INTERIM FINANCIAL
REPORT
FOR THE HALF YEAR
ENDED
31 DECEMBER
2023
abn 71 120 833
427
CORPORATE
DIRECTORY
Directors
Mr Benjamin Stoikovich
Chairman
Mr Frank
Eagar
Managing Director and CEO
Mr Ian
Middlemas
Non-Executive Director
Dr Julian
Stephens
Non-Executive Director
Mr Mark
Pearce
Non-Executive Director
Mr Nigel
Jones
Non-Executive Director
Company
Secretary
Mr Dylan Browne
London
Office Unit 3C, 38 Jermyn
Street, London
SW1Y 6DN, United Kingdom
Telephone:
+44 207 478 3900
Cape Town
Office
Ground
Floor, Block C,
The Terraces, Steenberg Office Park
Cape Town, South Africa
Operations
Office
Area
4
Lilongwe
Malawi
Registered and Principal
Office Level 9, 28 The
Esplanade
Perth WA 6000
Telephone: +61 8 9322 6322
Stock Exchange
Listings Australia
Australian
Securities Exchange
ASX Code: SVM - Ordinary
Shares
United
Kingdom
London
Stock Exchange (AIM)
AIM Code:
SVML - Depository
Interests
|
Nominated Advisor &
Broker
SP Angel
Corporate Finance LLP
Prince
Frederick House
35-39
Maddox Street
London W1S
2PP, United Kingdom
Brokers
Berenberg,
Gossler & Co, KG, London Branch 60
Threadneedle Street
London EC2R 8HP
United Kingdom T: +44 20 3753
3132
Share
Register Australia
Computershare Investor Services Pty Ltd
Level 17
221 St Georges Terrace
Perth WA 6000
Telephone:
1300 850 505
International:
+61 8 9323 2000
Facsimile:
+61 8 9323 2033
United
Kingdom
Computershare Investor Services PLC
The Pavilions,
Bridgewater Road,
Bristol BS99 6ZZ
Telephone: +44 370 702 0000
Solicitors
Thomson Geer
Auditor
Ernst & Young
Bankers
National Australia Bank
Standard
Bank - Malawi
|
|
|
CONTENTS
|
|
|
|
Directors' Report
|
|
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
|
|
Consolidated Statement of Financial
Position
|
|
Consolidated Statement of Changes in
Equity
|
|
Consolidated Statement of Cash
Flows
|
|
Notes to the Financial
Statements
|
|
Directors' Declaration
|
|
Competent Person
Statement
|
|
Auditor's Independence
Declaration
|
|
Independent Auditor's Review
Report
|
|
DIRECTORS' REPORT
The Directors of Sovereign Metals
Limited present their report on Sovereign Metals Limited
(Sovereign or the
Company or Parent) and the entities it controlled
at the end of, or during, the half year ended 31 December 2023
(Consolidated Entity or
Group).
DIRECTORS
The names of Directors in office at
any time during the financial period or since the end of the
financial period are:
Current Directors
Mr Benjamin
Stoikovich Chairman
Mr Frank Eagar
Managing Director and CEO (appointed 20 October 2023)
Mr Ian Middlemas
Non-Executive Director
Dr Julian Stephens
Non-Executive Director (previously Managing Director, Non-Executive
as of 20 October 2023)
Mr Mark Pearce
Non-Executive Director
Mr Nigel Jones
Non-Executive Director
All Directors were in office from 1
July 2023 until the date of this report, unless otherwise
noted.
REVIEW AND RESULTS OF OPERATIONS
KASIYA RUTILE-GRAPHITE PROJECT
Sovereign is focused on the
development of its Kasiya rutile-graphite
project (Kasiya or
the Project)
in Malawi. The Pre-Feasibility Study (PFS) confirmed Kasiya as a potentially
major critical minerals project delivering industry-leading
economic returns and sustainability metrics.
The Company's objective is to
develop a large-scale, long life rutile-graphite operation,
focusing on developing an environmentally and socially responsible,
sustainable operation.
Figure 1: Sovereign's Kasiya
project displaying location in South-East Africa
Kasiya is the largest rutile deposit
in the world with more than double the contained rutile as its
nearest rutile peer, Sierra Rutile. The Kasiya Mineral Resource Estimate (MRE) is 1.8
Billion tonnes (Bt) at 1.0%
rutile resulting in 17.9 Million tonnes (Mt) tonnes of contained natural rutile
and 24.4Mt of contained graphite. The MRE has broad zones of very
high-grade rutile which occurs contiguously across a very large
area of over 200km2. Rutile mineralisation lies in
laterally extensive, near surface, flat "blanket" style bodies in
areas where the weathering profile is preserved and not
significantly eroded. Kasiya's graphite co-product MRE is 1.8Bt at
1.4% graphite, containing over 24.4Mt of graphite.
SUMMARY AND HIGHLIGHTS DURING AND SUBSEQUENT TO PERIOD
END
PFS
Results
·
Results of the PFS released in late 2023
demonstrated Kasiya's potential to become the world's largest
rutile producer at an average of 222kt per annum and one of the
world's largest natural graphite producers outside of China at an
average of 244kt per annum based on an initial 25 year life-of-mine
(LOM)
·
PFS delivered compelling economics with a post-tax
NPV8 of US$1.6 Billion and post-tax IRR of 28%. This
long-life, multi-generational operation was modelled to initially
generate over US$16 Billion of revenue and provide an average
annual EBITDA of US$415 Million per annum
·
The PFS modelling was limited to only 25 years
with an initial Probable Ore Reserves declared of 538Mt,
representing only 30% of the total Project MRE
Project Optimisation
·
Sovereign advanced optimisation test work and
technical studies for Kasiya with the Company's strategic investor,
Rio Tinto
·
Significant field activities and a number of test
work programs have commenced in order to provide data for the
Project optimisation phase
·
The Company aims to become the world's largest,
lowest cost and lowest-emissions producer of two critical minerals
- titanium (rutile) and graphite
Rio
Tinto invests $40.6m to become a 15% Strategic
Investor
·
Rio Tinto made an investment of A$40.6 million in
Sovereign resulting in an initial 15% shareholding plus options to
increase their position to potentially 19.99% within 12
months
·
Rio Tinto's investment represents a significant
step towards unlocking a major new supply of low-CO2
natural rutile and flake graphite
·
Under the Investment Agreement, Rio Tinto will
provide assistance and advice on technical and marketing aspects
including Sovereign's graphite co-product, with a primary focus on
spherical purified graphite for the lithium-ion battery anode
market
Key
Management Appointments to Drive Project Optimisation and
Development at Kasiya
·
Appointment of experienced African based mining
executive, Mr Frank Eagar, as the new Managing Director and
CEO
·
Previous Managing Director Dr Julian Stephens has
transitioned to Non-Executive Director
·
Key technical appointments of experienced African
engineering, social, environmental and legal teams to work on
project optimisation and advancing the development of the Kasiya
Project
Lithium-Ion battery graphite program
upscaled
·
Over 60 tonnes of ore was extracted targeting
production of an initial 600kg of natural graphite for lithium-ion
battery anode test work and product qualification
·
The upscaled graphite qualification program will
support ongoing Project studies
·
Sovereign and Rio Tinto have agreed to collaborate
to qualify graphite from Kasiya, with a particular focus on
supplying the spherical purified graphite (SPG) segment of the lithium-ion battery
anode market
·
This
graphite qualification program coincides with China's announced
curbs on exports of natural graphite, a critical mineral for the
US, EU, Japan and Australia
Figures 2 & 3: Bulk
sample mechanised spiral drilling and sampling at Kasiya in
November 2023
Extensions to Rutile & Graphite Mineralisation at
Kasiya
·
Wide-spaced regional reconnaissance drilling,
outside the current JORC (2012) compliant MRE area, identified a
8km extension of mineralisation to the south which remains open
along strike and at depth
·
Results are testament to the world-class scale of
the Kasiya deposit and demonstrate potential for a future increase
of the Kasiya's MRE, which is already the largest natural rutile
deposit and second largest flake graphite deposit in the
world
Figure 4: Southern newly
defined mineralised extensions at Kasiya
Strong Support from the Government of Malawi
·
The Government of Malawi has applauded the timely
investment by Rio Tinto and marked it as a milestone towards
realising the country's aspirations of growing the mining sector as
a priority industry
·
PFS demonstrates Kasiya's potential to provide
significant socio-economic benefits for Malawi including fiscal
returns, job creation, skills transfer and sustainable community
development initiatives
·
With mining being one of the key pillars for
growth under Malawi's economic development strategy (Agriculture,
Tourism, Mining - ATM Policy) and the potential for Kasiya to
be a project of national significance, the Government has
constituted an Inter-ministerial Project Development Committee to
work alongside the Company to assist in the permitting process
Highly-experienced social specialist
appointed
·
Africa-based social specialist consultancy,
SocialEssence were appointed to lead social and community
development programs for Sovereign in Malawi
·
SocialEssence joins Sovereign's Owners Team and
will design, implement, and manage several social and community
initiatives which will feed into Project studies and
permitting
·
SocialEssence has a strong and successful track
record of implementing social responsibility programs across
southern Africa, including at First Quantum Minerals' Zambian
project
Commissioning of Sustainable
Farming Initiative in Malawi
·
Sovereign initiated a Conservation Farming Program
in Malawi as part of its sustainability initiatives related to the
development of Kasiya
·
Local farmers will be trained in sustainable
farming techniques to increase maize crop yield; protect soil from
erosion and degradation; and to improve long term food
security
·
Supporting local communities in addressing their
social priorities is a core principle of Sovereign's ESG Strategy
as the company advances the development of Kasiya
·
Sovereign's owner's team have previously
implemented this program at First Quantum Minerals' Zambian
operations where over 7,000 farmers were participating in the
program by 2022
Figure 5: Local communities
embracing the conservation farming program
Transfer of Malingunde licence to NGX
Limited
In January 2024, NGX Limited (NGX)
was issued with a retention licence of the Malingunde graphite
project which fully completed the demerger of Sovereign's
standalone graphite projects. In 2023, Sovereign successfully
demerged its standalone graphite projects (Nanzeka Project,
Malingunde Project, Duwi Project and Mabuwa Project) into NGX,
which listed on ASX in June 2023.
The net operating loss after tax for
the half year ended 31 December 2023 was $6,976,503 (2022:
$8,486,503) which is attributable to:
(i)
Interest income of $938,402 (2022:
$138,366) earned on term
deposits held by the Group;
(ii)
exploration and evaluation expenditure of
$5,027,397 (2022: $5,792,042), which is attributable to the Group's accounting
policy of expensing exploration and evaluation expenditure (other
than expenditures incurred in the acquisition of the rights to
explore) incurred by the Group in the period subsequent to the
acquisition of the rights to explore up to the successful
completion of definitive feasibility studies for each separate area
of interest. The exploration and evaluation expenditure in the
current period predominately relates to the Group's PFS at its
Kasiya Project in Malawi;
(iii) business development expenses of $996,548 (2022: $1,130,083)
which are attributable to the Group's investor and shareholder
relations activities including but not limited to public relations
costs, marketing and digital marketing, broker and advisor fees,
travel costs, conference fees, business development consultant fees
and costs of the Group's ASX and AIM listings; and
(iv) non-cash share based payments expenses of $1,089,974 (2022:
$1,061,657) which is attributable to the Group's accounting policy
of expensing the value of shares, incentive options and rights
(estimated using an appropriate pricing model) granted to key
employees, consultants and advisors. The value of incentive options
and rights is measured at grant date and recognised over the period
during which the option and rights holders become unconditionally
entitled to the incentive securities.
At 31 December 2023, the Group had
cash reserves of $39,436,707 (30 June 2023: $5,564,376) placing it in an excellent financial position to
continue with the development of Kasiya.
At 31 December 2023, the Company had
net assets of $44,263,313 (30 June 2023: $9,672,569), an increase of 358% compared with the prior
period. This is largely attributable to the increase in cash
reserves following the investment made by Rio Tinto in the
period.
SIGNIFICANT POST BALANCE DATE EVENTS
Other than the above, there are no
matters or circumstances which have arisen since 31 December 2023
that have significantly affected or may significantly
affect:
· the operations, in periods subsequent to 31 December 2023, of
the Group;
· the results of those operations, in periods subsequent to 31
December 2023, of the Group; or
· the state of affairs, in periods subsequent to 31 December
2023, of the Group.
AUDITOR'S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act
2001 requires our auditors, Ernst & Young, to provide the
directors of Sovereign Metals Limited with an Independence
Declaration in relation to the review of the half year financial
report. This Independence Declaration is on page 17 and forms part
of this Directors' Report.
This report is made in accordance
with a resolution of the directors made pursuant to section 306(3)
of the Corporations Act 2001.
For and on behalf of the
Directors
Frank Eagar
Managing Director and CEO
13 March 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER
2023
|
Note
|
Half Year Ended
31 December 2023
$
|
Half Year Ended
31 December 2022
$
|
Interest
income
|
|
938,402
|
138,366
|
Other
expenses
|
|
(173,386)
|
(45,234)
|
Exploration
and evaluation expenses
|
|
(5,027,397)
|
(5,792,042)
|
Corporate
and administrative expenses
|
|
(572,119)
|
(474,014)
|
Business
development expenses
|
|
(996,548)
|
(1,130,083)
|
Share based
payments expense
|
4(d)
|
(1,089,974)
|
(1,061,657)
|
Demerger
expenses
|
|
(55,481)
|
(121,839)
|
Loss before income
tax
|
|
(6,976,503)
|
(8,486,503)
|
Income tax
expense
|
|
-
|
-
|
Loss for the
period
|
|
(6,976,503)
|
(8,486,503)
|
|
|
|
|
Other comprehensive
income/(loss), net of income tax:
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
|
|
|
|
Exchange
differences on foreign entities
|
|
3,530
|
(38,018)
|
Other comprehensive
income/(loss) for the period, net of income tax
|
|
3,530
|
(38,018)
|
Total comprehensive loss for
the period
|
|
(6,972,973)
|
(8,524,521)
|
|
|
|
|
Loss attributable to members
of Sovereign Metals Limited
|
|
(6,972,973)
|
(8,524,521)
|
|
|
|
|
Total comprehensive loss
attributable to members of Sovereign Metals
Limited
|
|
(6,972,973)
|
(8,524,521)
|
Loss per
share
|
|
|
|
Basic and
Diluted loss per share (cents per share)
|
5
|
(1.1)
|
(1.8)
|
The above
Consolidated Statement of Profit or Loss and Other Comprehensive
Income should be read in conjunction with the accompanying
notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
|
Note
|
31 December 2023
$
|
30 June 2023
$
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and
cash equivalents
|
|
39,436,707
|
5,564,376
|
Other
receivables
|
|
353,837
|
286,484
|
Other
financial assets
|
|
245,000
|
420,000
|
Total Current
Assets
|
|
40,035,544
|
6,270,860
|
|
|
|
|
Non-current
Assets
|
|
|
|
Property,
plant and equipment
|
|
525,551
|
532,039
|
Exploration
and evaluation assets
|
3
|
5,086,129
|
5,086,129
|
Total Non-current
Assets
|
|
5,611,680
|
5,618,168
|
|
|
|
|
TOTAL
ASSETS
|
|
45,647,224
|
11,889,028
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
Liabilities
|
|
|
|
Trade and
other payables
|
|
1,288,116
|
2,063,838
|
Provisions
|
|
95,795
|
152,621
|
Total Current
Liabilities
|
|
1,383,911
|
2,216,459
|
|
|
|
|
TOTAL
LIABILITIES
|
|
1,383,911
|
2,216,459
|
NET ASSETS
|
|
44,263,313
|
9,672,569
|
|
|
|
|
EQUITY
|
|
|
|
Issued
capital
|
4(a)
|
117,835,631
|
74,508,488
|
Reserves
|
4(b)
|
(5,080,122)
|
(3,320,226)
|
Accumulated
losses
|
|
(68,492,196)
|
(61,515,693)
|
TOTAL
EQUITY
|
|
44,263,313
|
9,672,569
|
The above
Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER
2023
|
Issued Capital
$
|
Share Based
Payments Reserve
$
|
Demerger
Reserve
$
|
Foreign Currency Translation
Reserve
$
|
Accumulated Losses
$
|
Total Equity
$
|
Balance at 1 July
2023
|
74,508,488
|
4,155,950
|
(7,336,678)
|
(139,498)
|
(61,515,693)
|
9,672,569
|
Net loss
for the period
|
-
|
-
|
-
|
-
|
(6,976,503)
|
(6,976,503)
|
Other
comprehensive income
|
-
|
-
|
-
|
3,530
|
-
|
3,530
|
Total comprehensive
income/(loss) for the period
|
-
|
-
|
-
|
3,530
|
(6,976,503)
|
(6,972,973)
|
Transactions with owners,
recorded directly in equity
|
|
|
|
|
|
|
Issue of
placement shares
|
40,598,258
|
-
|
-
|
-
|
-
|
40,598,258
|
Transfer
from SBP reserve on conversion of
performance rights
|
2,853,400
|
(2,853,400)
|
-
|
-
|
-
|
-
|
Share based
payments expense
|
-
|
1,089,974
|
-
|
-
|
-
|
1,089,974
|
Share issue
costs
|
(124,515)
|
-
|
-
|
-
|
-
|
(124,515)
|
Total transactions with
owners recorded directly in equity
|
43,327,143
|
(1,763,426)
|
-
|
-
|
-
|
41,563,717
|
Balance at 31 December
2023
|
117,835,631
|
2,392,524
|
(7,336,678)
|
(135,968)
|
(68,492,196)
|
44,263,313
|
Balance at 1 July
2022
|
78,860,187
|
2,084,466
|
-
|
(87,695)
|
(55,695,820)
|
25,161,138
|
Net loss
for the period
|
-
|
-
|
-
|
-
|
(8,486,503)
|
(8,486,503)
|
Other
comprehensive loss
|
-
|
-
|
-
|
(38,018)
|
-
|
(38,018)
|
Total comprehensive loss for
the period
|
-
|
-
|
-
|
(38,018)
|
(8,486,503)
|
(8,524,521)
|
Transactions with owners,
recorded directly in equity
|
|
|
|
|
|
|
Issue of
shares upon exercise of options
|
27,000
|
-
|
-
|
-
|
-
|
27,000
|
Transfer
from SBP reserve upon exercise of options
|
12,108
|
(12,108)
|
-
|
-
|
-
|
-
|
Share based
payments expense
|
-
|
1,061,657
|
-
|
-
|
-
|
1,061,657
|
Share issue
costs
|
(88,430)
|
-
|
-
|
-
|
-
|
(88,430)
|
Total transactions with
owners recorded directly in equity
|
(49,322)
|
1,049,549
|
-
|
-
|
-
|
1,000,227
|
Balance at 31 December
2022
|
78,810,865
|
3,134,015
|
-
|
(125,713)
|
(64,182,323)
|
17,636,844
|
The above
Consolidated Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH
FLOWS
FOR THE
HALF YEAR ENDED 31 DECEMBER 2023
|
Half Year Ended
31 December 2023
$
|
Half Year Ended
31 December 2022
$
|
Cash flows from operating
activities
|
|
|
Payments to
suppliers and employees
|
(7,050,623)
|
(7,314,907)
|
Interest
received
|
744,942
|
150,791
|
Net cash used in operating
activities
|
(6,305,681)
|
(7,164,116)
|
|
|
|
Cash flows from investing
activities
|
|
|
Payments
for purchase of plant and equipment
|
(205,902)
|
(23,970)
|
Repayment
of loan receivable from NGX Limited
|
34,434
|
-
|
Net cash used in investing
activities
|
(171,468)
|
(23,970)
|
|
|
|
Cash flows from financing
activities
|
|
|
Proceeds
from issue of shares
|
40,598,258
|
-
|
Payments
for share issue costs
|
(248,778)
|
(600,221)
|
Net cash from/(used in)
financing activities
|
40,349,480
|
(600,221)
|
|
|
|
Net increase/(decrease) in
cash and cash equivalents
|
33,872,331
|
(7,788,307)
|
Net foreign
exchange differences
|
-
|
4,764
|
Cash and
cash equivalents at the beginning of the period
|
5,564,376
|
18,892,741
|
Cash and cash equivalents at
the end of the period
|
39,436,707
|
11,109,198
|
The above
Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE HALF YEAR ENDED 31 DECEMBER
2023
1. MATERIAL ACCOUNTING POLICY INFORMATION
Sovereign Metals Limited (the
"Company") is a for profit company limited by shares and
incorporated in Australia, whose shares are publicly traded on the
Australian Securities Exchange and the AIM Market of the London
Stock Exchange. The consolidated interim financial statements of
the Company as at and for the period from 1 July 2023 to 31
December 2023 comprise the Company and its subsidiaries (together
referred to as the "Group"). The nature of the operations and
principal activities of the Group are as described in the
Directors' Report. The interim consolidated financial statements of
the Group were authorised for issue in accordance with the
resolution of the directors on 12 March 2024.
This interim financial report does
not include all the notes of the type normally included in an
annual financial report. Accordingly, this report is to be read in
conjunction with the audited annual report of Sovereign for the
year ended 30 June 2023 (where comparative amounts have been
extracted from) and any public announcements made by the Group
during the interim reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
(a) Basis of
Preparation of Half Year Financial Report
The consolidated financial
statements have been prepared on the basis of historical cost,
except for the revaluation of certain financial instruments. Cost
is based on the fair values of the consideration given in exchange
for assets. All amounts are presented in Australian dollars.
There have been no changes in the critical accounting judgements or
key sources of estimation since 30 June 2023.
(b) Statement of
Compliance
The consolidated interim financial
report complies with Australian Accounting Standards, including
AASB 134 which ensures compliance with International Financial
Reporting Standard ("IFRS") IAS 34 "Interim Financial Reporting" as issued
by the International Accounting Standards Board. The accounting
policies adopted in the preparation of the half-year financial
report are consistent with those applied in the preparation of the
Group's annual financial report for the year ended 30 June 2023,
except for new standards, amendments to standards and
interpretations effective 1 July 2023. In the current half year,
the Group has adopted all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to its
operations and effective for the current annual reporting
period.
(d)
Issued standards and interpretations not early
adopted
Standard/Interpretation
|
Application Date of
Standard
|
Application Date for
Group
|
AASB 2020-1 Amendments to
Australian Accounting Standards - Classification of Liabilities as
Current or Non-Current
|
1 January
2024
|
1 July
2024
|
AASB 2022-6 Amendments to
Australian Accounting Standards - Non-current Liabilities with
Covenants
|
1 January
2024
|
1 July
2024
|
AASB 2014-10 Amendments to
Australian Accounting Standards - Sale or Contribution of Assets
between an Investor and its Associate or Joint
Venture
|
1 January
2025
|
1 July
2025
|
Australian Accounting Standards and
Interpretations that have recently been issued or amended but are
not yet effective have not been adopted by the Group for the
reporting period ended 31 December 2023. Those which may be
relevant to the Group are set out in the table below, but these are
not expected to have any significant impact on the Group's
financial statements:
2. SEGMENT INFORMATION
AASB 8 requires operating segments
to be identified on the basis of internal reports about components
of the Consolidated Entity that are regularly reviewed by the chief
operating decision maker in order to allocate resources to the
segment and to assess its performance. The Consolidated Entity has
one operating segment, being exploration in Malawi.
3. EXPLORATION AND EVALUATION ASSETS
|
31 December 2023
$
|
30 June 2023
$
|
(a)
Movement in Exploration and Evaluation
Assets
|
|
|
Malawi Project:
|
|
|
Carrying
amount as at 1 July
|
5,086,129
|
7,170,282
|
Disposals -
Demerger of NGX Limited
|
-
|
(2,084,153)
|
Closing
balance(i)
|
5,086,129
|
5,086,129
|
Note:
(i) The
ultimate recoupment of costs carried forward for exploration and
evaluation is dependent on the successful development and
commercial exploitation or sale of the respective areas of
interest..
4. EQUITY SECURITIES ISSUED
|
31 December 2023
$
|
30 June 2023
$
|
(a)
Issued Capital
|
|
|
563,003,401
(30 June 2023: 470,875,023) fully paid ordinary
shares
(Note 4(c))
|
117,835,631
|
74,508,488
|
|
|
|
(b)
Reserves
|
|
|
Share Based Payment
Reserve
|
|
|
6,100,000
(30 June 2023: 6,100,000) tranche 2 performance rights
|
-
|
2,484,430
|
7,810,000
(30 June 2023: 7,810,000) tranche 3 performance rights
|
2,149,093
|
1,671,52
|
3,150,000
(30 June 2023: nil) tranche 4 performance rights
|
110,699
|
-
|
4,150,000
(30 June 2023: nil) tranche 5 performance rights
|
132,732
|
-
|
Total Share Based Payments
Reserve (Note 4(d))
|
2,392,524
|
4,155,950
|
|
|
|
Foreign Currency Translation
Reserve (FCTR)
|
|
|
Exchange
differences
|
(135,968)
|
(139,498)
|
Total
Foreign Currency
Translation Reserve (FCTR)
|
(135,968)
|
(139,498)
|
|
|
|
Demerger
Reserve
|
(7,336,678)
|
(7,336,678)
|
Tota Demerger
Reserve
|
(7,336,678)
|
(7,336,678)
|
Total
Reserves
|
(5,080,122)
|
(3,320,226)
|
(c) Movements in
Ordinary Share Capital were as follows:
Date
|
Details
|
No. of
Shares
|
Issue Price
$
|
$
|
1 Jul 23
|
Opening
balance
|
470,875,023
|
-
|
74,508,488
|
Various
|
Issue of
placement shares
|
83,535,510
|
0.486
|
40,598,258
|
25 Aug
23
|
Issue of
advisory fee shares
|
2,492,868
|
-
|
-
|
29 Sep
23
|
Issue of
shares upon conversion of performance rights
|
6,100,000
|
-
|
2,853,400
|
31 Dec
23
|
Share issue
costs
|
-
|
-
|
(124,515)
|
31 Dec 23
|
Closing
balance
|
563,003,401
|
|
117,835,631
|
|
|
|
|
|
1 Jul 22
|
Opening
Balance
|
470,725,023
|
|
78,860,187
|
7 Jul
22
|
Issue of
shares upon exercise of options
|
150,000
|
$0.14
|
27,000
|
7 Jul
22
|
Transfer
from SBP reserve upon exercise of options
|
-
|
-
|
12,108
|
23 Mar
23
|
In-specie
distribution on demerger of NGX Limited
|
-
|
-
|
(4,178,114)
|
30 Jun
23
|
Share issue
costs
|
-
|
-
|
(212,693)
|
30 Jun 23
|
Closing
Balance
|
470,875,023
|
-
|
74,508,488
|
(d) Movements in
Options and Performance Rights were as follows:
Date
|
Details
|
No. of Performance
Rights
|
$(i)
|
1 Jul 2023
|
Opening
balance
|
13,910,000
|
4,155,950
|
29 Sep
2023
|
Transfer
from SBP reserve upon conversion of performance rights
|
(6,100,000)
|
(2,853,400)
|
Various
|
Issue of
performance rights
|
8,600,000
|
-
|
31 Dec
2023
|
Share based
payment expense
|
-
|
1,089,974
|
31 Dec 2023
|
Closing
balance
|
16,410,000
|
2,392,524
|
|
|
|
|
1 Jul 22
|
Opening
Balance
|
12,440,000
|
2,084,466
|
7 Jul
22
|
Transfer
from SBP reserve upon exercise of options
|
-
|
(12,108)
|
Various
|
Issue of
performance rights
|
1,920,000
|
-
|
1 Jun
23
|
Lapse of
performance rights
|
(450,000)
|
(256,164)
|
30 Jun
23
|
Share-based
payment expense
|
-
|
2,339,756
|
30 Jun 23
|
Closing
Balance
|
13,910,000
|
4,155,950
|
Notes
(i) The value of performance rights granted during the period is
estimated as at the date of grant based on the underlying share
price (recognised over the vesting period (if applicable) in
accordance with Australian Accounting Standards.
During the period, 1,300,000
"Definitive Feasibility Study Milestone" performance rights were
issued and 6,100,000 "Pre-Feasibility Study Milestone" performance
rights converted into ordinary shares, the terms of which are
consistent with what is disclosed in the Group's Annual Report for
30 June 2023. During the period, 3,150,000 "Grant of Mining Licence
Milestone" performance rights which convert on the unconditional
grant of a Mining Licence at the Kasiya Rutile Project in
accordance with the relevant Malawi mines act and 4,150,000 "Final
Investment Decision Milestone" which convert on a documented
resolution of the Board authorising the construction of the Kasiya
Rutile Project were issued.
5. LOSS PER SHARE
|
Half Year Ended
31 December 2023
Cents per Share
|
Half Year Ended
31 December 2022
Cents per Share
|
Basic and diluted loss per share
|
|
|
From continuing
operations
|
(1.1)
|
(1.8)
|
Total basic and diluted loss per share
|
(1.1)
|
(1.8)
|
The following reflects the loss and
share data used in the calculations of basic and diluted loss per
share:
|
Half Year Ended
31 December 2023
$
|
Half Year Ended
31 December 2022
$
|
Net loss
used in calculating basic and diluted earnings per share
|
(6,976,503)
|
(8,486,503)
|
|
|
|
|
Half Year Ended
31 December 2023
No. of Shares
|
Half Year Ended
31 December 2022
No. of Shares
|
Weighted
average number of ordinary shares used in calculating basic
earnings per share
|
544,889,130
|
470,870,105
|
Adjusted weighted average
number of ordinary shares and potential ordinary shares used in
calculating basic and diluted earnings per share
|
544,889,130
|
470,870,105
|
Non-dilutive securities
As at 31 December 2023, 36,549,598
unlisted Options and 16,410,000 unlisted Performance Rights (which
represent 50,959,598 potential Ordinary Shares) were non-dilutive
as they would decrease the loss per share. As at 31 December 2022,
11,105,125 unlisted Incentive Options and 12,800,000 unlisted
Performance Rights (which represent 23,905,125 potential Ordinary
Shares) were non-dilutive as they would decrease the loss per
share.
Conversions, calls, subscriptions or issues after 31 December
2023
Since 31 December 2023, no
Performance Rights were issued. Other than the above, there have
been no conversions to, calls of, or subscriptions for ordinary
shares or issues of potential ordinary shares since the reporting
date and before the completion of this financial report.
6. COMMITMENTS AND CONTINGENCIES
(a)
Commitments
|
31 December 2023
$
|
30 June 2023
$
|
Exploration Commitments -
Malawi Project:
|
|
|
Within one
year
|
48,502
|
51,962
|
After one
year but not more than five years
|
34,549
|
65,771
|
|
83,051
|
117,733
|
As a condition of retaining the
current rights to tenure to exploration tenements, the Group is
required to pay an annual rental charge and meet minimum
expenditure requirements for each tenement. These obligations are
not provided for in the financial statements and are at the sole
discretion of the Group. The majority of the remaining exploration
commitments relate to licences with a term greater than one year.
For the purposes of disclosure, the Group has apportioned the
remaining commitments on an equal monthly basis over the remaining
term of the exploration licences.
(b)
Contingencies
At the last annual reporting date,
the Consolidated Entity did not have any material contingent
liabilities. There has been no material change in contingent
assets and liabilities of the Consolidated Entity during the half
year.
7. DIVIDENDS PAID OR PROVIDED FOR
No dividend has been paid or
provided for during the half year (2022: nil).
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The net fair value of financial
assets and financial liabilities approximates their carrying
value.
9. SUBSEQUENT EVENTS AFTER BALANCE DATE
There are no matters or
circumstances which have arisen since 31 December 2023 that have
significantly affected or may significantly affect:
· the operations, in periods subsequent to 31 December 2023, of
the Group;
· the results of those operations, in periods subsequent to 31
December 2023, of the Group; or
· the state of affairs, in periods subsequent to 31 December
2023, of the Group.
DIRECTORS' DECLARATION
In accordance with a resolution of
the Directors of Sovereign Metals Limited, I state that:
In the opinion of the
Directors:
(a) the financial
statements and notes thereto are in accordance with the
Corporations Act 2001, including:
(i) complying
with Accounting Standard AASB 134: Interim Financial Reporting and the
Corporations Regulations 2001; and
(ii) giving a true
and fair view of the consolidated entity's financial position as at
31 December 2023 and of its performance for the half year ended on
that date.
(b) there are
reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
This declaration is signed in
accordance with a resolution of the Board of Directors made
pursuant to section 303(5) of the Corporations Act 2001.
On behalf of the Board
Frank Eagar
Managing Director and CEO
13 March 2024
COMPETENT PERSON
STATEMENT
Competent Person
Statement
The information in this announcement
that relates to Production Targets, Ore Reserves, Processing,
Infrastructure and Capital Operating Costs, Metallurgy (rutile and
graphite) is extracted from the announcement dated 28 September
2023 entitled 'Kasiya Pre-Feasibility Study Results'. Sovereign
confirms that: a) it is not aware of any new information or data
that materially affects the information included in the original
announcement; b) all material assumptions and technical parameters
underpinning the Production Target, and related forecast financial
information derived from the Production Target included in the
original announcement continue to apply and have not materially
changed; and c) the form and context in which the relevant
Competent Persons' findings are presented in this presentation have
not been materially modified from the original
announcement.
The information in this announcement
that relates to the Mineral Resource Estimate is extracted from an
announcement dated 5 April 2023 entitled 'Kasiya Indicated Resource
Increased by over 80%' which is available to view at
www.sovereignmetals.com.au and is based on, and fairly represents
information compiled by Mr Richard Stockwell, a Competent Person,
who is a fellow of the Australian Institute of Geoscientists (AIG).
Mr Stockwell is a principal of Placer Consulting Pty Ltd, an
independent consulting company. Sovereign confirms that a) it is
not aware of any new information or data that materially affects
the information included in the original announcement; b) all
material assumptions included in the original announcement continue
to apply and have not materially changed; and c) the form and
context in which the relevant Competent Persons' findings are
presented in this announcement have not been materially changed
from the original announcement.
Kasiya Total Indicated +
Inferred Mineral Resource Estimate at 0.7% rutile cut-off
grade
|
Classification
|
Resource
(Mt)
|
Rutile Grade
(%)
|
Contained Rutile
(Mt)
|
Graphite Grade (TGC)
(%)
|
Contained Graphite
(Mt)
|
Indicated
|
1,200
|
1.0%
|
12.2
|
1.5%
|
18.0
|
Inferred
|
609
|
0.9%
|
5.7
|
1.1%
|
6.5
|
Total
|
1,809
|
1.0%
|
17.9
|
1.4%
|
24.4
|
Ore Reserve for the Kasiya
Deposit
|
|
Classification
|
Tonnes
(Mt)
|
Rutile Grade
(%)
|
Contained Rutile
(Mt)
|
Graphite Grade (TGC)
(%)
|
Contained Graphite
(Mt)
|
RutEq. Grade*
(%)
|
Proved
|
-
|
-
|
-
|
-
|
-
|
-
|
Probable
|
538
|
1.03%
|
5.5
|
1.66%
|
8.9
|
2.00%
|
Total
|
538
|
1.03%
|
5.5
|
1.66%
|
8.9
|
2.00%
|
|
|
|
|
|
|
| |
* RutEq.
Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t)
+ Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) /
Rutile Price (US$1,484/t). All assumptions are taken from this
Study ** Any minor summation inconsistencies are due to
rounding.
Forward Looking
Statement
This release may include forward-looking statements, which may
be identified by words such as "expects", "anticipates",
"believes", "projects", "plans", and similar expressions. These
forward-looking statements are based on Sovereign's expectations
and beliefs concerning future events. Forward looking statements
are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could
cause actual results to differ materially from such statements.
There can be no assurance that forward-looking statements will
prove to be correct. Sovereign makes no undertaking to
subsequently update or revise the forward-looking statements made
in this release, to reflect the circumstances or events after the
date of that release.
AUDITOR'S INDEPENDENCE
DECLARATION
INDEPENDENT AUDITOR'S REVIEW
REPORT