TIDMSRES
RNS Number : 3540V
Sunrise Resources Plc
13 December 2021
13 December 2021
Sunrise Resources plc
("Sunrise" or "the Company")
Audited Results for the year to 30 September 2021
The Board of Sunrise Resources plc, the AIM-traded company
focusing on the development of its CS Pozzolan-Perlite Project in
Nevada, USA, is pleased to announce its audited results for the
year ended 30 September 2021.
Operational Highlights for 2021
CS Pozzolan-Perlite Project, Nevada, USA
Natural pozzolan
Market developments & legislative actions to decarbonise the
US cement and concrete industries continue to favour increased use
of natural pozzolan.
500-ton pozzolan bulk sample extracted in collaboration with
large cement and ready-mix company (CRMC).
Successful commercial scale grinding test completed by CRMC.
Successful commercial concrete trials made using CS Natural
Pozzolan.
President of CRMC confirmed his Board's support for a joint
development of the CS Project in recent meeting with Sunrise
Chairman and detailed financial terms are being discussed.
Perlite
100-ton perlite sample mined and processed.
Potential customer trials produced mixed but ultimately
encouraging results.
Additional 200-ton bulk sample ready for processing.
Market for horticultural perlite is expanding whilst supplies
are diminishing.
New Growth Opportunities - Looking to the future
Opportunities for natural pozzolan being evaluated in different
regional concrete markets.
New claims staked over natural pozzolan deposit at Hazen,
Nevada, targeting markets in northern Nevada and northern
California.
Claims staked over rare sepiolite industrial minerals prospect
in Nevada. Positive testwork results from European industrial
minerals company. Recent joint field evaluation suggests the
potential for an extensive deposit.
Clayton Silver Project, Nevada, USA
Diamond drill hole, twin of 1980s RC hole historic hole,
validates the Company's belief that historic silver grades may be
under-reported.
Recovered core from a 7.92m mineralised interval graded 303 g/t
(8.84 ounces/ton) silver and 0.2 g/t gold, 84% higher compared to
twinned hole.
Baker's Gold Project, Western Australia
Drill hole 21SBRC002 on DLR4 Target intersected 2m grading 14.4
g/t gold from 64m downhole including 1m grading 26.5 g/t gold. 95%
cyanide soluble.
Valorisation of Non-Core Assets
Garfield and Stonewall properties in Nevada sold to Power Metal
Resources plc for cash, shares and warrants. Sunrise retains a 2%
Net Smelter Royalty.
Lease/purchase option agreement signed with Kinross, World's 4th
largest gold producer, allowing Kinross to explore and buy out the
Company's Jackson Wash claims in Nevada for $500,000. Company would
retain 2.5% Net Smelter Royalty.
More detailed information follows.
Further information:
Sunrise Resources plc Tel: +44 (0)1625 838 884
Patrick Cheetham, Executive
Chairman
Beaumont Cornish Limited Tel: +44 (0)207 628 3396
Nominated Adviser
James Biddle/Roland Cornish
Peterhouse Capital Limited Tel: +44 (0)207 469 0930
Broker
Lucy Williams/Duncan Vasey
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 which forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via a
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
Notes
1. The information in this release has been compiled and
reviewed by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a
qualified person for the purposes of the AIM Note for Mining and
Oil & Gas Companies. Mr. Cheetham is a Member of the Institute
of Materials, Minerals & Mining and also a member of the
Australasian Institute of Mining & Metallurgy.
2. The news release may contain certain statements and
expressions of belief, expectation or opinion which are forward
looking statements, and which relate, inter alia, to the Company's
proposed strategy, plans and objectives or to the expectations or
intentions of the Company's directors. Such forward-looking
statements involve known and unknown risks, uncertainties, and
other important factors beyond the control of the Company that
could cause the actual performance or achievements of the Company
to be materially different from such forward-looking statements.
Accordingly, you should not rely on any forward-looking statements
and save as required by the AIM Rules for Companies or by law, the
Company does not accept any obligation to disseminate any updates
or revisions to such forward-looking statements.
Chairman's Statement
Dear Shareholders,
In 2021 our attention has been firmly fixed on the development
of our CS Pozzolan-Perlite Project and the valorisation of non-core
projects. Progress is being made on both fronts.
For most of the year we have been working with an existing
cement manufacturer and ready-mix concrete company (CRMC) on a
programme of commercial scale testwork. This started with a jointly
funded test mining programme and the delivery of a 500-ton bulk
sample to the CRMC's cement plant for test grinding.
The CS bulk sample material was successfully ground to the
target size direct from run-of-mine ore without the need for
crushing. This offers the potential of minimal site infrastructure
and lower costs if this can be applied more widely. The objective
was to assess the suitability of using the CRMC's surplus cement
milling facility for grinding the CS natural pozzolan. The use of
this surplus facility will allow for a low capital cost, low risk
start up to production. The ground pozzolan produced by the CRMC
was then tested on a commercial scale with excellent results
confirming the Company's own extensive laboratory test work results
and our CS material as a high quality natural pozzolan.
The CRMC is an internationally recognised company and has a
substantial ready-mix concrete business. The ready-mix business is
a captive customer for its cement products and can use CS natural
pozzolan as a replacement for the large volumes of coal power fly
ash it has traditionally used. The US supply of coal fly ash is now
declining with the continuing closure of US coal-fired power
plants. The COP26 Conference in 2021 has heralded the closure of
the coal industry and a new urgency to find materials that can
replace fly ash in concrete.
Commercial discussions with the CRMC have progressed to the
point where the CRMC now has the support of its Board to enter into
a joint development of the CS Project. I met with the President of
the CRMC last week and detailed financial terms are being
discussed. A second major building materials producer has also been
testing our materials during this year although discussions are at
an earlier stage.
We acknowledge that progress may appear slow, and this has been
frustrating for shareholders as well as management, but the cement
and concrete industries are conservative and have traditionally
been slow to change and adopt new technologies and materials.
Nevertheless, your Board believes that the value of the CS Project
has only been enhanced during the year and change is now
inevitable.
Our negotiations are taking place against a background of
fundamental industrial change driven by climate targets and the
inexorable drive to reduce carbon emissions. Concrete is the second
most used material in the world after water and one of the hardest
to decarbonise as the production of traditional Portland cement is
responsible for 7-8% of global carbon emissions.
California is at the forefront of this change and cement
producers in California are under pressure, not only from new State
legislation mandating carbon neutrality by 2045 and carbon caps but
also from their customers who are themselves under pressure to
build greener structures with lower embodied carbon. At the same
time, the market outlook for cement and concrete demand in the USA
is very positive and enhanced by the recent signing into law in the
US of the $1trillion Infrastructure Bill.
We continue to advance the testing of the perlite from our CS
Project where market developments have also been favourable as
outlined in the Operating Review. Our potential customers' testwork
was delayed due to the low availability of furnace capacity and the
results muddied by poor sizing of the raw material supplied, but
they have been sufficiently encouraged to move forward with
additional testing and additional raw material was mined during the
year for this purpose.
As we advance the CS Project we have this year also been looking
to the future and your Board has ambitions to build on its
experience at the CS Project to expand its pozzolan business. The
Company's specific opportunity for the CS Project is for use in the
concrete markets in southern California and southern Nevada, but
similar opportunities for the supply of natural pozzolan exist in
all of the major population centres in the western USA and the
Company has been researching opportunities in these additional
markets.
As a result of this ongoing research, we have staked additional
claims covering a deposit of natural pozzolan near the historic
settlement of Hazen in northern Nevada, which is rail-linked to the
markets of Reno and northern California. It is early days, but
initial testing results are positive. The Company is also
evaluating markets for the CS Pozzolan and Hazen Pozzolan as a
lightweight aggregate which has a high demand and high value in
lightweight concrete and facing bricks in earthquake prone
California.
In a separate development the Company, whilst researching
pozzolan opportunities, has identified an opportunity for the rare
industrial mineral sepiolite near Pioche in Nevada. Sepiolite is a
clay used as a viscosity modifier in a number of industrial
materials, as well as an absorbent. Claims have been staked and
positive initial tests by a European industrial minerals producer
led to a successful joint field evaluation last week.
During the year we continued with our strategy to divest
non-core projects and reached agreement with Power Metal Resources
to sell our Garfield and Stonewall projects for cash, shares,
warrants and a royalty interest. We also leased our Jackson Wash
claims to Kinross Gold (the fifth largest gold miner globally)
which is exploring for gold on adjacent claims and we also granted
Kinross an option to purchase these claims whilst retaining royalty
rights.
Also, in line with strategy to carry out drilling programmes on
projects where this might encourage potential joint venture
partners, we drilled our Baker's Gold Project in Western Australia,
intersecting high-grade gold mineralisation that warrants follow
up. We also received the high-grade silver assay results from last
years' drilling at the Clayton Silver Project and are responding to
a number of joint venture enquiries.
In 2021, despite the US COVID-19 related travel ban, we have
been able to continue business largely as usual and US recently
opened up to travel from the UK and we are hoping for a more
normalised business in 2022.
For our next Annual General Meeting we will be returning to our
usual venue, Arundel House, 6 Temple Place, London. WC2R 2PG, in
London, on Thursday 27 January 2022. In order to protect the health
of our staff and shareholders certain COVID-19 protocols may be in
place at the meeting. For those who do not wish to attend, we are
encouraging shareholders to appoint the Chairman as their proxy
(online at www.signalshares.com or by requesting and submitting a
hard copy Form of Proxy).
I look forward to reporting further progress in 2022 and wish
all our shareholders a Merry Christmas and a Happy New Year.
Patrick Cheetham
Executive Chairman
10 December 2021
Strategic Report
The Directors of the Company and its subsidiary undertakings
(which together comprise "the Group") present their Strategic
Report for the year ended 30 September 2021.
The principal activity of the Company is the acquisition,
exploration and development of mineral projects, primarily in the
western USA.
Our strategy is to develop the CS Pozzolan-Perlite Project
through to profitable production in order that the Company's
activities become self-funding and to unlock the value inherent in
its portfolio of mineral projects through sale, joint venture or
other arrangements.
The Company's Business Model is to acquire 100% ownership of
mineral assets at minimal expense. This usually involves staking
claims as was the case for the CS and NewPerl Projects or applying
for exploration licences from the relevant authority, as was the
case in Australia. In other cases, rights are negotiated with
existing project owners for initially low periodic payments that
rise over time as confidence in the project value increases and
this was the case for the Bay State Silver Project.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on value adding exploration and
development activities. The Company's administration costs are
reduced via a cost sharing Management Services Agreement with
Tertiary Minerals plc.
The Strategic Plan is on track although the timeframe for first
commercial production from the CS Project has moved out due to
delays in customer trials and protracted offtake negotiations.
Further details of our progress on the CS Project are given in
the Operating Review.
The Company's activities are financed by periodic capital
raisings, through private share placings. For more advanced
projects such as the CS Project the Board will seek to secure
additional funding from a range of sources, for example debt
funding, pre-financing through off-take agreements and other joint
arrangements.
Over the past few years, the Company has established a valuable
portfolio of drill-ready precious metal, base metal and industrial
mineral projects. Our strategy remains to valorise those projects
through sale or other arrangements seeking, wherever possible,
free-carried exposure to increases in value and production from the
projects. Examples during the year include the sale of our
interests in the Garfield and Stonewall Projects . This strategy
allows for drill testing of drill ready targets in order to add
further value prior to offering these projects for joint venture or
sale. This process was initiated with a drill programme at the
Clayton Silver-Gold Project last year and continued with drill
testing of the Baker's Gold Project in Australia in 2021 .
Organisation Overview
The Group's business is directed by the Board and is managed by
the Executive Chairman. The Company has a Management Services
Agreement with Tertiary Minerals plc ("Tertiary") which was the
original parent of the Company. Under this cost sharing agreement
Tertiary provides all of the Company's administration and technical
services, including the technical and management services of the
Executive Chairman, at cost. Day-to-day activities are managed from
Tertiary's offices in Macclesfield in the United Kingdom, but the
Group operates in two other countries and the corporate structure
of the Group reflects the historical pattern of project acquisition
by the Group and the need, where appropriate, for fiscal and other
reasons, to have incorporated entities in particular
territories.
The Group's exploration activity in Nevada, USA, is undertaken
through two local subsidiaries, SR Minerals Inc. and Westgold
Inc.
In Australia the Company operates through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd.
The Board of Directors comprises two independent non-executive
directors and the Executive Chairman. The Executive Chairman is
also Executive Chairman of Tertiary, but otherwise the Board is
independent of Tertiary. Tertiary is not a significant shareholder
(as defined under the AIM Rules) in the Company.
Financial & Performance Review
The Group is not yet producing minerals and so has no income
other than a small amount of bank interest. Consequently, the Group
is not expected to report profits until it disposes of or is able
to profitably develop or otherwise turn to account its exploration
and development projects.
The Group reports a loss of GBP335,252 for the year (2020:
GBP302,902) after administration costs of GBP318,630 (2020:
GBP298,980) and after crediting interest receivable of GBP61 (2020:
GBP261). The loss includes expensed pre-licence and reconnaissance
exploration costs of GBP17,320 (2020: GBP4,183), impairment of
exploration assets of GBP30,021 (2020: GBPNil) and gain on sale of
exploration assets of GBP30,658 (2020: GBPNil). Administration
costs include an amount of GBP19,633 (2020: GBP18,932) as non-cash
costs for the value of certain share warrants held by employees of
both Tertiary and Sunrise, calculated in accordance with IFRS 2.
Cash administration costs are therefore GBP298,967 (2020:
GBP280,048).
The Financial Statements show that, at 30 September 2021, the
Group had net current assets of GBP399,384 (2020: GBP1,048,356).
This represents the cash position and receivables, less trade and
other payables. These amounts are shown in the Consolidated and
Company Statements of Financial Position and are also components of
the Net assets of the Group. Net assets also include various
"intangible" assets of the Company. As the term suggests, these
intangible assets are not cash assets but include some of this
year's and previous years' expenditure on mineral projects where
that expenditure meets the criteria in Note 1(d) of the accounting
policies. The intangible assets total GBP2,133,137 (2020:
GBP1,867,218) and a breakdown by project is shown in Note 2 to the
financial statements .
Details of intangible assets, property, plant and equipment,
investments and right of use assets are also set out in Notes 8, 9,
10 and 17 of the financial statements.
Net assets also include the market value at year end of shares
in VR Resources Ltd and Power Metal Resources plc which are held as
"available for sale" investments as set out in Note 8.
Impairment
Expenditures which do not meet the criteria in Note 1(d), such
as pre-licence and reconnaissance costs, are expensed and added to
the Company's loss. The loss reported in any year can also include
expenditure for specific projects carried forward in previous
reporting periods as an intangible asset but which the Board
determines is "impaired" in this reporting period.
It is a consequence of the Company's business model that there
will be impairments of unsuccessful exploration projects from time
to time. The extent to which expenditure is carried forward as
intangible assets is a measure of the extent to which the value of
the Company's expenditure is preserved.
Biannual reviews are carried out by the Directors as to whether
there are any indications of impairment of the Group's assets.
At the year-end, an impairment review was undertaken by the
Directors to ascertain whether the carrying value of its
exploration and development projects and the associated
intercompany loans should be impaired under IFRS 6 and IAS 36. As a
result of the year end review it was judged that the Sundance
Project expenditure should be impaired and none of the Group's
intercompany loans should be impaired. Projects which are held for
sale or joint venture as shown in the Operating Review have not
been impaired as it is anticipated that their carrying values will
be recovered through sale or through residual joint venture
interests in future.
The intangible asset value of a project, shown at cost, should
not be confused with the realisable or market value of a particular
project which will, in the Directors' opinion, be at least equal in
value and often considerably higher. Hence the Company's market
capitalisation on the AIM Market is usually in excess of the net
asset value of the Group.
The Company finances its activities through periodic capital
raisings, via share placings and asset sales. As the Company's
projects become more advanced there may be strategic opportunities
to obtain funding for some projects through joint venture,
production sharing, royalty and other marketing arrangements.
Key Performance Indicators
The financial statements of a mineral exploration and
development company can provide a moment in time snapshot of the
financial health of a company but do not provide a reliable guide
to the performance of the Company or its Board.
The usual financial key performance indicators ("KPIs") are
neither applicable nor appropriate to measurement of the value
creation of a company which is involved in mineral exploration and
development which currently has no turnover. The Directors consider
that the detailed information in the Operating Review is the best
guide to the Group's progress and performance during the year.
The Directors highlight the following KPIs and expect that
further KPIs will be reported as the Company progresses through
development:
Health & Safety The Group has not lost any man-days through injury
and there have been no Health and Safety incidents
or reportable accidents during the year.
Environment No Group company has had notice or been notified
of any instance of non-compliance with environmental
legislation in any of the countries in which they
work.
Fundraising No fundraising was carried out during the year
ended 30 September 2021, the Company having raised
funds in the previous financial year. The Company
did issue equity to the value of GBP30,818 in settlement
of outstanding fees payable to Directors and GBP12,825
through the exercise of warrants.
------------------ ----------------------------------------------------------
In exploring for valuable mineral deposits, we accept that not
all our exploration will be successful but also that the rewards
for success can be high. We therefore expect that our shareholders
will be invested for the potential for capital growth taking a
long-term view of management's track record in mineral discovery
and development.
Fundraising
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at year end (GBP371,740), these
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Group's overheads and planned
discretionary project expenditures and to maintain the Company and
its subsidiaries as going concerns.
Operating Review
In 2020-2021 the Group continued to focus on advancing its CS
Project in Nevada, USA towards production with positive results
being received from potential customer trials. The Company has also
carried out exploration on a number of its precious metals projects
whilst continuing to divest non-core projects in line with its
stated strategy.
The CS Project is held in the Company's 100% owned subsidiary,
SR Minerals Inc. The Group's other Nevada projects are held through
SR Minerals Inc. and Westgold Inc. and its Baker's Gold project in
Australia is held through an Australian subsidiary, Sunrise
Minerals Australia Pty Ltd.
SR MINERALS INC.
CS POZZOLAN-PERLITE PROJECT, NEVADA, USA
The CS Project is located near Tonopah, in Nevada, USA, and
contains deposits of both natural pozzolan and perlite in three
separate zones - the Main Zone, the Tuff Zone and the Northeast
Exploration Area.
As reported last year, the Company has received the key permits
needed to advance the project towards production and with these
permits now in place the Company has been able to concentrate on
the acquisition of bulk samples and customer trials and the
refinement of its production options.
Permits
The three key permits required to operate the CS Project are the
BLM Decision of Record approving and authorising the Company's Mine
Plan of Operations, the Air Quality Operation Permit ("AQOP") and
the Reclamation Permit.
Production Options
Since the grant of the required permits, the Company has been
working on the following options for production of natural pozzolan
and perlite.
Natural Pozzolan
The use of natural pozzolan in cement and concrete mixes
requires that the pozzolan be ground to a fine size before use. The
production options being evaluated by the Company are:
-- Direct use of run -of-mine or crushed ore and by-product
perlite by cement companies in their grinding facilities.
-- Construction of a fixed process plant to grind the crushed
natural pozzolan for sale to cement companies and ready-mix
concrete companies.
Pozzolan can be crushed, if necessary, using the same mobile
plant used for perlite crushing and so the first of these options
has the lowest capital and operating cost but a fewer number of
potential customers who would need to have their own pozzolan
grinding capacity. Different grinding technologies, plant capital
and operating costs are being evaluated for the second option of a
stand-alone perlite grinding plant.
Perlite
-- Production of coarse horticultural grade perlite using mobile
crushing and screening equipment and use of undersized perlite as
natural pozzolan; and
-- Construction of a fixed perlite processing plant to produce a
range of raw perlite products in coarse, medium and fine
grades.
The Company is currently evaluating the first of these two
options because production can start quickly at a relatively low
capital cost as the mobile plant is available from the quarry
industry and can be bought, rented or leased, subject to
availability. Estimates of capital and rental costs have been
obtained and have been factored into the Company's financial
planning and forecasting. The Company's Class II AQOP, which
primarily applies to an on-site process plant, is based on the
first of these options.
The Company has permission to construct the onsite fixed perlite
processing plant set out in the second option and as referenced in
Phase II of the Plan of Operations, this has already been designed
and costed . However, it may be preferable to construct this at a
more suitable, rail-linked site elsewhere in Nevada.
Most recently, the Company has been evaluating the production of
a lightweight aggregate from the CS Project but this work is still
at an early stage.
Bulk Sampling and Customer Trials
Natural Pozzolan
Towards the end of 2020, a 500-ton sample of natural pozzolan
was mined in collaboration with a large cement and ready-mix
company (CRMC). This collaboration took place following a series of
successful bench-scale laboratory tests carried out by the
CRMC.
The CRMC's test grind objective was to assess the suitability of
its surplus cement milling facility for grinding the CS natural
pozzolan and to then test the ground product in some commercial
scale concrete pours.
The test grind was successfully completed, and this led to
commercial concrete trials made using the ground pozzolan in
partial substitution for Portland cement.
Concrete mixes are tailored to achieve target strengths
appropriate to the demands placed on the structures being
manufactured and a target strength is set at a specified number of
days after pouring.
In the case of the concrete pours reported to date the specified
(target) strength was 3,000 psi at 28 days. In both cases the
concrete exceeded this target strength after just 7 days curing.
This result was consistent with previous laboratory testing of the
CS natural pozzolan by both the Company and the CRMC.
After 7 days curing, the concrete made using CS natural pozzolan
achieved 105% and 113% of the target strengths respectively in the
two separate tests. This was an excellent result as the often
specified seven-day target commonly corresponds to approximately 70
percent of the target compressive strengths.
The CRMC's manager of mining completed a due diligence field
visit to the CS Project and discussions are at an advanced stage
for a joint development of the CS Project, although there is no
guarantee that a suitable commercial arrangement will result.
Perlite
In late 2020, the Company contracted a company in Nevada to
supply and operate a mobile crushing and screening plant to process
a 100-ton bulk sample of raw perlite from the Project. The plant
comprised a crusher, high frequency screens and associated
conveyors and was a basic version of the plant that is proposed for
the initial production facility.
The perlite bulk sample was crushed and screened into two
separate size-grades of horticultural raw perlite. The Company's
testing and analysis shows that during the crushing and screening
process carried out by the Company's contractor the screens
operated inefficiently resulting in over-crushing of the perlite
and the inclusion of too much fine perlite in the products. This
has adversely affected the quality of the raw perlite produced. The
production of a coarser particle size product can be resolved with
small adjustments to the crushing and screening process, but in
this case only 100 tons of material was available for processing
and there was insufficient opportunity to optimise the crusher and
screen settings.
The processed perlite was sent to a number of potential
customers for expansion of the raw perlite in their commercial
facilities. Different customers who expand perlite for end-use
horticultural markets do so in different types of furnaces and
consequently will achieve different production rates and yields of
expanded perlite using the same ore source and so must test the
material in their production furnaces prior to committing to
offtake agreements.
The sizing issues meant that two customers reported poor
expansion results despite one of these customers having obtained
good results previously with material from the same location.
Another described their test as promising but inconclusive due to
the feed material product being too fine grained but otherwise the
expanded perlite was described as have a good, low, bulk density
and a good colour. In the last expansion trial to be completed so
far the potential customer advised that they were able to produce
expanded horticultural perlite at very low target densities with
good production rates and a good-looking product. They also advised
that, assuming the previously mentioned sizing issues were resolved
as expected, the CS raw perlite would be a premium product, very
good for the US market and that they would be happy to start
receiving a regular supply. One more set of test results is still
awaited.
During the year a further 200-ton bulk sample of perlite was
extracted for further processing and testing.
Markets & Market Developments
Natural Pozzolan
Natural pozzolan is one of a range of materials that can
partially replace ordinary Portland cement in cement and concrete
mixes (usually up to 35%) and which collectively are known as
Supplementary Cementitious Materials ("SCMs"). SCMs both improve
the long-term strength and resistance of concrete compared to
concrete made using only Portland cement. These performance
characteristics have resulted in many State transport
infrastructure regulators mandating the use of SCMs in concrete
used in public works.
Natural pozzolans include some glassy volcanic tuffs, tephra and
perlite such as those of interest on the CS Project and were widely
used in major dam construction projects in the western USA.
However, for more than 40 years coal-fired power station fly ash
has been the most widely used SCM but supplies of fly ash are now
constrained and declining rapidly. This is due to the closure of a
large number of coal-fired power stations with many more closures
planned.
These closures are being driven by two factors - economics and
climate change. In the US, power generation economics favour
cleaner and cheaper natural gas and, more recently, renewable
energy options from solar and wind.
The Company is targeting the concrete markets in southern
California and southern Nevada. These States are literally at the
end of the line when it comes to rail supplies of the remaining
coal fly ash produced in the continental interior.
In many ways 2021 has been a seminal year for the cement and
concrete industries. The COP26 climate conference has sounded the
death knell for coal and, with it fly ash supply, with most
countries around the world prepared to phase out coal altogether
and leading coal consumers China and India agreeing to phase down
coal usage over time.
The production of Portland cement is responsible for 7-8% of the
global man-made carbon dioxide emissions with nearly one tonne of
carbon dioxide (CO(2) ) generated for each tonne of cement
produced. It is not then surprising that the cement and concrete
industries are targeted for emission reductions.
California already has a Carbon Cap and Trade scheme to limit
carbon emissions and in September 2021 Governor Gavin Newsom signed
legislation that directly targets greenhouse gas emissions
associated with the cement industry. This Cement Decarbonization
legislation is the first law of its kind in the US and is focused
on achieving net-zero emissions from the industry by the end of
2045. Experts believe this will pave the way for similar Federal
legislation in the US. 2021 also saw the publication by The US
Portland Cement Association of its road map to carbon neutrality. A
key component for this road map is the reduction in the quantity of
cement used in cement and concrete mixes through the use of SCMs
such as natural pozzolan.
Cement and concrete producers are also under pressure from their
specifiers and customers to supply concrete with lower embodied
carbon and it is expected that the California Department of
Transport may soon mandate the use of greener concrete mixes in
their infrastructure contracts. Both State and Federal
infrastructure contracts are set to increase now President Biden
has signed the US$1 trillion Infrastructure Bill into law.
All of these developments favour increased use of natural
pozzolan. Established fly ash distributors are already looking to
supplement or replace their SCM offerings with natural pozzolan
and, similarly, their customers, cement and ready-mix concrete
companies, are looking to source supplies of natural pozzolan
independently of their fly ash suppliers.
The price of natural pozzolan varies from market to market and
is fixed by negotiation but is expected to follow the price of fly
ash for now, typically $100/ton delivered.
For more information on natural pozzolan see:
https://pozzolan.org/
Perlite
Perlite is a glassy raw material which, when heated in a
furnace, pops like popcorn and expands by up to 20 times in volume
into a white or pale coloured low-density material.
Expanded perlite is used in:
-- Various industrial and household applications such as
insulation, paint texturing, plaster and concrete fillers, building
materials fillers, formed insulation, field conditioners (soil
porosity enhancement) and fire proofing.
-- Filter aids (in competition with diatomite).
-- Insulating industrial cryogenic storage vessels.
-- Potting medium in gardening and horticulture to aid water
retention and aeration of the soil.
According to the United States Geological Survey ("USGS"),
845,000 tons of raw perlite was mined in the USA in 2020, up 34% on
2019 with most material used internally. USGS statistics show the
price of raw perlite fell 4.7% in 2020 whilst the price of imports,
primarily from Greece rose 12.9%. China is the world's largest
producer with most of its production consumed internally.
The consumers of raw perlite are split between independent
expanders and downstream integrated mining-perlite expanding
companies. In 2020-2021 the supply of perlite to the independent
expander sector has been severely disrupted due to two major market
developments.
Firstly, Cornerstone Minerals, the Oregon-based and largest US
independent mine producer of horticultural grade perlite was
purchased by multi-national industrial minerals company Imerys.
Imerys has reportedly ceased supplying perlite to the many
independent expanders who bought on spot, focusing instead on
existing contracts and its 100% owned expansion plants.
Secondly, downstream integrated miner-expander Dicaperl has
reportedly cut supply to all independent expanders retaining the
raw perlite for its own use. Whilst perlite can be and is imported
from Greece, it does not expand as well as the traditional Oregon
material and supply is reportedly unpredictable.
These recent developments provide an opportunity for a new
supplier of raw perlite which the Company is looking to
exploit.
For more information on perlite see:
https://www.perlite.org/library/
NEWPERL PERLITE PROJECT, NEVADA
This project is located approximately 85km from the CS Project
in Nevada, USA.
The NewPerl Project contains a number of areas where surface
samples have shown excellent expandability results for
horticultural grades of perlite. Subject to further testing, this
could be suitable for feed into the CS Project in the future.
Drill testing of the NewPerl Project has been deferred in order
to focus resources on the CS Project although the Company has a
drill permit in place.
JACKSON WASH PERLITE PROJECT, NEVADA
In October 2021, the Company entered into a lease/option
agreement with Kinross Gold U.S.A Inc. granting Kinross a Lease and
Option to purchase the Company's 25 Jackson Wash mining claims in
Nevada, USA. The Company retains the right to mine perlite on the
project claims during the lease/option period.
The Jackson Wash Project is located 16km from the NewPerl
Project in Nevada and is also a target for horticultural grade
perlite with the potential to be suitable as a future feed for the
CS Project.
In addition to hosting large surface occurrences of perlite, the
project claims are located adjacent to the historic Montezuma
silver, gold and mercury mining centre being explored by Kinross.
Kinross produces more than 2 million ounces per year gold
(equivalent).
The terns of the lease/option agreement are given in Note 22 to
the Financial Statements.
HAZEN POZZOLAN PROJECT, NEVADA.
During the year the Company applied for claims to cover a
deposit of pumice near Hazen in Nevada and is now testing this
material as a natural pozzolan. Initial tests results have shown 7
and 28-day strength results very similar to the CS natural pozzolan
and the material is very lightweight and so it will also be
evaluated for its potential as a lightweight aggregate for use in
lightweight concrete blocks and facing stones.
The deposit is very well located, being just 9 miles from a rail
siding with good road and rail connections to Reno and to the
cement and ready-mix markets of northern California, and so can be
more readily targeted at these markets than the CS Project.
Further work is required to determine the extent of the deposit
and access to the property. As this project is at an early stage,
costs have been expensed in the reporting period.
PIOCHE SEPIOLITE PROJECT, NEVADA
Whilst researching new opportunities for natural pozzolan,
attention was drawn to an occurrence of the mineral sepiolite.
Sepiolite is used commercially as a viscosity modifier and is rare
in commercial sized deposits.
Claims have been staked and initial tests by a European mineral
producer were positive. A recent joint field visit indicated the
potential for an extensive deposit of sepiolite; further samples
were collected and additional tests will now be carried out in
Europe.
As this project is at an early stage, costs have been expensed
in the reporting period.
OTHER SR MINERALS INC. PROJECTS
SR Minerals Inc. continues to hold mining claims at a number of
additional projects in Nevada including the Bay State Silver
Project , the County Line Diatomite Project and the Ridge Limestone
Project . These projects are available for sale or joint
venture.
SR Minerals Inc. holds a royalty interest in the Junction
Copper-Gold-Silver Project held by VR Resources Ltd although it is
understood that no work is currently planned for this Project.
SR Minerals Inc. also holds a royalty on the Garfield
Copper-Gold Project as a result of the recent sale of this
project.
WESTGOLD INC.
The Company's Westgold subsidiary holds interests in three
projects in Nevada - Clayton , Newark and Stonewall .
CLAYTON SILVER-GOLD PROJECT, NEVADA
The property lies at the south end of the Clayton Valley, a
major centre of lithium brine production, in the Walker Lane
Mineral Belt. It is some 19 miles southeast of the producing
Mineral Ridge Gold Mine, 19 miles southwest of the major historic
mining centre of Goldfield, where a number of large gold-silver
deposits are currently under development. The property also lies 40
miles southwest of the famous silver deposits at Tonopah which
produced over 138 million ounces of silver and 1.5 million ounces
of gold from 1900-1921.
Previous Exploration
The mineralisation at the Clayton Project was discovered in the
1980s when surface samples assayed up 5.4 grammes/tonne (g/t) gold
and 265 grammes/tonne silver. Fifteen drill holes were drilled by
Freeport-McMoRan Gold Co ("Freeport") in 1987 within an area of
about 500m x 350m. A number of these holes intersected significant
silver mineralisation within a zone of extensive brecciation and
silicification believed to represent the upper levels of an
epithermal system. In 1989 Coeur Exploration drilled a further 6
shallow RC holes (CL-16 to 21) in the central part of the project
area. Wide intervals of low-grade silver mineralisation were
intersected.
Sunrise Resources Drilling
In November 2020, the Company completed a vertical diamond core
drill hole, 20CLDD001, to a depth of 104.7m to twin and further
evaluate silver mineralisation reported in Freeport Hole CL-15.
Drilling conditions were difficult due to heavy faulting and
extensive zones of swelling clays in the fractured and
hydrothermally altered rock. Whilst these geological conditions can
be favourable indications for mineralisation, core recovery was
very poor as a result.
Massive quartz vein and quartz breccia were intersected in the
target zone from 82.30m to 90.22m downhole (true thickness unknown)
containing fine grained disseminated sulphides including a mineral
logged as the silver sulphide mineral acanthite. Within this 7.92m
interval there were two intervals with no core recovery having an
aggregate thickness of 1.98m.
The fire-assay weighted average grade of the core recovered in
this 7.92m down-hole interval, comprising 5.94m of recovered core,
was 303 g/t silver (8.84 troy ounces/ton) and 0.2g/t gold. When
analysed by geochemical methods the equivalent grade was 4% higher
at 316 g/t silver (9.23 ounces/ton).
No information is available for the interval where no core was
recovered but, as it is internal to the mineralised zone and
includes 1.37m of missing core adjacent to the highest-grade sample
recovered, the Company believes that in-situ material that was not
recovered is also likely to be silver bearing.
When compared to the analytical results from the 1980s drill
hole, CL-15, hole twinned by hole 20CLDD001 shows an 84% increase
in silver grade. Corresponding gold grades were 50% lower, but the
economic value of the mineralisation is overwhelmingly from the
silver content in both drill holes.
These results, and the Company's geological logging, support
Freeport's mineralogical evaluation of drill samples and the
results of screen gold and silver analyses which were interpreted
by Freeport to indicate that silver occurs in association with fine
grained sulphide minerals that may have preferentially been lost
from the drill samples into the drill fluids and that the
historically reported silver grades are likely to be
understated.
The presence of primary silver and other sulphide minerals in
the mineralised intersection support a belief that the higher
grades are primary, rather than the result of supergene enrichment,
and so have depth potential.
The Clayton Project is available for joint venture although the
Company will consider follow up drilling as resources become
available.
NEWARK GOLD PROJECT, NEVADA
The Newark Gold Project is located at the southern end of the
Battle Mountain-Eureka (Cortez) gold trend. It lies 40 km south of,
and along the same structural zone as, the past-producing Alligator
Ridge Mine, 13 km southwest of the past producing Illipah Gold Mine
and 20 km east of the Pan Gold Mine.
The Newark Project was originally targeted for Carlin-style gold
mineralisation by Freeport in the 1980s following the discovery of
gold anomalous values in silicified rocks in a favourable
structural and stratigraphic setting. Carlin-style deposits can be
both large (e.g. Goldstrike which contains 39 million ounces gold
at a grade of 3.3 g/t) and high-grade (e.g. Barrick's recent
Goldrush discovery which contains 8.6 million ounces gold at a
grade of 10.6 g/t).
Freeport drilled a total of 16 holes. Significantly, hole NWK8
intersected 47m of low-level gold (average 0.14 ppm gold) in
jasperoid from 75m to the end of the hole at 122m. Drilling is
warranted to test this gold bearing jasperoid and to deepen the
hole through to about 400m depth to test the underlying Joana
Limestone which can be a significant host for Carlin-style gold
mineralisation.
The Company will consider a joint venture partner for this
project and has obtained a permit for an initial drilling programme
at Newark and has lodged the required reclamation bond.
SUNDANCE GOLD PROJECT
The Project is located approximately 90 miles southeast of Reno
. The area was targeted following the Company's discovery of
anomalous gold in surface samples containing up to 0.4
grammes/tonne gold in clay altered and quartz veined volcanic
rocks. The Company completed an initial soil sampling programme and
anomalous gold-in-soil values were returned on most sample lines
with values up to 168 ppb gold and a 60m width >100 ppb gold on
one particular sample traverse.
At present, due to commitments on its other projects, the
Company is not planning any further work on the Sundance
Project.
MYRTLE GOLD PROJECT
The Company's work at and around the Sundance Project
highlighted an area some few miles to the southwest where surface
sampling returned encouraging gold and silver values. A number of
mining claims were staked as a result around a small historic mine
known as the Myrtle Mine.
GARFIELD COPPER-GOLD PROJECT and STONEWALL GOLD PROJECT,
NEVADA
During the reporting period the Company sold its exploration
rights at Garfield and Stonewall Properties in Nevada, USA to
AIM-listed Power Metal Resources plc ("PMR"). The consideration
received was GBP20,000 cash, and the issue of 2.25 million new
Ordinary Shares in PMR, plus 2.25 million warrants, each warrant
entitling the holder to subscribe for one new Ordinary Share in PMR
at a price of 3.75 pence per share.
The Company retains a 2% Net Smelter Return Royalty in respect
of the two properties, half of which can be purchased by PMR for
US$1million for each property.
The profit on disposal recognised in the Consolidated Income
Statement GBP30,658, arises from the fair value of consideration
received GBP74,000 (market value of shares, GBP54,000 and cash
GBP20,000) less the carrying value of the exploration assets,
accumulated costs of GBP43,342.
The warrants and royalties received are contingent assets and
their likely realisation is considered to be unpredictable at
present. They have not been assigned a valuation on this basis.
Nevertheless, the Garfield and Stonewall Projects are considered
to be prospective for sediment hosted skarn and porphyry-style
copper-gold mineralisation at the Garfield Project and
epithermal-style gold-silver mineralisation at the Stonewall
Project.
SUNRISE MINERALS AUSTRALIA PTY LTD
BAKER'S GOLD PROJECT
The Baker's Gold Project is located 25km southeast of
Meekatharra in the Murchison Goldfield of Western Australia. It
lies on the eastern limb of the Meekatharra Greenstone Belt which
has yielded over 5.5 million ounces of gold and contains a number
of present and past producing gold mines.
The Baker's Project area licence has seen various rounds of
historical exploration including separate programmes of wide-spaced
percussion drilling.
The Company carried out mapping and sampling and three rounds of
soil sampling at Baker's between 2014 and 2018 generating a number
of gold-in-soil anomalies which, together with historical
exploration results, defined three drill testing targets.
At the end of 2020, the Company commissioned Yugunga-Nya
Heritage Pty Ltd to undertake an archaeological and ethnographic
survey for a follow up drilling programme. During the
archaeological and ethnographic survey, the whole of the Baker's
Project survey area was assessed. No archaeological sites were
identified within the three proposed drill areas and no
ethnographic sites were mentioned by Yugunga-Nya representatives as
being within project tenements.
The survey cleared the way for the proposed drill programme to
proceed, which included an initial five reverse circulation drill
holes to test three separate gold targets which include old mine
workings, areas of gold nugget production and a gold-in-soil
geochemical anomaly. Five holes were drilled for a total of 589m
using the reverse circulation percussion method.
The Dicky Lee Target
This is an area of small-scale open pit mining with pit
dimensions of approximately 60m by 40m and depths of up to 10m. The
pit was excavated in the 1980s following the discovery of specimen
quality gold-quartz nuggets, by metal detectorists both at surface
and in-situ. The gold at Dicky Lee occurs in a quartz vein
stockwork in dolerite.
The Company had previously carried out mapping and sampling of
the pit area and only two historical drill holes have tested the
pit area, and both intersected wide intervals of low-grade gold
mineralisation (69m grading 0.2g/t gold and 80m grading 0.2 g/t
gold including 1m grading 5.7 g/t gold from 5m down hole).
One hole was drilled at the Dicky Lee pit, 21SBRC001, in 2021 to
follow up on historical drill results This hole was drilled to a
depth of 196m and intersected a number of narrow low-grade gold
mineralisation with a best intersection of 1m grading 2.19 g/t
Au.
The DLR4 Target
The DLR4 target lies some 750m southwest of the Dicky Lee pit
and is named after the number of a shallow historic drill hole DLR4
which was completed by Australian Consolidated Minerals in 1987.
This hole averaged 0.55 g/t gold over the 22m interval from 2m down
hole depth to the end of hole at 24m and the final 2m sample
assayed 1.17 g/t gold. No follow up drilling was carried out.
Project-wide and follow-up soil sampling carried out by the
Company defined a 500m long zone of gold-in-soil anomalies centred
on hole DLR4. Quartz float can be observed at surface and appears
to be the target for the historical drilling.
Three holes, 21SBRC002, 3 and 5, were drilled at 50m spacing in
a fence configuration across the soil anomaly with the most
north-easterly hole in the traverse, 21SBRC002 encountering
high-grade gold mineralisation proximal to historical hole DLR4. A
2m interval from 64m down hole (approximately 50m below surface)
graded 11.5 g/t gold and included a 1m interval grading 20.40 g/t
gold. A 7-metre zone with low-grade gold values was intersected
immediately below.
As a check to eliminate any possible nugget effect, the pulp
rejects from the high-grade interval were re-submitted for analysis
by 1kg cyanide leach. In this method, a 1kg sample is leached with
a cyanide solution to extract the cyanide soluble gold. The leach
residue (tail) was then assayed by 50g fire assay to allow
determination of the total gold content. These re-analysis results
indicate that gold was previously under-reported, and the
high-grade intersection reporting as 2m grading 14.4 g/t gold from
64m downhole including 1m grading 26.5 g/t gold.
The results also show that 95% of the gold in the sample is
cyanide soluble, a favourable metallurgical indication.
The Company believes the DLR4 Target to be highly prospective
being currently open along strike and at depth. Further drilling is
justified to determine the orientation and extent of the newly
discovered high-grade mineralisation.
Third Target
The Third Target was a narrow zone of prospector scale working
where sampling by the Company had returned high gold values. This
target was speculative and tested by a single drill hole,
21SBRC004, but no significant results were returned.
Risks & Uncertainties
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this
stage in its development and in the foreseeable future are detailed
below together with risk mitigation strategies employed by the
Board.
Risk Mitigation Strategies
Exploration Risk
The Group's business is mineral The directors bring many years
exploration and development which of combined mining and exploration
are speculative activities. There experience and an established
is no certainty that the Group track record in mineral discovery.
will be successful in the definition
of economic mineral deposits, or The Company targets advanced and
that it will proceed to the development drill-ready exploration projects
of any of its projects or otherwise in order to avoid higher risk
realise their value. grass roots exploration.
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Resource/Reserve Risk
All mineral projects have risk Mineral Resources and Reserves
associated with defined grade and are estimated by independent specialists
continuity. Mineral Resources and on behalf of the Group and reported
Reserves are always subject to in accordance with accepted industry
uncertainties in the underlying standards and codes. The directors
assumptions which include the quality are realistic in the use of metal
of the underlying data, geological and mineral price forecasts and
interpretations, technical assumptions impose rigorous practices in the
and price forecasts. QA/QC programmes that support
its independent estimates.
-------------------------------------------
Development and Marketing Risk
Delays in permitting, financing, To reduce development risk the
mine commissioning and marketing directors will ensure that its
a project and its products may permitting, financial evaluation
result in delays to the Group meeting and financing and market mechanisms
production targets. are robust and thorough and will
seek to position the Company as
a low-cost producer.
-------------------------------------------
Commodity Price Risk
Changes in commodity prices can The Company consistently reviews
affect the economic viability of commodity prices and trends for
mining projects and affect decisions its key projects throughout the
on continuing exploration activity. development cycle.
-------------------------------------------
Mining and Processing Technical
Risk From the earliest stages of exploration,
Notwithstanding the completion the directors look to use consultants
of metallurgical testwork, test and contractors who are leaders
mining and pilot studies indicating in their field and in future will
the technical viability of a mining seek to strengthen executive management
operation, variations in mineralogy, and the Board with additional
mineral continuity, ground stability, technical and financial skills
groundwater conditions and other as the Company transitions from
geological conditions may still exploration to production.
render a mining and processing
operation economically or technically
non-viable.
-------------------------------------------
Environmental and Social Governance The development of industrial
(ESG) Risk minerals projects such as the
Exploration and development of CS Project carry a lower level
a project can be adversely affected of environmental and social liability
by environmental and social legislation than gold or base metal projects
and the unforeseen results of environmental due to low levels of toxic contaminants
and social impact studies carried in the ore and processing chemicals.
out during evaluation of a project. The Company has adopted an Environmental
Once a project is in production Policy and avoids the acquisition
unforeseen events can give rise of projects where liability for
to environmental liabilities. legacy environmental issues might
fall upon the Company. The Environmental
Policy will be updated in future
to account for planned mining
activities.
-------------------------------------------
Political Risk
All countries carry political risk The Company's strategy restricts
that can lead to interruption of its activities to stable, democratic
activity. Politically stable countries and mining friendly jurisdictions.
can have enhanced environmental
and social permitting risks, risks The Company has adopted a strong
of strikes and changes to taxation, Anti-corruption Policy and a Code
whereas less developed countries of Conduct and these are strictly
can have, in addition, risks associated enforced.
with changes to the legal framework,
civil unrest and government expropriation
of assets.
Partner Risk
Whilst there has been no past evidence The Board's policy is to maintain
of this, the Group can be adversely control of certain key projects
affected if joint venture partners so that it can control the pace
are unable or unwilling to perform of exploration and development
their obligations or fund their and reduce partner risk.
share of future developments.
For projects where other parties
are responsible for critical payments
and expenditures the Company's
agreements legislate that such
payments and expenditures are
met.
------------------------------------------
Financing & Liquidity Risk
The Company has an ongoing requirement The Company maintains a good network
to fund its activities through of contacts in the capital markets
the equity markets and in future that has historically met its
to obtain finance for project development. financing requirements. The Company's
There is no certainty such funds low overheads and cost-effective
will be available when needed. exploration strategies help reduce
its funding requirements and currently
the outstanding directors' fees
are settled in shares. Nevertheless,
further equity issues will be
required over the next 12 months.
------------------------------------------
Financial Instruments
Details of risks associated with The directors are responsible
the Group's Financial Instruments for the Group's systems of internal
are given in Note 19 to the financial financial control. Although no
statements. systems of internal financial
control can provide absolute assurance
against material misstatement
or loss, the Group's systems are
designed to provide reasonable
assurance that problems are identified
on a timely basis and dealt with
appropriately.
In carrying out their responsibilities,
the directors have put in place
a framework of controls to ensure
as far as possible that ongoing
financial performance is monitored
in a timely manner, that corrective
action is taken and that risk
is identified as early as practically
possible, and they have reviewed
the effectiveness of internal
financial control.
The Board, subject to delegated
authority, reviews capital investment,
property sales and purchases,
additional borrowing facilities,
guarantees and insurance arrangements.
------------------------------------------
COVID-19
The Company has applied all government guidelines in its
day-to-day operations and administration. The restrictions on
international travel have impacted the ability of the Company to
meet with potential customers in the US and the ability to
supervise local operations. Fortunately, this has not caused any
material delays or setbacks in the advancement of corporate
objectives. Management and staff have carried out their duties
diligently and efficiently in the circumstances of the
"work-from-home" rules and social distancing.
The Company is pleased to report that, to date, there have been
no cases of Coronavirus amongst its staff.
Forward-Looking Statements
This Annual Report may contain certain statements and
expressions of belief, expectation or opinion which are
forward-looking statements, and which relate, inter alia, to the
Company's proposed strategy, plans and objectives or to the
expectations or intentions of the Company's directors. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the control of the
Company that could cause the actual performance or achievements of
the Company to be materially different from such forward-looking
statements.
Section 172 (1) Statement
Section 172 of the Companies Act 2006 requires a director of a
company to act in the way he or she considers, in good faith, would
be most likely to promote the success of the company for the
benefit of its members as a whole. This requires a director to have
regard, among other matters, to: the likely consequences of any
decision in the long term; the interests of the Company's
employees; the need to foster the Company's business relationships
with suppliers, clients, joint arrangement partners and others; the
impact of the Company's operations on the community and the
environment; the desirability of the Company maintaining a
reputation for high standards of business conduct; and the need to
act fairly with members of the Company.
The Company's directors give careful consideration to these
factors in discharging their duties. The stakeholders we consider
are our shareholders, employees, suppliers (including consultants
and contractors), our joint arrangement partners, the regulatory
bodies that we engage with and those that live in the societies and
geographical areas in which we operate. The directors recognise
that building strong, responsible and sustainable relationships
with our stakeholders will help us to deliver our strategy in line
with our long-term objectives.
Having regard to:
The likely consequences of any decision in the long-term:
The Company's Aims and Business Model are set out at the head of
this Strategic Report and in the Chairman's Statement. The
Company's mineral exploration and development business is, by its
very nature, long-term and so the decisions of the Board always
consider the likely long-term consequences and take into
consideration, for example, trends in metal and minerals supply and
demand, the long-term political stability of the countries in which
the Company operate and the potential impact of its decisions on
its stakeholders and the environment. As the Company aims to
transition the CS Project into production other projects also
become important to the long-term future of the Company and this
has framed the Board's decision to allocate a portion of capital to
the testing of some of the Company's precious metal projects and to
acquiring new projects. The Board's approach to general strategy
and long-term risk management are set out in the Corporate
Governance Statement (Principle 1) and the section on Risks and
Uncertainties.
The interests of the Company's employees:
The Company has no employees. It relies on the employees of
Tertiary Minerals plc through a services agreement with Tertiary
Minerals plc, but all of these employees have daily access to the
Executive Chairman and their views are considered in the Board's
decision making. Further details on the Board's employment
policies, health and safety policy and employee engagement are
given in the Corporate Governance Statement (Principle 8).
The need to foster the Company's business relationships with its
stakeholders:
The sustainability of the Company's business long-term is
dependent on maintaining strong relationships with its
stakeholders. The factors governing the Company's decision making
and the details of stakeholder engagement are set out in the
Corporate Governance Statement (Principles 2, 3, 8 and 10).
Having regard to the impact of the Company's operations on the
community and the environment:
The Company requires a "social licence" to operate sustainably
in the mining industry and so the Board makes careful consideration
of any potential impacts of its activities on the local community
and the environment. The Board strives to maintain good relations
with the local communities in which it operates and with local
businesses. For example, in permitting the CS Project for
production the Board has carried our extensive work and
consultation with regulators and the local community
representatives to evaluate the benefits and impacts of its CS
Project. Further discussion of these activities and Board
considerations can be found in the Operating Review and in the
Corporate Governance Statement (Principle 3).
The desirability of the Company maintaining a reputation for
high standards of business contact:
The Board recognises that its reputation is key to its long-term
success and depends on maintaining high standards of corporate
governance. It has adopted the QCA Code of Corporate Governance and
sets out in detail how it has complied with the 10 key principles
of the QCA Code in the Corporate Governance Statement. This
contains details of various Company policies designed to maintain
high standards of business conduct such as the Share Dealing
Policy, Health and Safety Policy and Anti-Bribery Policy and Code
of Conduct.
The need to act fairly between Members of the Company:
The Board ensures that it takes decisions in the interests of
the members (shareholders) as a whole and aims to keep shareholders
fully informed of significant developments, ensuring that all
shareholders receive Company news at the same time. The Executive
Chairman devotes time to answering genuine shareholder queries, no
individual or group of shareholders is given preferential
treatment. Further information is provided in the Corporate
Governance Statement (Principles 2 and 10).
This Strategic Report was approved by the Board of Directors on
10 December 2021 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Directors' Responsibilities
The directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires directors to prepare financial statements
for a company for each financial year. Under that law the directors
have elected to prepare the Group and Company financial statements
in accordance with applicable law and International Accounting
Standards in conformity with the Companies Act 2006. 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 Group and Company and of the profit or loss of
the Group for that period. The directors are also required to
prepare the financial statements in accordance with the AIM Rules
of the London Stock Exchange for companies trading securities on
the AIM market.
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 they have been prepared in accordance with
applicable law and International Accounting Standards in conformity
with the Companies Act 2006, 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 and the
Group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
Report and the Directors' Report and other information included in
the Annual Report and financial statements are prepared in
accordance with applicable law in the United Kingdom.
Website Publication
The maintenance and integrity of the Sunrise Resources plc
website is the responsibility of the directors. Legislation in the
United Kingdom governing the preparation and dissemination of the
accounts and the other information included in annual reports may
differ from legislation in other jurisdictions.
Information from the Directors' Report
The directors are pleased to submit their Annual Report and
audited financial statements for the year ended 30 September
2021.
The Strategic Report contains details of the principal
activities of the Company and includes the Operating Review which
provides detailed information on the development of the Group's
business during the year and indications of likely future
developments and events that have occurred after the financial year
end.
Going Concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at the year-end of GBP371,740 (2020:
GBP1,089,417) these projections include the proceeds of future
fundraising necessary within the next 12 months to meet the Group's
overheads and planned discretionary project expenditures and to
maintain the Company and its subsidiaries as going concerns.
Although the Company has been successful in raising finance in the
past, there is no assurance that it will obtain adequate finance in
the future. This represents a material uncertainty related to
events or conditions which may cast significant doubt on the Group
and Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
Dividend
The directors do not recommend the payment of any dividend.
Financial Instruments and Other Risks
The business of mineral exploration and evaluation has inherent
risks. Details of the Group's financial instruments and risk
management objectives and of the Group's exposure to risk
associated with its financial instruments are given in Note 19 to
the financial statements.
Details of risks and uncertainties that affect the Group's
business are given in the Strategic Report.
Directors
The directors holding office in the period were:
Mr P L Cheetham - Chairman of the Board and Chairman of the
Nomination Committee.
Mr R D Murphy - Chair of the Remuneration Committee and a member
of the Nomination and Audit Committees.
Mr J Cole - Chair of the Audit Committee and member of the
Nomination and Remuneration Committees (Appointed 27 May 2021)
Mr D J Swan - Previous Chair of the Audit Committee and member
of the Nomination and Remuneration Committees (Retired 27 May
2021)
Attendance at Board and Committee Meetings
The Board retains control of the Group with day-to-day
operational control delegated to the Executive Chairman. The full
Board meets four times a year and on any other occasions it
considers necessary.
Board Meetings Nomination Audit Committee Remuneration
Committee Committee
--------------
Director Attended Held Attended Held Attended Held Attended Held
---------- ----- --------- ----- ----------- ----- -----
P L Cheetham 12 12 1 1 2 2 0 0
---------- ----- --------- ----- ----------- ----- --------- -----
R D Murphy 12 1 2 0
---------- ----- --------- ----- ----------- ----- --------- -----
*J Cole 1 0 0 0
---------- --------- ----------- ---------
** D J Swan 11 1 1 0
---------- ----- --------- ----- ----------- ----- --------- -----
*Appointed 27 May 2021 and so only eligible to attend 1 meeting
during the reporting period
**Retired 27 May 2021
The directors' shareholdings are shown in Note 16 to the
financial statements.
Events After The Report Date
There were no events to report occurring after the reporting
period.
Shareholders
As at the date of this report the following interests of 3% or
more in the issued share capital of the Company appeared in the
share register.
Number % of share
As at 10 December 2021 of shares capital
Interactive Investor Services Nominees Limited SMKTISAS 397,811,800 10.75
----------- ----------
Interactive Investor Services Nominees Limited SMKTNOMS 312,041,563 8.43
----------- ----------
Pershing Nominees Limited BICLT 284,029,545 7.67
----------- ----------
Hargreaves Lansdown (Nominees) Limited 15942 247,184,245 6.68
----------- ----------
Barclays Direct Investing Nominees Limited CLIENT1 225,222,350 6.08
----------- ----------
Hargreaves Lansdown (Nominees) Limited VRA 213,357,929 5.76
----------- ----------
Euroclear Nominees Limited EOC01 182,765,338 4.94
----------- ----------
Interactive Investor Services Nominees Limited TDWHSIPP 170,607,382 4.61
----------- ----------
Hargreaves Lansdown (Nominees) Limited HLNOM 147,434,313 3.98
----------- ----------
JIM Nominees Limited JARVIS 119,380,611 3.22
----------- ----------
HSDL Nominees Limited 117,135,839 3.16
----------- ----------
Disclosure of Audit Information
Each of the directors has confirmed that so far as they are
aware, there is no relevant audit information of which the
Company's Auditor is unaware, and that they have taken all the
steps that they ought to have taken as a director in order to make
themselves aware of any relevant audit information and to establish
that the Company's Auditor is aware of that information.
Auditor
A resolution to reappoint Crowe U.K. LLP as Auditor of the
Company will be proposed at the forthcoming Annual General
Meeting.
Charitable and Political Donations
During the year, the Group made no charitable or political
donations.
Annual General Meeting
The Company's Annual General Meeting will be held on Thursday 27
January 2022 at 10.00 a.m.
Conflicts of Interest
The Companies Act 2006 permits directors of public companies to
authorise directors' conflicts and potential conflicts, where
appropriate, where the Articles of Association contain a provision
to this effect. The Company's Articles contain such a provision.
Procedures are in place in order to avoid any conflict of interest
between the Company and Tertiary Minerals plc. Tertiary provides
corporate and project management services to Sunrise.
Approved by the Board on 10 December 2021 and signed on its
behalf.
Patrick Cheetham
Executive Chairman
Board of Directors
The Directors and Officers of the Company during the financial
year were:
Patrick Cheetham
Executive Chairman
Key Strengths:
-- Founding director
-- Mining geologist with 39 years' experience in mineral exploration
-- 34 years in public company management
Appointed: March 2005
Committee Memberships: Chairman of the Nomination Committee
External Commitments: Executive Chairman of Tertiary Minerals
plc
Roger Murphy
Non-Executive Director
Key Strengths:
-- Career focus in capital raising for mining and oil & gas companies
-- Former MD, Investment Banking, of Dundee Securities Europe Ltd
-- Geologist
Appointed: May 2016
Committee Memberships: Chairman of the Remuneration Committee
and Member of Audit and Nomination Committees
External Commitments : Partner and non-executive Director of
Madini Minerals, Executive Director of Zamare Minerals Ltd, Sarn
Helen Gold Limited and TREO Minerals Ltd.
James Cole
Non-Executive Director
Key Strengths:
-- Chartered Accountant with strong commercial background and
track record of success in fundraising, mergers, disposals and
acquisitions in resource sector
-- Previously Finance Director for the Goal Group Limited.
Formerly Chief Financial Officer Cominco Resources Ltd, AIM/TSX
traded European Minerals Corporation plc and TSX/OSE traded Crew
Gold Corporation.
Appointed: May 2021
Committee Memberships: Chairman of the Audit Committee and a
Member of the Remuneration and Nomination Committees
External Commitments: Not applicable.
David Swan
Senior Non-Executive Director (Retired)
Key Strengths:
-- Chartered Accountant with career focus in natural resources industry
-- Previously executive director of several public listed mining companies
Appointed: May 2012 Retired: May 2021
Previous Committee Memberships: Chairman of the Audit Committee
and a Member of the Remuneration and Nomination Committees
Rod Venables
Company Secretary
Key Strengths:
-- Qualified company/commercial solicitor
-- Director and Head of Company Secretarial Services at City Group PLC
-- Experienced in both Corporate Finance and Corporate Broking
Appointed: July 2019
External Commitments: Company Secretary for Tertiary Minerals
plc and other clients of City Group PLC
Corporate Governance
Chairman's Overview
There is no prescribed corporate governance code for AIM
companies and the London Stock Exchange prefers to give companies
the flexibility to choose from a range of codes which suit their
specific stage of development, sector and size.
The Board considers the corporate governance code published by
the Quoted Companies Alliance to be the most suitable code for the
Company. Accordingly, the Company has adopted the principles set
out in the QCA Corporate Governance Code (the "QCA Code") and
applies these principles wherever possible, and where appropriate
given its size and available resources. The Company's Corporate
Governance Statement was reviewed and amended by the Board on 10
December 2021. The Company has set out on its website and in its
Corporate Governance Statement the 10 principles of the QCA Code
and details of the Company's compliance.
Patrick Cheetham, in his capacity as Chairman, has overall
responsibility for the corporate governance of the Company and the
Board is responsible for delivering on our well-defined business
strategy having due regard for the associated risks and
opportunities.
The Company's corporate governance arrangements now in place are
designed to deliver a corporate culture that understands and meets
shareholder and stakeholder needs and expectations whilst
delivering long-term value for shareholders.
The Board recognises that its principal activity, mineral
exploration and development, has potential to impact on the local
environment and consequently has adopted an Environmental Policy to
ensure that the Group's activities have minimal environmental
impact. Where appropriate the Group's contracts with suppliers and
contractors legally bind those suppliers and contractors to do the
same. The Group's activities, carried out in accordance with the
Environmental Policy, have had only minimal environmental impact at
present and this policy is regularly reviewed . Where appropriate,
all work is carried out after advance consultation with affected
parties.
The Board recognises the benefits that social media engagement
can have in helping the Company reach out to shareholders and other
stakeholders, but it also recognises that misuse or abuse of social
media can bring the Company into disrepute. To facilitate the
responsible use of social media the Company has adopted a Social
Media Policy applicable to all officers and employees of the
Company.
The Board has also adopted a Share Dealing Code for dealings in
shares of the Company by directors and employees and an
Anti-corruption Policy and Code of Conduct applicable to employees,
suppliers and contractors.
The Group recognises that the goodwill of its contractors,
consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings.
The Group has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers. The
amount shown in the Consolidated and Company Statements of
Financial Position in respect of trade payables at the end of the
financial year represents 4 days of average daily purchases (2020:
5 days). This amount is calculated by dividing the creditor balance
at the year end by the average daily Group spend in the year.
The Board recognises it has a responsibility to provide
strategic leadership and direction in the development of the
Group's health and safety strategy in order to protect all of its
employees and other stakeholders. The Company has developed a
Health and Safety Policy to clearly define roles and
responsibilities and in order to identify and manage risk.
Your Board currently comprises three directors of which two are
non-executive and considered by the Board to be independent of
management. We believe that this balance provides an appropriate
level of independent oversight. The Board has the ability to seek
independent advice although none was deemed necessary in the year
under review. The Board is aware of the need to refresh its
membership from time to time and to match its skill set to those
required for the development of its mineral interests and will
consider appointing additional independent non-executive directors
in the future.
Patrick Cheetham
Executive Chairman
Corporate Governance Statement
The QCA Code sets out ten principles which should be applied.
The principles are set out below with an explanation of how the
Company applies each principle, and the reasons for any aspect of
non-compliance.
Principle One: Establish a strategy and business model which
promote long-term value for shareholders.
The Company has a clearly defined strategy and business model
that has been adopted by the Board and is set out in the Strategic
Report. Details of the challenges to the execution of the Company's
strategy and business model and how those will be addressed can be
found in Risks and Uncertainties in the Strategic Report.
Principle Two: Seek to understand and meet shareholder needs and
expectations.
The Board is committed to maintaining good communication with
its shareholders and investors. The Chairman and members of the
Board from time to time meet with shareholders and investors
directly or through arrangements with the Company's brokers to
understand their investment requirements and expectations and to
address their enquiries and concerns.
All shareholders are normally encouraged to attend the Company's
Annual General Meetings where they can meet and directly
communicate with the Board. After the close of business at the
Annual General Meeting, the Chairman makes an up-to-date corporate
presentation and opens the floor to questions from
shareholders.
Shareholders are also welcome to contact the Company via email
at info@sunriseresourcesplc.com with any specific queries.
The Company also provides regulatory, financial and business
news updates through the Regulatory News Service (RNS) and various
media channels such as Twitter. Shareholders also have access to
information through the Company's website,
www.sunriseresourcesplc.com , which is updated on a regular basis
and which includes the latest corporate presentation on the Group.
Contact details are also provided on the website.
Principle Three: Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
The Board takes regular account of the significance of social,
environmental and ethical matters affecting the business of the
Group. At this stage in the Group's development, the Board has not
adopted a specific written policy on Corporate Social
Responsibility as it has a limited pool of stakeholders other than
its shareholders. Rather, the Board seeks to protect the interests
of the Group's stakeholders through individual policies and through
ethical and transparent actions. The Company engages positively
with local communities, regulatory authorities, suppliers and other
stakeholders in its project locations and encourages feedback
through this engagement. Through this process the Company
identifies the key resources and fosters the relationships on which
the business relies.
Principle Four: Embed effective risk management, considering
both opportunities and threats, throughout the organisation.
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible whilst recognising
that its business opportunities carry an inherently high level of
risk. The principal risks and uncertainties facing the Group at
this stage in its development and in the foreseeable future are
detailed in Risks and Uncertainties in the Strategic Report,
together with risk mitigation strategies employed by the Board.
Principle Five: Maintain the board as a well-functioning,
balanced team led by the chair.
The Board's role is to agree the Group's long-term direction and
strategy and monitor achievement of its business objectives. The
Board meets formally four times a year for these purposes and holds
additional meetings when necessary to transact other business. The
Board receives regular and timely reports for consideration on all
significant strategic, operational and financial matters. Relevant
information for consideration by the Board is circulated in advance
of its meetings.
The Board met twelve times during the year to consider such
matters. Further details are provided in the Directors' Report. The
Board is supported by the Audit, Remuneration and Nomination
Committees.
The Board currently consists of the Executive Chairman (Patrick
Cheetham), and two non-executive directors (Roger Murphy and James
Cole). The current Board's preference is that independent
non-executive directors comprise the majority of Board members.
Patrick Cheetham is currently the Chairman and Chief Executive.
Patrick Cheetham has a service contract as Chairman of the Company
and his services as Chief Executive are provided to the Company, at
cost, through a Management Services Agreement with Tertiary
Minerals plc ("Tertiary"), in which he is a shareholder and where
he is also employed as Chairman. In 2021, Patrick Cheetham
dedicated over 51% of his working time to the Company and this is
expected to increase significantly in 2022 due to reduced
responsibilities in Tertiary. The combined role of Chairman and
Chief Executive results in cost savings and is considered
acceptable whilst there is a majority of independent directors on
the Board and having regard to the fact that the Company is not yet
revenue generating.
The non-executive directors have committed the time necessary to
fulfil their roles during the year. The attendance record of the
directors at Board and Board Committee meetings are detailed in the
Directors' Report
The current non-executive directors are considered independent
of management and free from any business or other relationship
which could materially interfere with the exercise of their
independent judgement.
Principle Six: Ensure that between them the directors have the
necessary up to date experience, skills and capabilities.
The Board considers the current balance of sector, financial and
public market skills and experience of its directors are relevant
to the Company's business and are appropriate for the current size
and stage of development of the Company and the Board considers
that it has the skills and experience necessary to execute the
Company's strategy and business plan and discharge its duties
effectively.
The directors maintain their skills through membership of
various professional bodies, attendance at mining conferences and
through their various external appointments.
All Directors have access to the advice and services of the
Company Secretary who is responsible for ensuring that Board
procedures and applicable rules and regulations are observed. All
directors are able to take independent professional advice, if
required, in relation to their duties and at the Company's
expense.
Principle Seven: Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement.
The ultimate measure of the effectiveness of the Board is the
Company's progress against the long-term strategy and aims of the
business. This progress is reviewed in Board meetings held at least
four times a year. The Executive Chairman's performance is
regularly reviewed by the rest of the Board.
The Nomination Committee, currently consisting of the Executive
Chairman and the two non-executive directors, meets once a year to
lead the formal process of rigorous and transparent procedures for
Board appointments. During this meeting the Nomination Committee
reviews the structure, size and composition of the Board;
succession planning; leadership; key strategic and commercial
issues; conflicts of interest; time required from non-executive
directors to execute their duties effectively; overall
effectiveness of the Board and its own terms of reference. A new
non-executive director, James Cole, was appointed during the
year.
Under the Articles of Association, new directors appointed to
the Board must stand for election at the first Annual General
Meeting of the Company following their appointment. Under the
Articles of Association, existing directors retire by rotation and
may offer themselves for re-election.
Principle Eight: Promote a corporate culture that is based on
ethical values and behaviours.
The Board recognises and strives to promote a corporate culture
based on strong ethical and moral values. The Group is currently
managed via a service agreement with Tertiary. It has no employees
but encourages Tertiary's employees to understand all aspects of
the Group's business and Tertiary seeks to remunerate its employees
fairly, being flexible where practicable. In future, the Group will
give full and fair consideration to applications for employment
received regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs, transgender status or sexual
orientation. The Board takes account of Tertiary's employees'
interests when making decisions, and suggestions from those
employees aimed at improving the Group's performance are
welcomed.
The corporate culture of the Company is promoted to Tertiary's
employees, suppliers and contractors and is underpinned by the
implementation and regular review, enforcement and documentation of
various policies: Health and Safety Policy; Environmental Policy;
Share Dealing Policy; Anti-Corruption Policy & Code of Conduct;
Privacy and Cookies Policy and Social Media Policy. These
procedures enable the Board to determine that ethical values are
recognised and respected.
The Board recognises that its principal activity, mineral
exploration and development, has potential to impact on local
environments and consequently has adopted an Environmental Policy
to ensure that, wherever they take place, the Group's activities
have minimal environmental impact. Where appropriate the Group's
contracts with suppliers and contractors legally bind those
suppliers and contractors to do the same. The Group's activities
carried out in accordance with the Environmental Policy have had
only minimal environmental impact and this policy is regularly
reviewed. Where appropriate, all work is carried out after advance
consultation with affected parties.
Principle Nine: Maintain governance structures and processes
that are fit for purpose and support good decision-making by the
Board.
The Board has overall responsibility for all aspects of the
business. The Chairman is responsible for overseeing the running of
the Board, ensuring that no individual or group dominates the
Board's decision-making, and that the non-executive directors are
properly briefed on all operational and financial matters. The
Chairman has overall responsibility for corporate governance
matters in the Group and chairs the Nomination Committee. The
Chairman has the responsibility for implementing the strategy of
the Board and managing the day-to-day business activities of the
Group. The Company Secretary is responsible for ensuring that Board
procedures are followed, and applicable rules and regulations are
complied with. Key operational and financial decisions are reserved
for the Board through quarterly project reviews, annual budgets,
and quarterly budget and cash-flow forecasts and on an ad hoc basis
where required.
The two non-executive directors are responsible for bringing
independent and objective judgment to Board decisions. The Board
has established Audit, Remuneration and Nomination Committees with
formally delegated duties and responsibilities. James Cole
currently chairs the Audit Committee, Roger Murphy chairs the
Remuneration Committee and Patrick Cheetham chairs the Nomination
Committee.
This Corporate Governance statement will be reviewed at least
annually to ensure that the Company's corporate governance
framework evolves in line with the Company's strategy and business
plan.
Principle Ten: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
The Company regularly communicates with, and encourages feedback
from, its shareholders who are its key stakeholder group. The
Company's website is regularly updated and users, including all
stakeholders, can register to be alerted via email when material
announcements are made. The Company's contact details are on the
website should stakeholders wish to make enquiries of
management.
The Group's financial reports for at least the past five years
can be found here:
https://www.sunriseresourcesplc.com/financial-reports and contains
past Notices of Annual General Meetings.
The results of voting on all resolutions in general meetings are
posted to the Company's website, including any actions to be taken
as a result of resolutions for which votes against have been
received from at least 20 per cent of independent votes.
Audit Committee Report
The Audit Committee is a sub-committee of the Board, comprised
of the independent non-executive directors and assists the Board in
meeting responsibilities in respect of external financial reporting
and internal controls. The Audit Committee also keeps under review
the scope and results of the audit. It also considers the
cost-effectiveness, independence and objectivity of the auditors
taking account of any non-audit services provided by them. James
Cole is Chair of the Audit Committee.
The specific objectives of the Committee are to:
a) maintain adequate quality and effective scope of the external
audit of the Group including its branches where applicable and
review the independence and objectivity of the auditors.
b) ensure that the Board of Directors has adequate knowledge of
issues discussed with external auditors.
c) ensure the financial information and reports issued by the
Company to AIM, shareholders and other recipients are accurate and
contain proper disclosure at all times.
d) maintain the integrity of the Group's administrative
operating and accounting controls and internal control
principles.
e) ensure proper accounting policies are adhered to by the Group.
The Committee has unlimited access to the external auditors, to
senior management of the Group and to any external party deemed
necessary for the proper discharge of its duties. The Committee may
consult independent experts where it considers necessary to perform
it duties.
The Audit Committee reviews the financial controls of the
Company on a regular basis and is satisfied that the Group's
financial controls and reporting procedures are robust and
sufficient to ordinarily prevent fraud and ensure that senior
management, the Committee and the Board are fully aware of the
Company's financial position at all times.
The Audit Committee met twice in the last financial year, on 11
December 2020 and 24 May 2021. Significant reporting issues
considered during the year included the following:
1. Impairments
The Committee has reviewed the carrying values of the Group
projects and the Group inter-company loans and carried out
impairment reviews. The project carrying values are assessed
against the IFRS 6 criteria set out in Note 1(k). Loans to Group
undertakings are assessed for impairment under IFRS 9.
As a result of the year-end review it was judged that the
Sundance Project expenditure should be impaired and that none of
the Group's inter-company loans should be impaired.
2. Going Concern
The Committee also considered the Going Concern basis on which
the accounts have been prepared (see Note 1(b)). The directors are
satisfied that the Going Concern basis is appropriate for the
preparation of the financial statements.
James Cole
Chair - Audit Committee
Remuneration Committee Report
The Remuneration Committee is a sub-committee of the Board and
comprises the independent non-executive directors, Mr Cole having
been appointed as a member of the Remuneration Committee on 27 May
2021. Mr Murphy is Chairman of the Remuneration Committee.
The primary objective of the Committee is to review the
performance of the executive directors and review the basis of
their service agreements and make recommendations to the Board
regarding the scale and structure of their remuneration.
However, the Company does not currently remunerate any of the
directors other than in their capacity as directors. Whilst the
Chairman of the Board, Patrick Cheetham, does have an executive
role, his technical and managerial services are provided under a
general service agreement with Tertiary Minerals plc and his
remuneration is fixed by Tertiary Minerals plc. Nonetheless, it is
the role of the Remuneration Committee to ensure that the executive
director is appropriately incentivised and rewarded for his
services to the Company and this will be considered as part of the
Committee's review of any Long-Term Incentive Plan.
The Remuneration Committee has not met during the financial year
under review.
Roger Murphy
Chair - Remuneration Committee
Nomination Committee Report
The Nomination Committee comprises the Chairman and the
independent non-executive directors. Patrick Cheetham is Chair of
the Nomination Committee.
The Nomination Committee meets at least once per year to lead
the formal process of rigorous and transparent procedures for Board
appointments and to make recommendations to the Board in accordance
with best practice and other applicable rules and regulations,
insofar as they are appropriate to the Group at this stage in its
development.
The Committee is required to:
(a) Review the structure, size and composition of the Board and
make recommendations to the Board with regard to any changes.
(b) Give full consideration to succession planning for directors
and other senior executives in the course of its work, taking into
account the challenges and opportunities facing the Company, and
the skills and expertise needed on the Board in the future.
(c) Keep under review the leadership needs of the organisation
to compete effectively in the marketplace.
(d) Review annually the time required from non-executive directors.
(e) Arrange periodic reviews of its own performance and, at
least annually, review its constitution and terms of reference to
ensure it is operating at maximum effectiveness and recommend any
changes it considers necessary to the Board for approval.
The Committee carries out its duties for the Parent Company,
major subsidiary undertakings and the Group as a whole and met once
during the period under review, on 27 May 2021 to consider and
recommend to the Board the appointment of Mr. Cole to the Board.
Mr. Cole was subsequently appointed to the Board and to the
Nomination Committee.
The Committee is satisfied that the current Board has a depth of
experience and level and range of skills appropriate to the Company
at this stage in its development. It is however recognised that the
Company is likely to need additional expertise as it moves forward
into commercial production and so the composition of the Board will
be kept under careful review to ensure that the Board can deliver
long-term growth in shareholder value.
Patrick Cheetham
Chair - Nomination Committee
Publication of Statutory Accounts
The financial information set out in this announcement does not
constitute the Company's Annual Accounts for the period ended 30
September 2021 or 2020. The financial information for 2020 is
derived from the Statutory Accounts for 2020. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2021 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The Auditors have reported on the 2021 and
2020 accounts. Neither set of accounts contain a statement under
section 498(2) of (3) the Companies Act 2006 and both received an
unqualified audit opinion. However, there was an emphasis of matter
in relation to a requirement that the Company raise funds in the
future to continue as a going concern.
Availability of Financial Statements
The Annual Report containing the full financial statements for
the year to 30 September 2021 will be uploaded to the Shareholder
Documents section on the Company's website on or around 17 December
2021 https://www.sunriseresourcesplc.com/shareholder-documents
Consolidated Income Statement
for the year ended 30 September 2021
2021 2020
Notes GBP GBP
-------------------------------------------------- ------ ---------------------- -----------------
Pre-licence exploration costs 17,320 4,183
Impairment of deferred exploration assets 30,021 -
Administration costs 318,630 298,980
-------------------------------------------------- ------ ---------------------- -----------------
Operating loss (365,971) (303,163)
Gain on sale of exploration assets 9 30,658 -
Interest receivable 61 261
-------------------------------------------------- ------ ---------------------- -----------------
Loss before income tax 3 (335,252) (302,902)
Income tax 7 - -
-------------------------------------------------- ------ ---------------------- -----------------
Loss for the year attributable to equity holders
of the parent (335,252) (302,902)
-------------------------------------------------- ------ ---------------------- -----------------
Loss per share - basic and diluted (pence) 6 (0.009) (0.009)
-------------------------------------------------- ------ ---------------------- -----------------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2021
2021 2020
GBP GBP
------------------------------------------------------ --------- ---------
Loss for the year (335,252) (302,902)
------------------------------------------------------ --------- ---------
Items that could be reclassified subsequently to the
income statement:
Foreign exchange translation differences on foreign
currency net investments in subsidiaries (86,770) (75,659)
(86,770) (75,659)
------------------------------------------------------ --------- ---------
Items that will not be reclassified to the income
statement:
Changes in the fair value of equity investments (9,651) (1,660)
------------------------------------------------------ --------- ---------
(96,421) (77,319)
------------------------------------------------------ --------- ---------
Total comprehensive loss for the year attributable
to equity holders of the parent (431,673) (380,221)
------------------------------------------------------ --------- ---------
Consolidated and Company Statements of Financial Position
at 30 September 2021
Company Registration Number: 05363956
Group Company Group Company
2021 2021 2020 2020
Notes GBP GBP GBP GBP
------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 9 2,133,137 - 1,867,218 -
Right of use assets 17 13,423 - 18,431 -
Investment in subsidiaries 8 - 2,753,586 - 2,269,548
Other investments 8 63,503 45,675 19,765 -
------------------------------- ----- ----------- ----------- ----------- -----------
2,210,063 2,799,261 1,905,414 2,269,548
Current assets
Receivables 11 130,805 22,701 51,980 26,670
Cash and cash equivalents 12 371,740 337,817 1,089,417 1,065,480
------------------------------- ----- ----------- ----------- ----------- -----------
502,545 360,518 1,141,397 1,092,150
Current liabilities
Trade and other payables 13 (100,861) (80,357) (90,677) (80,786)
Lease liabilities 17 (2,300) - (2,364) -
------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 399,384 280,161 1,048,356 1,011,364
Non current liabilities
Lease liabilities 17 (4,715) - (7,336) -
Reclamation 20 (26,665) - - -
Net assets 2,578,067 3,079,422 2,946,434 3,280,912
------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up share capital 14 3,701,805 3,701,805 3,677,997 3,677,997
Share premium account 5,675,616 5,675,616 5,655,781 5,655,781
Share warrant reserve 14 40,164 40,164 33,893 33,893
Fair value reserve 33,102 28,662 42,753 36,987
Foreign currency reserve 14 (37,331) 1,321 49,439 1,319
Accumulated losses (6,835,289) (6,368,146) (6,513,429) (6,125,065)
------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to owners
of the parent 2,578,067 3,079,422 2,946,434 3,280,912
------------------------------- ----- ----------- ----------- ----------- -----------
The Company reported a loss for the year ended 30 September 2021
of GBP256,473 (2020: GBP233,598).
These financial statements were approved and authorised for
issue by the Board on 10 December 2021 and were signed on its
behalf.
P L Cheetham J Cole
Executive Chairman Director
Consolidated Statement of Changes in Equity
Share Share Fair Foreign
Share premium warrant value currency Accumulated
capital account reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2019 2,749,760 5,059,244 24,476 44,413 125,098 (6,220,042) 1,782,949
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (302,902) (302,902)
Change in fair
value - - - (1,660) - - (1,660)
Exchange differences - - - - (75,659) - (75,659)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (1,660) (75,659) (302,902) (380,221)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 928,237 596,537 - - - - 1,524,774
Share-based payments
expense - - 18,932 - - - 18,932
Transfer of expired
warrants - - (9,515) - - 9,515 -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2020 3,677,997 5,655,781 33,893 42,753 49,439 (6,513,429) 2,946,434
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (335,252) (335,252)
Change in fair
value - - - (9,651) - - (9,651)
Exchange differences - - - - (86,770) - (86,770)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (9,651) (86,770) (335,252) (431,673)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 23,808 19,835 - - - - 43,643
Share-based payments
expense - - 19,663 - - - 19,663
Transfer of expired
warrants - - (13,392) - - 13,392 -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2021 3,701,805 5,675,616 40,164 33,102 (37,331) (6,835,289) 2,578,067
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Company Statement of Changes in Equity
Share Share Foreign
Share premium warrant Fair value currency Accumulated
capital account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
At 30 September
2019 2,749,760 5,059,244 24,476 36,987 1,321 (5,900,982) 1,970,806
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Loss for the year - - - - - (233,598) (233,598)
Change in fair - - - -
value - - -
Exchange differences - - - - (2) - (2)
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Total comprehensive
loss for the year - - - - (2) (233,598) (233,600)
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Share issue 928,237 596,537 - - - - 1,524,774
Share-based payments
expense - - 18,932 - - - 18,932
Transfer of expired
warrants - - (9,515) - - 9,515 -
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
At 30 September
2020 3,677,997 5,655,781 33,893 36,987 1,319 (6,125,065) 3,280,912
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Loss for the year - - - - - (256,473) (256,473)
Change in fair
value - - - (8,325) - - (8,325)
Exchange differences - - - - 2 - 2
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (8,325) 2 (256,473) (264,796)
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Share issue 23,808 19,835 - - - - 43,643
Share-based payments
expense - - 19,663 - - - 19,663
Transfer of expired
warrants - - (13,392) - - 13,392 -
At 30 September
2021 3,701,805 5,675,616 40,164 28,662 1,321 (6,368,146) 3,079,422
---------------------- --------- --------- -------- ---------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2021
Group Company Group Company
2021 2021 2020 2020
Notes GBP GBP GBP GBP
------------------------------------------- ----- --------- --------- --------- ---------
Operating activity
Operating (loss)/profit (335,313) (285,413) (303,163) (270,642)
Depreciation/interest charge 17 4,744 - 3,700 -
Share-based payment charge 19,663 19,663 18,932 18,932
Shares issued in lieu of net wages 30,818 30,818 30,724 30,724
Shares issued via exercise of warrants 12,825 12,825 17,550 17,550
Impairment charge - deferred exploration
asset 9 30,021 - - -
Disposal of exploration assets 9 40,480 - - -
Non cash addition to equity investment 8 (45,675) (45,675) - -
Reclamation liability 20 (26,665) - - -
(Increase)/decrease in receivables 11 (78,825) 3,969 1,761 (5,382)
(Increase)/Decrease in trade and
other payables 13 10,184 (429) 17,690 32,981
------------------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from operating
activity (337,743) (264,242) (212,806) (175,837)
------------------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 60 28,941 261 37,173
Cash receipt from disposal of exploration
assets 20,000 - - -
Lease payments 17 (2,378) - (12,431) -
Development expenditures 9 (391,061) - (188,587) -
Loans to subsidiaries - (484,038) - (293,167)
Net cash outflow from investing
activity (373,379) (455,097) (200,757) (255,994)
------------------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital (net of
expenses) - - 1,476,500 1,476,500
------------------------------------------- ----- --------- --------- --------- ---------
Net cash inflow from financing
activity (711,122) (719,339) 1,476,500 1,476,500
------------------------------------------- ----- --------- --------- --------- ---------
Net increase/(decrease) in the
year (711,122) (719,339) 1,062,937 1,044,669
Cash and cash equivalents at start
of year 1,089,417 1,065,480 27,069 20,941
Exchange differences 6,555 (8,324) (589) (130)
------------------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents at 30
September 12 371,740 337,817 1,089,417 1,065,480
------------------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2021
Background
Sunrise Resources plc (the "Company") is a public company
incorporated and domiciled in England. It is traded on the AIM
Market of the London Stock Exchange - EPIC: SRES.
The Company is a holding company (together, "the Group") for one
company incorporated in Australia, and two companies incorporated
in Nevada, in the United States of America. The Group's financial
statements are presented in Pounds Sterling (GBP) which is also the
functional currency of the Company.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
1. Accounting policies
(a) Basis of preparation
The financial statements have been prepared on the basis of the
recognition and measurement requirements of applicable law and
International Accounting Standards in conformity with the Companies
Act 2006.
(b) Going concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at year end (GBP371,740), these
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the
Company has been successful in raising finance in the past, there
is no assurance that it will obtain adequate finance in the future.
This represents a material uncertainty related to events or
conditions which may cast significant doubt on the Group's and
Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
(c) Basis of consolidation
Investments, including long-term loans, in the subsidiaries are
valued at the lower of cost or recoverable amount, with an ongoing
review for impairment.
The Group's financial statements consolidate the financial
statements of Company and its subsidiary undertakings using the
acquisition method and eliminate intercompany balances and
transactions.
In accordance with section 408 of the Companies Act 2006, the
Company is exempt from the requirement to present its own statement
of comprehensive income. The amount of the loss for the financial
year recorded within the financial statements of the Company is
GBP256,473 (2020: GBP233,598).
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in
relation to separate areas of interest (which may comprise more
than one exploration licence or exploration licence applications)
are capitalised and carried forward where:
(1) such costs are expected to be recouped through successful
exploration and development of the area, or alternatively by its
sale; or
(2) exploration and/or evaluation activities in the area have
not yet reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to the
areas are continuing.
A biannual review is carried out by the directors to consider
whether there are any indications of impairment in capitalised
exploration and development costs. The biannual impairment reviews
were conducted in April 2021 and October 2021.
Where an indication of impairment is identified, the relevant
value is written off to the income statement in the period for
which the impairment was identified. An impairment of exploration
and development costs may be subsequently reversed in later periods
should conditions allow.
Accumulated costs, where the Group does not yet have an
exclusive exploration licence and in respect of areas of interest
which have been abandoned, are written off to the income statement
in the year in which the pre-licence expense was incurred or in
which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the
lower of cost and expected net recoverable amount. On reaching a
mining development decision, for example, the commitment of capital
to mine development, exploration and evaluation costs are
reclassified as development costs and all development costs on a
specific area of interest will be amortised over the useful
economic life of the projects, once they become income generating
and the costs can be recouped.
(e) Trade and other receivables and payables
Trade and other receivables and payables are measured at initial
recognition at fair value and subsequently measured at amortised
cost.
(f) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand
and short-term bank deposits with a maturity of three months or
less.
(g) Leases
IFRS 16 requires the recognition of lease commitments as right
of use assets and the recognition of a corresponding liability.
Lease costs are recognised in the income statement in the form of
depreciation of the right of use asset over the lease term and
interest charges representing the unwind of the discount on the
lease liability.
Short term leases, which fall outside the IFRS 16 requirements,
having a duration of 12 months or less, are charged to the income
statement on straight line basis.
(h) Deferred taxation
Deferred taxation, if applicable, is provided in full in respect
of taxation deferred by temporary differences between the treatment
of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are
regarded as recoverable.
(i) Foreign currencies
The Group's consolidated financial statements are presented in
Pounds Sterling (GBP), being the functional currency of the
Company, and the currency of the primary economic environment in
which the Company operates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of
exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign
operations and the assets and liabilities of overseas subsidiaries,
associated undertakings and joint arrangements, that have a
functional currency different from the Group's presentation
currency, are translated at the closing exchange rates. Income
statements of overseas subsidiaries, that have a functional
currency different from the Group's presentation currency, are
translated at exchange rates at the date of transaction. Exchange
differences arising on opening reserves are taken to the foreign
currency reserve in equity.
(j) Share warrants and share-based payments
The Company issues warrants to employees (including directors)
and third parties. The fair value of the warrants is recognised as
a charge measured at fair value on the date of grant and determined
in accordance with IFRS 2 or IAS 39, adopting the
Black-Scholes-Merton model. The fair value is recognised on a
straight-line basis over the vesting period, with a corresponding
adjustment to equity, based on the management's estimate of shares
that will eventually vest. The expected life of the warrants is
adjusted, based on management's best estimates, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The details are shown in Note 15.
The Company also issues shares in order to settle certain
liabilities, including payment of fees to directors. The fair value
of shares issued is based on the closing mid-market price of the
shares traded on the AIM market on the day prior to the date of
settlement and it is expensed on the date of settlement with a
corresponding increase in equity.
(k) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies
above, management has identified the judgemental areas that have
the most significant effect on the amounts recognised in the
financial statements:
Intangible assets - exploration and evaluation
IFRS 6 "Exploration for and Evaluation of Mineral Resources"
requires that exploration and evaluation assets shall be assessed
for impairment when facts and circumstances suggest that the
carrying amount may exceed recoverable amount.
In practical terms, this requires that project carrying values
are regularly monitored and assessed for recoverability whether
from future exploitation of resources or realised by sale to a
third party.
Where activities have not reached a stage, which permits
reasonable confirmation of the existence of mineral reserves, the
directors must form a judgement whether future exploration and
evaluation should continue. This requires management to use their
sector experience, apply their specialist expertise and form a
conclusive judgement whether or not, on the balance of evidence
that further exploration is justified to determine if an
economically viable mining operation can be established in future.
Such estimates, judgements and assumptions are likely to change as
new information and evidence becomes available. If it becomes
apparent, in the judgement of the directors, that recovery of
capitalised expenditure is unlikely, the carrying value should be
considered as impaired and treated as detailed below.
Impairment
Impairment reviews for deferred exploration and evaluation costs
are carried out on a project by project basis, with each project
representing a potential single cash generating unit. The directors
are required to continually monitor and review the carrying values
by reference to new developments, stages in the exploration process
and new circumstances. Assessment of the potential impairment of
assets requires an updated judgement of the probability of adequate
future cash flows from the relevant project. It includes
consideration of:
(a) The period for which the entity has the right to explore in
the specific area and whether this right will expire in the near
future, and whether the right is expected to be renewed.
(b) Whether substantive expenditure on further exploration for
and evaluation of mineral resources for the specific project is
either budgeted or planned.
(c) Whether exploration for and evaluation of mineral resources
on the specific project has led to the discovery of commercially
viable quantities of mineral resources and whether the entity has
decided to discontinue such activities on the project.
(d) Whether sufficient data exist to indicate that, although a
development on the specific project is likely to proceed, the
carrying amount of the exploration and evaluation asset is likely
to be recovered in full from successful development of a mine or by
the sale of the project.
The judgements in respect of key projects are as follows;
The CS Project in Nevada is the Group's lead project with a
carrying value of GBP1,187,000. In the judgement of the directors,
this is justified as, following the successful grant of various
mining and production permits, the focus is on the mine start up
and production.
Further exploration at the Bay State Project, Nevada (carrying
value GBP411,000), is budgeted and project leases and claims are
being maintained. In the judgement of the directors further
evaluation and exploration is justified as, despite some drilling
issues, positive drilling results have been obtained so far. In the
opinion of the directors this asset is not impaired.
Although there has been no exploration during 2021 on the County
Line Project, Nevada (carrying value GBP137,000), in the judgement
of the directors further evaluation of the production potential is
justified. The mining claims have been renewed for a further
12--month period and the project is not impaired.
In relation to the Bakers Project, Australia (carrying value of
GBP144,000), exploration during the year has provided good results
and further exploration has been budgeted. In the judgment of the
directors exploration results to-date justify further exploration
and in the opinion of the directors the project is not
impaired.
Also, in relation to other projects, the exploration rights are
being maintained and further exploration and/or drilling is
budgeted therefore the directors have reached the conclusion that
no impairments are required.
Going concern
The preparation of financial statements requires an assessment
of the validity of the going concern assumption. This in turn is
dependent on finance being available for the continuing working
capital requirements of the Group. Based on the assumption that
such finance will become available, the directors believe that the
going concern basis is appropriate for these accounts.
Share warrants and share-based payments
The estimates of costs recognised in connection with the fair
value of share warrants requires that management selects an
appropriate valuation model and make decisions on various inputs
into the model including the volatility of its own share price, the
probable life of the warrants before exercise, and behavioural
consideration of warrant holders.
(l) Financial assets designated at fair value through OCI
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments designated
at fair value through OCI when they meet the definition of equity
under IAS 32 Financial Instruments: Presentation and are not held
for trading. The classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to
profit or loss. Dividends are recognised as other income in the
statement of profit or loss when the right of payment has been
established, except when the Group benefits from such proceeds as a
recovery of part of the cost of the financial asset, in which case,
such gains are recorded in OCI. Equity instruments designated at
fair value through OCI are not subject to impairment
assessment.
The Group elected to classify irrevocably its listed equity
investments under this category.
(m) Reclamation costs
The Group's mining and exploration activities are subject to
various governmental laws and regulations relating to the
protection of the environment. The Group records a liability for
the estimated future rehabilitation costs and decommissioning of
its development projects at the time a constructive obligation is
determined.
When provisions for closure and environmental rehabilitation are
initially recognised, the corresponding cost is capitalised as an
intangible asset, representing part of the cost of acquiring the
future economic benefits of the operation. The capitalised cost of
closure and environmental rehabilitation activities is recognised
in mining interests and, from the commencement of commercial
production, is amortised over the expected useful life of the
operation to which it relates. Any change in the value of the
estimated expenditure is reflected in an adjustment to the
provision and asset.
(n) Standards, amendments and interpretations not yet
effective
At the date of authorisation of these financial statements,
there are no amended standards and interpretations issued by the
IASB that impact the Group as they are either not relevant to the
Group's activities or require accounting which is consistent with
the current accounting policies.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors.
The Board considers the business has one reportable segment, the
management of exploration projects, which is supported by a Head
Office function. For the purpose of measuring segmental profits and
losses the exploration segment bears only those direct costs
incurred by or on behalf of those projects, no Head Office cost
allocations are made to this segment. The Head Office function
recognises all other costs.
Exploration Head
projects office Total
2021 GBP GBP GBP
---------------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Pre-licence exploration costs 17,320 - 17,320
Share-based payments - 19,663 19,663
Impairment of exploration assets 30,021 - 30,021
Other expenses - 298,967 298,967
---------------------------------------------------- ------------ ---------- ----------
Operating loss (47,341) (318,630) (365,971)
Gain of disposal of exploration assets 30,658 - 30,658
Interest receivable - 61 61
---------------------------------------------------- ------------ ---------- ----------
Loss before income tax (16,683) (318,569) (335,252)
Income tax - - -
---------------------------------------------------- ------------ ---------- ----------
Loss for the year attributable to equity
holders of the parent (16,683) (318,569) (335,252)
---------------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets:
Deferred exploration costs:
Baker's Gold Project, Australia 144,343 - 144,343
County Line Diatomite Project, USA 136,665 - 136,665
Bay State Silver Project, USA 410,686 - 410,686
NewPerl Project/Jackson Wash Project, USA 66,153 - 66,153
Ridge Limestone Project, USA 29,262 - 29,262
CS Pozzolan-Perlite Project, USA 1,187,489 - 1,187,489
Clayton Gold Project, USA 117,771 - 117,771
Newark Silver-Gold Project, USA 31,470 - 31,470
Myrtle Project, USA 9,298 - 9,298
---------------------------------------------------- ------------ ---------- ----------
2,133,137 - 2,133,137
Right of use assets 13,423 - 13,423
Other investments - 63,503 63,503
---------------------------------------------------- ------------ ---------- ----------
2,146,560 63,503 2,210,063
---------------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 105,178 25,627 130,805
Cash and cash equivalents - 371,740 371,740
---------------------------------------------------- ------------ ---------- ----------
105,178 397,367 502,545
---------------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (29,973) (70,888) (100,861)
Lease liabilities (2,300) - (2,300)
---------------------------------------------------- ------------ ---------- ----------
Net current assets 72,905 326,479 399,384
---------------------------------------------------- ------------ ---------- ----------
Non-current liabilities
Reclamation liabilities (26,665) - (26,665)
Lease liabilities (4,715) - (4,715)
---------------------------------------------------- ------------ ---------- ----------
Net assets 2,188,085 389,982 2,578,067
---------------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 391,061 - 391,061
Exchange rate adjustments to deferred exploration
costs (80,880) - (80,880)
---------------------------------------------------- ------------ ---------- ----------
Exploration Head
projects office Total
2020 GBP GBP GBP
---------------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Pre-licence exploration costs 4,183 - 4,183
Share-based payments - 18,932 18,932
Other expenses - 280,048 280,048
---------------------------------------------------- ------------ ---------- ----------
Operating loss (4,183) (298,980) (303,163)
Interest receivable - 261 261
---------------------------------------------------- ------------ ---------- ----------
Loss before income tax (4,183) (298,719) (302,902)
Income tax - - -
---------------------------------------------------- ------------ ---------- ----------
Loss for the year attributable to equity
holders of the parent (4,183) (298,719) (302,902)
---------------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets:
Deferred exploration costs:
Baker's Gold Project, Australia 70,451 - 70,451
County Line Diatomite Project, USA 139,396 - 139,396
Garfield Silver-Gold-Copper Project, USA 28,158 - 28,158
Bay State Silver Project, USA 410,965 - 410,965
NewPerl Project/Jackson Wash Project, USA 62,160 - 62,160
Ridge Limestone Project, USA 25,378 - 25,378
CS Pozzolan-Perlite Project, USA 1,066,685 - 1,066,685
Clayton Gold Project, USA 20,087 - 20,087
Newark Silver-Gold Project, USA 29,768 - 29,768
Stonewall Gold Project, USA 14,170 - 14,170
---------------------------------------------------- ------------ ---------- ----------
1,867,218 - 1,867,218
Right of use assets 18,431 - 18,431
Other investments - 19,765 19,765
---------------------------------------------------- ------------ ---------- ----------
1,885,649 19,765 1,905,414
---------------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 22,909 29,071 51,980
Cash and cash equivalents - 1,089,417 1,089,417
---------------------------------------------------- ------------ ---------- ----------
22,909 1,118,488 1,141,397
---------------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (20,541) (70,136) (90,677)
Lease liabilities (2,364) - (2,364)
---------------------------------------------------- ------------ ---------- ----------
Net current assets 4 1,048,352 1,048,356
---------------------------------------------------- ------------ ---------- ----------
Non-current liabilities
Lease liabilities (7,336) - (7,336)
---------------------------------------------------- ------------ ---------- ----------
Net assets 1,878,317 1,068,117 2,946,434
---------------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 188,587 - 188,587
Exchange rate adjustments to deferred exploration
costs (74,419) - (74,419)
---------------------------------------------------- ------------ ---------- ----------
3. Loss before income tax
2021 2020
The operating loss is stated after charging: GBP GBP
---------------------------------------------- ----- -----
Fees payable to the Company's auditor for:
The audit of the Company's annual accounts 8,200 7,619
Other Services:
Interim review of accounts 1,050 1,020
Corporation tax fees 767 740
Corporation tax review fees - -
---------------------------------------------- ----- -----
4. Directors' emoluments
2021 2020
Remuneration in respect of directors was as follows: GBP GBP
------------------------------------------------------ ------ ------
P L Cheetham (salary) 16,000 16,000
D J Swan (salary) 10,540 16,000
J Cole (salary) 5,524
R D Murphy (salary) 16,000 16,000
------------------------------------------------------ ------ ------
48,063 48,000
------------------------------------------------------ ------ ------
In the year ended 30 September 2021 the cost of Employer's
National Insurance Contributions for directors was GBPNil (2020:
GBP50.34).
In the year ended 30 September 2021 the value of non-cash
share-based payments in respect of share warrants issued to the
directors was GBP17,979 (2020: GBP3,600).
Patrick Cheetham is also a director of Tertiary Minerals plc and
under the terms of the Management Services Agreement (see Note 5) a
total of GBP68,174, including Employers National Insurance
Contributions, was charged to the Company for his services during
the year (2020: GBP80,121). These services are provided at
cost.
The directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP66,337 (2020: GBP51,995).
5. Staff costs
Staff costs for the Group and the Company, including 2021 2020
directors, were as follows: GBP GBP
------------------------------------------------------ ------ ------
Wages and salaries 48,063 48,000
Social security costs - 50
Pension 295 345
Share-based payments 17,979 3,733
------------------------------------------------------ ------ ------
66,337 52,128
------------------------------------------------------ ------ ------
The average monthly number of employees employed 2021 2020
by the Group and the Company during the year was Number Number
as follows:
--------------------------------------------------- ------- -------
Directors 3 3
Other Officers 0 0
--------------------------------------------------- ------- -------
3 3
--------------------------------------------------- ------- -------
The Company does not employ any staff directly apart from the
directors. The services of technical and administrative staff are
provided by Tertiary Minerals plc as part of the Management
Services Agreement between the two companies (see Note 16).
The Company issues share warrants to employees of Tertiary
Minerals plc from time to time and these non-cash share-based
payments resulted in a charge within the financial statements of
GBP1,686 (2020: GBP729).
Company secretarial services are provided by Rod Venables
through City Group plc.
6. Loss per share
Loss per share has been calculated using the loss for the year
attributable to equity holders of the Company and the weighted
average number of shares in issue during the year.
2021 2020
------------------------------------------ ------------- -------------
Loss (GBP) (335,252) (302,902)
Weighted average shares in issue (No.) 3,693,084,489 3,237,733,688
------------------------------------------ ------------- -------------
Basic and diluted loss per share (pence) (0.009) (0.009)
------------------------------------------ ------------- -------------
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share are identical to those used
for the basic earnings per ordinary share. This is because the
exercise of share warrants would have the effect of reducing the
loss per ordinary share and is therefore anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2020: GBPNil).
The tax credit for the period is lower than the credit resulting
from the loss before tax at the standard rate of corporation tax in
the UK - 19% (2020: 19%). The differences are explained below.
2021 2020
Tax reconciliation GBP GBP
----------------------------------------------- ----------- -----------
Loss before income tax (335,252) (302,902)
----------------------------------------------- ----------- -----------
Tax at 19% (2020: 19%) (63,698) (57,551)
----------------------------------------------- ----------- -----------
Pre-trading expenditure no longer deductible
for tax purposes 50,650 44,764
----------------------------------------------- ----------- -----------
Administration expenditure not deductible for
tax purposes 19,851 19,372
----------------------------------------------- ----------- -----------
Tax effect at 19% (2020: 19%) 13,395 12,186
----------------------------------------------- ----------- -----------
Tax credit for the period (50,303) (45,365)
----------------------------------------------- ----------- -----------
Tax recognised on loss - -
----------------------------------------------- ----------- -----------
Total losses carried forward for tax purposes (3,774,180) (3,509,429)
----------------------------------------------- ----------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP3,774,180
(2020: GBP3,509,429). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the
future capped to GBP5m per annum allowance. The deferred tax asset
has not been recognised as the future recovery is uncertain given
the exploration status of the Group. The carried forward tax loss
is adjusted each year for amounts that can no longer be carried
forward.
8. Investments
Subsidiary undertakings
Date of Type and percentage
Country incorporation of shares held
of /registration at
Company incorporation/registration 30 September 2021 Principal activity
--------------------------- --------------------------- -------------- ------------------- -------------------
Sunrise Minerals Australia 7 October 100% of ordinary
Pty Ltd Australia 2009 shares Mineral exploration
Nevada, 12 January 100% of ordinary
SR Minerals Inc. USA 2014 shares Mineral exploration
Nevada, 13 April 2016 100% of ordinary
Westgold Inc. USA shares Mineral exploration
=========================== =========================== ============== =================== ===================
The registered office of Sunrise Minerals Australia Pty Ltd is
Level 4, 35-37 Havelock Street West, Perth, WA 6005.
The registered office of SR Minerals Inc. and Westgold Inc. is
241 Ridge Street, Suite 210, Reno, NV 89501.
Company Company
2021 2020
Investment in subsidiary undertakings GBP GBP
-------------------------------------------------- --------- ---------
Ordinary Shares - Sunrise Minerals Australia Pty
Ltd 61 61
Loan - Sunrise Minerals Australia Pty Ltd 850,747 759,530
Less - provision for impairment (546,541) (546,541)
Ordinary Shares - SR Minerals Inc. 1 1
Loan - SR Minerals Inc. 2,216,053 1,937,253
Ordinary Shares - Westgold Inc. 1 1
Loan - Westgold Inc. 233,264 119,243
-------------------------------------------------- --------- ---------
At 30 September 2,753,586 2,269,548
-------------------------------------------------- --------- ---------
Investments in share capital of subsidiary undertakings
The directors consider that the carrying value of the Company's
investments in shares of subsidiary undertakings totalling GBP63 is
not material and therefore does not require an impairment
review.
Loans to Group undertakings
Amounts owed by subsidiary undertakings are unsecured and
payable in cash. Loan interest is charged to US subsidiaries on
intercompany loans with Parent Company.
A review of the recoverability of loans to subsidiary
undertakings, totalling GBP2,753,586 has been carried out in
accordance with IFRS 9. As a result, the directors have concluded
that no potential credit losses arose in the year. The assessment
has been based upon a review of the underlying exploration assets
held by the subsidiary undertakings.
Other investments - listed investments
Country of Type and percentage
incorporation of shares held at
Company /registration 30 September 2021 Principal activity
---------------------- -------------- ------------------- -------------------
VR Resources Ltd Canada 0.12% of ordinary Mineral exploration
shares
Power Metal Resources United Kingdom 0.18% of ordinary Mineral exploration
plc shares
---------------------- -------------- ------------------- -------------------
Group Company Group Company
Investment designated at fair 2021 2021 2020 2020
value through OCI GBP GBP GBP GBP
------------------------------- -------- ------- ------- -------
Value at start of year 19,765 - 22,078 -
Additions 54,000 54,000 - -
Disposals - - - -
------------------------------- -------- ------- ------- -------
Movement in valuation (10,262) (8,325) (2,313) -
------------------------------- -------- ------- ------- -------
At 30 September 63,503 45,675 19,765 -
------------------------------- -------- ------- ------- -------
The fair value of each investment is equal to the market value
of its shares at 30 September 2021, based on the closing mid-market
price of shares on its equity exchange market.
These are level one inputs for the purpose of the IFRS 13 fair
value hierarchy.
9. Intangible assets
Group Company Group Company
2021 2021 2020 2020
Deferred exploration expenditure GBP GBP GBP GBP
--------------------------------------- ----------- ----------- ----------- -----------
Cost
At start of year 4,565,673 2,203,594 4,377,086 2,203,594
Reclamation 26,239 - - -
Additions 391,061 - 188,587 -
--------------------------------------- ----------- ----------- ----------- -----------
At 30 September 4,982,973 2,203,594 4,565,673 2,203,594
--------------------------------------- ----------- ----------- ----------- -----------
Disposals
At start of year (2,698,455) (2,203,594) (2,624,036) (2,203,594)
Impairment losses during the
year (30,021) - - -
Disposals during the year (40,480) - - -
Foreign currency exchange adjustments (80,880) - (74,419) -
--------------------------------------- ----------- ----------- ----------- -----------
At 30 September (2,849,836) (2,203,594) (2,698,455) (2,203,594)
--------------------------------------- ----------- ----------- ----------- -----------
Carrying amounts
At 30 September 2,133,137 - 1,867,218 -
--------------------------------------- ----------- ----------- ----------- -----------
At start of year 1,867,218 - 1,753,050 -
--------------------------------------- ----------- ----------- ----------- -----------
During the year the directors carried out an impairment review
with reference to IFRS 6.20 (a) which resulted in no impairment
being required. Refer to accounting policy 1(d) and 1(j) for a
description of the considerations used in the impairment
review.
10. Property, plant and equipment
The Group has the use of tangible assets held by Tertiary
Minerals plc as part of the Management Services Agreement between
the two companies.
11. Receivables
Group Company Group Company
2021 2021 2020 2020
GBP GBP GBP GBP
------------------- ------- ------- ------ -------
Prepayments 13,677 11,037 18,350 16,272
Accrued income - - - -
Other receivables 117,128 11,664 33,630 10,398
------------------- ------- ------- ------ -------
At 30 September 130,805 22,701 51,980 26,670
------------------- ------- ------- ------ -------
12. Cash and cash equivalents
Group Company Group Company
2021 2021 2020 2020
Cash at bank and in hand GBP GBP GBP GBP
-------------------------- ------- ------- --------- ---------
At 30 September 371,740 337,817 1,089,417 1,065,480
========================== ======= ======= ========= =========
13. Trade and other payables
Group Company Group Company
2021 2021 2020 2020
GBP GBP GBP GBP
----------------------------------- ------- ------- ------ -------
Amounts owed to Tertiary Minerals
plc 44,147 44,147 43,717 43,717
Trade creditors 6,070 2,841 3,753 2,647
Accruals 26,434 9,159 19,404 10,619
Net pay due in shares 18,147 18,147 16,254 16,254
Social security and taxes 6,063 6,063 7,549 7,549
----------------------------------- ------- ------- ------ -------
At 30 September 100,861 80,357 90,677 80,786
----------------------------------- ------- ------- ------ -------
14. Issued capital and reserves
2021 2021 2020 2020
Number GBP Number GBP
------------------------------- ------------- --------- ------------- ---------
Allotted, called up and fully
paid
Ordinary shares of 0.1p each
Balance at start of year 3,677,996,870 3,677,997 2,749,760,308 2,749,760
Shares issued in the year 23,807,817 23,808 928,236,562 928,237
Balance at 30 September 3,701,804,687 3,701,805 3,677,996,870 3,677,997
------------------------------- ------------- --------- ------------- ---------
During the year to 30 September 2021 the following share issues
took place:
An issue of 6,772,459 0.1p ordinary shares at 0.24p per share to
three directors, for a total consideration of GBP16,254, in
satisfaction of directors' fees (30 October 2020).
An issue of 9,090,909 0.1p ordinary shares at 0.1p per share,
via exercise of warrants for a total of GBP10,000 (18 January
2021).
An issue of 500,000 0.1p ordinary shares at 0.16p per share, via
exercise of warrants for a total of GBP800 (27 January 2021).
An issue of 750,000 0.1p ordinary shares at 0.16p per share, via
exercise of warrants for a total of GBP1,200 (3 February 2021).
An issue of 750,000 0.1p ordinary shares at 0.11p per share, via
exercise of warrants for a total of GBP825 (15 February 2021).
An issue of 5,944,449 0.1p ordinary shares at 0.245p per share
to three directors, for a total consideration of GBP14,564, in
satisfaction of directors' fees (27 May 2021).
During the year to 30 September 2020 a total of 928,236,562 0.1p
ordinary shares were issued, at an average price of 0.17p per
share, for a total consideration of GBP1,598,274 net of
expenses.
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, which relate to
subsidiaries only, from their functional currency into the Parent's
functional currency, being Sterling, are recognised directly in the
foreign currency reserve.
Share warrant reserve
The share warrant reserve is used to recognise the value of
equity-settled share warrants provided to employees, including key
management personnel, as part of their remuneration, and to third
parties in connection with fundraising. Refer to Note 15 for
further details.
15. Share warrants granted
Warrants not exercised or expired at 30 September 2021
Issue Exercisable
date Exercise price Number Expiry dates
---------- -------------- ---------- --------------- ------------
Any time before
01/02/17 0.135p 3,250,000 expiry 01/02/22
Any time before
31/01/18 0.160p 3,250,000 expiry 31/01/23
Any time before
21/02/19 0.160p 4,000,000 expiry 21/02/24
Any time before
21/02/19 0.110p 4,000,000 expiry 21/02/24
*Any time from
06/08/20 0.195p 35,000,000 05/08/21 05/08/25
---------- -------------- ---------- --------------- ------------
Total 49,500,000
---------- -------------- ---------- --------------- ------------
*Of these 15,000,000 warrants cannot be exercised before the
Company makes the first sustainable sales of perlite/pozzolan
product from the CS Project.
Share warrants are issued for nil consideration and are
exercisable as disclosed above. They are exchangeable on a one for
one basis for each ordinary share of 0.1p at the exercise price on
the date of conversion.
Share warrant movements:
2021 2020
----------------------- --------------------------
Weighted Weighted
average average
Number of exercise exercise
share price Number of price
warrants (Pence) share warrants (Pence)
------------------------------ ------------ --------- --------------- ---------
Outstanding at start of year 92,948,052 0.18 27,875,000 0.18
Granted during the year - - 74,448,052 0.19
Forfeited during the year - - - -
Exercised during the year (11,090,909) 0.12 - -
Expired during the year (32,357,143) 0.20 (9,375,000) 0.28
------------------------------ ------------ --------- --------------- ---------
Outstanding at end of year 49,500,000 0.18 92,948,052 0.18
------------------------------ ------------ --------- --------------- ---------
Exercisable at end of year 49,500,000 0.18 57,948,052 0.17
------------------------------ ------------ --------- --------------- ---------
The share warrants outstanding at 30 September 2021 had a
weighted average exercise price of 0.18p (2020: 0.18p), a weighted
average fair value of 0.064p (2020: 0.056p) and a weighted average
remaining contractual life of 3.22 years.
In the year ended 30 September 2021 no warrants were
granted.
In the year ended 30 September 2020 warrants were granted on 1
November 2019, 19 February 2020 and 24 August 2020 to Peterhouse
Capital Limited as part of fundraising with an aggregate estimated
fair value of GBP14,469.
In the year ended 30 September 2020 warrants were granted on 6
August 2020 to non-executive director of the Company, a director
and employees of Tertiary Minerals plc with an aggregate estimated
fair value of GBP23,153. Note 5 explains the value recognised in
the reporting period in respect of Tertiary Minerals plc.
In the year to 30 September 2021 the Company recognised expenses
of GBP19,664 (2020: GBP18,932) related to issuing of share warrants
in connection with equity-settled share-based payment transactions.
The fair value is charged to administrative expenses and where
there is a vesting period it is charged on a straight-line basis
over the vesting period, together with a corresponding increase in
equity, based on the management's estimate of shares that will
eventually vest.
The fair values of warrants are estimated using a
Black-Scholes-Merton Pricing Model and charged to administrative
expenses on a straight-line basis over the vesting period, together
with a corresponding increase in equity, based on the management's
estimate of shares that will eventually vest.
The inputs into the Black-Scholes-Merton Pricing 2021 2020
Model were as follows:
-------------------------------------------------- ------ ----------
Weighted average share price - 0.20p
Weighted average exercise price - 0.19p
Expected volatility - 70%
Expected life - 2.4 years
Risk-free rate - 0.12%
Expected dividend yield - 0%
-------------------------------------------------- ------ ----------
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous 3 years.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
In the year ended 30 September 2021 the following share warrants
were exercised:
On 18 January 2021 9,090,909 warrants at an exercise price of
0.11p were exercised for a consideration of GBP10,000.
On 27 January 2021 500,000 warrants at an exercise price of
0.16p were exercised for a consideration of GBP800.
On 3 February 2021 750,000 warrants at an exercise price of
0.16p were exercised for a consideration of GBP1,200.
On 15 February 2021 750,000 warrants at an exercise price of
0.11p were exercised for a consideration of GBP825.
16. Related party transactions
Key management personnel
The directors holding office at the year end and their warrants
held in the share capital of the Company are:
At 30 September
At 30 September 2021 2020
Share Warrant Warrant
Shares warrants exercise expiry Shares Share warrants
number number price date number number
----------------------- ----------- ---------- --------- -------- ----------- --------------
P L Cheetham* 234,293,916 30,000,000 0.195p 05/08/25 231,047,657 30,000,000
D J Swan** - resigned 32,759,580 2,000,000 0.160p 21/02/24 29,281,338 2,000,000
J Cole - - - - - -
R D Murphy 54,942,230 2,000,000 0.160p 21/02/24 48,949,823 4,000,000
2,000,000 0.195p 05/08/25
----------------------- ----------- ---------- --------- -------- ----------- --------------
*Includes 5,500,000 shares held by K E Cheetham, wife of P L
Cheetham
** D J Swan ceased to be a director of the Company on 27 May
2021
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the
consolidated accounts of Tertiary Minerals plc, which held 0.59% of
the issued share capital on 30 September 2021 (2020: 0.6%).
Tertiary Minerals plc provides management services to Sunrise
Resources plc and consequently during the year the Group incurred
costs of GBP 165,058 (2020: GBP 175,750 ) recharged at cost from
Tertiary Minerals being overheads of GBP19,700 (2020: GBP 20,369 ),
costs paid on behalf of the Group of GBP4,644 (2020: GBP1,175),
Tertiary staff salary costs of GBP72,540 (2020: GBP 74,085 ) and
Tertiary directors' salary costs of GBP68,174 (2020: GBP 80,121
).
At the balance sheet date an amount of GBP44,147 (2020:
GBP43,717) was due to Tertiary Minerals plc.
Patrick Cheetham, the Executive Chairman of the Company, is also
a director of Tertiary Minerals plc.
At 30 September 2021 and at the date of this report Donald
McAlister, a director of Tertiary Minerals plc, held 550,000 shares
in the Company.
17. Leases
Group Company Group Company
2021 2021 2020 2020
Right of use assets GBP GBP GBP GBP
--------------------------------------- ------- ------- ------- -------
Cost
At start of year 21,970 - - -
Additions - - 21,970 -
Disposals - - - -
Foreign currency exchange adjustments (960) - - -
--------------------------------------- ------- ------- ------- -------
At 30 September 21,010 - 21,970 -
--------------------------------------- ------- ------- ------- -------
Depreciation
At start of year (3,539) - - -
Charge for the year (4,202) - (3,539) -
Disposals - - - -
Foreign currency exchange adjustments 154 - - -
--------------------------------------- ------- ------- ------- -------
At 30 September (7,587) - (3,539) -
--------------------------------------- ------- ------- ------- -------
Carrying amounts
At 30 September 13,423 - 18,431 -
--------------------------------------- ------- ------- ------- -------
At start of year 18,431 - - -
--------------------------------------- ------- ------- ------- -------
Group Company Group Company
2021 2021 2020 2020
Lease liabilities GBP GBP GBP GBP
--------------------------------------- ------- ------- -------- -------
Cost
At start of year 9,700 - - -
Additions - - 21,970 -
Lease payments (2,378) - (12,431) -
Interest charge 117 - 161 -
Foreign currency exchange adjustments (424) - - -
--------------------------------------- ------- ------- -------- -------
At 30 September 7,015 - 9,700 -
--------------------------------------- ------- ------- -------- -------
Minimum
lease
payments Interest Present value
GBP GBP GBP
---------------------------------- --------- -------- -------------
No later than one year 2,378 (78) 2,300
Later than one year and no later
than 5 years 4,755 (40) 4,715
Later than five years - - -
---------------------------------- --------- -------- -------------
Total lease liabilities 7,015
---------------------------------- --------- -------- -------------
Current liabilities 2,300
Non-current liabilities 4,715
---------------------------------- --------- -------- -------------
The right of use assets and related lease liabilities are for
the lease of water rights for use in conjunction with the CS
Project in Nevada, USA. Total cash flow outflow amount is
GBP4,319.
18. Capital management
The Group's capital requirements are dictated by its project and
overhead funding requirements from time to time. Capital
requirements are reviewed by the Board on a regular basis.
The Group manages its capital to ensure that entities within the
Group will be able to continue as going concerns, to increase the
value of the assets of the business and to provide an adequate
return to shareholders in the future when exploration assets are
taken into production.
The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of its assets. In order to maintain or adjust the
capital structure the possibilities open to the Group in future
include issuing new shares, consolidating shares, returning capital
to shareholders, taking on debt and selling assets.
19. Financial instruments
At 30 September 2021, the Group's and Company's financial assets
consisted of receivables due within one year, other investments and
cash and cash equivalents. At the same date, the Group and Company
had no financial liabilities other than trade and other payables
due within one year and had no agreed borrowing facilities as at
this date. There is no material difference between the carrying and
fair values of the Group's and Company's financial assets and
liabilities.
The carrying amounts for each category of financial instrument
held at 30 September 2021, as defined in IFRS 9, are as
follows:
Group Company Group Company
2021 2021 2020 2020
GBP GBP GBP GBP
------------------------------------- ------- ------- --------- ---------
Financial assets at amortised
cost 488,868 349,481 1,123,277 1,065,480
Financial assets at fair value
through other comprehensive income 63,503 45,675 19,765 -
Financial Liabilities at amortised
cost 110,331 56,146 76,574 56,983
------------------------------------- ------- ------- --------- ---------
Risk management
The principal risks faced by the Group and Company resulting
from financial instruments are liquidity risk, foreign currency
risk and, to a lesser extent, interest rate risk and credit risk.
The directors review and agree policies for managing each of these
risks as summarised below. The policies have remained unchanged
from previous periods as the risks are assessed not to have
changed.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars,
Australian Dollars and others to provide funding for exploration
and evaluation activity, whilst the Company holds cash balances in
Sterling, US Dollars, Australian Dollars and small amounts in other
currencies.
The Company is dependent on equity fundraising through private
placings which the directors regard as the most cost-effective
method of fundraising. The directors monitor cash flow in the
context of their expectations for the business to ensure sufficient
liquidity is available to meet foreseeable needs.
Currency risk
The Group's financial risk management objective is broadly to
seek to make neither profit nor loss from exposure to currency or
interest rate risks. The Group is exposed to transactional foreign
exchange risk and takes profits and losses as they arise as, in the
opinion of the directors, the cost of hedging against fluctuations
would be greater than the related benefit from doing so.
Fluctuations in the exchange rate are not expected to have a
material effect on reported loss or equity.
Group Company Group Company
Bank balances were held in the following 2021 2021 2020 2020
denominations: GBP GBP GBP GBP
-------------------------------------------- ------- ------- --------- ---------
United Kingdom Sterling 328,133 328,133 1,064,927 1,064,927
Australian Dollar 19,544 9,568 9,588 369
United States Dollar 23,986 39 14,823 105
Other 77 77 79 79
-------------------------------------------- ------- ------- --------- ---------
Interest rate risk
The Company finances operations through equity fundraising and
therefore does not carry borrowings.
Fluctuating interest rates have the potential to affect the loss
and equity of the Group and the Company insofar as they affect the
interest paid on financial instruments held for the benefit of the
Group. The directors do not consider the effects to be material to
the reported loss or equity of the Group or the Company presented
in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such
as VAT refunds, invoices issued to related parties and its joint
arrangements for management charges. The amounts outstanding from
time to time are not material other than for VAT refunds which are
considered by the directors to be low risk.
The Company has exposure to credit risk in respect of its cash
deposits with NatWest bank and this exposure is considered by the
directors to be low risk.
20. Provision for other liabilities and charges
2021 2020
Group GBP GBP
----------------------- ------ ----
Reclamation Liability
At start of year - -
Additions 26,665 -
At 30 September 26,665 -
----------------------- ------ ----
The Group makes provision for future reclamation costs relating
to exploration projects. Provisions are calculated based upon
internal estimates and expected costs based upon past experience
and expert guidance where appropriate.
21. Contingent Assets
The Company has the following contingent assets:
Power Metal Resources plc
2.25 million warrants and 2% Net Smelter Return Royalty,
received as part of the consideration for the disposal of Stonewall
and Garfield exploration projects in June 2021.
VR Resources
3% Net Smelter Return Royalty received as part of the
consideration for the sale of the Junction Gold-Copper exploration
project to in August 2017.
No values have been assigned to these contingent assets on the
basis that realisation is uncertain and considered to be
unpredictable.
22. Events after the balance sheet date
Lease Option agreement with Kinross
In October 2021, the Company entered into a lease/option
agreement with Kinross Gold U.S.A Inc. granting Kinross a Lease and
Option to purchase the Company's 25 Jackson Wash mining claims in
Nevada, USA. Under the terms of the Agreement Kinross has been
granted:
-- a 9-year mining lease over the Claims; and
-- an option (the "Option") to purchase the Claims at any time
during the term of the Lease for US$500,000 and the grant to the
Company of a 2.5% Net Smelter Royalty.
Kinross will make the following payments to the Company until
the Lease expires or is terminated or the Option is exercised:
-- US$5,000 annually in advance in years 1-3;
-- US$10,000 annually in advance in years 4-6; and
-- US$15,000 annually in advance in years 7-9.
Kinross has paid a US$10,000 signing bonus, the year 1 lease
payment and reimbursed 2021 claim filing fees of US$4,437 (total
payment of US$19,437).
All of the above-mentioned payments will be considered as
advance payments of the Royalty, should the Royalty become payable.
Kinross may purchase 60% of the Royalty (1.5% of the 2.5% royalty)
for a total of US$1.5 million in increments of US$500,000 per
0.5%.
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END
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(END) Dow Jones Newswires
December 13, 2021 02:00 ET (07:00 GMT)
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