company’s website:

www.pembridgeresources.com. Regular updates to

record news in relation to the Company are included on

the Company’s website.

The Directors are available to meet with institutional

shareholders to discuss any issues and gain an

understanding of the Company’s business, its strategies

and governance. Meetings are also held with the

corporate governance representatives of institutional

investors when requested.

Annual General Meeting - At an AGM, individual

shareholders are normally given the opportunity to put

questions to the Chairman and to other members of

the Board that may be present. Notice of the AGM is

sent to shareholders at least 21 working days before

the meeting. Details of proxy votes for and against

each resolution, together with the votes withheld,

are announced to the London Stock Exchange and

are published on the Company’s website as soon as

practical after the meeting.

Gati Al-Jebouri

Chairman and Chief Executive Officer

27 April 2023

Governance Report

Pembridge Resources plc

Directors’ Remuneration Report

During 2019 the Company put in place a remuneration committee comprising its two non-executive directors.

The items included in this report are unaudited unless otherwise stated.

Statement of Pembridge Resources Plc’s policy on Directors’ remuneration

The Company’s policy is to maintain levels of remuneration so as to attract, motivate, and retain Directors and Senior

Executives of the highest calibre who can contribute their experience to deliver industry leading performance with the

Company’s operations. Currently Director’s remuneration is not subject to specific performance targets.

In 2020, the Company implemented a remuneration policy so that a meaningful proportion of Executive and Senior

Management’s remuneration is structured so as to link rewards to corporate and individual performance, align their

interests with those of shareholders and to incentivise them to perform at the highest levels. No Director takes part in

any decision directly affecting their own remuneration. This has not changed in 2022.

Directors’ remuneration

The Directors who held office at 31 December 2022 and who had beneficial interests in the ordinary shares of the

Company are summarised as follows:

Name of Director Position No.of shares held

Gati Al-Jebouri Chairman and Chief Executive Officer 21,250,117

Francis McAllister Non-Executive Director 4,663,540

Guy Le Bel Non-Executive Director 3,073,545

The Directors entered into service agreements at the time of the Company’s admission to the main market in August

2018. Mr. Al-Jebouri entered into a new service agreement when he became Chairman and Chief Executive Officer on

19 September 2019. Details of Directors’ emoluments and of payments made for professional services rendered are

set out below.

Directors’ Remuneration Report

Pembridge Resources plc

Directors’ Remuneration Report

Remuneration components

For the year ended 31 December 2022 salaries, fees and share based payments were the main components of

remuneration, with health insurance also for the Chief Executive Officer. This is expected to continue in 2023.

Directors’ emoluments and compensation (audited)

Set out below are the emoluments of the Directors for the years ended 31 December 2022 and 2021:

Fees

US$’000

Bonuses

US$’000

Share-based

payment

US$’000

Health

insurance

US$’000

Total

US$’000

2022

Francis McAllister 31 13 4 - 48

Gati Al-Jebouri 236 118 17 11 382

Guy Le Bel 31 13 4 - 48

Total 298 144 25 11 478

2021

Francis McAllister 17 - - - 17

Gati Al-Jebouri 236 - - 16 252

Guy Le Bel 17 - - - 17

Total 270 - - 16 286

In 2022, the Directors received share options exercisable at 5p per share, vesting immediately, as part of the bonuses

for performance in 2021. These are reflected at their fair value in the table above. The number of shares over which

options were awarded is shown below.

Number of shares

Francis McAllister 250,000

Gati Al-Jebouri 1,000,000

Guy Le Bel 250,000

1,500,000

Directors beneficial share interests (audited)

The interests of the Directors who served during the year in the share capital of the Company at 31 December 2022

and at the date of this report or their resignation (if earlier) were as follows:

Name of Director

Number of ordinary

shares held at

31 December 2022

Number of ordinary

shares held as at the

date of this report

Number of

options /

warrants

Number of

share options / warrants

vested but unexercised

Francis McAllister 4,663,540 4,663,540 1,645,833 1,645,833

Guy Le Bel 3,073,545 3,073,545 1,645,833 1,645,833

Gati Al-Jebouri 21,250,117 21,250,117 7,659,779 7,659,779

Directors’ Remuneration Report

Pembridge Resources plc

Directors’ Remuneration Report

Total pension entitlements (audited)

The Company currently has a statutory workplace

pension scheme in place but did not pay pension

amounts in relation to any Directors.

The Company has not paid out any excess retirement

benefits to any Directors or past Directors.

Payments to past Directors (audited)

The Company has not paid any compensation to

past Directors.

Payments for loss of office (audited)

No payments were made to Directors for loss of office

during the year.

Consideration of shareholder views

The Board considers shareholder feedback received

and guidance from shareholder bodies. This feedback,

plus any additional feedback received from time to

time, is considered as part of the Company’s annual

policy on remuneration.

Policy for new appointments

Base salary levels will take into account market data for

the relevant role, internal relativities, the individual’s

experience and their current base salary. Where an

individual is recruited at below market norms, they may

be re-aligned over time (e.g. two to three years), subject

to performance in the role. Benefits will generally be in

accordance with the approved policy.

For external and internal appointments, the Board may

agree that the Company will meet certain relocation

and/or incidental expenses as appropriate.

Policy on payment for loss of office

Payment for loss of office would be determined by the

remuneration committee once appointed, taking into

account contractual obligations.

Other matters

The Company does not currently have any annual or

long-term incentive schemes in place for any of the

Directors and as such there are no disclosures in

this respect.

Approved on behalf of the Board

Gati Al-Jebouri

Chairman and Chief Executive Officer

27 April 2023

Directors’ Remuneration Report

Pembridge Resources plc

Directors’ Responsibilities

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 UK-adopted

international accounting standards. 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 international

accounting standards in conformity with the

Companies Act 2006 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 and the Directors’ Remuneration

Report comply with the requirements of the Companies

Act 2006 and, as regards the Financial Statements,

UK-adopted IFRS (UK-adopted international

accounting standards). 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.

Website publication

The Directors are responsible for the maintenance

and integrity of the corporate and financial information

included on the Company’s website. Legislation

in the United Kingdom governing the preparation

and dissemination of the Financial Statements

may differ from legislation in other jurisdictions.

Directors’ Responsibility Statement Pursuant

to Disclosure and Transparency Rules

Each of the Directors, whose names and

functions are listed on page 8, confirm that,

to the best of their knowledge and belief:

• the Financial Statements have been prepared in

accordance with UK-adopted IFRS (UK-adopted

international accounting standards), and give

a true and fair view of the assets, liabilities,

financial position and loss of the Company; and

• the annual report and Financial Statements,

including the Business review, includes a fair

review of the development and performance of

the business and the position of the Company,

together with a description of the principal

risks and uncertainties that they face.

Directors’ Responsibilities

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Opinion

We have audited the financial statements of Pembridge Resources plc (the ‘parent company’) and its subsidiaries

(the ‘group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of comprehensive

income, the Consolidated and Parent Company Statements of financial position, the Consolidated and Parent

Company Statements of changes in equity, the Consolidated and Parent Company Cash flow statements and notes

to the financial statements, including significant accounting policies. The financial reporting framework that has been

applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the

parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion, the financial statements:

• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as

at 31 December 2022 and of the group’s loss for the year then ended;

• the group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards;

• the parent company financial statements have been properly prepared in accordance with UK-adopted international

accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

• the financial statements 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 Auditor’s responsibilities for the audit of the

financial statements section of our report. We are independent of the group and parent 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 as applied to listed public interest entities, 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 2 in the financial statements, which indicates that further funding will be required within

the 12 months following the date of approval of the financial statements in order to meet working capital needs

As stated in note 2, these events or conditions, along with the other matters as set forth in note 2, indicate that a

material uncertainty exists that may cast significant doubt on the group and parent 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 director’s use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment

of the group and parent company’s ability to continue to adopt the going concern basis of accounting included:

• Challenging the directors’ forecasts prepared to assess the group and parent company’s ability to meet its

financial obligations as they fall due for a period of at least twelve months from the date of approval of the

financial statements. We have reviewed the committed cash flows against contractual arrangements and historic

information and compared general budgeted overheads to current run rates;

• Identifying and evaluating subsequent events which impact upon going concern and evaluating the likelihood of

occurrence of forecast future cash inflows; and

• Stress testing the forecasted cash flows by eliminating sources of cash inflows that are not currently guaranteed,

as well as critically reviewing committed versus non committed expenditure, in order to evaluate reasonably

possible downside scenarios impacting the headroom.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Our application of materiality

Entity Basis for materiality Materiality

Pembridge Resources Plc – Group 2% net assets

(2021: N/A – first year as a group)

$161,000

(2021: N/A – first year as a group)

Pembridge Resources Plc – Parent company 2% net assets

(2021: 2% net assets)

$160,000

(2021: $210,000)

The calculated level of materiality is broadly similar to the prior year as net assets have remained broadly unchanged

year on year. We consider net assets to be the most significant determinant of the group’s and parent company’s

financial position and performance used by shareholders, with the key financial statement balances being

investments in financial assets and cash.

Performance materiality for the group and parent company was set at 70% (2021: 70% company only – group N/A) to

ensure sufficient coverage of key balances. We apply the concept of materiality both in planning and performing our

audit, and in evaluating the effect of misstatements. At the planning stage materiality is used to determine the financial

statement areas that are included within the scope of our audit and the extent of sample sizes during the audit.

We agreed with the audit committee that we would report to the committee all individual audit differ-ences identified

during the course of our audit of the group in excess of $8k (2021: $10.5k). There were no misstatements identified

during the course of our audit that were individually, or in aggre-gate, considered to be material.

Our approach to the audit

In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial

statements. In particular, we looked at areas involving significant accounting estimates and judgement by the

directors and considered future events that are inherently uncertain, including classification and valuation of certain

financial instruments and valuation of share-based payments. We also addressed the risk of management override of

controls, including among other matters consideration of whether there was evidence of bias that represented a risk

of material misstatement due to fraud.

Work on all significant components have been performed by us as the group auditor.

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit

strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters

were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter How our scope addressed this matter

Classification and valuation of Minto investment

[Note 4, 5 and 15]

During the prior year, the parent company’s former

subsidiary, Minto Explorations Limited (‘Minto’)

became publicly listed under the name Minto Metals

Corp. (‘MNTO’) on the TSXV exchange in Cana-da,

through a reverse takeover process. At the time of the

listing of Minto on the Canadian stock exchange, the

Shareholders’ Agreement between the group and the

other owners of Minto was terminated.

Pembridge participated in the capital raise and retained

its shareholding of 11.2% in Minto Metals. However,

the share structure changed and Minto Metals now

has only one class of shares, meaning the parent

company no longer held 100% of the voting rights with

its shareholding, but only 11.2%. Management has

concluded that this investment should be treated as a

financial asset at fair value through profit or loss.

There is a risk that this treatment is not appropriate

in accordance with the requirements of IFRS

10 Consolidated Financial Statements, IAS 28

Investments in Associates and Joint Ventures and IFRS

9 Financial Instruments.

There is a further risk that the investment has not been

recorded at the correct value and is therefore materially

misstated at the year end.

Our work in this area included:

• Reviewing and challenging management’s paper on the

classification of the investment balance in accordance

with IAS 28 and IFRS 9, vouching key assumptions to

supporting documentation where applicable;

• Ensuring that the asset is correctly classified and

recorded in accordance with IFRS 9; and

• Recalculating the market value using the year-end

share price and the number of shares held

Based on work performed, we are satisfied that the

investment in Minto has been classified and valued

appropriately and in accordance with IAS 28.

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Other information

The other information comprises the information included in the annual report, other than the financial statements

and our auditor’s report thereon. The directors are responsible for the other information contained within the annual

report. Our opinion on the group and parent company 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. 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 course of

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 the part of the directors’ remuneration report to be audited has been properly prepared in accordance

with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have 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 group and the parent company and their environment

obtained in the course of the audit, we have not identified material misstatements in the strategic report or the

directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires

us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have

not been received from branches not visited by us; or

• the parent company financial statements and the part of the directors’ remuneration report to be audited are not

in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation

of the group and parent company financial statements and for being satisfied that they give a true and fair view, and

for such internal control as the directors determine is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

In preparing the group and parent company financial statements, the directors are responsible for assessing the

group’s and the parent 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 directors either intend to liquidate the

group or the parent company or to cease operations, or have no realistic alternative but to do so.

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Auditor’s 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 an auditor’s report 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in

line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including

fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• We obtained an understanding of the group and parent company and the sector in which they operate to identify

laws and regulations that could reasonably be expected to have a direct effect on the financial statements.

We obtained our understanding in this regard through discussions with management and relevant industry

experience. We also selected a specific audit team based on experience with auditing entities within this industry

facing similar audit and business risks.

• We determined the principal laws and regulations relevant to the group and parent company in this regard to be

those arising from:

• Disclosure & Transparency Rules;

• Listing Rules;

• Companies Act 2006; and

• UK employment law.

• We designed our audit procedures to ensure the audit team considered whether there were any indications of

non-compliance by the group and parent company with those laws and regulations. These procedures included,

but were not limited to:

• Making enquiries of management;

• A review of Board minutes;

• A review of legal ledger accounts; and

• A review of RNS announcements.

• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in

addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that

there were no other significant fraud risks .

• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing

audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates

for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or

outside the normal course of business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those

leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases

the more that compliance with a law or regulation is removed from the events and transactions reflected in the

financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater

regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,

collusion, omission or misrepresentation.

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 auditor’s report.

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Pembridge Resources plc

Independent Auditor’s Report to the members of Pembridge Resources Plc

Independent Auditor’s Report to the

Members of Pembridge Resources Plc

Other matters which we are required to address

We were appointed by the Board of Directors on 10 February 2017 to audit the financial statements for the year

ending 31 December 2016 and subsequent financial periods. Our total uninterrupted period of engagement is 7

years, covering the periods ending 31 December 2016 to 31 December 2022.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent

company and we remain independent of the group and the parent company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

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 an auditor’s report 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.

Eric Hindson

(Senior Statutory Auditor)

For and on behalf of PKF Littlejohn LLP

Statutory Auditor

27 April 2023

15 Westferry Circus

Canary Wharf

London E14 4HD

Pembridge Resources plc

Consolidated Financial Statements

Note

Year ended

31 December 2022

US$’000

Year ended

31 December 2021

US$’000

Administrative, legal and professional expenses (1,309) (1,186)

Exceptional items

– revaluation of Capstone liability 7 - (1,429)

– payment of Capstone liability by Minto in March 2021 7 - 5,000

– assumption of the Capstone liability by Minto Metals Corp 7 - 15,000

– mark-to-market valuation of investment in Minto Metals Corp 7 (6,215) 3,800

Foreign exchange gain 448 40

Operating (loss) / profit 7 (7,076) 21,225

Finance income 200 274

Finance cost 11 (1,137) (919)

(Loss) / profit before income tax (8,013) 20,580

Income tax 12 - -

(Loss) / profit for the year (8,013) 20,580

Other comprehensive income (2) -

Total comprehensive (loss) / income for the year (8,015) 20,580

(Loss) / profit is attributable to:

Non-controlling interest 7 (10) -

Shareholders of the Company 7 (8,003) 20,580

(Loss) / profit for the year (8,013) 20,580

Total comprehensive (loss) / income is attributable to:

Non-controlling interest (10) -

Shareholders of the Company (8,005) 20,580

Total comprehensive (loss) / income for the year (8,015) 20,580

Earnings per share expressed in US cents

Year ended

31 December 2022

Year ended

31 December 2021

(Loss) / profit per share attributable to the equity holders of the Company 13

- Basic (8.3c) 24.4c

- Diluted (8.3c) 19.1c

All amounts relate to continuing activities.

As permitted by section 408 the companies Act 2006, the statement of comprehensive income of the parent company is not presented as

part of these financial statements.

The notes form an integral part of these financial statements.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2022

Pembridge Resources plc

Consolidated Financial Statements

Note

31 December 2022

US$’000

31 December 2021

US$’000

Assets

Non-current assets

Investments in financial assets 15 9,854 16,036

Promissory note from Minto 16 - 5,000

Total non-current assets 9,854 21,036

Current assets

Promissory note from Minto 16 5,000 -

Trade and other receivables 16 1,894 4,157

Cash and cash equivalents 17 617 280

Total current assets 7,511 4,437

Total assets 17,365 25,473

Non-Current liabilities

Borrowings 19 (5,753) (3,000)

Deferred consideration due to Capstone 25 - (5,000)

Total non-current liabilities (5,753) (8,000)

Current liabilities

Trade and other payables 18 (380) (434)

Borrowings 19 (3,000) (6,145)

Deferred consideration due to Capstone 25 (5,000) -

Total current liabilities (8,380) (6,579)

Total liabilities (14,133) (14,579)

Net assets 3,232 10,894

Equity

Share capital 20 1,276 1,212

Share premium 20 10,246 10,000

Capital redemption reserve 1,011 1,011

Translation reserve (2) -

Other reserve 325 293

Retained deficit (9,625) (1,622)

Equity attributable to shareholders of the Company 3,231 10,894

Non-controlling interests 1 -

Total equity 3,232 10,894

The Financial Statements were approved and authorised for issue by the Board on 27 April 2023 and signed on behalf of the Board by:

Consolidated Statement of Financial Position

As at 31 December 2022

Registered number: 07352056

Gati Al-Jebouri

Chairman and Chief Executive Officer

The notes form an integral part of these financial statements.

Pembridge Resources plc

Consolidated Financial Statements

Note

31 December 2022

US$’000

31 December 2021

US$’000

Assets

Non-current assets

Investment in subsidiary 14 46 -

Investments in financial assets 15 9,854 16,036

Receivable from Minto 16 - 5,000

Total non-current assets 9,900 21,036

Current assets

Promissory note from Minto 16 5,000 -

Trade and other receivables 16 1,893 4,157

Cash and cash equivalents 17 609 280

Total current assets 7,502 4,437

Total assets 17,402 25,473

Non-Current liabilities

Borrowings 19 (5,753) (3,000)

Deferred consideration due to Capstone 25 - (5,000)

Total non-current liabilities (5,753) (8,000)

Current liabilities

Trade and other payables 18 (377) (434)

Borrowings 19 (3,000) (6,145)

Deferred consideration due to Capstone 25 (5,000) -

Total current liabilities (8,377) (6,579)

Total liabilities (14,130) (14,579)

Net assets 3,272 10,894

Equity

Share capital 20 1,276 1,212

Share premium 20 10,246 10,000

Capital redemption reserve 1,011 1,011

Other reserve 325 293

Retained deficit (9,586) (1,622)

Equity attributable to shareholders of the Company 3,272 10,894

The Financial Statements were approved and authorised for issue by the Board on 27 April 2023 and signed on behalf of the Board by:

Company Statement of Financial Position

As at 31 December 2022

Registered number: 07352056

Gati Al-Jebouri

Chairman and Chief Executive Officer

The notes form an integral part of these financial statements.

Pembridge Resources plc

Consolidated Financial Statements

Consolidated Statement of Changes in Equity

For the year ended 31 December 2022

capital

US$’000

premium

US$’000

Capital

redemption

reserve

US$’000

Other

reserve

US$’000

Retained

deficit

US$’000

Total

US$’000

Non-

controlling

interest

US$’000

Total

Equity

US$’000

Balance at 1 January 2021 965 9,222 1,011 46 (22,202) (10,958) - (10,958)

Profit for the year - - - - 20,580 20,580 - 20,580

Other comprehensive income for the year - - - - - - - -

Total comprehensive income for the year - - - - 20,580 20,580 - 20,580

Proceeds from shares issued 247 789 - - - 1,036 - 1,036

Direct cost of shares issued - (11) - - - (11) - (11)

Share based payments - - - 247 - 247 - 247

Total transactions with owners

recognised directly in equity

247 778 - 247 - 1,272 - 1,272

Balance at 31 January 2022 1,212 10,000 1,011 293 (1,622) 10,894 - 10,894

Loss for the year - - - - (8,003) (8,003) (10) (8,013)

Other comprehensive income for the year - - - (2) - (2) - (2)

Total comprehensive income for the year - - - (2) (8,003) (8,005) (10) (8,015)

Proceeds from shares issued 64 246 - - - 310 11 321

Share based payments - - - 32 - 32 - 32

Total transactions with owners

recognised directly in equity

64 246 - 32 - 342 11 353

Balance at 31 December 2022 1,276 10,246 1,011 323 (9,625) 3,231 1 3,232

The notes form an integral part of these financial statements.

Pembridge Resources plc

Consolidated Financial Statements

Company Statement of Changes in Equity

For the year ended 31 December 2022

capital

US$’000

premium

US$’000

Capital

redemption

reserve

US$’000

Other

reserve

US$’000

Retained

deficit

US$’000

Total

US$’000

Balance at 1 January 2021 965 9,222 1,011 46 (22,202) (10,958)

Profit for the year - - - - 20,580 20,580

Other comprehensive income for the year - - - - - -

Total comprehensive income for the year - - - - 20,580 20,580

Proceeds from shares issued 247 789 - - - 1,036

Direct cost of shares issued - (11) - - - (11)

Share based payments - - - 247 - 247

Total transactions with owners

recognised directly in equity

247 778 - 247 - 1,272

Balance at 31 December 2022 1,212 10,000 1,011 293 (1,622) 10,894

Loss for the year - - - - (7,964) (7,964)

Other comprehensive income for the year - - - - - -

Total comprehensive income for the year - - - - (7,964) (7,964)

Proceeds from shares issued 64 246 - - - 310

Share based payments - - - 32 - 32

Total transactions with owners

recognised directly in equity

64 246 - 32 - 342

Balance at 31 December 2022 1,276 10,246 1,011 325 (9,586) 3,272

The notes form an integral part of these financial statements.

The following describes the nature and purpose of each reserve within owners’ equity:

Reserve Description and purpose

Share capital Nominal value of shares issued.

Share premium Amount subscribed for share capital in excess of nominal value, less share issue costs.

Capital redemption reserve Reserve created on cancellation of deferred shares.

Other reserve This comprises the Share-Based Payment Reserve, which is the cumulative fair value of

warrants and share options granted, together with the equity element of the convertible

loan, and the Translation Reserve, which is the cumulative translation adjustment from

retranslation of group undertakings with functional currencies other than USD.

Retained deficit Cumulative net gains and losses recognised in the statement of comprehensive income.

Non-controlling interest Non-controlling interests represent the portion of the equity of a subsidiary not attributable

either directly or indirectly to the parent company and are presented separately in the

Consolidated Statement of comprehensive income and within equity in the Consolidated

statement of financial position, distinguished from parent company shareholders’ equity.

Pembridge Resources plc

Consolidated Financial Statements

Note

Year Ended

31 December

2022

US$’000

Year Ended

31 December

2021

US$’000

Cash flows from operating activities

(Loss) / profit for the year (8,013) 20,580

Adjusted for:

Net finance costs 937 645

Unrealised FX on debt included in administrative expenses (668) (31)

Share based payments 32 247

Revaluation of Capstone liability - (3,571)

Assumption of the Capstone liability by Minto Metals Corp - (15,000)

Mark-to-market valuation of investment in Minto Metals Corp 6,215 (3,800)

Movement in fair value of derivatives 56 (26)

(1,441) (956)

Movements in working capital

Decrease in trade and other receivables 2,451 -

Decrease in trade and other payables (101) (55)

Cash generated / (used) by operations 909 (1,011)

Income taxes recovered / (paid) - -

Net cash generated from / (used in) operating activities 909 (1,011)

Cash flows from investing activities

Purchase of investments (33) (3,034)

Net cash used in investing activities (33) (3,034)

Cash flows from financing activities

Interest payments (420) -

Repayment of borrowings (333) (20)

Proceeds from borrowings - 3,304

Proceeds from issuance of shares 214 1,025

Net cash (used in) / generated from financing activities (539) 4,309

Net increase in cash and cash equivalents 337 264

Cash and cash equivalents at beginning of year 280 16

Cash and cash equivalents at end of year 17 617 280

The notes form an integral part of these financial statements.

Consolidated Cash Flow Statement

For the year ended 31 December 2022

Pembridge Resources plc

Consolidated Financial Statements

Note

Year Ended

31 December

2022

US$’000

Year Ended

31 December

2021

US$’000

Cash flows from operating activities

(Loss) / profit for the year (7,964) 20,580

Adjusted for:

Net finance costs 937 645

Unrealised FX on debt included in administrative expenses (668) (31)

Share based payments 32 247

Revaluation of Capstone liability - (3,571)

Assumption of the Capstone liability by Minto Metals Corp - (15,000)

Mark-to-market valuation of investment in Minto Metals Corp 6,215 (3,800)

Movement in fair value of derivatives 56 (26)

(1,392) (956)

Movements in working capital

Decrease in trade and other receivables 2,452 -

Decrease in trade and other payables (102) (55)

Cash generated from / (used in) operations 958 (1,011)

Income taxes recovered / (paid) - -

Net cash generated from / (used in) operating activities 958 (1,011)

Cash flows from investing activities

Purchase of investments (79) (3,034)

Net cash used in investing activities (79) (3,034)

Cash flows from financing activities

Interest payments (420) -

Repayment of borrowings (333) (20)

Proceeds from borrowings - 3,304

Proceeds from issuance of shares 203 1,025

Net cash (used in) / generated from financing activities (550) 4,309

Net increase in cash and cash equivalents 329 264

Cash and cash equivalents at beginning of year 280 16

Cash and cash equivalents at end of year 17 609 280

The notes form an integral part of these financial statements.

Company Cash Flow Statement

For the year ended 31 December 2022

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

1. NATURE OF OPERATIONS AND GENERAL INFORMATION

The principal activity of the Company is to operate as a mining focused holding Company. The Company has an investment in a listed

entity which owns the Minto copper-gold-silver mine in Yukon, Canada.

Pembridge Resources Plc is incorporated and domiciled in England. The address of the Company’s registered office is 38-43 Lincoln’s

Inn Fields, London, WC2A 3PE. Pembridge Resources Plc’s shares are listed on the Standard Segment of the Official List of the London

Stock Exchange.

The Company’s Financial Statements are presented in United States dollars (US$), which is also the functional currency of the Company,

and rounded to the nearest thousand.

2. BASIS OF PREPARATION

The Financial Statements have been prepared in accordance with UK-adopted international accounting standards.

The Financial Statements have been prepared under the historical cost convention, except as modified for assets and liabilities recognised

at fair value on a business combination and contingent consideration measured at fair value.

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a high degree of

judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.

Going concern

The Financial Statements have been prepared on a going concern basis, which assumes that the Company will continue operating in the

foreseeable future and will be able to service its debt obligations, realise its assets and discharge its liabilities as they fall due.

The Company and Group have a planning, budgeting and forecasting process to determine the funds required to support their operations

and expansionary plans. The budget for 2023 assumes repayments from Minto during 2023 and cost saving measures that are

mentioned in the Strategic Report.

Negotiations are ongoing between Capstone Copper Corp (“Capstone”), Minto and Pembridge in respect of the timing of both the USD 5

million final payment due to Capstone and of Minto repaying the last surety funding due to Pembridge, being the remaining principal of

CAD 1 million and accumulated interest including the amount that was due on 31 March 2023. The Group’s ability to continue as a going

concern is dependent on the outcome of these negotiations. Pembridge’s management expect these negotiations to reach a constructive

conclusion but, because there can be no assurance of their outcome, a material uncertainty exists which may cast doubt on the Group’s

ability to continue as a going concern.

In June 2021 Pembridge raised debt of USD 3 million using 14% Convertible Loan Notes, which was used exclusively for the purchase of

additional newly issued shares in Minto Metals Corp. (“Minto”) when it became listed on the Toronto Stock Exchange at the IPO price of

CAD 2.60 per share, giving Pembridge an overall equity stake in Minto of 11.1%. The Convertible Loan Notes had a maturity date of 31

May 2023. Since 31 December 2022, Pembridge has reached agreement with the Convertible Loan Note holders to extend the repayment

period to May 2025, with interest payments being made at the same 14% per annum each year on or around 31 May of each year, with

Pembridge having the right to defer payment of interest until May 2025 if the cash position of Pembridge does not permit the payment

of interest. In return, Pembridge has agreed that the accrued interest up to 31 January 2023 is to be settled at the time of the new terms

being accepted by each Convertible Loan Note investor and for the conversion price to be reduced from £0.08 to £0.0375 per share,

expressed as 4.65 USD cents at the exchange rate of GBP1:USD1.24 when the arrangement was proposed.

Pembridge does not presently plan to sell its holding in Minto, but Minto is now a publicly listed company so this can be done if necessary

to raise funds. A restriction on pre-existing owners selling shares means that, as at 31 December 2022, Pembridge could sell 60% of

its shares, with the restriction on the remaining 40% lifting on 25 May 2023, so that it would be possible to sell these shares if the cash

proceeds were needed.

Having prepared forecasts based on current resources, assessing methods of obtaining additional finance, the Directors believe the

Company and Group has sufficient resources to meet its obligations for a period of 12 months from the date of approval of these Financial

Statements. Taking these matters into consideration, the Directors continue to adopt the going concern basis of accounting in preparing

these Financial Statements. The Financial Statements do not include the adjustments that would be required should the going concern

basis of preparation no longer be appropriate.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

3. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE COMPANY

Amendments to accounting standards issued by the IASB and adopted in the year ended 31 December 2022 did not have a material

impact on the results or financial position of the Group.

Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not

mandatory for 31 December 2022 reporting periods and have not been adopted early by the Group. These standards, amendments and

interpretations are not expected to have a material impact on the results or financial position of the Group in future reporting periods.

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, described in Note 5, the Directors are required to make judgments, estimates

and assumptions about the carrying amounts 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 if the revision affects only that period or in the period of the revision and future periods if the

revision affects both current and future periods.

Critical judgments exercised in applying accounting policies, apart from those involving estimates, that have the most significant effect on

the amounts recognised in the financial statements are as follows:

Financial instruments

Financial assets and liabilities are designated upon inception to various classifications. The designation determines the method by which the

financial instruments are carried on the balance sheet subsequent to inception and how changes in value are recorded. The designation may

require the Company to make certain judgments, taking into account management’s intention of the use of the financial instruments.

Since its listing on the TSXV Exchange, Minto Metals is a listed company whose shares are all voting shares, which means that Pembridge’s

11.1% holding does not give the Company control or substantial influence over Minto Metals. As a result, Pembridge accounts for its

investment in Minto Metals not as a subsidiary but as a financial asset, which is revalued on a mark-to-market basis.

Income taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and

liabilities and their respective income tax bases (“temporary differences”), and losses carried forward. Deferred tax assets are recognised

for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised.

The determination of the ability of the Company to utilise tax loss carry-forwards to offset deferred tax liabilities requires management

to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess

whether it is probable that the Company will benefit from these prior losses and other deferred tax assets, and what tax rates are

expected to be in effect when temporary differences reverse. Changes in economic conditions, metal prices and other factors could result

in revisions to the estimates of the benefits to be realised or the timing of utilizing the losses.

Share based payments

Estimating fair value for share based payment transactions requires determination of the most appropriate valuation model, which is

dependent on the terms and conditions of the grant of share options and warrants. This estimate also requires determination of the most

appropriate inputs to the valuation model including the expected life, volatility and dividend yield and making assumptions about them.

The assumptions used for estimating fair value for share based payment transactions are disclosed in Note 21.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

5. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation and Business combinations

Up until March 2022 the company was a single entity and therefore the consolidated results and position as at 31 December 2021 mirrors

that of the individual company.

The consolidated Financial Statements comprise the Financial Statements of the company and its subsidiaries as at 31 December 2022.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability

to affect those returns through its power over the investee. Specifically, the Group controls an investee if the Group has:

(i) Power over the investee i.e. existing rights that give it the current ability to direct the relevant activities of the investee

(ii) Exposure, or rights to, variable returns from its involvement with the investee

(iii) The ability to use its power over the investee to affect its returns

Generally there is a presumption that a majority of voting rights results in control. When the Group has less than a majority of the voting

or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an

investee, including:

(i) The contractual arrangements with the other vote holders of the investee

(ii) Rights arising from other contractual arrangements

(iii) The Group’s voting rights and potential rights

Consolidation of a subsidiary begins when a Group obtains control over a subsidiary and ceases when the Group loses control of

the subsidiary. Profit or loss and each component of Other Comprehensive Income (‘OCI’) are attributed to the equity holders of the

Company and to the non-controlling interest, even if this results in the non-controlling interest having a deficit balance. When necessary,

adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting

policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the

Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the

consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquire.

Acquisition related costs are expensed as incurred and included in administrative expenses. Identifiable assets acquired and liabilities

and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the

acquisition date.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration

classified as a liability and within the scope of IFRS 9 is measured at fair value with the changes in fair value recognised in profit or loss.

Reporting foreign currency transactions in functional currency

In preparing the Financial Statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are

recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that

are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair

value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.

Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising,

if any, are recognised in profit or loss.

Translation from functional currency to presentational currency

When the functional currency of a Group entity is different from the Group’s presentational currency (US dollars), its results and financial

position are translated into the presentational currency as follows:

(i) Assets and liabilities are translated using exchange rates prevailing at the balance sheet date.

(ii) Income and expense items are translated at average exchange rates for the year, except where the use of such average rates does

not approximate the exchange rate at the date of a specific transaction, in which case the transaction rate is used.

(iii) All resulting exchange differences are recognised in other comprehensive income and presented in the translation reserve in

equity and are reclassified to profit or loss in the period in which the foreign operation is disposed of.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

5. SIGNIFICANT ACCOUNTING POLICIES (continued)

Taxes

Income tax represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable result for the period. Taxable profit or loss differs from reported profit or loss 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 liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in

the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the

balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax

assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences

can be utilised.

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. Deferred

tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax

is also dealt with in equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax

liabilities and when they relate to taxes levied by the same taxation authority and the Company intends to settle its current tax assets and

liabilities on a net basis.

Compound instruments and borrowings

The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the

substance of the contractual agreement. At the date of issue, the fair value of the liability component is estimated using the prevailing

market interest rate for similar debt instruments. This amount is recorded as a liability on an amortised cost basis until extinguished upon

conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component

from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not

subsequently remeasured. Where the nature of the instrument is such that an equity component could exist in principle, but the event

that would cause this (such as conversion on a ‘fixed for fixed’ basis on a sale) is inherently uncertain, no value is attributed to it.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least

12 months after the reporting period.

Borrowing costs are expensed in the period in which they are incurred.

Financial instruments

On initial recognition, financial assets are recognised at fair value and are subsequently classified and measured at: (i) amortised cost; (ii) fair

value through other comprehensive income (“FVOCI”); or (iii) fair value through profit or loss (“FVTPL”). The classification of financial assets is

generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset

is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where

transaction costs are expensed. All financial assets not classified and measured at amortised cost or FVOCI are measured at FVTPL. On initial

recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the

investment’s fair value in OCI, but the Company has not so elected in respect of its investment in Minto Metals Corp.

The classification determines the method by which the financial assets are carried on the statement of financial position subsequent to inception

and how changes in value are recorded. Accounts receivable are measured at amortised cost with subsequent impairments recognised in the

statement of income / (loss). Derivative assets are measured at FVTPL with subsequent changes recognised in profit or loss.

Financial liabilities are designated as either: (i) fair value through profit or loss; or (ii) amortised cost. All financial liabilities are classified

and subsequently measured at amortised cost except for financial liabilities at FVTPL. The classification determines the method by which

the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded.

Accounts payable and accrued liabilities are classified as amortised cost and carried on the statement of financial position at amortised

cost. All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of

financing costs in the statement of comprehensive income. The Company derecognises financial liabilities when, and only when, the

Company’s obligations are discharged, cancelled or they expire.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or

transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most

advantageous market for the asset or liability.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using

the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised within the fair value

hierarchy described as follows:

(i) Level 1 – quoted market prices in active markets for identical assets or liabilities

(ii) Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or

indirectly observable.

(iii) Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

External valuers are involved for the valuation of assets and liabilities acquired in a business combination, and significant liabilities such as

contingent consideration.

Trade receivables

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing

components. They are subsequently measured at amortised cost using the effective interest method, less loss allowance.

Impairment and collectability of financial assets

An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognised based on expected credit losses.

This applies to financial assets measured at amortised cost. The estimated present value of future cash flows associated with the asset is

determined and an impairment loss is recognised for the difference between this amount and the carrying amount as follows: the carrying

amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial

asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognised in

profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortised cost decreases, the

previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the

date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand and deposits held at call with banks. Any interest earned is accrued monthly and

classified as finance income. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash

equivalents as defined above.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are

unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting

period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable

that an outflow of resources that can be reliably estimated will be required to settle the obligation. The amount recognised as a provision

is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks

and uncertainties surrounding the obligation. Where the effect is material, the provision is discounted to net present value using an

appropriate current market-based pre-tax discount rate and the unwinding of the discount is included in profit or loss as interest expense

from discounting obligations.

Employee benefits

Liabilities for wages and salaries, including non-monetary benefits and annual leave, that are expected to be settled wholly within 12

months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up

to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Earnings per share

Basic earnings / (loss) per share is computed by dividing net earnings available (attributable) to common shareholders by the weighted

average number of common shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the

conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on

earnings / (loss) per share.

The dilutive effect of convertible securities is reflected in diluted earnings / (loss) per share by application of the “if converted” method.

Investment in subsidiary

The Company recognises its investments in subsidiaries at cost, less any provision for impairment.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

5. SIGNIFICANT ACCOUNTING POLICIES (continued)

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as

a deduction from proceeds.

Share based payments

The fair value of services received from employees and third parties in exchange for the grant of share options and warrants is recognised

as an expense, except for those granted in connection with the issue of new ordinary shares which are shown as a deduction in equity. A

corresponding increase is recognised in other reserves in equity. The fair value of the share options and warrants is calculated using an

appropriate valuation model. At each reporting period end the Company revises its estimate of the number of options that are expected

to become exercisable. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and

share premium when exercised.

6. OPERATING SEGMENTS

Operating segments are reported in a manner consistent with the internal reporting provided to the Board, who are responsible for

allocating resources and assessing performance of the operating segment.

The Company has one operating segment, being investment activities, therefore all IFRS 8 disclosures are incorporated within other notes

to the Financial Statements.

7. OPERATING (LOSS) / PROFIT

Audit fees and staff costs are shown in notes 8 and 9.

Exceptional items are analysed below.

Year Ended

31 December 2022

US$’000

Year Ended

31 December 2021

US$’000

Revaluation of Capstone liability - (1,429)

Payment of Capstone liability by Minto in March 2021 - 5,000

Assumption of the Capstone liability by Minto Metals Corp - 15,000

Mark-to-market valuation of investment in Minto Metals Corp (6,215) 3,800

(6,215) 22,371

Pembridge accounts for its investment in Minto as a financial asset, which is revalued on a mark-to-market basis. The revaluation of the

investment to its share price of C$1.64 per share at 31 December 2022 resulted in a loss of US$6,215,000 (2021: revaluation from its

historic cost to its market value of C$2.50 per share at 31 December 2021 resulted in a gain of US$3,800,000).

2021

The payment of the Capstone liability for the acquisition of Minto Exploration Ltd is dependent on certain conditions related to production

and copper prices being met. At the end of 2020, the payments were not certain in amount or timing, which meant that the value placed

on the liability was less than the maximum possible US$ 20 million. During 2021, all conditions were met and the full balance because

payable, which resulted in a further charge of US$1,429,000.

Minto made a payment of US$5 million of the obligation to Capstone in March 2021 on behalf of Pembridge under the terms of the

Shareholders’ Agreement then in force, which reduced the obligation to US$15 million.

The assumption of the Capstone liability by Minto Metals Corp was part of the reverse take-over process under which Minto Exploration

Ltd. amalgamated with 1246778 B.C. Ltd. to form Minto Metals Corp. As part of this process, the Shareholder’s Agreement between

Pembridge and the other owners of Minto Explorations Ltd. was terminated and Pembridge and Minto Metals Corp (“Minto”) executed the

Future Expenditures Agreement (“FEA”). As a result of the FEA, Minto assumed the obligations of Pembridge with respect to all outstanding

Capstone payments arising under the Share Purchase Agreement for the acquisition of Minto Exploration Ltd. Minto had paid $5 million

of the full US$20 million already, so the amount of the promissory note issued by Minto to Pembridge in respect of this was US$15

million. Of this amount, US$10 million was paid prior to 31 December 2021 and payment of the remaining US$5 million was deferred by

agreement with Capstone until 15 January 2023. Negotiations are ongoing with Capstone and Minto in respect of its further deferral.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

8. AUDITOR’S REMUNERATION

Year Ended

31 December 2022

US$’000

Year Ended

31 December 2021

US$’000

Remuneration receivable by the Company’s auditors for the audit of the

Financial Statements

41 41

Total remuneration 41 41

9. EMPLOYEES AND KEY MANAGEMENT

The total Directors’ emoluments for the year, including share-based payments, were US$478,000 (2021 – US$286,000). Detailed disclosure

of Directors’ remuneration is disclosed in the Directors’ remuneration report on page 14.

The average number of employees in the Company was 2 (2021 – 2), and in the Group in 2022 the average number of employees was 3.

Key management personnel as defined under IAS 24 have been identified as only the Board of Directors.

Group

Year ended

31 December 2022

US$’000

Company

Year ended

31 December 2021

US$’000

Staff costs

Wages and salaries 694 442

Social security costs 33 48

Injury protection and health insurance 12 17

Pensions 5 5

Share based payments 32 247

776 759

10. RELATED PARTY TRANSACTIONS

The Company has borrowings from its Chairman and CEO, Gati Al-Jebouri, which which date from between 2019 and 2021. These

borrowings and interest accrued thereon were restructured in November 2022 into a new loan of £4,673,773. This loan is repayable by

31 December 2025 and incurs interest of 14% per annum.

Gati Al-Jebouri has invested US$500,000 in the convertible loan notes described in note 19.

In December 2021, the Company agreed to a convertible loan of £80,000 with Gati Al-Jebouri. The loan carried no interest and was

converted to new ordinary shares at an exercise price of 5p in May 2022.

11. FINANCE COSTS

Year Ended

31 December 2022

US$’000

Year Ended

31 December 2021

US$’000

Interest on loans – Loan from Director 717 674

Interest on loans – Convertible loan notes 420 245

1,137 919

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

12. INCOME TAX

Current tax:

Year Ended

31 December 2022

US$’000

Year Ended

31 December 2021

US$’000

UK corporation tax on the result for the year - -

Total current taxation - -

Deferred taxation - -

Income tax - -

Differences explained below:

(Loss) / profit before tax (8,013) 20,580

(Loss) / profit before tax multiplied by the standard rate 19% (2021: 19%) (1,522) 3,910

Effect of:

Non-qualifying depreciation -

Expenses not deductible 9 11

Non-taxable portion of unrealised losses / (gains) 1,181 (4,250)

Tax losses for which no deferred income tax asset was recognised 322 329

Tax charge / (credit) for the year - -

Unrecognised deferred tax asset

Tax losses UK – excess management expenses 3,304 3,350

3,304 3,350

The deferred tax assets are currently unrecognised as the likelihood of sufficient future taxable profits does not yet meet the definition

of “probable”.

The unrecognised deferred tax asset has no expiry period.

13. EARNINGS PER SHARE

The calculation of basic and diluted loss per ordinary share is based on the following data:

Year Ended

31 December 2022

Year Ended

31 December 2021

Basic (loss) / profit per share (US cents) (8.3c) 24.4c

Diluted (loss) / profit per share (US cents) (8.3c) 19.1c

Weighted average number of shares for basic profit / (loss) per share 96,058,119 84,449,176

Weighted average number of shares for diluted profit / (loss) per share 131,120,926 107,884,498

The basic and diluted result per share have been calculated using the loss attributable to shareholders of the Company of US$8,003,000

(2021: profit US$20,580,000 ) as the numerator, i.e. no adjustment to loss / profit was necessary. The basic and dilutive loss per share for

2022 are the same because the effect of the exercise of share options and warrants would be anti-dilutive.

Details of share options and warrants that could potentially dilute earnings per share in future periods are set out in Note 21.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

14. INVESTMENT IN SUBSIDIARY - COMPANY

Pembridge Resources Bulgaria LLC.

US$’000

At 1 January 2022 -

Capital injected on formation of new subsidiary 46

At 31 December 2022 46

Minto Exploration Ltd.

US$’000

At 1 January 2022 9,202

Reclassification (see note 15) (9,202)

At 31 December 2021 -

15. INVESTMENTS IN FINANCIAL ASSETS - GROUP AND COMPANY

Minto Metals Corp

US$’000

Shares in

Vulcan Green Copper Ltd.

US$’000

Convertible loan note in

Vulcan Green Copper Ltd.

US$’000

Total

US$’000

At 1 January 2021 - - - -

Reclassification (see note 14) 9,202 - - 9,202

Additions 3,000 34 - 3,034

Revaluation to fair market value 3,800 - - 3,800

At 31 December 2021 16,002 34 - 16,036

Additions - - 33 33

Revaluation to fair market value (6,215) - - (6,215)

At 31 December 2022 9,787 34 33 9,854

On the date of Minto’s listing, when the investment was reclassified from a subsidiary to a financial asset, the existing shares in Minto

owned by the Company had a fair market value, at the subscription price for new shares of C$2.60, of US$13,588,000. As part of the Minto

capital raise that completed with its listing as Minto Metals Corp in 2021, Pembridge invested US$3 million. This maintained Pembridge’s

interest in Minto at 11.1%. The share structure of Minto Metals Corp, with all shares being voting shares, means that Pembridge does not

control Minto Metals Corp. and It is now reported as a financial asset, valued at its fair market value based on its closing share price on

TSXV on 31 December 2022 of C$1.64.

In July 2021, the Company made an investment of £25,000 in Vulcan Green Copper Ltd. (“Vulcan”) as part of Vulcan’s capital raise of

£500,000. Vulcan is the holder of the Kitumba Copper project in Zambia and is valued at £3.5 million post capital raise. The Pembridge

investment represents just under 1% of Vulcan’s share capital.

In March 2022, the Company invested a further £25,000 in Vulcan, in the form of a convertible loan note. The loan carries interest at 12%

and will convert automatically to shares on the earlier of the following events:

1. Vulcan does a single funding raising of more than £250,000;

2. Vulcan does an Initial Public Offering (“IPO”) on the London Stock Exchange or an equivalent admission to any other recognised

investment exchange;

3. On a change of control of Vulcan; or

4. Three years after issuance of the note.

Under the first three scenarios, Pembridge will be able to convert its loan into shares at a discount of 50% to the price set in the triggering

transaction. Under the fourth scenario, the conversion price would be 1p per share, which represents a 90% discount to the pricing of the

2021 £500,000 capital raise.

Pembridge Resources plc

Consolidated Financial Statements

16. TRADE AND OTHER RECEIVABLES

Group

31 December 2022

US$’000

Company

31 December 2022

US$’000

Company

31 December 2021

US$’000

Receivable from Minto 1,814 1,814 4,106

Other receivables 27 26 -

Prepayments 39 39 25

Derivative asset 14 14 26

Promissory note from Minto 5,000 5,000 -

Trade and other receivables - current 6,894 6,893 4,157

Other receivables – non-current:

Promissory note from Minto

- - 5,000

The receivable from Minto due in less than one year is primarily the funding for the surety account and the timing of its repayment is now

subject to negotiation.

The promissory note from Minto due in more than one year is Minto’s commitment under a promissory note to pay the remaining

$5 million due to Capstone on Pembridge’s behalf. This payment was due on 15 January 2023 and negotiations are ongoing with

Capstone and Minto in respect of its further deferral.

17. CASH AND CASH EQUIVALENTS

Group

31 December 2022

US$’000

Company

31 December 2022

US$’000

Group & Company

31 December 2021

US$’000

Cash and short-term deposits 617 609 280

18. TRADE AND OTHER PAYABLES

Group

31 December 2022

US$’000

Company

31 December 2022

US$’000

Group & Company

31 December 2021

US$’000

Accrued interest 245 245 245

Other payables and accruals 91 88 189

Derivative liability 44 44 -

380 377 434

Accrued interest is from the convertible loan notes and will be payable in June 2023.

Other payables are non-interest bearing and normally settled in the month following date of invoice.

Notes to the Financial Statements

For the year ended 31 December 2022

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

19. BORROWINGS - GROUP AND COMPANY

31 December 2022

US$’000

31 December 2021

US$’000

Convertible loan notes - 3,000

Loans from directors 5,753 -

Borrowings – non-current 5,753 3,000

Loans from directors - 6,145

Convertible loan notes 3,000 -

Total borrowings 8,753 9,145

The Company has borrowings from its Chairman and CEO, Gati Al-Jebouri, which which date from between 2019 and 2021. These

borrowings and interest accrued thereon were restructured in November 2022 into a new loan of £4,673,773. This loan is repayable by

31 December 2025 and incurs interest of 14% per annum.

In June 2021, the Company issued convertible loan notes with a value of USD 3 million, with an interest rate of 14%, redeemable after two

years, in order that it could participate in Minto’s capital raise. The loan notes may be converted into Ordinary Shares in the Company

at any time from 1 June 2022 until 31 May 2023 at an exercise price of $0.113 (8p at an exchange rate of £1 - $1.415) at the option of

the noteholder. Gati Al-Jebouri has invested US$500,000 in the convertible loan notes. Interest of US$245,000 has been accrued and is

disclosed in note 18.

Since 31 December 2022, Pembridge has reached agreement with the Convertible Loan Note holders to extend the repayment period to

May 2025, with interest payments being made at the same 14% per annum each year on or around 31 May of each year, with Pembridge

having the right to defer payment of interest until May 2025 if the cash position of Pembridge does not permit the payment of interest. In

return, Pembridge has agreed that the accrued interest up to 31 January 2023 is to be settled at the time of the new terms being accepted

by each Convertible Loan Note investor and for the conversion price to be reduced from £0.08 to £0.0375 per share, expressed as 4.65

USD cents at the exchange rate of GBP1:USD1.24 when the arrangement was proposed.

In December 2021, the Company agreed to a convertible loan of £80,000 with Gati Al-Jebouri. The loan carried no interest and was

converted to new ordinary shares at an exercise price of 5p in May 2022.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

20. SHARE CAPITAL AND PREMIUM

Allotted, called up and fully paid

Number of

ordinary shares

Share Capital –

ordinary shares

US$000

Share premium

US$000

Total

US$000

At 1 January 2022 92,165,516 1,212 10,000 11,212

Shares issued 4,800,000 64 246 310

At 31 December 2022 96,965,516 1,276 10.246 11,522

Ordinary shares have attached to them full voting, dividend and capital distribution rights (including on a winding up).

The shares issued in 2022 comprised 3,200,000 shares issued in January 2022 at 5p per share in exchange for cash of £160,000 and the

conversion of the convertible loan note for £80,000 issued to Gati Al-Jebouri in December 2021, for which the cash was received in 2021,

into equity at 5p per share.

21. SHARE BASED PAYMENTS - GROUP AND COMPANY

Movements in the number of share options and warrants and their related weighted average exercise prices are as follows:

2022 2021

Options and warrants

Number

Average exercise price

(pence)

Options and warrants

Number

Average exercise price

(pence)

Outstanding at 1 January 35,456,139 7.66 7,907,466 9.77

Granted 1,750,000 5.00 28,148,673 7.83

Forfeited (600,800) 9.99 (600,000) 43.40

Exercised (1,600,000) 5.00 -

Outstanding at 31 December 35,005,339 7.28 35,456,139 7.66

Exercisable at 31 December 35,005,339 7.28 7,006,666 7.01

The weighted average remaining contractual life for the share options and warrants outstanding as at 31 December 2022 was 1.5 years

(2021: 2.2 years).

The fair value of share-based payment transactions is calculated using the Black-Scholes Option Pricing Model. Key inputs to the model

were: volatility 56.34% (2021: 77.75%), risk free rate 3.67% (2020: 1.75%) and dividend yield 0% (2021: 0%). Share options and warrants

outstanding at the end of year have the following expiry dates and exercise prices:

Grant-Vest Expiry date

Exercise price

(pence)

2022

Number

2021

Number

2017 2021 43.4 - -

2018 2022 43.4 - 300,000

2019 2022 15.625 - 300,800

2020-2021 2023 5.00 2,791,666 2,791,666

2020-2021 2030 5.00 3,915,000 3,915,000

2021-2022 2023 8.00 26,548,673 26,548,673

2021-2022 2022 5.00 - 1,600,000

2022-2022 2027 5.00 1,500,000 -

2022-2022 2032 5.00 250,000 -

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

22. FINANCIAL INSTRUMENTS

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and

the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument,

are disclosed in note 5.

The Company held investments in two companies as financial assets at 31 December 2022. The investment in Minto Metals Corp is

classified as level 1 under the fair value hierarchy. Vulcan Green Copper Ltd is a private company and the investments in it are classified

as level 3 under the fair value hierarchy.

The only other financial assets currently held by the Company are classified as receivables and cash and cash equivalents

Categories of financial instruments

The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities.

Group

31 December 2022

US$’000

Company

31 December 2022

US$’000

Company

31 December 2021

US$’000

Financial assets

At fair value through profit and loss

Investment in Minto Metals Corp 9,787 9,787 16,002

Investment in Vulcan Green Copper Ltd 67 67 34

Trade receivables - - -

At amortised cost

Minto receivables 6,814 6,814 9,106

Other receivables 27 26 -

Cash and cash equivalents 617 617 280

17,312 17,311 25,442

Financial liabilities

At amortised cost

Trade payables - - -

Other payables (336) (333) (434)

Borrowings (8,753) (8,753) (9,145)

At fair value through profit and loss

Deferred consideration due to Capstone (5,000) (5,000) (5,000)

(14,089) (14,086) (14,579)

As at 31 December 2022, trade and other receivables are all considered to be recoverable.

The fair value is equivalent to book value for current assets and liabilities at amortised cost.

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

22. FINANCIAL INSTRUMENTS (continued)

The main risks arising from the Company’s financial instruments are liquidity risk and foreign currency risk. Interest rate risk is minimised

by fixed rate borrowings as described in note 19. The Directors review and agree policies for managing these risks and these are

summarised below.

Liquidity risk

Liquidity risk arises from the Company’s management of working capital. It is the risk that the Company will encounter difficulty in meeting

its financial obligations as they fall due.

The Directors monitor cash flow on a regular basis and at quarterly Board meetings in the context of their expectations for the business, in

order to ensure sufficient liquidity is available to meet foreseeable needs.

The Company’s cash at bank is held with institutions with A credit ratings (Fitch).

As of December 31, 2022, the Company’s liabilities that have contractual maturities were as follows:

Contractual cash flows

Carrying amount

US$’000

Total

US$’000

2023

US$’000

2024

US$’000

2025

US$’000

2026

US$’000

After 2026

US$’000

Trade and other payables 336 336 336 - - - -

Loan from Director 5,753 5,753 - - 5,753 - -

Convertible loan notes 3,000 3,000 3,000 - - - -

Payable to Capstone 5,000 5,000 5,000 - - - -

14,089 14,089 8,336 - 5,753 - -

As of December 31, 2021, the Company’s liabilities that have contractual maturities were as follows:

Contractual cash flows

Carrying amount

US$’000

Total

US$’000

2022

US$’000

2023

US$’000

2024

US$’000

2025

US$’000

After 2025

US$’000

Trade and other payables 434 434 434 - - - -

Loan from Director 6,145 6,145 6,145 - - - -

Convertible loan notes 3,000 3,000 - 3,000 - - -

Payable to Capstone 5,000 5,000 - 5,000 - - -

14,579 14,579 6,579 8,000 - - -

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

Foreign currency risk management

The carrying amounts of monetary assets and monetary liabilities denominated in a currency other than the relevant company’s functional

currency at the reporting date are as follows:

CAD items in a USD

functional company

31 December 2022

US$’000

GBP items in a USD

functional company

31 December 2022

US$’000

CAD items in a USD

functional company

31 December 2021

US$’000

GBP items in a USD

functional company

31 December 2021

US$’000

Financial assets

Other receivables 1,814 - 4,106 -

Cash and cash equivalents - 617 - 280

1,814 617 4,106 280

Financial liabilities

Trade and other payables - (88) - (189)

Borrowings - (5,753) - (6,145)

- (5,841) - (6,334)

1,814 (5,224) 4,106 (6,054)

Of the receivable from Minto (including interest), at 31 December 2022 C$1.9 million (US$1,402,000) (2021: C$4 million (US$3,166,000))

was hedged against GBP using forwards, which provides a partial hedge against the Company’s GBP borrowings.

The following table details the Company’s sensitivity to a 10% increase and decrease in the US dollar against the relevant foreign

currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally and represents Management’s assessment of

the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated

monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. A positive number below

indicates an increase in profit and equity where the US dollar strengthens 10% against the relevant currency. For a 10% weakening of the

US dollar against the relevant currency, there would be an equal and opposite impact on the profit and equity, and the balances below

would be negative.

31 December 2022

US$’000

31 December 2021

US$’000

Effect on profit / (loss) +10% 341 194

-10% (341) (194)

Effect on equity +10% 341 194

-10% (341) (194)

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

23. RECONCILIATION OF MOVEMENT IN NET DEBT - GROUP

2022

1 January

US$’000

New

borrowing

US$’000

Interest

added to

debt

US$’000

Debt

repaid

US$’000

Other cash

flows

US$’000

Foreign

exchange

US$’000

31 December

US$’000

Cash at bank and in hand 280 - - (333) 670 - 617

Borrowings (9,145) - (717) 333 107 669 (8,753)

Net debt (8,865) - (717) - 777 669 (8,136)

2021

1 January

US$’000

New

borrowing

US$’000

Interest

added to

debt

US$’000

Debt

repaid

US$’000

Other cash

flows

US$’000

Foreign

exchange

US$’000

31 December

US$’000

Cash at bank and in hand 16 3,304 - (20) (3,020) - 280

Borrowings (5,218) (3,304) (674) 20 - 31 (9,145)

Net debt (5,202) - (674) - (3,020) 31 (8,865)

US$107,000 of borrowing was repaid in 2022 not as a cash payment but by the issuance of shares on conversion of a convertible note loan.

24. CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company considers its capital to be equal to the sum of its total equity, disclosed on the Balance Sheet, and net debt. The Company’s

objectives when managing its capital are:

• To ensure that the Company and all of its businesses are able to operate as going concerns and ensure that the Company operates

within the financial covenants contained within its debt facilities

• To have available the necessary financial resources to allow the Company to invest in areas that may deliver acceptable future

returns to investors

• To maintain sufficient financial resources to mitigate against risks and unforeseen events

• To maximise shareholder value through maintaining an appropriate balance between equity and net debt

Pembridge Resources plc

Consolidated Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2022

25. COMMITMENTS AND CONTINGENCIES

Contingent consideration

On 3 June 2019, the Company acquired all of the outstanding common shares of Minto Explorations Ltd (“Minto”) from Capstone Mining

Corp (Capstone) (“Minto Acquisition”). The consideration for the Minto acquisition comprises up to US$20 million in total payments due to

Capstone payable out of future cash flows and realisations from Minto and based on certain hurdles linked to production levels at Minto

as well as future copper prices as detailed below. Of the three payments detailed below, the first was contingent only in respect of its

timing, whereas payments 2 and 3 were contingent on copper prices reaching certain levels within a specified timeframe.

1. First payment to Capstone of US$5 million will be due at the earlier of when production at Minto has reached a steady state 60% of

mill capacity and 31 January 2021 (the ‘Restart Date’).

2. Second payment to Capstone of US$5 million will be due once production at Minto has reached 60% of mill capacity and the copper

price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters, within three years of the Restart Date.

3. Final payment to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t) for

two consecutive quarters, within three years of the Restart Date.

Because the payments were dependent on the above conditions being met, they were not certain in amount or timing and the Company

calculated a fair value as at 31 December 2020 for the total consideration due for the Minto Acquisition as US$18.6 million. During 2021,

all conditions were satisfied and the payable to Capstone was recognised in full. Of the US$20 million, US$15 million was paid in 2021 and

payment of the remaining US$5 million was deferred by agreement with Capstone until 15 January 2023. Negotiations are ongoing with

Capstone and Minto in respect of its further deferral.

2022

$’000

2021

$’000

Current 5,000 -

Non-current - 5,000

5,000 5,000

26. EVENTS SUBSEQUENT TO THE REPORTING DATE

Convertible Loan Notes

In June 2021 Pembridge raised debt of USD$3 million using 14% Convertible Loan Notes, which was used exclusively for the purchase of

additional newly issued shares in Minto Metals Corp. (“Minto”) when it became listed on the Toronto Stock Exchange at the IPO price of

CAD$2.60 per share, giving Pembridge an overall equity stake in Minto of 11.1%. The Convertible Loan Notes had a maturity date of

31 May 2023. Since 31 December 2022, Pembridge has reached agreement with the Convertible Loan Note holders to extend the

repayment period to May 2025, with interest payments being made at the same 14% per annum each year on or around 31 May of each

year, with Pembridge having the right to defer payment of interest until May 2025 if the cash position of Pembridge does not permit the

payment of interest. In return, Pembridge has agreed that the accrued interest up to 31 January 2023 is to be settled at the time of the

new terms being accepted by each Convertible Loan Note investor and for the conversion price to be reduced from £0.08 to £0.0375 per

share, expressed as 4.65 USD cents at the exchange rate of GBP1:USD1.24 when the arrangement was proposed.

Cost saving measures

Since 31 December 2022, Pembridge has introduced cost saving measures, the main ones being that its CEO and Chairman has agreed

to defer his salary effective from March until September 2023 and the company’s CFO has agreed to move to a part-time basis with a

corresponding cost saving effective from 1 April. In addition, because of Pembridge’s limited cash resources, it has agreed with Gati Al-

Jebouri that the interest that became payable on its loan from him on 31 March 2023 will be added to the loan principal.

Pembridge Resources plc

Consolidated Financial Statements

Directors Gati Al-Jebouri

Francis Ralph McAllister

Guy Le Bel

(Chairman and Chief Executive Officer)

(Non-Executive Director)

Secretary David James

Registered office 38-43 Lincoln’s Inn Field

London WC2A 3PE

Registered number 07352056 (England and Wales)

Auditor PKF Littlejohn LLP

Statutory Auditor

15 Westferry Circus

Canary Wharf

London E14 4HD

Bankers Bank of Scotland

St James’s Gate

14-16 Cockspur Street

London SW1Y 5BL

Solicitors Armstrong Teasdale (UK) Limited

38-43 Lincoln’s Inn Field

London WC2A 3PE

Brokers Tavira Securities

88 Wood Street

London

EC2V 7DA

Registrars Link Group

10th Floor Central Square

29 Wellington Street

Leeds LS1 4DL

Website www.pembridgeresources.com

TDIM PERE