TIDMTYM
RNS Number : 4416I
Tertiary Minerals PLC
11 December 2020
11 December 2020
Tertiary Minerals plc ("Tertiary" or "the Company")
Audited Results for the year ended 30 September 2020
The Board of Tertiary Minerals plc is pleased to announce
audited results for the year ended 30 September 2020.
Operational Summary for the Year ended 30(th) September 2020
Continuing to build and explore its project portfolio in Nevada,
USA:
Ø Pyramid Gold Project
o Maiden drill hole confirms target zone is gold
mineralised.
o Property wide soil sampling programme completed - results
awaited.
Ø Paymaster Polymetallic Project
o Valley Prospect - Samples from outcropping skarn zone up to
7.5% zinc, 4.3% lead and 180 g/t silver. Drone magnetic survey
completed to define drill target.
o East Slope Prospect - 650m long zinc soil anomaly defined by
initial soil sampling, infill soil sampling and drone magnetic
survey completed, Results awaited.
New Projects include:
Ø Mt Tobin Silver Prospect
o Reconnaissance samples up to 101 grammes/tonne (g/t) silver
(3.12 ounces/ton) over a 450m strike length sampled to date. Open
to north and south.
o Drone magnetic survey and a soil sampling programme have now
been completed. Results awaited.
Ø Peg Leg Polymetallic Prospect
o Trenching programme tested outcropping skarn zone. Analytical
Results disappoint but drone magnetic survey identified untested
targets.
Ø Lucky Copper Project
o Targeting disseminated, sediment hosted, intrusion-related
copper deposit.
o Drill permit received to re-test historical intersection of
20.4m cumulative thickness of grading 0.65% copper to end of hole
at 77.7m depth.
Fluorspar Projects:
o Storuman mine permit (Sweden) - appeal process continues, no
progress during the year
o MB Project (Nevada, USA) terminated. Metallurgical test work
failed to define a viable processing method.
Kaaresselkä Gold Project Royalty, Finland
o Encouraging results reported by TSX listed Aurion Resources
Ltd where Tertiary holds a number of royalty interests.
o Vanha Gold Zone extended to 200 m depth and 600 m along
strike.
For more information please contact:
Tertiary Minerals plc:
Patrick Cheetham, Executive
Chairman +44 (0) 1625 838 679
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SP Angel Corporate Finance LLP
Nominated Adviser and Broker
Richard Morrison +44 (0) 203 470 0470
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Caroline Rowe
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Peterhouse Capital Limited
Joint Broker
Lucy Williams + 44 (0) 207 469 0930
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Duncan Vasey
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Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Chairman's Statement
I am pleased to present the Company's Annual Report and
Financial Statements for the year ended 30 September 2020, a year
of transition as we continue to build our project portfolio. We now
have five attractive precious metal and base metal projects in
Nevada, USA, one of the most prospective exploration terrains on
Earth. These include precious metal targets as well as a number of
targets for copper mineralisation, an under explored commodity in
Nevada which is, of course, more famous for its gold and silver
deposits.
We have been active in exploring and adding to our Nevada
projects throughout the year with results still awaited for our
autumn exploration programmes. This has included combinations of
soil sampling, geophysics and trenching on our Paymaster, Pyramid,
Mt Tobin and Peg Leg Projects and it is anticipated that drilling
will be the next step on a number of these exciting prospects.
These projects and the work carried out in 2020 are discussed in my
Operating Review.
We have seen some developments on our royalty interests in 2020,
most notably with the completion of a drilling programme by Aurion
Resources Ltd on the Kaaresselkä Gold project in Finland where 12
holes were drilled to follow up on our previous exploration.
Results announced recently were described as encouraging and extend
the gold mineralized zone to c.200 m depth and to c.600 m strike
length at the Vanha target.
At the end of the reporting period we made the difficult
decision to terminate our interest in the large MB Fluorspar
Project in Nevada after years of effort to find a viable processing
route. The combination of fine-grained mineral intergrowths, poor
recovery and low grade combined to make production of a saleable
concentrate unviable.
There is no news to report on our Storuman Fluorspar Project as
we have had no response yet to our appeal against the decision by
the Swedish Mining Inspectorate to reject Tertiary's Exploitation
(Mine) Permit in its current form after having previously granted
this. Many projects in Sweden are in the same unfortunate situation
and there is no legislated timeframe for the Government to
respond.
Fluorspar, as a source of fluorine, is one of the least known of
the battery commodities. Fluoride ion batteries provide an
interesting alternative to lithium ion batteries, in particular
because of their larger theoretical energy densities and the
increasing use of fluoropolymers in lithium batteries is an
opportunity for the market in the coming years. We have acquired
significant expertise in fluorspar and remain interested in
identifying and acquiring new fluorspar projects.
In June this year we saw the resignation of our Managing
Director, Richard Clemmey, who was originally recruited to take our
Storuman Fluorspar Project into production. Since Mr. Clemmey's
departure I have temporarily taken on a more involved executive
role until a new MD is found and have overseen our recent high
level of exploration activity. For some time we have been looking
for a new non-executive director and an excellent candidate has now
been identified and we expect to make a new Board appointment in
the very near future.
Our Annual General Meeting for the year ended 30 September 2020
will be held in our offices in Macclesfield, on Thursday 28 January
2021. In order to observe ongoing government restrictions on social
distancing and public gatherings, only the Chairman and one other
nominated Shareholder will attend the meeting to ensure that the
meeting is quorate. Other Shareholders and third parties will not
be permitted to attend the Meeting and will be refused entry.
Shareholders are therefore encouraged to appoint the Chairman as
their proxy (online at www.signalshares.com or by requesting and
submitting a hard copy Form of Proxy) as soon as possible. In line
with corporate governance best practice and in order that any proxy
votes of those shareholders who are not allowed to attend and to
vote in person are fully reflected in the voting on the
resolutions, the Chairman of the meeting will direct that voting on
the resolutions set out in the notice of meeting will take place by
way of a poll. The final poll vote on the resolutions will be
published after the General Meeting on the Company's website.
As anticipated in my 2019 Statement, 2020 has been a better year
for stock markets and junior mining companies in particular, and,
despite the COVID-19 pandemic, this has enabled us to raise funds
to continue to explore our project portfolio. A consequence of the
higher availability of funding across the mining markets is
increased competition for drilling and geological contractors. This
may delay progress on our projects but we are pleased that the
COVID-19 pandemic has not held up our project work so far and
mining is currently exempt from business restrictions in Nevada.
However, the rate of infection is continuing to rise over much of
the USA and we are starting to see this further affect the
availability of contract staff. On the positive side these
shortages are likely to be alleviated by the roll-out of new
vaccines.
On that note I think there is reason for cautious optimism in
looking forward to 2021 and I look forward to delivering further
news of developments on our exciting project portfolio.
Patrick Cheetham
Executive Chairman
11 December 2020
Strategic Report
Group Overview
Our AIM is to increase shareholder value through the discovery
and development of valuable mineral deposits.
Our Strategy is to build, explore and develop a multi-commodity
project portfolio.
Our Principal Activities involve the identification,
acquisition, exploration and development of mineral deposits
including precious metals, base metals and industrial minerals in
Nevada, USA and northern Europe.
The head office is based in Macclesfield in the United Kingdom
with operating locations in Nevada, USA, Sweden and Norway.
Company's Business Model
For exploration projects, the Group prefers to acquire 100%
ownership of mineral assets at minimal cost. This involves either
applying for exploration licences from the relevant authority or
negotiating rights with existing project owners for initially low
periodic payments that rise over time as confidence in the project
value increases.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on exploration and development - value
adding activities. The Company currently has five full-time
employees including the Executive Chairman who work with and
oversee carefully selected and experienced consultants and
contractors. Following the departure of the Managing Director in
June 2020 the Board of Directors now comprises one independent
Non-Executive Director and the Chairman.
Administration costs are further reduced via an arrangement
governed by a Management Services Agreement with Sunrise Resources
plc, whereby Sunrise Resources pays a share of the cost of head
office overheads (GBP20,369 in the reporting period). As at the 30
September 2020, Tertiary holds 0.6% of the issued ordinary share
capital of Sunrise Resources plc.
The Company's activities are financed by periodic capital
raisings, through share placings or share related financial
instruments. When projects become more advanced, or as acquisition
opportunities advance, the Board will seek to secure additional
funding from a range of various sources, for example debt funding,
pre-financing through off-take agreements and joint venture
partnerships.
Operating Review & Performance
Precious Metal & Base Metal Projects, Nevada, USA
Pyramid Gold Project (100% owned by Tertiary by lease
agreement)
The Pyramid Project is located 25 miles northwest of Reno in the
Pyramid Mining District and is secured by a 20-year lease on 9
patented claims with options to purchase (subject to underlying
royalties) and an additional 25 mining claims staked to cover
additional targets along strike.
Geology, Mineralisation and Past Exploration
The Pyramid Mining District lies at the northwest end of the
Walker Lane mineral belt, a major northwest trending structural
deformation zone and a highly productive gold, silver and copper
producing region which is host to numerous past and currently
producing multi-million ounce epithermal gold deposits as well as
porphyry copper and porphyry molybdenum deposits.
In the main part of the Pyramid District, precious metals were
mined from 1866 on a small scale from three moderately to steeply
dipping, northwest-striking vein systems within the Perry Canyon.
The only documented field exploration within the area of the
Company's claims was carried out by Battle Mountain Gold Mining
("Battle Mountain") who leased the project from our current lessors
in the period 1988--89.
Soil sampling by Battle Mountain identified a significant
open-ended gold-in-soil anomaly which they then tested with two
drill holes. Drill hole PYR 9 intersected high-grade gold
mineralisation and visible gold within a sample thickness of 1.52m
grading 17.8 g/t Au from 94.5m downhole. A broad zone of low-grade
mineralisation continued to the end of the hole at 115.8m where the
last 1.52m sample graded 2.6 g/t Au.
The second hole, PYR 10, targeted the same western line soil
anomaly some 150m to the southwest but was interpreted to have been
drilled in the wrong direction and made no significant gold
intersections.
Battle Mountain did not carry out any follow up exploration.
Company Exploration
In 2020 the Company completed drill hole TPYR1 to twin and
deepen percussion hole PYR9. TPYR1 was drilled to a depth of 137m
down hole at the same 45-degree angle and azimuth and from the same
general location as PYR9. Gold assay results showed a best
intersection of 0.55m grading 2.01 g/t Au from 82.6m down hole.
Whilst lower than those from the historic drill hole PYR9, the
results have confirmed that the target zone is gold
mineralised.
Most recently in autumn 2020 a programme of soil sampling was
completed to confirm and determine the extent of an open-ended gold
and multi-element soil anomaly originally defined by Battle
Mountain and to test the broader potential of the vein systems on
the Project area which is highlighted by the results of 43 surface
chip samples taken by Battle Mountain which assayed up to 7.27 g/t
Au and averaged 1.3 g/t Au.
A total of 370 soil samples have been collected by the Company
on a 30m by 120m grid. Results are not yet available but drilling
and/or trenching is provisionally planned to test any strong soil
anomalies.
Paymaster Polymetallic Project (100% owned by Tertiary)
The Paymaster Project is located approximately 30km southwest of
Tonopah in Nevada, USA, and is held by mining claims covering an
area of more than 390 acres.
Geology, Mineralisation and Past Exploration
The primary target at the Paymaster Project is a skarn hosted
zinc-silver deposit in Cambrian age limestone in contact with shale
and is located one mile south of the limestone contact with the
Cretaceous age Lone Mountain granite pluton.
Zinc skarns are important, not only as a source of zinc, lead,
copper, silver and other associated metals, but also as indicators
of buried porphyry copper and molybdenum deposits. As a class of
mineral deposit, they include a number of world class zinc-silver
deposits such as Antamina in Peru. The Company's consultant
geologist has also drawn analogies to the Taylor Zinc-Silver
Deposit owned by South 32 at Hermosa, in the neighbouring state of
Arizona (reported resource of 155mt grading 3.4% zinc, 3.7% lead
and 69g/t silver).
The skarn mineralisation at Paymaster is exposed in a number of
prospector scale workings but has seen no systematic company
exploration until now.
Company Exploration
In 2019 the Company sampled outcropping skarn mineralisation
over a total distance of 1.7km in a number of wide spaced and very
shallow prospector pits. Seven grab samples of the skarn
mineralisation exposed in or excavated from the pits average 10.1%
zinc (maximum 20.9%), 1.5% lead (max. 6.5%) 134 g/t silver (max 253
g/t or 7.3 ounces/ton) and 0.68% copper (maximum 3.4%). The skarn
samples also contain up to 0.11% cobalt (average of 419ppm or
0.045%) and up to 58ppm tellurium (average 31ppm) and 782ppm
bismuth (average 315ppm).
An initial soil sampling programme was completed by the Company
in 2019 and defined significantly elevated levels of Ag, Cu, Zn, Co
and Pb over a strike length of over 2,000 metres and work has now
focused on two areas of mineralisation:
Valley Prospect
-- New thick skarn zone observed in the field: Approximately 350m long and up to 8m thick.
-- Rock sample taken from historic shaft spoil dump assayed 7.5%
zinc, 4.3% lead and 180 g/t silver.
East Slope Prospect
-- 650m long zinc soil anomaly (100-250 ppm Zinc) surrounding previously sampled outcrop of zinc-silver-cobalt bearing skarn mineralisation, including 175m long 250-500 ppm zinc soil anomaly.
-- Previous rock sample assays up to 20.9% zinc, 0.11% cobalt
and 198 ppm silver within the prospect.
In 2020 a detailed magnetic survey was carried out by drone to
cover these two main prospects. In addition, an infill soil
sampling programme was competed to cover the East Slope Prospect
where previous wide spaced soil sampling defined a coherent zinc
anomaly over 500m long (+100ppm zinc) and where samples from
prospecting pits have assayed up to 21% zinc.
134 infill soil samples were collected on a 10m by 20m grid and
results are awaited. A programme of drone photogrammetry has been
completed for topographic control.
Peg Leg Copper-Silver-Lead-Zinc Project (100% owned by
Tertiary)
The Peg Leg Project claims are located 11km north of Tonopah in
the San Antone Mineral Field. Historical workings comprise shallow
shafts, trenches and bulldozer scrapes exploring contact
metasomatic (skarn) deposits associated with the Frazier's Well
granodiorite.
The project was originally prospected for tungsten which occurs
in grey marble. The Company's reconnaissance sampling has confirmed
the tungsten content in one skarn layer within the limestone where
sampling across 11m width in an old shallow trench returned 11m at
0.22% tungsten.
However, the principal target is a zone of base-precious metal
skarn mineralisation along the granite/limestone contact where an
outcrop of mineralisation exposed adjacent to the granite contact
assayed 59 grammes/tonne (g/t) silver 1.4% copper, 2.4% lead and
1.8% zinc. The waste pile from a nearby shallow mine shaft contains
material assaying up to 181 g/t silver, 3.9% copper, 10.1% lead and
1.2% zinc.
The Company has completed four exploration trenches along a
granite/limestone contact zone targeting skarn-style mineralisation
over a strike length of approximately 230m. The objective of the
trenching was to test the thickness of the outcropping
mineralisation which is largely obscured by scree and old mine
waste.
The trenches explored zones of oxidised skarn mineralisation
adjacent to the granite contact but analytical results were
disappointing. However, a drone magnetic survey has also been
completed and this has identified additional and as-yet-untested
skarn targets beyond the area so far investigated.
Mt Tobin Silver Prospect (100% owned by Tertiary)
Mt Tobin is located 73km south of Winnemucca in north-central
Nevada, The Company's mining claims cover a zone of stratiform
mineralisation in chert and silicified sediments 45-60m thick over
a strike length of 1,200m. This is coincident with a significant
silver-lead-zinc soil anomaly reported by previous explorer
Queenstake Resources.
In 2020 the Company carried out field reconnaissance work and
rock samples returned silver values of up to 101 grammes/tonne
(g/t) silver (3.12 ounces/ton) over a 450m strike length sampled to
date, Mineralisation is open to north and south, structurally
controlled and spatially related to dyke intrusion.
A drone magnetic survey and a soil sampling programme have now
been completed. This survey comprised 23.6-line km of flying on
traverses 50m apart. 304 soil samples were collected on a 40m by
100m grid. Results are awaited.
Lucky Copper Prospect (100% owned by Tertiary)
The Lucky Project comprises 13 claims on the east side of the
old Aurum mining centre, 96km northeast of the major porphyry
copper mining town of Ely in north-east Nevada.
The target is a disseminated sediment hosted, intrusion-related
copper deposit based on a 1951 shallow churn (percussion) drill
hole which intersected copper mineralised limestone and porphyry
beneath alluvium on the range front pediment slope. A 20.4m
cumulative thickness of this sequence assayed 0.65% copper to the
bottom of the hole at 77.7m depth. The hole ended in
mineralisation.
A preliminary field evaluation and sampling programme has been
carried out in 2020 and drill testing is proposed as soon as a
drill rig contract can be secured.
The aim of the drill programme will be to confirm and extend at
depth the copper mineralised drill intersection made in 1951.
Fluorspar Projects
Storuman Fluorspar Project, Sweden
The Company's 100% owned Storuman Project is located in north
central Sweden and is linked by the E12 highway to the port city of
Mo-i-Rana in Norway and by road and rail to the port of Umeå on the
Gulf of Bothnia.
JORC Compliant Mineral Resource
Classification Million Tonnes (Mt) Fluorspar (CaF(2)
%)
Indicated 25.0 10.28
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Inferred 2.7 9.57
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Total 27.7 10.21
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Exploitation (Mine) Permit
No work was carried out in 2020 and the Company continues to
wait for feedback from the Swedish Government in response to its
appeal against the decision by the Swedish Mining Inspectorate to
reject Tertiary's Exploitation (Mine) Permit in its current
form.
The appeal was lodged on 3 May 2019 and still no timeline for a
response has been given by the Swedish Government.
MB Fluorspar Project, Nevada, USA
The Company's interest in the MB Fluorspar Project was
terminated during the year.
This follows extensive project work over a number of years and
which continued during the year. Despite a large resource of
low-grade fluorspar having been defined, metallurgical test work
has failed to achieve target concentrate grades or recovery.
The fluorspar in the deposit is finely intergrown with other
minerals, in particular calcite, and the Company concluded, after
extensive testwork, that a viable processing route cannot be
achieved for the MB Project using currently available
technologies.
In addition to this, the leasing costs and expenditure
commitments under the Company's lease agreement with the underlying
claim holder were set to increase substantially from 30 September
2020 and holding costs could no longer be justified.
Lassedalen Fluorspar Project, Norway
The Lassedalen Fluorspar Project is favourably located near
Kongsberg, 80km to the south-west of Oslo in Norway. It is less
than 1km from highway E134 and approximately 50km from the nearest
Norwegian port.
JORC Compliant Mineral Resource
Classification Million Tonnes (Mt) Fluorspar (CaF(2)
%)
Inferred 4.0 24.6
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The resource defined at Lassedalen is currently too small to
justify development at present but it is open to expansion along
strike and at depth. Given the commitments on its other projects
and available funding, further exploration at the Lassedalen
Project has continued to be a lower priority in 2019/2020 and
consideration is being given to the future of the project.
Royalty Interests
Kaaresselkä and Kiekerömaa Gold Projects, Finland
The Company retains a royalty interest in the Kaaresselkä and
Kiekerömaa gold projects which were sold in 2016 to TSX--V listed
Aurion Resources Ltd ("Aurion"). These projects are located in the
Central Lapland Greenstone Belt of the Fennoscandian Shield where
there are a number of existing gold mines and a number of potential
new mine developments.
Since acquiring the Kaaresselkä Project, Aurion's work on the
project has included re-logging of all drill holes, oriented core
measurements, a detailed ground magnetic survey, whole rock
geochemistry, GIS compilation and integration of historical data
into 3D modelling software. This work has allowed for a
reinterpretation of the geology and a better understanding of the
property's potential. The main host lithology is strongly altered
and sheared mafic volcanics, which is a classic setting for major
orogenic gold deposits.
In the reporting period Aurion completed its maiden drill
programme at Kaaresselkä. The programme comprised 12 holes for a
total of 2,400m testing four targets (Vanha, Lampi South, Lampi
North, Tienvarsi) with the aim of confirming historical drilling
and testing the mineralised structure at depth and along strike.
The results were described by Aurion as encouraging and include
drill intercepts of 1.52 g/t Au over 2.85 m (KS20001 from 306.50 m
down hole) and 1.85 g/t Au over 5.40 m (KS20002 from 199.00 m down
hole). The drilling has extended the gold mineralized zone to 200 m
depth and to 600 m strike length at Vanha target.
Non-Core Projects
Rosendal Tantalum Project, Finland
The Exploration Licence for the project expired in October 2015
and the Company has applied for a renewal of the Licence. If the
Company is unsuccessful in finding a suitable partner or buyer to
progress the project, it is unlikely the renewal will be
granted.
Health and Safety
The Group has maintained strict compliance with its Health and
Safety Policy and is pleased to report there have been no lost time
accidents during the year.
Environment
No Group company has had or been notified of any instance of
non-compliance with environmental legislation in any of the
countries in which they work.
Financial Review & Performance
The Group is currently in the earlier stages of the typical
mining development cycle and so has no income other than cost
recovery from the management contract with Sunrise Resources plc
and a small amount of bank interest. Consequently, the Group is not
expected to report profits until it is able to profitably develop,
dispose of, or otherwise commercialise its exploration and
development projects.
The Group reports a loss of GBP2,498,167 for the year (2019:
GBP831,507) after administration costs of GBP597,994 (2019:
GBP502,788) and after crediting interest receivable of GBP437
(2019: GBP234). The loss includes impairment of the MB Project of
GBP2,027,000, expensed pre-licence and reconnaissance exploration
costs of GBP49,360 (2019: GBP75,778). Administration costs include
GBP30,290 (2019: GBP8,021) as non-cash costs for the value of
certain share warrants held by employees as required by IFRS 2.
Revenue includes GBP175,750 (2019: GBP189,742) from the
provision of management, administration and office services
provided to Sunrise Resources plc, to the benefit of both companies
through efficient utilisation of services.
The financial statements show that, at 30 September 2020, the
Group had net current assets of GBP628,365 (2019: GBP21,499). This
represents the cash position after allowing for receivables and
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 name
suggests, these intangible assets are not cash assets but include
this year's and previous years' accrued expenditure on minerals
projects where that expenditure meets the criteria set out in Note
1(d) (accounting policies) to the Financial Statements. The
intangible assets total GBP541,958 (2019: GBP2,461,972) and the
breakdown by project is shown in Note 2 to the Financial
Statements.
Expenditure which does not meet the criteria set out in Notes
1(d) and 1(n), such as pre-licence and reconnaissance costs, are
expensed and add to the Company's loss. The loss reported in any
year can also include expenditure that was carried forward in
previous reporting periods as an intangible asset but which the
Board determines is "impaired" in the reporting period.
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.
The intangible asset value of a project does not equate to 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
AIM can be in excess of or less than the net asset value of the
Group.
Details of intangible assets, property, plant and equipment and
investments are set out in Notes 8, 9 and 10 of the financial
statements.
The financial statements of a mineral exploration 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 and its long-term potential to create
value.
Key Performance Indicators
The usual financial key performance indicators ("KPIs") are
neither applicable nor appropriate to measurement of the value
creation of a company involved in mineral exploration and which
currently has no turnover other than cost recovery. 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 Company does seek to reduce overhead costs, where
practicable, and is reporting administration costs this financial
year of GBP597,994 (2019: GBP502,788).
Fundraising
During the 2020 financial year the Company raised a total of
GBP1,135,800, before expenses, as shown in Note 14 to the Financial
Statements.
These funds were raised through:
-- the issue on 19 November 2019 of zero coupon convertible
securities to Bergen Global Opportunity Fund, LP (the "Investor"),
a US based institutional investment fund as detailed in Notes 14
and 20 of the Financial Statements; and
-- a placing of shares on 25 February 2020 to clients of the
Company's joint broker, Peterhouse Securities Ltd, as detailed in
Notes 14 of the Financial Statements; and
-- a share subscription deed on 2 April 2020 with Precious
Metals Capital Group LLC, a U.S. based institutional specialist
investor, as detailed in Notes 14 and 21 of the Financial
Statements.
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 (GBP622,859), 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.
Impairment
A biannual review is carried out by the directors to assess
whether there are any indications of impairment of the Group's
assets.
Investments in Group undertakings:
The directors have reviewed the carrying value of the Company's
investments in shares of subsidiary undertakings totalling
GBP224,890, by reference to estimated recoverable amounts. In turn,
this requires an assessment of the recoverability of underlying
exploration assets in those subsidiaries in accordance with IFRS
6.
Loans to Group undertakings:
A review of the recoverability of loans to subsidiary
undertakings, totalling GBP2,275,735 has been carried out. This
indicated a potential credit loss arising in the year of
GBP1,899,212 relating to Tertiary Minerals US Inc. The assessment
and provision arises from the fact that there has been an
impairment of the underlying exploration assets held by Tertiary
Minerals US Inc., leading to doubt over recoverability of the loan.
The provision made against the receivables has reduced it to the
value of the underlying development assets.
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 directors bring many years
The Group's business is mineral of combined mining and exploration
exploration and evaluation which experience and an established track
are speculative activities. There record in mineral discovery.
is no certainty that the Group The Company mainly targets advanced
will be successful in the definition and drill ready exploration projects
of economic mineral deposits, in order to avoid higher risk grass
or that it will proceed to the roots exploration.
development of any of its projects
or otherwise realise their value.
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Resource Risk
Resources and reserves are estimated
All mineral projects have risk by independent specialists on behalf
associated with defined grade of the Group in accordance with
and continuity. Mineral Reserves accepted industry standards and
are always subject to uncertainties codes. The Directors are realistic
in the underlying assumptions in the use of mineral price forecasts
which include geological projections and impose rigorous practices in
and metal/mineral assumptions. the QA/QC programmes that support
its independent estimates.
-----------------------------------------------
Development Risk
Delays in permitting, or changes In order to reduce development
in permit legislation and/or regulation, risk in future, the directors will
financing and commissioning a ensure that its permit application
project may result in delays to processes and financing applications
the Group meeting production targets are robust and thorough.
or even the Company ultimately
not receiving the required permits
and in extreme cases loss of title.
-----------------------------------------------
Commodity Risk
Changes in commodity prices can The Company consistently reviews
affect the economic viability commodity prices and trends for
of mining projects and affect its key projects throughout the
decisions on continuing exploration development cycle.
activity.
-----------------------------------------------
Mining and Processing Technical
Risk From the earliest stages of exploration
the directors look to use consultants
Notwithstanding the completion and contractors who are leaders
of metallurgical testwork, test in their field and in future will
mining and pilot studies indicating seek to strengthen the executive
the technical viability of a mining management and the Board with additional
operation, variations in mineralogy, technical and financial skills
mineral continuity, ground stability, as the Company transitions from
groundwater conditions and other exploration to production.
geological conditions may still
render a mining and processing
operation economically or technically
non-viable.
-----------------------------------------------
Environmental Risk
Mineral exploration carries a lower
Exploration and development of level of environmental liability
a project can be adversely affected than mining. The Company has adopted
by environmental legislation and an Environmental Policy and the
the unforeseen results of environmental directors avoid the acquisition
studies carried out during evaluation of projects where liability for
of a project. Once a project is legacy environmental issues might
in production unforeseen events fall upon the Company.
can give rise to environmental
liabilities.
-----------------------------------------------
Political Risk
All countries carry political The Company's strategy currently
risk that can lead to interruption restricts its activities to stable,
of activity. Politically stable democratic and mining friendly
countries can have enhanced environmental jurisdictions.
and social permitting risks, risks
of strikes and changes to taxation, The Company has adopted a strong
whereas less developed countries Anti-corruption Policy and a Code
can have, in addition, risks associated of Conduct and these are strictly
with changes to the legal framework, enforced.
civil unrest and government expropriation
of assets.
-----------------------------------------------
Partner Risk
Whilst there has been no past The Company currently maintains
evidence of this, the Group can control of certain key projects
be adversely affected if joint so that it can control the pace
venture partners are unable or of exploration and reduce partner
unwilling to perform their obligations risk.
or fund their 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
Liquidity risk is the risk that The Company maintains a good network
the Company will not be able to of contacts in the capital markets
raise working capital for its that has historically met its financing
ongoing activities. requirements.
The Group's goal is to finance The Company's low overheads and
its exploration and evaluation cost-effective exploration strategies
activities from future cash flows, help reduce its funding requirements.
but until that point is reached Nevertheless, further equity issues
the Company is reliant on raising will be required over the next
working capital from equity markets 12 months.
or from industry sources. There
is no certainty such funds will
be available when needed.
-----------------------------------------------
Financial Instruments
The directors are responsible for
Details of risks associated with the Group's systems of internal
the Group's Financial Instruments financial control. Although no
are given in Note 19 to the financial systems of internal financial control
statements . 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.
-----------------------------------------------
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 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. 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:
All of the Company's employees have daily access to the
Executive Chairman and to the non-executive directors and there is
a continuous and transparent dialogue on all employment matters.
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. The Executive Chairman meets with regulators and
community representatives when promulgating the Company's plans for
exploration and development and takes their comments into
consideration wherever possible. Further discussion of these
activities 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 starting.
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 on 11 December
2020 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Our Governance
Corporate Governance Statement
There is no prescribed corporate governance code for AIM
companies and 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 for small and mid-sized quoted
companies 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 to its size and available
resources.
The Chairman, Patrick Cheetham, has overall responsibility for
the Corporate Governance of the Company. This Corporate Governance
Statement was reviewed and amended by the Board on 30 October
2020.
The QCA Code sets out ten principles which should be applied.
The principles are listed below with an explanation of how the
Company applies each principle and/or the reasons for any aspect of
non-compliance.
Principle One: Establish a strategy and business model which
promotes long-term value for shareholders.
The Company has a clearly defined strategy and business model
that has been adopted by the Board. Details of the key challenges
to the execution of the Company's strategy and business model and
how these challenges are 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.
Where feasible all shareholders are encouraged to attend the
Annual General Meeting where they can meet and directly communicate
with the Board. Shareholders are welcome to contact the Company via
email at info@tertiaryminerals.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.tertiaryminerals.com, which is updated on a regular basis.
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 (both internal and external to the
Group) through individual policies and through ethical and
transparent actions. The Company engages positively with suppliers,
stakeholders and with local communities through open meetings and
meetings with community representatives in its project locations
and encourages feedback through this engagement.
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
together with risk mitigation strategies employed by the Board are
detailed in Risks and Uncertainties in the Strategic Report.
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 is supported by the Audit, Remuneration and Nomination
Committees.
The Board currently consists of the Executive Chairman and one
independent Non-Executive Director. The current Board's preference
is that there is a minimum of two independent Non-Executive
Directors. However, this is not currently the case and the Company
intends that an additional independent Non-Executive Director will
be appointed shortly. When there are two independent Non-Executive
Directors in post, the Board considers that the Board structure
will be acceptable having regard to the fact that it is not yet
revenue-earning.
Despite serving as a Non-Executive Director for more than nine
years, Donald McAlister is considered independent of management and
free from any business or other relationship which could materially
interfere with the exercise of his independent judgement. In
compliance with good practice, he will continue to seek annual
re-election rather than every third year as per the Articles of
Association.
Attendance at Board and Committee Meetings
The Board retains full control of the Group with day-to-day
operational control delegated to the Executive Directors. The full
Board meets formally four times a year and on any other occasions
it considers necessary. During the period under review there were
sixteen Board meetings, two Remuneration Committee meetings, two
Audit Committee meetings and one Nomination Committee meeting. All
meetings were attended by their constituent directors.
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 the directors is relevant to
the Company's business and is appropriate given the current size
and stage of development of the Company. The Board is satisfied
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.
The Board and its committees will also seek external expertise
and advice where required.
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 performance of the Executive Directors is
reviewed once a year by the rest of the Board, and measured against
a definitive list of short, medium and long-term strategic targets
set by the Board.
The Nomination Committee, currently consisting of the Chairman
and the Non-Executive Director, 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.
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 corporate culture of
the Company is promoted throughout its workforce, 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 and Code of Conduct; Privacy and Cookies
Policy and Social Media Policy.
Employees
The Group encourages its employees to understand all aspects of
the Group's business and seeks to remunerate its employees fairly,
being flexible where practicable. The Group gives 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 employees' interests when making decisions, and
suggestions from employees aimed at improving the Group's
performance are welcomed.
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 13 days of average daily purchases (2019:
11 days).
Anti-Corruption Policy and Code of Conduct
The Company has adopted and implements an Anti-Corruption Policy
and a Code of Conduct.
Health and Safety
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
stakeholders. The Company has developed and implemented a Health
and Safety Policy to clearly define roles and responsibilities and
in order to identify and manage risk.
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 ensuring 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
Executive 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.
Non-Executive Director, Donald McAlister, is 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. Donald
McAlister currently chairs the Audit and Remuneration Committees
and Patrick Cheetham chairs the Nomination Committee.
Audit Committee
The Audit Committee, currently composed entirely of the
Non-Executive Director, 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 Auditor
taking account of any non-audit services provided by them.
Remuneration Committee
The Remuneration Committee also comprises the Non-Executive
Director. The Remuneration Committee determines the appropriate
remuneration for the Company's executive directors, ensuring that
this reflects their performance and that of the Group, and to
demonstrate to shareholders that executive remuneration is set by
Board members who have no personal interest in the outcome of their
decisions.
The Company has previously operated a long-term bonus and
incentive scheme for the position of Managing Director. The
objective of adopting the scheme was to provide reward for
successfully achieving performance targets set by the Board in line
with the Company's Aims and Strategy. The Company has in place an
Inland Revenue approved share option scheme and also issues
warrants to subscribe for shares to executive directors and
employees. Directors' emoluments are disclosed in Note 4 to the
financial statements and details of directors' warrants are
disclosed in Note 17.
As noted above, the Company intends that an additional
independent Non-Executive Director will be appointed shortly. The
audit and remuneration committees will then comprise two
independent Non-Executive Directors.
Conflicts of Interest
The Companies Act 2006 permits directors of public companies to
authorise directors' conflicts and potential conflicts, where
appropriate, and the Articles of Association contain a provision to
this effect.
At 30 September 2020, Tertiary Minerals plc held 0.6% of the
issued share capital of Sunrise Resources plc and the Chairman of
Tertiary Minerals plc is also Chairman of Sunrise Resources plc.
Tertiary Minerals plc also provides management services to Sunrise
Resources plc, in the search, evaluation and acquisition of new
projects.
Procedures are in place in order to avoid any conflict of
interest between the Company and Sunrise Resources plc.
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 various stakeholder groups. The Company's website is
regularly updated and users can register to be alerted via email
when certain announcements are made.
The Group's financial reports can be found here:
www.tertiaryminerals.com/investor-media/financial-reports
Notices of General Meetings held for at least the past five
years can be found here: www.tertiaryminerals.com/news-releases
The results of voting on all resolutions in general meetings
will be 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.
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.
Patrick Cheetham
Executive Chairman
11 December 2020
Board of Directors
The directors and officers of the Company during the financial
year were:
Patrick Cheetham (60)
Chairman
Key Strengths and Experience
-- Geologist.
-- 38 years' experience in mineral exploration.
-- 33 years' experience in public company management.
-- Founder of the Company, Dragon Mining Ltd, Archaean Gold NL and Sunrise Resources plc.
External Appointments
Chairman and founder of Sunrise Resources plc.
Richard Clemmey (47) (Resigned 30 June 2020)
Previously Managing Director
Key Strengths and Experience
-- Chartered Engineer.
-- 26 years' experience in developing and managing
mining/quarrying projects worldwide for Derwent Mining, Lafarge,
Hargreaves (GB) Ltd, Marshalls plc and CFE.
-- Board Director since May 2012.
External Appointments
Gritstone Ltd.
Donald McAlister (61)
Non-Executive Director *
Key Strengths and Experience
-- Accountant.
-- Previously Finance Director at Mwana Africa plc, Ridge Mining
plc, Reunion Mining and Moxico Resources plc.
-- 25 years' experience in all financial aspects of the resource
industry, including metal hedging, tax planning, economic
modelling/evaluation, project finance and IPOs.
-- Founding director of the Company.
External Appointments
Financial Director of ZincOx Resources plc.
* Currently Chair of the Audit Committee and the Remuneration
Committee.
Rod Venables - City Group PLC
Company Secretary
Key Strengths and Experience
-- Qualified company/commercial solicitor
-- Director and Head of Company Secretarial Services at City Group PLC
-- Experienced in both Corporate Finance and Corporate Broking
External Appointments
Company Secretary for Sunrise Resources plc and other corporate
clients of City Group PLC.
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 the 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 International Financial
Reporting Standards (IFRSs) as adopted by the European Union and
applicable law. 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 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
IFRSs as adopted by the European Union, 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 Tertiary Minerals 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
2020.
The Strategic Report contains details of the principal
activities of the Company and includes the Operating Review and
Performance which provides detailed information on the development
of the Group's business during the year and indications of likely
future developments.
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 (GBP622,859), 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 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 are unable to recommend the payment of a
dividend.
Financial Instruments & Other 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 is given in Note 19 to the Financial
Statements.
The business of mineral exploration and evaluation has inherent
risks. Details of risks and uncertainties that affect the Group's
business are given in Risks and Uncertainties.
Directors
The directors holding office during the year were:
Mr P L Cheetham
Mr R H Clemmey (Resigned 30 June 2020)
Mr D A R McAlister
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.
The directors' shareholdings are shown in Note 17 to the
financial statements.
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 11 December 2020 of shares capital
Interactive Investor Services Nominees Limited
SMKTNOMS 86,851,224 10.44
---------- ----------
Hargreaves Lansdown (Nominees) Limited 15942 63,269,726 7.61
---------- ----------
Interactive Investor Services Nominees Limited
SMKTISAS 59,999,436 7.21
---------- ----------
Aurora Nominees Limited 2288700 50,786,187 6.11
---------- ----------
Barclays Direct Investing Nominees Limited
CLIENT1 46,521,466 5.59
---------- ----------
Euroclear Nominees Limited EOC01 44,136,845 5.31
---------- ----------
Hargreaves Lansdown (Nominees) Limited HLNOM 39,688,700 4.77
---------- ----------
Hargreaves Lansdown (Nominees) Limited VRA 32,662,960 3.93
---------- ----------
HSDL Nominees Limited 30,882,097 3.71
---------- ----------
Cancellation of Deferred Shares
At a General Meeting held on 10 September 2020 the shareholders
approved a buy-back of deferred shares in accordance with the
Company's Articles of Association for an aggregate consideration of
GBP1.00. After the buy-back the deferred shares were cancelled.
The deferred shares effectively carried no value and were
created as a result of a capital restructuring in April 2017
whereby each existing ordinary share with a nominal value of 1p was
subdivided into 1 new ordinary share of 0.01p and 1 deferred share
of 0.99p each. Further details are provided in Note 14.
Disclosure of Audit Information
Each of the directors has confirmed that so far as he is aware,
there is no relevant audit information of which the Company's
Auditor is unaware, and that he has taken all the steps that he
ought to have taken as a director in order to make himself aware of
any relevant audit information and to establish that the Company's
Auditor is aware of that information.
Auditor
A resolution to re-appoint Crowe U.K. LLP as Auditor of the
Company and the Group 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 28
January 2021 at 2.00 p.m., in Macclesfield.
Approved by the Board on 11 December 2020 and signed on its
behalf.
Patrick Cheetham
Executive Chairman
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 2020 or 2019. The financial information for 2019 is
derived from the Statutory Accounts for 2019. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2020 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The Auditors have reported on the 2020 and
2019 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 2020 will be posted to shareholders on or
around 23 December 2020, a soft copy of which will then be
available to download from the company's website:
https://www.tertiaryminerals.com
Consolidated Income Statement
for the year ended 30 September 2020
2020 2019
Notes GBP GBP
-------------------------------------------------- ----- ----------- ---------
Revenue 2,17 175,750 189,742
Administration costs (597,994) (502,788)
Pre-licence exploration costs (49,360) (75,778)
Impairment of deferred exploration asset 8 (2,027,000) (442,917)
Operating loss (2,498,604) (831,741)
Interest receivable 437 234
-------------------------------------------------- ----- ----------- ---------
Loss before income tax 3 (2,498,167) (831,507)
Income tax 7 - -
-------------------------------------------------- ----- ----------- ---------
Loss for the year attributable to equity holders
of the parent (2,498,167) (831,507)
-------------------------------------------------- ----- ----------- ---------
Loss per share - basic and diluted (pence) 6 (0.38) (0.19)
-------------------------------------------------- ----- ----------- ---------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2020
2020 2019
GBP GBP
------------------------------------------------------------- ------------- -----------
Loss for the year (2,498,167) (831,507)
------------------------------------------------------------- ------------- -----------
Items that could be reclassified subsequently to
the income statement:
Foreign exchange translation differences on foreign
currency net investments in subsidiaries (94,278) 115,415
(94,278) 115,415
------------------------------------------------------------- ------------- -----------
Items that will not be reclassified to the income
statement:
Changes in the fair value of other investments 23,263 (71,670)
------------------------------------------------------------- ------------- -----------
23,263 (71,670)
------------------------------------------------------------- ------------- -----------
Total comprehensive income/(loss) for the year attributable
to
equity holders of the parent (2,569,182) (787,762)
------------------------------------------------------------- ------------- -----------
Consolidated and Company Statements of Financial Position
at 30 September 2020
Company Number 03821411 Group Company Group Company
2020 2020 2019 2019
Notes GBP GBP GBP GBP
----------------------------- ----- ------------ ------------ ------------ ------------
Non-current assets
Intangible assets 8 541,958 - 2,461,972 -
Property, plant & equipment 9 3,369 3,369 4,182 4,182
Investment in subsidiaries 10 - 541,958 - 2,196,297
Other investments 10 55,985 55,985 89,775 89,775
----------------------------- ----- ------------ ------------ ------------ ------------
601,312 601,312 2,555,929 2,290,254
----------------------------- ----- ------------ ------------ ------------ ------------
Current assets
Receivables 11 71,695 52,634 41,568 19,347
Cash and cash equivalents 12 622,859 587,139 50,617 29,445
694,554 639,773 92,185 48,792
----------------------------- ----- ------------ ------------ ------------ ------------
Current liabilities
Trade and other payables 13 (66,189) (37,038) (70,686) (29,717)
----------------------------- ----- ------------ ------------ ------------ ------------
Share subscription loan 21 (420,000) (420,000) - -
----------------------------- ----- ------------ ------------ ------------ ------------
(486,189) (457,038) (70,686) (29,717)
----------------------------- ----- ------------ ------------ ------------ ------------
Net current assets 208,365 182,735 21,499 19,075
----------------------------- ----- ------------ ------------ ------------ ------------
Net assets 809,677 784,047 2,577,428 2,309,329
----------------------------- ----- ------------ ------------ ------------ ------------
Equity
Called up Ordinary Shares 14 83,164 83,164 44,307 44,307
Deferred Shares 14 - - 2,644,062 2,644,062
Share premium account 10,740,972 10,740,972 10,008,687 10,008,687
Capital redemption reserve 14 2,644,061 2,644,061 - -
Merger reserve 131,096 131,096 131,096 131,096
Share option reserve 14 71,897 71,897 67,468 67,468
Fair value reserve 14,819 14,819 (8,444) (8,444)
Foreign currency reserve 14 325,474 - 419,752 -
Accumulated losses (13,201,806) (12,901,962) (10,729,500) (10,577,847)
----------------------------- ----- ------------ ------------ ------------ ------------
Equity attributable to the
owners of the parent 809,677 784,047 2,577,428 2,309,329
----------------------------- ----- ------------ ------------ ------------ ------------
The Company reported a loss for the year ended 30 September 2020
of GBP2,349,976 (2019: -GBP779,821).
These financial statements were approved and authorised for
issue by the Board on 11 December 2020 and were signed on its
behalf.
P L Cheetham D A R McAlister
Executive Chairman Director
Consolidated Statement of Changes in Equity
Ordinary Share Capital Share Fair Foreign
share Deferred premium redemption Merger option value currency Accumulated
capital shares account reserve reserve reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
At 30
September
2018 35,932 2,644,062 9,785,702 - 131,096 168,923 63,226 304,337 (10,007,469) 3,125,809
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Loss for the
period - - - - - - - - (831,507) (831,507)
Change in
fair value - - - - - - (71,670) - - (71,670)
Exchange
differences - - - - - - - 115,415 - 115,415
Total
comprehensive
loss for the
year - - - - - - (71,670) 115,415 (831,507) (787,762)
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Share issue 8,375 - 222,985 - - - - - - 231,360
Share based
payments
expense - - - - - 8,021 - - - 8,021
Transfer of
expired
warrants - - - - - (109,476) - - 109,476 -
At 30
September
2019 44,307 2,644,062 10,008,687 - 131,096 67,468 (8,444) 419,752 (10,729,500) 2,577,428
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Loss for the
period - - - - - - - - (2,498,167) (2,498,167)
Change in
fair value - - - - - - 23,263 - - 23,263
Exchange
differences - - - - - - - (94,278) - (94,278)
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Total
comprehensive
loss for the
year - - - - - - 23,263 (94,278) (2,498,167) (2,569,182)
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Share issue 38,857 - 732,284 - - - - - - 771,141
Cancellation
of deferred
shares - (2,644,062) 1 2,644,061 - - - - - -
Share based
payments
expense - - - - - 30,290 - - - 30,290
Transfer of
expired
warrants - - - - - (25,861) - - 25,861 -
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
At 30
September
2020 83,164 - 10,740,972 2,644,061 131,096 71,897 14,819 325,474 (13,201,806) 809,677
--------------- -------- ----------- ---------- ---------- ------- --------- -------- -------- ------------ -----------
Company Statement of Changes in Equity
Ordinary Share Capital Share Fair
share Deferred premium redemption Merger option value Accumulated
capital shares account reserve reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
At 30
September
2018 35,932 2,644,062 9,785,702 - 131,096 168,923 63,226 (9,907,502) 2,921,439
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
Loss for the
period - - - - - - (779,821) (779,821)
Change in fair
value - - - - - - (71,670) - (71,670)
Total
comprehensive
loss for the
year - - - - - - (71,670) (779,821) (851,491)
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
Share issue 8,375 - 222,985 - - - - - 231,360
Share based
payments
expense - - - - - 8,021 - - 8,021
Transfer of
expired
warrants - - - - - (109,476) - 109,476 -
At 30
September
2019 44,307 2,644,062 10,008,687 - 131,096 67,468 (8,444) (10,577,847) 2,309,329
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
Loss for the
period - - - - - - (2,349,976) (2,349,976)
Change in fair
value - - - - - - 23,263 - 23,263
Total
comprehensive
loss for the
year - - - - - - 23,263 (2,349,976) (2,326,713)
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
Share issue 38,857 - 732,284 - - - - - 771,141
Cancellation
of deferred
shares - (2,644,062) 1 2,644,061 - - - - -
Share based
payments
expense - - - - - 30,290 - - 30,290
Transfer of
expired
warrants - - - - - (25,861) - 25,861 -
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
At 30
September
2020 83,164 - 10,740,972 2,644,061 131,096 71,897 14,819 (12,901,962) 784,047
--------------- -------- ----------- ---------- ---------- ------- --------- -------- ------------ -----------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2020
Group Company Group Company
2020 2020 2019 2019
Notes GBP GBP GBP GBP
------------------------------------------ ----- ----------- ----------- --------- ---------
Operating activity
Total (loss)/profit after tax
excluding interest received (2,498,604) (2,381,116) (831,741) (810,097)
Depreciation charge 9 1,850 1,850 1,635 1,635
Shares issued in lieu of net
wages 4,090 4,090 1,360 1,360
Share based payment charge 30,290 30,290 8,021 8,021
Impairment charge - deferred
exploration asset 8 2,027,000 - 442,917 -
Increase/(decrease) in provision
for impairment of loans to subsidiaries 10 - 1,958,667 - 487,610
(Increase)/decrease in receivables 11 (30,127) (33,287) 55,084 53,401
Increase/(decrease) in payables 13 (4,497) 7,321 5,523 (8,885)
------------------------------------------ ----- ----------- ----------- --------- ---------
Net cash outflow from operating
activity (469,998) (412,185) (317,201) (266,955)
------------------------------------------ ----- ----------- ----------- --------- ---------
Investing activity
Interest received 437 41,140 234 30,279
Exploration and development
expenditures 8 (200,071) - (121,967) -
Disposal of other investments 10 57,053 57,053 40,883 40,883
Purchase of property, plant
& equipment 9 (1,037) (1,037) (2,509) (2,509)
Additional loans to subsidiaries 10 - (304,328) - (204,985)
Net cash outflow from investing
activity (143,618) (207,172) (83,359) (136,332)
------------------------------------------ ----- ----------- ----------- --------- ---------
Financing activity
Issue of share capital (net
of expenses) 767,051 767,051 230,000 230,000
Share subscription loan 21 420,000 420,000
Net cash inflow from financing
activity 1,187,051 1,187,051 230,000 230,000
------------------------------------------ ----- ----------- ----------- --------- ---------
Net increase/(decrease) in cash
and cash equivalents 573,435 567,694 (170,560) (173,287)
------------------------------------------ ----- ----------- ----------- --------- ---------
Cash and cash equivalents at
start of year 50,617 29,445 218,297 202,732
Exchange differences (1,193) - 2,880 -
------------------------------------------ ----- ----------- ----------- --------- ---------
Cash and cash equivalents at
30 September 12 622,859 597,139 50,617 29,445
------------------------------------------ ----- ----------- ----------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2020
Background
Tertiary Minerals plc is a public company incorporated and
domiciled in England. It is traded on the AIM market of the London
Stock Exchange - EPIC: TYM.
The Company is a holding company for a number of companies
(together, "the Group"). 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 International Financial
Reporting Standards (IFRS), as adopted by the European Union. They
have also been prepared in accordance with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
(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 (GBP622,859), 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 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 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 Tertiary Minerals plc and its subsidiary undertakings
using the acquisition method and eliminate intercompany balances
and transactions.
In accordance with section 408 of the Companies Act 2006,
Tertiary Minerals plc 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
Tertiary Minerals plc is GBP2,349,976 (2019: GBP779,821). The loss
for 2020 includes provision for impairment of its investment in
subsidiary undertakings in the amount of GBP1,958,667 (Note
10).
(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 2020 and October 2020.
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, 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) Property, plant & equipment
All property, plant and equipment assets are stated at cost less
accumulated depreciation. Depreciation is provided by the Group on
all property, plant and equipment, at rates calculated to write off
the cost, less estimated residual value, of each asset evenly over
its expected useful life, as follows:
Fixtures and fittings 20% to 33% per annum Straight-line
basis
Computer equipment 33% per annum Straight-line basis
Useful life and residual value are reassessed annually.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) Revenue
Revenue is recognised as the fair value of management services
provided to Sunrise Resources plc and relates to expenditure
incurred and recharged. The company recognises revenue as
contractual performance obligations are satisfied. Revenue is net
of discounts, VAT and other sales-related taxes.
Other income
Other income includes amounts received from Sunrise Resources
plc under the management services agreement. Other income is
recognised in the period the management services are provided based
on the expenditure incurred.
(k) 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.
(l) Leases
The Group adopted IFRS 16 from 1 January 2019 and this requires
the recognition of operating lease commitments on the Group's
statement of financial position as 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. The adoption of IFRS 16 did
not have material impact on the financial statements of the Group
as it has negligible leasing exposure and exploration project
leases are exempt as exploration assets under IFRS 16.3(b).
Short term leases, which meet the requirements to not be
accounted for by recognising a right of use asset and a lease
liability, having a duration of 12 months or less and without
reasonable certainty about their renewal, are charged to the income
statement on straight line basis.
(m) Share warrants and share based payments
The Company issues warrants and options to employees (including
directors) and third parties. The fair value of the warrants and
options is recognised as a charge measured at fair value on the
date of grant and determined in accordance with IFRS 2, IAS 32 and
IAS 39, adopting the Black-Scholes-Merton model. The fair value is
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 expected life of the options and warrants is
adjusted based on management's best estimates, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The details of the calculation are shown in Note
15.
The Company also issues shares and/or warrants in order to
settle certain liabilities, including partial payment of fees to
directors. The fair value of shares issued is based on the closing
mid-market price of the shares 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.
(n) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies
above, the Group 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 as 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 as detailed below.
Royalty assets
Royalty assets representing the Company's rights to future
royalties based upon the extraction of mineral resources by a third
party are amortised based upon units of production. The directors
consider bi-annually whether there are any indications of
impairment of royalty assets. If such indications exist a full
impairment review is undertaken and any impairment arising is
charged to the income statement.
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 judgments in respect of key projects are;
The MB Fluorspar project costs were fully impaired in the amount
of GBP2,027,000 after metallurgical test work was unsuccessful and
the Group's lease agreement on the project was terminated.
Two gold projects Kaaresselkä and Kiekerömaa with a total
carrying value of GBP359,584 were sold to a third party Aurion
Resources Limited (Aurion) in 2016. Tertiary has the right to
future royalties, but only if these projects proceed to the
definition of mineral resources and reserves and successful
exploration and production. Aurion has recently completed a
drilling programme at Kaaresselkä. Based upon this and their
confidence regarding the likely outcome of exploration, the
directors have concluded that the carrying value is not
impaired.
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, share options and share based payments
The estimates of costs recognised in connection with the fair
value of share options and share warrants require 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 and options before
exercise, and behavioural considerations of warrant holders.
(o) Standards, amendments and interpretations not yet
effective
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and in
some cases have not yet been adopted by the EU.
(a) New standards, interpretations and amendments effective from 1 January 2019
The following new standards were effective and did not impact
the Group:
-- IFRS 16 Leases (IFRS 16)
-- IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)
(b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods. The following amendments
are effective for the periods beginning on or after 1 January
2020:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
Revised Conceptual Framework for Financial Reporting
In January 2020, the IASB issued amendments to IAS 1, which
clarify the criteria used to determine whether liabilities are
classified as current or non-current based upon whether an entity
has a right at the end of the reporting period to defer settlement
of the liability. The amendments are effective for annual reporting
periods beginning on or after 1 January 2022.
Amendments as part of the 2015-2018 Annual Improvements Cycle
were as follows;
-- IFRS 3/ IFRS 11: Measuring interests in Joint operations.
-- IAS 12: Accounting for income tax consequences of dividend payments.
-- IAS 23: Treatment of borrowings originally made to develop a specific asset.
-- IAS 1:125 Disclose significant key assumptions concerning the
future, and other key sources of estimation uncertainty.
-- IAS 1:122 Disclose significant judgements management has made
in applying the entity's accounting policies.
Tertiary Minerals Plc is currently assessing the impact of these
new accounting standards and amendments. The Group does not believe
that the amendments to IAS 1 will have a significant impact on the
classification of its liabilities.
2. Segmental analysis
The Chief Operating Decision Maker is the Board. 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
2020 GBP GBP GBP
----------------------------------------------- ----------- --------- -----------
Consolidated Income Statement
Revenue - 175,750 175,750
----------------------------------------------- ----------- --------- -----------
Pre-licence exploration costs (49,360) - (49,360)
Impairment of deferred exploration asset (2,027,000) - (2,027,000)
Share-based payments - (30,290) (30,290)
Administration costs and other expenses - (567,704) (567,704)
----------------------------------------------- ----------- --------- -----------
Operating Loss (2,076,360) (422,244) (2,498,604)
Bank interest received - 437 437
----------------------------------------------- ----------- --------- -----------
Loss before income tax (2,076,360) (421,807) (2,498,167)
Income tax - - -
----------------------------------------------- ----------- --------- -----------
Loss for the year attributable to equity
holders (2,076,360) (421,807) (2,498,167)
----------------------------------------------- ----------- --------- -----------
Non-current assets
Intangible assets:
Royalty assets:
Kaaresselkä Gold Project, Finland 261,329 - 261,329
Kiekerömaa Gold Project, Finland 98,255 - 98,255
----------------------------------------------- ----------- --------- -----------
359,584 - 359,584
Deferred exploration costs:
Paymaster, USA 39,055 - 39,055
Pyramid, USA 108,227 - 108,227
Pegleg, USA 11,964 - 11,964
Mt Tobin, USA 12,565 - 12,565
Lucky, USA 10,563 - 10,563
----------------------------------------------- ----------- --------- -----------
182,374 - 182,374
Property, plant & equipment - 3,369 3,369
Other investments - 55,985 55,985
----------------------------------------------- ----------- --------- -----------
541,958 59,354 601,312
----------------------------------------------- ----------- --------- -----------
Current assets
Receivables 16,640 55,055 71,695
Cash and cash equivalents - 622,859 622,859
16,640 677,914 694,554
----------------------------------------------- ----------- --------- -----------
Current liabilities
Trade and other payables (22,275) (43,914) (66,189)
Share subscription loan - (420,000) (420,000)
----------------------------------------------- ----------- --------- -----------
(22,275) (463,914) (486,189)
Net current assets (5,635) 214,000 208,365
----------------------------------------------- ----------- --------- -----------
Net assets 536,323 273,354 809,677
----------------------------------------------- ----------- --------- -----------
Other data
Deferred exploration additions 200,071 - 200,071
Exchange rate adjustments to deferred
exploration costs (93,903) - (93,903)
Exchange rate adjustments to royalty assets 818 - 818
----------------------------------------------- ----------- --------- -----------
2. Segmental analysis (continued)
Exploration Head
projects office Total
2019 GBP GBP GBP
----------------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Revenue - 189,742 189,742
----------------------------------------------- ----------- --------- ---------
Pre-licence exploration costs (75,778) - (75,778)
Impairment of deferred exploration asset (442,917) - (442,917)
Share-based payments - (8,021) (8,021)
Administration costs and other expenses - (494,767) (494,767)
----------------------------------------------- ----------- --------- ---------
Operating Loss (518,695) (313,046) (831,741)
Disposal of other investments - - -
Bank interest received - 234 234
----------------------------------------------- ----------- --------- ---------
Loss before income tax (518,695) (312,812) (831,507)
Income tax - - -
----------------------------------------------- ----------- --------- ---------
Loss for the year attributable to equity
holders (518,695) (312,812) (831,507)
----------------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaresselkä Gold Project, Finland 260,938 - 260,938
Kiekerömaa Gold Project, Finland 97,828 - 97,828
MB Fluorspar Project, USA 2,056,419 - 2,056,419
Paymaster, USA 17,395 - 17,395
Pyramid, USA 29,392 - 29,392
----------------------------------------------- ----------- --------- ---------
2,461,972 - 2,461,972
Property, plant & equipment - 4,182 4,182
Other investments - 89,775 89,775
----------------------------------------------- ----------- --------- ---------
2,461,972 93,957 2,555,929
----------------------------------------------- ----------- --------- ---------
Current assets
Receivables 22,154 19,414 41,568
Cash and cash equivalents - 50,617 50,617
22,154 70,031 92,185
----------------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (9,183) (61,503) (70,686)
Net current assets 12,971 8,528 21,499
----------------------------------------------- ----------- --------- ---------
Net assets 2,474,943 102,485 2,577,428
----------------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 121,967 - 121,967
Exchange rate adjustments to deferred
exploration costs 112,536 - 112,536
----------------------------------------------- ----------- --------- ---------
3. Loss before income tax
2020 2019
GBP GBP
-------------------------------------------------------- ------ ------
The operating loss is stated after charging
Operating lease rentals - land and buildings 18,560 21,081
Depreciation - owned assets 1,850 1,635
Fees payable to the Group's Auditor for:
The audit of the Group's annual accounts 6,363 6,125
The audit of the Group's subsidiaries, pursuant
to legislation 4,671 3,105
Fees payable to the Group's Auditor and its associates
for other services:
Interim review of accounts 1,020 1,000
Corporation tax fees 1,460 1,300
Corporation tax review fees - 3,300
-------------------------------------------------------- ------ ------
4. Directors' emoluments
Remuneration in respect of directors was as follows:
Net cost Income from recharge
to Group to Total Total
2020 Sunrise Resources 2020 2019
GBP plc GBP GBP
2020
GBP
-------------------------- --------- -------------------- ------- -------
P L Cheetham (salary) 37,237 71,305 108,542 86,888
R H Clemmey (salary) 66,340 - 66,340 86,889
D A R McAlister (salary) 18,365 - 18,365 16,833
121,942 71,305 193,247 190,610
-------------------------- --------- -------------------- ------- -------
The above remuneration amounts do not include non-cash
share-based payments charged in these financial statements in
respect of share warrants issued to the directors amounting to
GBP7,831 (2019: GBP4,677) or Employer's National Insurance
contributions of GBP23,067 (2019: GBP23,072).
There was no bonus in the year 2020. Bonus remuneration is
applicable to performance in the previous financial year.
Pension contributions made during the year on behalf of
Directors amounted to GBP987 (2019: GBP1,061).
The directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP201,078 (2019: GBP195,287).
After recharge to Sunrise Resources plc, if all benefits are
taken into account, the key management personnel net compensation
cost to the Group would be GBP129,773 (2019: GBP126,514).
5. Staff costs
Total s taff costs for the Group and Company, including directors,
were as follows:
Net cost Income from recharge
to Group to Total Total
2020 Sunrise Resources 2020 2019
GBP plc GBP GBP
2020
GBP
------------------------ --------- -------------------- ------- -------
Wages and salaries 175,775 137,366 313,141 318,804
Social security costs 17,845 16,840 34,685 36,093
Share-based payments 9,921 - 9,921 8,021
------------------------ --------- -------------------- ------- -------
203,541 154,206 357,747 362,918
------------------------ --------- -------------------- ------- -------
The average monthly number of part-time and full-time 2020 2019
employees, including directors, employed by the Number Number
Group and Company during the year was as follows:
------------------------------------------------------ ------- -------
Technical employees 3 3
Administration employees (including non-executive
directors) 4 5
------------------------------------------------------ ------- -------
7 8
------------------------------------------------------ ------- -------
Managing Director, Richard Clemmey, ceased to be an employee and
director in June 2020. The Company Secretary, Colin Fitch, retired
in June 2019 and since July 2019 the company secretarial services
have been 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 parent and the weighted
average number of ordinary shares in issue during the year.
2020 2019
------------------------------------------- ----------- -----------
Loss (GBP) (2,498,167) (831,507)
Weighted average ordinary shares in issue
(No.) 661,815,154 416,198,199
Basic and diluted loss per ordinary share
(pence) (0.38) (0.19)
------------------------------------------- ----------- -----------
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 and options would have the effect of
reducing the loss per ordinary share and is therefore
anti-dilutive. Deferred shares are excluded from the loss per share
calculation as they have no attributable earnings.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2019: GBPNil).
2020 2019
GBP GBP
----------------------------------------------- ----------- ---------
Tax reconciliation
Loss before income tax (2,498,167) (831,507)
Tax at 19% (2019: 19%) (474,652) (157,986)
----------------------------------------------- ----------- ---------
Differences between capital allowances and
depreciation 31 (1,828)
Expenditure disallowed for tax purposes 127,909 29,902
Pre-trading expenditure no longer deductible
for tax purposes 27,346 43,625
----------------------------------------------- ----------- ---------
Tax effect at 19% (2019: 19%) 29,504 13,623
----------------------------------------------- ----------- ---------
Unrelieved tax losses carried forward (445,148) (144,363)
----------------------------------------------- ----------- ---------
Tax recognised on loss - -
----------------------------------------------- ----------- ---------
Total losses carried forward for tax purposes 11,028,887 8,689,670
----------------------------------------------- ----------- ---------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP11,028,887
(2019: GBP8,689,670). 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 tax loss is
adjusted each year for amounts that can no longer be carried
forward.
The difference of GBP3,664 between 2019 and 2020 total losses
carried forward balance is additional expenditure non-deductible
for tax purposes relating to 2019.
8. Intangible assets
Deferred Deferred
exploration Royalty exploration
expenditure assets expenditure
2020 2020 2019
Group GBP GBP GBP
----------------------- ------------ ------- ------------
Cost
At start of year 5,885,219 358,766 6,009,482
Additions 200,071 - 121,967
Exchange adjustments (93,903) 818 112,536
----------------------- ------------ ------- ------------
At 30 September 5,991,387 359,584 6,243,985
----------------------- ------------ ------- ------------
Disposals
At start of year (3,782,013) - (3,339,096)
Impairment losses
during year (2,027,000) - (442,917)
Disposals during year - - -
----------------------- ------------ ------- ------------
At 30 September (5,809,013) - (3,782,013)
----------------------- ------------ ------- ------------
Carrying amounts
At 30 September 182,374 359,584 2,461,972
----------------------- ------------ ------- ------------
At start of year 2,103,206 358,766 2,670,386
----------------------- ------------ ------- ------------
Two gold projects, Kaaresselkä and Kiekerömaa, with a total
carrying value of GBP359,584 have been re-classified in the
financial statements as Royalty Assets. The exploration rights were
sold to a third party, Aurion Resources Limited ("Aurion") in 2016
and Tertiary has the right to future royalties, but only if these
projects proceed to the definition of mineral resources and
reserves and successful exploration and production. The
re-classification in the financial statements therefore reflects
the distinct nature of these projects within intangible fixed
assets.
The directors carried out an impairment review which, with
reference to IFRS6.20(b), resulted in an impairment charge,
relating to the Tertiary Minerals US Inc MB Fluorspar project,
being recognised in the Consolidated Income Statement as part of
operating expenses. Refer to accounting policy 1(d) and 1(n) for a
description of the considerations used in the impairment
review.
9. Property, plant & equipment
Group Company Group Company
fixtures fixtures fixtures fixtures
and fittings and fittings and fittings and fittings
2020 2020 2019 2019
GBP GBP GBP GBP
--------------------- ------------- ------------- ------------- -------------
Cost
At start of year 48,152 33,394 49,543 34,785
Additions 1,037 1,037 2,509 2,509
Disposals 0 0 (3,900) (3,900)
--------------------- ------------- ------------- ------------- -------------
At 30 September 49,189 34,431 48,152 33,394
--------------------- ------------- ------------- ------------- -------------
Depreciation
At start of year (43,970) (29,212) (46,235) (31,477)
Charge for the year (1,850) (1,850) (1,635) (1,635)
Disposals 0 0 3,900 3,900
At 30 September (45,820) (31,062) (43,970) (29,212)
--------------------- ------------- ------------- ------------- -------------
Net Book Value
At 30 September 3,369 3,369 4,182 4,182
--------------------- ------------- ------------- ------------- -------------
At start of year 4,182 4,182 3,308 3,308
--------------------- ------------- ------------- ------------- -------------
10. Investments
Subsidiary undertakings
Type and percentage
Country of of shares held
incorporation/ at
Company registration 30 September 2020 Principal activity
---------------------- --------------- ------------------- -------------------
100% of ordinary
Tertiary Gold Limited England & Wales shares Mineral exploration
Tertiary (Middle 100% of ordinary
East) Limited England & Wales shares Mineral exploration
Tertiary Minerals 100% of ordinary
US Inc. Nevada, USA shares Mineral exploration
The registered office of Tertiary Gold Limited and Tertiary
(Middle East) Limited is the same as the Parent Company, being
Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP.
The registered office of Tertiary Minerals US Inc. is 241 Ridge
Street, Suite 210, Reno, NV 89501, USA.
Company Company
2020 2019
Investment in subsidiary undertakings GBP GBP
--------------------------------------------- ----------- -----------
Ordinary shares - Tertiary (Middle East)
Limited 1 1
Ordinary shares - Tertiary Gold Limited 224,888 224,888
Ordinary shares - Tertiary Minerals US Inc. 1 1
Loan - Tertiary (Middle East) Limited 685,890 683,947
Less - Provision for impairment (685,890) (683,947)
Loan - Tertiary Gold Limited 5,360,637 5,302,305
Less - Provision for impairment (5,225,942) (5,168,430)
Loan - Tertiary Minerals US Inc. 2,081,585 1,837,532
Less - Provision for impairment (1,899,212) -
--------------------------------------------- ----------- -----------
At 30 September 541,958 2,196,297
--------------------------------------------- ----------- -----------
Investments in share capital of subsidiary undertakings
The directors have reviewed the carrying value of the Company's
investments in shares of subsidiary undertakings totalling
GBP224,890, by reference to estimated recoverable amounts. In turn,
this requires an assessment of the recoverability of underlying
exploration assets in those subsidiaries in accordance with IFRS
6.
Loans to Group undertakings
Amounts owed by subsidiary undertakings are unsecured and
repayable 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 has been carried out. This indicated potential credit
losses arising in the year which have been provided for as follows:
Tertiary Gold Limited GBP57,512 (2019: GBP486,907), Tertiary Middle
East Limited GBP1,943 (2019: GBP704) and Tertiary Minerals US Inc.
GBP1,899,212, following an impairment of the MB project. The
provisions made reflect the differences between the loan carrying
amounts and the value of the underlying project assets.
Other investments - listed investments
Type and percentage
Country of of shares held
incorporation/ at
Company registration 30 September 2020 Principal activity
------------------ --------------- ------------------- -------------------
Sunrise Resources 0.6% of ordinary
plc England & Wales shares Mineral exploration
------------------ --------------- ------------------- -------------------
Group Company Group Company
Investment designated at fair value 2020 2020 2019 2019
through OCI GBP GBP GBP GBP
------------------------------------- -------- -------- -------- --------
Value at start of year 89,775 89,775 202,328 202,328
Additions - - - -
Disposal (57,053) (57,053) (40,883) (40,883)
Movement in valuation 23,263 23,263 (71,670) (71,670)
------------------------------------- -------- -------- -------- --------
At 30 September 55,985 55,985 89,775 89,775
------------------------------------- -------- -------- -------- --------
Disposals in the last financial year comprise a disposal of
52,500,000 Sunrise Resources plc shares (2019: 52,000,000) Sunrise
Resources plc shares.
The fair value of each investment is equal to the market value
of its shares at 30 September 2020, 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.
11. Receivables
Group Company Group Company
2020 2020 2019 2019
GBP GBP GBP GBP
------------------- ------ ------- ------ -------
Trade receivables 43,717 43,717 10,496 10,496
Other receivables 18,412 1,772 20,020 1,725
Prepayments 9,566 7,145 11,052 7,126
------------------- ------ ------- ------ -------
At 30 September 71,695 52,634 41,568 19,347
------------------- ------ ------- ------ -------
The Group aged analysis of trade receivables is as follows:
Not 30 days Over Total
impaired or less 30 days carrying
amount
GBP GBP GBP GBP
------------------------ --------- -------- -------- ---------
2020 Trade receivables 43,717 43,717 - 43,717
2019 Trade receivables 10,496 10,496 - 10,496
------------------------ --------- -------- -------- ---------
12. Cash and cash equivalents
Group Company Group Company
2020 2020 2019 2019
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Cash at bank and in hand 52,827 27,107 47,787 26,615
Short-term bank deposits 570,032 570,032 2,830 2,830
-------------------------- ------- ------- ------- -------
At 30 September 622,859 597,139 50,617 29,445
-------------------------- ------- ------- ------- -------
13. Trade and other payables
Group Company Group Company
2020 2020 2019 2019
GBP GBP GBP GBP
--------------------------------- ------ ------- ------ -------
Trade payables 14,735 13,036 11,592 5,737
Other taxes and social security
costs 7,106 7,106 6,481 6,481
Accruals 41,716 14,264 48,055 12,941
Other payables 2,632 2,632 4,558 4,558
--------------------------------- ------ ------- ------ -------
At 30 September 66,189 37,038 70,686 29,717
--------------------------------- ------ ------- ------ -------
14. Issued capital and reserves
2020 2020 2019 2019
No. GBP No. GBP
------------------------------- ----------- ------ ----------- ------
Allotted, called up and fully
paid Ordinary Shares
Balance at start of year 443,075,665 44,307 359,323,754 35,932
Shares issued in the year 388,571,372 38,857 83,751,911 8,375
------------------------------- ----------- ------ ----------- ------
Balance at 30 September 831,647,037 83,164 443,075,665 44,307
------------------------------- ----------- ------ ----------- ------
2020 2020 2019 2019
No. GBP No. GBP
-------------------------- ------------- ----------- ----------- ---------
Deferred Shares
Balance at start of year 267,076,933 2,644,062 267,076,933 2,644,062
Cancellation of shares (267,076,933) (2,644,062) - -
Balance at 30 September - - 267,076,933 2,644,062
-------------------------- ------------- ----------- ----------- ---------
Capital restructure
At a General Meeting on 10 September 2020 the shareholders
approved a buy-back of the Company's deferred shares in accordance
with the Company's Articles of Association for an aggregate
consideration of GBP1.00. The buy-back of the deferred shares was
funded from the part-proceeds of a placing of 1,000 new ordinary
shares 0.01p each at a price of 0.25p per share to the Company's
Chairman, Patrick Cheetham. The deferred shares were then cancelled
and a Capital Redemption Reserve formed to the value of
GBP2,644,061.
The deferred shares resulted from a subdivision of the Company's
ordinary share capital in 2017 whereby each existing Ordinary Share
with a nominal value of 1p was subdivided into 1 new Ordinary Share
of 0.01p and 1 deferred share of 0.99p each. The deferred shares
had no significant rights attached to them and carried no right to
vote or to participate in distribution of surplus assets and were
not admitted to trading on the AIM market of the London Stock
Exchange plc or any other stock exchange. The deferred shares
effectively carried no value.
Share issues
During the year to 30 September 2020 the following share issues
took place:
An issue of 18,000,000 0.01p Ordinary Shares, to Bergen Global
Opportunity Fund, LP ("Bergen") as collateral shares relating to
the convertible securities issuance deed (19 November 2019).
An issue of 17,000,000 0.01p Ordinary Shares, to Bergen for
settlement of commencement fee (26 November 2019).
An issue of 651,900 0.01p Ordinary Shares at 0.21p per share, to
a director, in satisfaction of directors' fees, for a total
consideration of GBP1,369 (2 December 2019).
An issue of 154,705,883 0.01p Ordinary Shares at 0.17p per
share, by exercise of conversion rights (Bergen convertible loan
note), for a total consideration of GBP263,000 before expenses (18
February 2020).
An issue of 100,000,000 0.01p Ordinary Shares at 0.275p per
share, by way of placing, for a total consideration of GBP275,000
before expenses (25 February 2020).
An issue of 402,644 0.01p Ordinary Shares at 0.34p per share, to
a director, in satisfaction of directors' fees, for a total
consideration of GBP1,369 (27 February 2020).
An issue of 33,333,334 0.01p Ordinary Shares at 0.18p per share
to Precious Metal Capital Group LLC ("PMCG"), by way of
subscription deed, for a total consideration of GBP60,000 before
expenses (29 April 2020).
An issue of 25,000,000 0.01p Ordinary Shares at 0.2p per share
to PMCG, by way of subscription deed, for a total consideration of
GBP50,000 before expenses (14 May 2020).
An issue of 38,888,889 0.01p Ordinary Shares at 0.18p per share
to PMCG, by way of subscription deed, for a total consideration of
GBP70,000 before expenses (3 July 2020).
An issue of 587,722 0.01p Ordinary Shares at 0.23p per share, to
a director, in satisfaction of directors' fees, for a total
consideration of GBP1,352 (31 July 2020).
An issue of 1,000 0.01p Ordinary Shares, to P. Cheetham at 0.25p
per share to buy back and cancel deferred shares for an aggregate
consideration of GBP1 (24 August 2020).
During the year to 30 September 2019 a total of 83,751,911 0.01p
ordinary shares were issued, at an average price of 0.3p, for a
total consideration of GBP231,360 net of expenses.
The total amount of transaction fees debited to the Share
Premium account in the year was GBP13,750 (2019: GBP20,000).
Nature and purpose of reserves
Capital redemption reserve
Non distributable reserve into which amounts are transferred
following the redemption or the purchase of a company's own shares.
The provisions relating to the capital redemption reserve are set
out in section 733 of the Companies Act 2006.
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
Company's functional currency, being Sterling, are recognised
directly in the foreign currency reserve.
Share option reserve
The share option reserve is used to recognise the fair value of
share-based payments provided to employees, including key
management personnel, by means of share options and share warrants
issued as part of their remuneration. Refer to Note 15 for further
details.
15. Warrants granted
Warrants not exercised at 30 September 2020
Exercise Expiry
Issue date price Number Exercisable dates
------------ -------- ---------- ------------------------ ----------
11/03/2016 1.40p 1,000,000 Any time before expiry 11/03/2021
31/01/2017 1.025p 1,000,000 Any time before expiry 31/01/2022
31/01/2018 1.875p 1,000,000 Any time before expiry 31/01/2023
21/02/2019 0.50p 3,500,000 Any time before expiry 21/02/2024
21/02/2019 0.35p 5,000,000 Any time before expiry 21/02/2024
26/11/2019 0.335p 22,000,000 Any time before expiry 26/11/2023
02/03/2020 0.275p 5,000,000 Any time before expiry 02/03/2021
27/02/2020 0.34p 8,100,000 Any time from 27/02/2021 27/02/2025
------------ -------- ---------- ------------------------ ----------
Total 46,600,000
------------ -------- ---------- ------------------------ ----------
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 at the exercise price on the date of
conversion.
A grant of 22,000,000 warrants at an exercise price of 0.336p,
to Bergen relating to the convertible securities issuance deed (26
November 2019).
A grant of 8,100,000 warrants at an exercise price of 0.34p, to
employees and directors of the Company (27 February 2020).
A grant of 5,000,000 warrants at an exercise price of 0.275p, as
part of fundraising, to Peterhouse Capital Limited (2 March
2020).
Share-based payments
The Company issues warrants to directors and employees on
varying terms and conditions.
Details of the share warrants outstanding during the year are
as follows:
2020 2019
Weighted Number Weighted
average of average
Number exercise share warrants exercise
of price and share price
share warrants Pence options Pence
------------------------------ --------------- --------- --------------- ---------
Outstanding at start of year 13,200,000 1.106 9,050,000 7.877
Granted during the year 35,100,000 0.328 8,500,000 0.412
Exercised during the year - - - -
Forfeited during the year - - - -
Expired during the year (1,700,000) 4 (4,350,000) 13.84
------------------------------ --------------- --------- --------------- ---------
Outstanding at 30 September 46,600,000 0.415 13,200,000 1.106
------------------------------ --------------- --------- --------------- ---------
Exercisable at 30 September 38,500,000 0.43 4,700,000 2.362
------------------------------ --------------- --------- --------------- ---------
The warrants outstanding at 30 September 2020 had a weighted
average exercise price of 0.415p (2019: 1.1p), a weighted average
fair value of 0.13p (2019: 0.43p) and a weighted average remaining
contractual life of 3.01 years (2019: 3.42 years).
In the year ended 30 September 2020, warrants were granted on 26
November 2019, 2 March 2020 and 27 February 2020. The aggregate of
the estimated fair values of the warrants granted on these dates is
GBP33,125. In the year ended 30 September 2019, warrants were
granted on 21 February 2019. The aggregate of the estimated fair
values of the warrants granted on this date is GBP11,173.
There were no warrants exercised in the year ending 30 September
2020.
The inputs into the Black-Scholes-Merton Pricing Model were as
follows:
2020 2019
--------------------------------- ---------- -------
Weighted average share price 0.279p 0.350p
Weighted average exercise price 0.328p 0.388p
Expected volatility 75.0% 75.0%
Expected life 3.57 years 4 years
Risk-free rate 0.408% 0.827%
Expected dividend yield 0% 0%
--------------------------------- ---------- -------
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous three
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.
The Company recognised total expenses of GBP30,290 and GBP8,021
related to equity-settled share-based payment transactions in 2020
and 2019 respectively. 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.
16. Leases
The Company rents office premises under a short-term operating
lease agreement.
Future minimum lease payments under non-cancellable operating
leases are:
2020 2019
Land & buildings Land & buildings
GBP GBP
----------------------- ----------------- -----------------
Office accommodation:
Within one year 15,863 3,525
----------------------- ----------------- -----------------
The Company does not sub-let any of its leased premises.
Lease payments recognised in loss for the period amounted to
GBP18,560 (2019: GBP21,081).
17. Related party transactions
Key management personnel
The directors holding office in the period and their warrants
held in the share capital of the Company are:
At 30 September
At 30 September 2020 2019
Share Warrants Warrant Share
Shares warrants exercise expiry Shares warrants
number number price date number number
-------------------------- ---------- --------- --------- ---------- ---------- ---------
P L Cheetham* 12,641,471 2,000,000 0.500p 21/02/2024 12,612,113 3,000,000
2,000,000 0.340p 27/02/2025
D A R McAlister 2,937,609 1,500,000 0.500p 21/02/2024 1,295,343 1,500,000
1,500,000 0.340p 27/02/2025
R H Clemmey - resigned** 977,405 3,000,000 0.350p 21/02/2024 977,405 3,000,000
3,000,000 0.340p 27/02/2025
-------------------------- ---------- --------- --------- ---------- ---------- ---------
* Includes 2,843,625 shares held by K E Cheetham, wife of P L
Cheetham.
* The shareholding reported for the years ended 30 September
2017, 2018 and 2019 were under-reported by 28,358 ordinary shares
due to an administrative error.
** R H Clemmey ceased to be an employee and director of the
Company on 30 June 2020.
The directors have no beneficial interests in the shares of the
Company's subsidiary undertakings as at 30 September 2020. The
directors of the Company are the directors of all Group
companies.
Details of the Parent Company's investment in subsidiary
undertakings are shown in Note 10.
Sunrise Resources plc
During the year the Company charged costs of GBP175,750 (2019:
GBP189,742) to Sunrise Resources plc being shared overheads of
GBP20,369 (2019: GBP27,025), costs paid on behalf of Sunrise
Resources plc of GBP1,175 (2019: GBP6,554), staff salary costs of
GBP74,085 (2019: GBP78,590) and directors' salary costs of
GBP80,121 (2019: GBP77,574), comprising P L Cheetham GBP80,121
(2019: GBP76,773) and R H Clemmey GBPnil (2019: GBP801). All salary
costs include employer's National Insurance and Pension
contributions.
The salary costs in Notes 4 and 5 include these charges.
At the balance sheet date an amount of GBP43,717 (2019:
GBP10,496) was due from Sunrise Resources plc.
P L Cheetham, a director of the Company, is also a director of
Sunrise Resources plc.
Shares and warrants held in Sunrise Resources plc by the
Company's directors are as follows:
At 30 September
At 30 September 2020 2019
Warrants Warrants
Shares Warrants Exercise expiry Shares Warrants
number number price date number number
-------------------------- ----------- ---------- --------- ---------- ----------- ---------
P L Cheetham* 231,047,657 30,000,000 0.195p 05/08/2025 125,593,683 3,000,000
D A R McAlister 550,000 - - - 550,000 -
R H Clemmey - resigned** - 500,000 0.160p 18/02/2021 - 3,000,000
500,000 0.135p 01/02/2022
500,000 0.160p 31/01/2023
750,000 0.110p 21/02/2024
-------------------------- ----------- ---------- --------- ---------- ----------- ---------
* Includes 5,500,000 shares held by K E Cheetham, wife of P L
Cheetham.
** R H Clemmey ceased to be an employee and director of the
Company on 30 June 2020.
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, selling assets and adjusting the
amount of dividends paid to the shareholders.
19. Financial instruments
At 30 September 2020, the Group's and Company's financial assets
consisted of listed investments, trade receivables and cash and
cash equivalents. At the same date, the Group and Company had
financial liabilities of trade and other payables due within one
year and had share subscription outstanding amount with PMCG
convertible to shares within 24 months from the issue date of 2
April 2020 as at this date. There is no material difference between
the carrying and fair values of the Group and Company's financial
assets and liabilities.
The carrying amounts for each category of financial instruments
held at 30 September 2020, as defined in IFRS 9, are as
follows:
Group Company Group Company
2020 2020 2019 2019
GBP GBP GBP GBP
------------------------------------- ------- ------- ------ -------
Financial assets at amortised
cost 684,527 632,336 81,133 41,670
Financial assets at fair value
through other comprehensive income 55,985 55,985 89,775 89,775
Financial liabilities at amortised
cost 58,402 29,251 62,156 21,187
Share subscription loan 420,000 420,000 62,156 21,187
------------------------------------- ------- ------- ------ -------
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 these risks remain unchanged.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars, Swedish
Krona, Canadian Dollars, Euros and Saudi Riyals to provide funding
for exploration and evaluation activity. The Group and the Company
are dependent on equity fundraising through share 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
risk. 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.
Bank and cash balances were held in the following
denominations:
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
------------------------- ------- ------ ------- ------
United Kingdom Sterling 599,433 23,526 596,509 22,433
United States Dollar 19,804 11,628 290 6,691
Swedish Krona 3,238 5,734 - -
Norwegian Krona 4 4 4 4
European Euro 321 9,664 321 303
Canadian Dollar 15 14 15 14
Saudi Riyal 44 47 - -
622,859 50,617 597,139 29,445
------------------------- ------- ------ ------- ------
Surplus Sterling funds are placed with NatWest bank on
short-term treasury deposits at variable rates of interest.
The Company and the Group are exposed to changes in exchange
rates mainly in the Sterling value of US Dollar denominated
financial assets.
Sensitivity analysis shows that the Sterling value of its US
Dollar denominated financial assets at 30 September 2020 would
increase or decrease by GBP990 for each 5% increase or decrease in
the value of Sterling against the Dollar.
Neither the Company nor the Group is exposed to material
transactional currency risk.
Interest rate risk
The Group and Company finance their operations through equity
fundraising and therefore do 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.
20. Convertible Loan note
On 19 November 2019, the Company entered into a convertible
securities issuance deed (the "Agreement") with Bergen Global
Opportunity Fund, LP (the "Investor"), a US based institutional
investment fund, in connection with an issuance by the Company of
zero coupon convertible securities having a nominal amount of up to
GBP653,000 (the "Convertible Securities"). Pursuant to the
Agreement, on 26 November 2019 the Company issued a convertible
security with the nominal value of GBP263,000 (at the purchase
price of GBP232,000).
In connection with the Agreement:
(a) the Company issued to the Investor 17,000,000 Shares by way
of a commencement fee in relation to the overall funding
("Commencement Fee Shares");
(b) the Company issued to the Investor 18,000,000 Shares at par
to collateralise the investment ("Collateral Shares").
(c) the Company issued 22,000,000 warrants with an exercise
period of 48 months from the date of issue (the "Warrants") to the
Investor entitling the Investor (or any subsequent holder of the
Warrants) to subscribe for one Share per Warrant at the exercise
price equal to 0.33588 pence.
(d) On 18 February 2020, the Company received a Conversion
Notice from the Investor in respect of the Conversion of GBP263,000
of the Convertible Security as a result of which the Company will
issued 154,705,883 new ordinary shares at a Conversion Price of
0.17 pence per share.
(e) The Company announced that the convertible securities issuance deed (the "Agreement")
between the Company and Bergen Global Opportunity Fund, LP
("Bergen"), dated 19 November
2019, the details of which were notified on 20 November 2019,
has been terminated by the parties
by mutual consent, effective as of 1 April 2020. Following the
termination, no further funding will be
provided to the Company under the Agreement.
21. Share subscription loan
Tertiary Minerals plc entered into a share subscription deed on
2 April 2020 with Precious Metals Capital Group LLC (PMCG), a U.S.
based institutional specialist investor. PMCG made an investment of
GBP600,000 by way of a subscription for Company shares.
The placing was made by PMCG by way of prepayment for Company
shares to be issued, at the Subscriber's request, within 24 months
of the date of the placing. A further investment may be made by the
Subscriber within 12 months after the date of this placement, but
only with the consent of the Company, in the amount not exceeding
an additional GBP600,000, by way of prepayment for shares to be
issued, at the Subscriber's request, within 24 months following the
date of such subsequent placement.
The number of shares to be issued as a result of the placing is
determined by dividing the subscription amount (or that part of the
subscription amount in relation to which the shares are being
issued) by 95% of the prevailing price, the latter being the
average of the five daily volume weighted average prices during a
specified period immediately prior to the date of issuance of the
shares. Alternatively, the Subscriber may choose for the
subscription price to be equal to GBP0.0042, being an approximately
133% premium to the Company's share price on 1 April 2020.
As at 30 September 2020 the outstanding amount of prepayment is
GBP420,000 following three issues of shares within the period since
2 April 2020 (Note 14).
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END
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(END) Dow Jones Newswires
December 11, 2020 10:45 ET (15:45 GMT)
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