TIDMTYM
RNS Number : 4980D
Tertiary Minerals PLC
19 February 2020
TERTIARY MINERALS PLC
("Tertiary" or the "Company")
19 February 2020
Audited Results for the year to 30 September 2019
The Board of Tertiary Minerals plc is pleased to announce
audited results for the year ended 30 September 2019.
OPERATIONAL HIGHLIGHTS FOR THE 12 MONTHSING 30 SEPTEMBER
2019:
In line with the Company's strategy to build a new
multi-commodity project portfolio to enable the Company to reduce
its future geographical, technical, permitting and commodity risk
exposure and provide long-term shareholder value, two new
exploration projects have been acquired in the period:
Pyramid Project
Ø Geological analogies with high-grade multi-million ounce Fire
Creek & Midas Gold Mines
Ø 20-year lease secured over group of 9 patented claims with
option to purchase (subject to underlying royalties)
Ø Additional 25 mining claims staked to cover additional targets
along strike
Ø Limited historical exploration (1989-90) has defined priority
epithermal vein drill target:
-- Drill hole PYR 9 - intersected visible gold and assayed 1.52m
grading 17.8 g/t Au from 94.5m down hole
-- PYR 9 ended in 1.52m grading 2.6 g/t Au at 115.8m depth
Ø PYR 9 was only drill hole to effectively test a cohesive 750m
long open-ended gold-mercury-arsenic soil geochemical anomaly
Ø Claims contain a number of untested epithermal veins and
stockwork target zones - 43 widespread surface samples assayed up
to 7.27 g/t Au and averaged 1.3 g/t Au
Ø The State of Nevada:
-- 5th largest gold producer in world
-- 5.58 M oz of gold produced in 2018
-- Ranked #1 most desirable mining jurisdiction in the world by The Fraser Institute
Ø The Company is currently planning an initial drilling
programme; drill contractor selected to start as soon as
possible.
Paymaster Polymetallic Project
Ø The Company staked claim to the Paymaster
zinc-copper-silver-cobalt-tellurium prospect in Nevada, USA
Ø Grab samples assay up to 21% zinc (Zn), 6.5% lead (Pb), 3.3%
copper (Cu) and 253g/t silver (Ag)
Ø Mineralisation intermittently exposed and sampled over 1.7km
strike length
Ø Samples also contain high levels of high-tech metals tellurium
and cobalt (Co)
Ø Successful soil sampling programme completed:
-- 165 soil samples
-- Significant elevated levels of Ag, Cu, Zn, Co and Pb over a
strike length of over 2,000 metres, maximum values:
o Ag: 17.5 ppm; Cu: 896 ppm; Zn: 872 ppm; Co: 33 ppm; Pb: 2251
ppm
A further two zones of zinc-silver mineralisation have also been
identified in the field:
Ø 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 assayed 7.5% zinc, 4.3% lead and 180 g/t silver
Ø 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
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.
For more information please contact:
Tertiary Minerals plc:
Richard Clemmey, Managing +44 (0) 1625 838
Director 679
Patrick Cheetham, Chairman
SP Angel Corporate Finance LLP
Nominated Adviser and Broker
+44 (0) 203 470
Richard Morrison 0470
Caroline Rowe
Chairman's Statement
I am pleased to present the Company's Annual Report and
Financial Statements for the year ended 30 September 2019.
In my interim report in May 2019, I spoke of our disappointment
in the decision of the Swedish Mining Inspectorate to overturn
their 2016 grant of our mining concession for the Storuman
Fluorspar Project and our submission of an appeal to the Swedish
Government. The Mining Inspectorate's decision was made on the
basis that our proposed mine infrastructure and reindeer herding in
the area could not coexist although their decision states that the
economic aspects point in favour of granting the exploitation
concession, that a permit regarding Natura 2000-area is
unnecessary, that fluorspar is included in the EU list of critical
raw materials and that a mining establishment would mean positive
socio-economic benefit for the municipality of Storuman. Our appeal
contends that the Mining Inspectorate did not adequately consider
the extensive mitigation measures proposed for the local reindeer
herding activities.
The Government has not yet decided on the appeal and,
frustratingly, will not commit to a decision timeframe. Many new
mining projects in Sweden are similarly affected and lobbying of
the Government by other mining companies has not resulted in a
change in the Government's current position towards mining
projects.
Financial constraints during the year have limited our ability
to fund activities on other fluorspar projects and so only limited
work has taken place on the Company's large MB Fluorspar Project in
Nevada. However, testwork is ongoing to address the metallurgical
complexity that characterises the near surface mineralisation that
would be mined in the early years of the Company's preliminary mine
plan. When finances allow we intend to progress the economic
scoping study for development of the project. This may include
further drilling of conceptual higher-grade targets in the northern
part of the project. No work was carried out at the Lassedalen
Fluorspar Project in Norway.
As a Board we have faced some difficult decisions in 2019 as our
fluorspar projects have not sustained the value they once added to
the Company and our efforts to acquire a more advanced project are
limited by our size and available financial resources.
Consequently, the Board initiated a parallel back-to-its-roots
strategy of gold and base metal exploration with an emphasis on low
cost value adding acquisition and exploration of gold and base
metal projects in Nevada, USA. Nevada is ranked as the most
desirable mining jurisdiction in the world by the Fraser Institute
and in 2018 produced 5.58 million ounces of gold.
In line with this parallel strategy we are delighted to have
acquired interests in two new projects in 2019 of which the most
advanced is the Pyramid Gold Project in Nevada where we have leased
a parcel of private land and staked additional mining claims.
Limited exploration in the late 1980s defined a priority epithermal
gold vein drill target defined by a single drill hole which
intersected visible gold and assayed 1.52m grading 17.8 g/t Au from
94.5m down hole. The broader target and vein trend are defined by a
cohesive 750m long open-ended gold-mercury-arsenic soil geochemical
anomaly. We intend to drill this target as soon as possible.
We also staked claims to secure the Paymaster Project in Nevada
where grab samples of skarn-type mineralisation have returned
assays up to 21% zinc, 6.5% lead, 3.3% copper and 253 g/t silver
and where mineralisation is intermittently exposed and sampled over
1.7km strike length. We conducted a soil sampling programme in 2019
and identified the Valley and East Slope zinc-silver prospects as
key prospects for follow up exploration in 2020.
In 2019, the stock market for junior mining companies on the AIM
market was the most challenging I have experienced in over 20
years. Brexit was undoubtedly a factor as were the trade tensions
between the US and China. For Tertiary, these factors have been
exacerbated by the negative news from Sweden for our key Storuman
Project and the inertia of the Swedish Government in its decision
making.
Whilst we raised a modest amount of money in early 2019 to fund
our activities in the first half of the year, fundraising for
Tertiary and its peers at near market prices has been nearly
impossible in the second half of 2019 and we have not been prepared
to accept opportunistic offers of heavily discounted share
placings. Instead, following the end of the financial year, we
accepted an offer of funding from Bergen Global Opportunity Fund,
LP, a U.S. based institutional investment fund and raised an
initial GBP232,000 before expenses through the issuance of
zero-coupon convertible securities as part of a facility having a
nominal value of up to GBP653,000. We believe this will prove less
dilutive to shareholders at this time. The balance of this facility
can be drawn down by agreement with Bergen. As has been the case at
year-end for several previous years, the Company will need to raise
further funds in the next 12 months to continue as a going
concern.
Market commentators are anticipating a better year for small cap
companies in 2020 and we look forward to reporting news from our
exciting new gold and base metal projects in Nevada over this
coming year.
Our Annual General Meeting for the year ended 30 September 2019
will be held in our offices in Macclesfield this year, on Thursday
19 March 2020.
Patrick Cheetham
Executive Chairman
18 February 2020
Strategic Report
Group Overview
Company's Aims
-- Increase shareholder value through the discovery and
development of valuable mineral deposits.
-- Reduce the Group's geographical, technical, permitting and commodity risk exposure.
Company's Strategy
-- Build and explore a new multi-commodity project portfolio.
-- Continue the evaluation of the Company's fluorspar deposits.
-- Operate only in stable, democratic and mining friendly jurisdictions.
Principal Activities
-- 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 core 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 either involves
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 has five full-time employees
including the Managing Director who work with and oversee carefully
selected and experienced consultants and contractors. During the
year the Board of Directors comprised one independent Non-Executive
Director, the Managing Director and the Chairman.
Administration costs are 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. As at the 30 September 2019, Tertiary holds 2.71% 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. Access to capital through this method has continued to
be very challenging and this is a limiting factor to the speed at
which the Company can progress the development of its projects.
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.
Review & Operating Performance
Pyramid Gold Project, Nevada, USA
As part of the Company's strategy to build a new multi-commodity
project portfolio, in May 2019, the Company secured exploration
rights and an option to purchase a group of claims in the Pyramid
Mining District of Nevada. The project is located 25 miles
northwest of Reno and is readily accessible from State Highway 445
which crosses the northwest tip of the project.
Project Highlights
-- 20-year lease secured over a group of 9 patented claims with
options to purchase (subject to underlying royalties)
-- Additional 25 mining claims staked to cover additional targets along strike
-- Located in productive Walker Lane porphyry copper/epithermal gold belt
-- Limited historical exploration (1989-90) has defined priority epithermal vein drill target:
o Drill hole PYR 9 - intersected visible gold and assayed 1.52m
grading 17.8 g/t Au from 94.5m down hole
o PYR 9 ended in 1.52m grading 2.6 g/t Au at 115.8m depth
o PYR 9 was only drill hole to effectively test a cohesive 750m
long open-ended gold-mercury-arsenic soil geochemical anomaly
o Claims contain a number of untested epithermal veins and
stockwork target zones - 43 widespread surface samples assayed up
to 7.27 g/t Au and averaged 1.3 g/t Au
Geology and Mineralisation
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
porphyry copper and porphyry molybdenum deposits.
Within the Pyramid Mining District, the Company's Pyramid
Project is underlain by a thick sequence of mid-late Tertiary age
(23 Ma old) rhyolitic tuffs interpreted by the Nevada Bureau of
Mines & Geology to have formed within an east-west elongated
Caldera structure named the Perry Canyon Caldera.
The gold veins at Pyramid lie within the Perry Canyon Caldera
and are interpreted from historical mapping and mineral exploration
to lie on the margins of a large and deeply buried porphyry system
in the southeast part of the district that is currently claimed by
copper producer Asarco LLC (a division part of Groupo Mexico). At
the higher erosional levels currently preserved at Pyramid such
porphyry systems are prospective for high-sulphidation gold
deposits (in more central areas) such as those found further south
in the Walker Lane at the Goldfield Mining District (4 million
ounces of past production at 1oz gold/ton) and low and
intermediate-sulphidation epithermal deposits (of which there are
many examples in the Walker Lane) in more peripheral areas where
the Company's claims are located. This pattern of mineralisation is
similar to that of many large porphyry systems in the US, Peru and
the Pacific Basin countries.
Past Mining and Exploration
In the main part of the Pyramid District, precious metals were
mined from three moderately to steeply dipping, northwest-striking
vein systems named after the prominent mines that occur along them
- Ruth, Burrus, and Bluebird. The Company's claim interests cover
the Ruth vein system and a number of parallel vein systems and
zones of alteration. In addition to abundant quartz and pyrite,
vein minerals in unoxidized ore from the Ruth vein system include
barite, anglesite, galena, sphalerite, acanthite, gold and
cassiterite.
The Pyramid Mining District was established in 1866 with only
small-scale production reported. Modern exploration in the Pyramid
district has focused primarily on the search for porphyry copper
mineralisation with only limited exploration having been carried
out for gold.
The only documented field exploration in the area of the
Company's claims was carried out by Battle Mountain Gold Mining
("Battle Mountain") who leased the project from the current
lessors, Golden Crescent Corporation, in the period 1988-89. Battle
Mountain carried out surface sampling, soil sampling and drilled 10
shallow exploration holes for a total of 1,006m of drilling to
depths between 43m and 140m.
Soil sampling was conducted on a 30m x 120m grid within a
confined area 600m x 600m centred on Battle Mountain's main target
area, the Ruth Mine vein system and associated vein stockwork. This
identified a series of gold-in-soil anomalies and eight of their
ten drill holes were designed to test a broad gold anomaly located
just northwest of the Ruth Mine. These intersected areas of
anomalous gold up to 1.5m grading 1.64 grammes/tonne gold (g/t Au)
in hole PYR 1 from 10.7m depth.
Battle Mountain's two other drill holes were designed to test a
parallel vein west of the Ruth vein system which correlates with a
separate strong gold-arsenic-mercury soil anomaly, mercury and
arsenic being strongly associated with gold in epithermal gold
deposits. This soil anomaly is open ended and continues strongly to
the northwest and southeast boundaries of the sampled area.
Drill hole PYR 9 on this western line 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.
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.
Next Steps
The association of high-grade gold mineralisation in a previous
drill hole associated with a strong and open-ended gold soil
anomaly supported strongly by epithermal pathfinder elements
mercury and arsenic presents a compelling drill target.
Similar narrow high-grade epithermal gold deposits in Nevada
have hosted multi-million-ounce deposits such as the producing
Midas Mine where the main veins produced more than 2.2 million
ounces of gold and 26.9 million ounces of silver between 1998 and
2013.
Tertiary Minerals intends to follow up Battle Mountain's
drilling and soil sampling results with an initial drilling
programme as soon as possible. Core drilling is planned as water,
which can affect sample quality, was encountered in drilling both
holes PYR 9 and 10.
The broader potential of the vein systems on the Project area
are highlighted by the results of 43 surface chip samples taken by
Battle Mountain from various outcropping veins and old mine
workings within the Company's Project area. These assayed up to
7.27 g/t Au and averaged 1.3 g/t Au.
This high prospectivity was confirmed by surface grab carried
out by the Nevada Bureau of Mines & Geology during a regional
assessment in 1999 when samples from the 1km long Ruth vein system
averaged 1.3 g/t gold and 131 g/t silver. The highest gold content,
8 g/t Au, was from the Surefire Mine area which has never been
drill tested.
Paymaster Polymetallic Project, Nevada, USA
In February 2019, the Company staked claim (19 claims) to the
Paymaster zinc-copper-silver-cobalt-tellurium prospect. The project
is located approximately 30km southwest of Tonopah in Nevada, USA,
and covers an area of more than 390 acres.
Project Highlights
-- Grab samples assay up to 21% zinc, 6.5% lead, 3.3% copper and 253 g/t silver
-- Mineralisation intermittently exposed and sampled over 1.7km strike length
-- Samples also contain high levels of high-tech metals tellurium and cobalt
Geology, Mineralisation and Past Exploration
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 Paymaster skarn mineralisation was originally prospected in
the late 1950's under US Defense Minerals Exploration
Administration grant system. A government mining engineer
recommended that the project be drill tested, but records suggest
this did not take place and no production ensued.
In 1960, it was the subject of a brief publication by the US
Geological Survey when zinc rich secondary clay minerals,
sphalerite (zinc sulphide), galena (lead sulphide) and magnetite
were identified in a pyroxene-garnet-quartz skarn mineral
assemblage at the eastern end of the area now claimed by the
Company. The prospector scale workings were later described in a
Geological Survey of Nevada publication in 1991 by an acknowledged
world expert on skarn deposits, Lawrence (Larry) Meinert who, on
the basis of his observations, concluded that the Paymaster skarn
must be part of a much larger hydrothermal system.
Within the Company's claim holdings, the skarn mineralisation
has recently been traced westward 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).
The mineralised skarn samples were collected largely from one
stratigraphic horizon within Cambrian age limestone in contact with
shale and 1 mile south of the limestone contact with the Cretaceous
age Lone Mountain granite pluton. Where sampled the skarn appears
to be associated with cross cutting faults and the continuity along
strike between exposures is currently unknown but pinch and swell
is seen on a local scale.
Follow-up soil sampling programme was completed by the Company
in 2019:
-- 165 soil samples
-- Significant elevated levels of Ag, Cu, Zn, Co and Pb over a
strike length of over 2,000 metres, maximum values:
o Ag: 17.5 ppm
o Cu: 896 ppm
o Zn: 872 ppm
o Co: 33 ppm
o Pb: 2251 ppm
A further two zones of zinc-silver mineralisation have also been
identified in the field:
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 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
Next Steps
Follow up mapping, sampling, geophysics are now planned to
identify future drilling targets.
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
-------------------- ------------------
Inferred 2.7 9.57
-------------------- ------------------
Total 27.7 10.21
-------------------- ------------------
Exploitation (Mine) Permit
The Company, together with its Swedish Lawyers, prepared and
submitted, on 3 May 2019, a detailed appeal to the Swedish
Government against the decision by the Swedish Mining Inspectorate
to reject Tertiary's Exploitation (Mine) Permit in its current
form. The Company now awaits feedback from the Swedish Government
in response to its appeal.
MB Fluorspar Project, Nevada, USA
The MB Property comprises 60 contiguous mining claims and is
located 19km southwest of the town of Eureka in central Nevada,
USA. The state of Nevada is widely and justifiably recognised to be
one of the most attractive mining jurisdictions in the world.
Eureka is located on US Highway 50 and the main railroad is located
165km to the north of the deposit providing bulk freight
distribution to the East and West of the USA. The USA, like Europe,
is a key fluorspar market currently importing the majority of its
fluorspar requirements. Rail access to the west coast provides
access to Asian markets, which may be a target market in the
future.
JORC Compliant Mineral Resource
Classification Million Tonnes (Mt) Fluorspar (CaF(2)
%)
Indicated 6.1 10.8
-------------------- ------------------
Inferred 80.3 10.7
-------------------- ------------------
Total 86.4 10.7
-------------------- ------------------
Metallurgical Testwork
Early metallurgical testwork completed at SGS Lakefield has
indicated that the ore in certain areas of the deposit is
metallurgically complex, presenting processing challenges, and
therefore the Company has engaged the services of one of the
world's leading consultant fluorspar metallurgists to assist with
the testwork. Progress has been slow during the period 2018/2019
due to lack of available funding. The Company has budgeted further
testwork during 2020 subject to available funds.
Following successful completion of the metallurgical testwork,
the Company will progress to modelling various production scenarios
and optimisation of the transport method/cost from mine to the USA
market and ports. Successful completion of these work programmes
should enable the Company to work towards completion of a Scoping
Study. Further work required for the completion of the Scoping
Study may include an additional phase of drilling to target higher
grade mineralisation, in line with the recommendations received
from the appraisal of the MB deposit from world renowned economic
geologist, Dr Richard Sillitoe.
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. The Company views this resource as strategically
important for the European market alongside its Storuman
Project.
JORC Compliant Mineral Resource
Classification Million Tonnes (Mt) Fluorspar (CaF(2)
%)
Inferred 4.0 24.6
-------------------- ------------------
Given the commitments on its other projects and available
funding, further exploration at the Lassedalen Project has been a
lower priority in 2018/2019.
Strategic Relationship with Possehl Erzkontor GmbH & Co.
KG
Further to the signing of a MOU in 2017 with leading global
commodities trading group, Possehl Erzkontor GmbH & Co. KG
("Possehl"), a wholly owned subsidiary of CREMER, Possehl continue
to support the Company with the development of its projects.
Non-Core Projects
Kaaresselkä and Kiekerömaa Gold Projects, Finland
Following the successful sale of its two legacy gold assets,
Kaaresselkä and Kiekerömaa in Finland, to TSX--V listed Aurion
Resources Ltd ("Aurion"), the Company retains a royalty interest in
the projects. Aurion continue to be supported by Kinross Gold
Corporation which currently holds a 9.9% interest in Aurion.
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. The Company has previously received a
prestigious national award for its innovative reclamation and
sustainable mineral development work on its MB Project in Nevada,
USA.
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 GBP831,507 for the year (2018:
GBP2,267,197) after administration costs of GBP502,788 (2018:
GBP507,931) and after crediting interest receivable of GBP234
(2018: GBP142). The loss includes impairment of the Lassedalen
Project of GBP442,917, expensed pre-licence and reconnaissance
exploration costs of GBP75,778 (2018: GBP38,725). Administration
costs include GBP8,021 (2018: GBP8,997) as non-cash costs for the
value of certain share warrants held by employees as required by
IFRS 2.
Revenue includes GBP189,742 (2018: GBP218,841) from the
provision of m anagement, 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 2019, the
Group had net current assets of GBP21,499 (2018: GBP249,787). 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 GBP2,461,972 (2018: GBP2,670,386) 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 the
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 reduced administration costs this
financial year - current year GBP502,788 (2018: GBP507,931).
Fundraising
During the 2019 financial year the Company raised a total of
GBP250,000, before expenses, as shown in Note 14 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 (GBP50,617), 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 GBP1,971,407 has been carried out. This
indicated a potential credit loss arising in the year of GBP486,907
(2018: GBP4,681,523) relating to Tertiary Gold Limited. The
assessment and provision arises from the fact that there has been
an impairment of the underlying exploration assets held by Tertiary
Gold Limited, leading to doubt over recoverability of the loan. The
provision made against the receivable 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.
----------------------------------------
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 and the Board with additional technical
operation, variations in mineralogy, and financial skills as the Company
mineral continuity, ground stability, transitions from exploration to
groundwater conditions and other 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 Code
can have, in addition, risks associated of Conduct and this is 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.
This Strategic Report was approved by the Board on 18 February
2020 and signed on its behalf.
Richard Clemmey
Managing Director
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, the Corporate Governance Code 2018
("the QCA Code") for small and mid-sized quoted companies to be the
most suitable code for the Company and has adopted the principles
set out in 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 approved by the Board on 18 February 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.
Principle Two: Seek to understand and meet shareholder needs and
expectations.
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 local
communities and stakeholders 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 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 reports for consideration on all significant
strategic, operational and financial matters.
The Board is supported by the Audit, Remuneration and Nomination
Committees.
The Board currently consists of the Chairman, Managing Director
and one Non-Executive Director. The current Board's preference is
that independent Non-Executive Directors are equally represented or
comprise the majority of Board members. However, this is not
currently the case as the Company intends that an additional
Non-Executive Director will be appointed in due course. When there
are two Non-Executive Directors in post, the Board considers that
the current Board structure is nevertheless 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 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
twelve 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 appropriate given the current
size and stage of development of the Company and that the Board 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 Company Secretary who is
responsible for ensuring that Board procedures and applicable rules
and regulations are observed.
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 Managing Director's performance 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,
Managing Director and one 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 11 days of average daily purchases (2018:
15 days).
Anti-Corruption Policy and Code of Conduct
The Company has adopted and implements an Anti-Corruption Policy
and 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
Managing Director 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 and Remuneration Committees with
formally delegated duties and responsibilities. Donald McAlister
currently chairs the Audit and Remuneration Committees.
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 operates a long-term bonus and incentive scheme for
the Managing Director. The objective of adopting the scheme is 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.
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 2019, Tertiary Minerals plc held 2.71% 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
18 February 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)
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 (60)
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
-- Company Secretary for Sunrise Resources plc.
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 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 accounts for the year ended 30 September 2019.
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 (GBP50,617), t hese
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 in the Strategic
Report.
Directors
The directors currently holding office are:
Mr P L Cheetham
Mr R H Clemmey
Mr D A R McAlister
Post Balance Sheet Events
On 8 October 2019, the Swedish tax office informed the Company
that the appeal was not successful with regards to levy of an
incorrect tax return relating to tax year 2013/14 in Tertiary Gold
Sweden Branch. The levy was increased to SEK 296,958 (approximately
GBP24,461) by the interest of SEK 8,703. The Company's tax lawyer
in Sweden is further appealing the decision. This event is treated
as a post balance sheet adjusting event and the full cost of
potential tax levy was accrued.
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 will issue to the Investor 18,000,000 Shares at
par to collateralise the investment ("Collateral Shares"). Investor
may be required to make a further payment to the Company once all
of the obligations of the Company under the Agreement have been
finally met and no amount remains outstanding to the Investor,
depending on the price of Shares at such time; and
(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 18th 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
issue 154,705,883 new ordinary shares at a Conversion Price of 0.17
pence per share.
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 18 February 2020 of shares capital
Interactive Investor Services Nominees Limited
SMKTNOMS 36,591,837 7.64
---------- ----------
Securities Services Nominees Limited 1850004 31,278,520 6.53
---------- ----------
JIM Nominees Limited JARVIS 30,912,864 6.46
---------- ----------
Barclays Direct Investing Nominees Limited
CLIENT1 28,903,754 6.04
---------- ----------
Interactive Investor Services Nominees Limited
SMKTISAS 27,609,274 5.77
---------- ----------
SVS (Nominees) Limited POOL 20,529,450 4.29
---------- ----------
SVS Securities (Nominees) Ltd ONL 20,474,804 4.28
---------- ----------
Hargreaves Lansdown (Nominees) Limited 15942 17,171,588 3.59
---------- ----------
Vidacos Nominees Limited IGUKCLT 16,934,318 3.54
---------- ----------
SVS Securities (Nominees) ISA Ltd ISA 16,100,891 3.36
---------- ----------
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 Annual General Meeting will be held on Thursday, 19 March
2020 at 2.00 p.m. in Macclesfield.
Approved by the Board on 18 February 2020 and signed on its
behalf.
Richard Clemmey
Managing Director
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 2019 or 2018. The financial information for 2018 is
derived from the Statutory Accounts for 2018. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2019 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The Auditors have reported on the 2019 and
2018 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 2019 will be posted to shareholders on or
around 25 February 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 2019
2019 2018
Notes GBP GBP
-------------------------------------------------- ----- ----------- -----------
Revenue 2,17 189,742 218,841
Administration costs (502,788) (507,931)
Pre-licence exploration costs (75,778) (38,725)
Impairment of deferred exploration asset 8 (442,917) (1,976,618)
Operating loss (831,741) (2,304,433)
Disposal of other investments - 37,094
Interest receivable 234 142
-------------------------------------------------- ----- ----------- -----------
Loss before income tax 3 (831,507) (2,267,197)
Income tax 7 - -
-------------------------------------------------- ----- ----------- -----------
Loss for the year attributable to equity holders
of the parent (831,507) (2,267,197)
-------------------------------------------------- ----- ----------- -----------
Loss per share - basic and diluted (pence) 6 (0.19) (0.65)
-------------------------------------------------- ----- ----------- -----------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2019
2019 2018
GBP GBP
------------------------------------------------------------- ----------- -------------
Loss for the year (831,507) (2,267,197)
------------------------------------------------------------- ----------- -------------
Items that could be reclassified subsequently to
the income statement:
Foreign exchange translation differences on foreign
currency net investments in subsidiaries 115,415 (62,575)
Fair value movement on other investments - (72,010)
------------------------------------------------------------- ----------- -------------
115,415 (134,585)
------------------------------------------------------------- ----------- -------------
Items that have been reclassified subsequently to
the income statement:
Disposal of other investments - (38,634)
------------------------------------------------------------- ----------- -------------
- (38,634)
------------------------------------------------------------- ----------- -------------
Items that will not be reclassified to the income
statement:
Changes in the fair value of other investments (71,670) -
------------------------------------------------------------- ----------- -------------
(71,670) -
------------------------------------------------------------- ----------- -------------
Total comprehensive income/(loss) for the year attributable
to
equity holders of the parent (787,762) (2,440,416)
------------------------------------------------------------- ----------- -------------
Consolidated and Company Statements of Financial Position
at 30 September 2019
Company Number 03821411
Group Company Group Company
2019 2019 2018 2018
Notes GBP GBP GBP GBP
----------------------------------- ----- ------------ ------------ ------------ -----------
Non-current assets
Intangible assets 8 2,461,972 - 2,670,386 -
Property, plant & equipment 9 4,182 4,182 3,308 3,308
Investment in subsidiaries 10 - 2,196,297 - 2,478,924
Other investments 10 89,775 89,775 202,328 202,328
----------------------------------- ----- ------------ ------------ ------------ -----------
2,555,929 2,290,254 2,876,022 2,684,560
----------------------------------- ----- ------------ ------------ ------------ -----------
Current assets
Receivables 11 41,568 19,347 96,653 72,749
Cash and cash equivalents 12 50,617 29,445 218,297 202,732
92,185 48,792 314,950 275,481
----------------------------------- ----- ------------ ------------ ------------ -----------
Current liabilities
Trade and other payables 13 (70,686) (29,717) (65,163) (38,602)
----------------------------------- ----- ------------ ------------ ------------ -----------
Net current assets 21,499 19,075 249,787 236,879
----------------------------------- ----- ------------ ------------ ------------ -----------
Net assets 2,577,428 2,309,329 3,125,809 2,921,439
----------------------------------- ----- ------------ ------------ ------------ -----------
Equity
Called up Ordinary Shares 14 44,307 44,307 35,932 35,932
Deferred Shares 14 2,644,062 2,644,062 2,644,062 2,644,062
Share premium account 10,008,687 10,008,687 9,785,702 9,785,702
Merger reserve 131,096 131,096 131,096 131,096
Share option reserve 14 67,468 67,468 168,923 168,923
Fair value reserve (8,444) (8,444) 63,226 63,226
Foreign currency reserve 14 419,752 - 304,337 -
Accumulated losses (10,729,500) (10,577,847) (10,007,469) (9,907,502)
----------------------------------- ----- ------------ ------------ ------------ -----------
Equity attributable to the owners
of the parent 2,577,428 2,309,329 3,125,809 2,921,439
----------------------------------- ----- ------------ ------------ ------------ -----------
The Company reported a loss for the year ended 30 September 2019
of GBP779,821 (2018 - GBP4,971,649).
These financial statements were approved and authorised for
issue by the Board on 18 February 2020 and were signed on its
behalf.
R H Clemmey D A R McAlister
Director Director
Consolidated Statement of Changes in Equity
Ordinary Share Share Fair Foreign
share Deferred premium Merger option value currency Accumulated
capital shares account reserve reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- -------- ----------- ---------- ------- --------- --------- -------- ------------ -----------
At 30
September
2017 31,708 2,644,062 9,331,768 131,096 259,690 173,870 366,912 (7,840,036) 5,099,070
--------------- -------- ----------- ---------- ------- --------- --------- -------- ------------ -----------
Loss for the
period - - - - - - - (2,305,831) (2,305,831)
Change in fair
value - - - - - (72,010) - - (72,010)
Transfer of
disposals to
income
statement - - - - - (38,634) - 38,634 -
Exchange
differences - - - - - - (62,575) - (62,575)
--------------- -------- ----------- ---------- ------- --------- --------- -------- ------------ -----------
Total
comprehensive
loss for the
year - - - - - (110,644) (62,575) (2,267,197) (2,440,416)
--------------- -------- ----------- ---------- ------- --------- --------- -------- ------------ -----------
Share issue 4,224 - 453,934 - - - - - 458,158
Share based
payments
expense - - - - 8,997 - - - 8,997
Transfer of
expired
warrants - - - - (99,764) - - 99,764 -
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
--------------- -------- ----------- ---------- ------- --------- --------- -------- ------------ -----------
Company Statement of Changes in Equity
Ordinary Share Share
share Deferred premium Merger option Fair value Accumulated
capital shares account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP GBP
--------------------- -------- ----------- ---------- -------- --------- ---------- ------------ -----------
At 30 September
2017 31,708 2,644,062 9,331,768 131,096 259,690 115,987 (5,035,617) 7,478,694
--------------------- -------- ----------- ---------- -------- --------- ---------- ------------ -----------
Loss for the
period - - - - - (4,977,649) (4,977,649)
Change in fair
value - - - - - (46,761) - (46,761)
Transfer of
disposals to
income statement - - - - - (6,000) 6,000 -
Total comprehensive
loss for the
year - - - - - (52,761) (4,971,649) (5,024,410)
--------------------- -------- ----------- ---------- -------- --------- ---------- ------------ -----------
Share issue 4,224 - 453,934 - - - - 458,158
Share based
payments expense - - - - 8,997 - - 8,997
Transfer of
expired warrants - - - - (99,764) - 99,764 -
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
--------------------- -------- ----------- ---------- -------- --------- ---------- ------------ -----------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2019
Group Company Group Company
2019 2019 2018 2018
Notes GBP GBP GBP GBP
------------------------------------------ ----- --------- --------- ----------- -----------
Operating activity
Total (loss)/profit after tax
excluding interest received (831,741) (810,097) (2,267,339) (4,985,875)
Depreciation charge 9 1,635 1,635 4,019 3,999
Shares issued in lieu of net
wages 1,360 1,360 8,158 8,158
Share based payment charge 8,021 8,021 8,997 8,997
Impairment charge - deferred
exploration asset 442,917 - 1,976,618 -
Impairment charge - other investments - - - -
Non-cash additions to other
investments - - - -
Gain on disposal of other investments - - (37,094) (5,830)
Increase/(decrease) in provision
for impairment of loans to subsidiaries 10 - 487,610 - 4,682,590
(Increase)/decrease in receivables 11 55,084 53,401 (2,400) 641
Increase/(decrease) in payables 13 5,523 (8,885) (10,645) (2,679)
------------------------------------------ ----- --------- --------- ----------- -----------
Net cash outflow from operating
activity (317,201) (266,955) (319,686) (289,999)
------------------------------------------ ----- --------- --------- ----------- -----------
Investing activity
Interest received 234 30,279 142 14,226
Exploration and development
expenditures 8 (121,967) - (201,622) -
Disposal of development asset - - - -
Disposal of other investments 10 40,883 40,883 133,094 16,828
Purchase of property, plant
& equipment 9 (2,509) (2,509) (2,966) (2,966)
Additional loans to subsidiaries 10 - (204,985) - (126,285)
Net cash outflow from investing
activity (83,359) (136,332) (71,352) (98,197)
------------------------------------------ ----- --------- --------- ----------- -----------
Financing activity
Issue of share capital (net
of expenses) 230,000 230,000 450,000 450,000
Net cash inflow from financing
activity 230,000 230,000 450,000 450,000
------------------------------------------ ----- --------- --------- ----------- -----------
Net increase/(decrease) in cash
and cash equivalents (170,560) (173,287) 58,962 61,804
------------------------------------------ ----- --------- --------- ----------- -----------
Cash and cash equivalents at
start of year 218,297 202,732 159,278 140,928
Exchange differences 2,880 - 57 -
------------------------------------------ ----- --------- --------- ----------- -----------
Cash and cash equivalents at
30 September 12 50,617 29,445 218,297 202,732
------------------------------------------ ----- --------- --------- ----------- -----------
Notes to the Financial Statements
for the year ended 30 September 2019
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.
The Group has adopted IFRS 9 from 1 October 2018. The directors
reviewed the Group's existing financial assets as at 1 October 2018
and reclassified the investments previously held as available for
sale into at fair value through other comprehensive income (OCI)
category. The adoption of IFRS 9 did not result in adjustments to
the amounts recognised in the financial statements. The new
accounting policy is set out in Note 1(f).
(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 (GBP50,617), 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 GBP779,821 (2018: GBP4,971,649). The loss
for 2019 includes provision for impairment of its investment in
subsidiary undertakings in the amount of GBP487,610 (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 2019 and December 2019.
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) Leasing and hire purchase commitments
Rentals applicable to operating leases where substantially all
the benefits and risks of ownership remain with the lessor are
charged to the income statement on a 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 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.
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;
MB fluorspar project has a carrying value of GBP2.1m and
expenditure of GBP132k is budgeted for 2020. The complexity of ore
was raised as an issue in the early exploration phase, however,
using historical data and chemical analysis the directors expect
that the deeper zones to the North-West of the site will not be as
complex from a metallurgical viewpoint and there are reasonable
prospects for progressing. So in their judgment development of this
project is to continue.
Two gold projects with a total carrying value of GBP359,000 were
sold to a third party in 2016. Tertiary has the right to future
royalties, but only if these projects proceed to drilling,
successful exploration and production. The directors have sought
confirmation from the third party of their plans and commitment to
continue with the project. 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. Specifically, the
adoption of IFRS 16 (leases) will change the accounting treatment
by lessees of leases currently classified as operating leases.
Lease agreements will give rise to the recognition by the lessee of
an asset, representing the right to use the leased item and a
related liability for future lease payments. Lease costs will be
recognised in the income statement in the form of depreciation of
the right of use asset over the lease term and finance charges
representing the unwind of the discount on the lease liability. The
adoption of IFRS 16 will not have a 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).
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
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
----------------------------------------------- ----------- --------- ---------
2. Segmental analysis (continued)
Exploration Head
projects office Total
2018 GBP GBP GBP
----------------------------------------------- ----------- --------- -----------
Consolidated Income Statement
Revenue - 218,841 218,841
----------------------------------------------- ----------- --------- -----------
Pre-licence exploration costs (38,725) - (38,725)
Impairment of deferred exploration asset (1,976,618) - (1,976,618)
Share-based payments - (8,997) (8,997)
Administration costs and other expenses - (498,934) (498,934)
----------------------------------------------- ----------- --------- -----------
Operating Loss (2,015,343) (289,090) (2,304,433)
Disposal of other investments - 37,094 37,094
Bank interest received - 142 142
----------------------------------------------- ----------- --------- -----------
Loss before income tax (2,015,343) (251,854) (2,267,197)
Income tax - - -
----------------------------------------------- ----------- --------- -----------
Loss for the year attributable to equity
holders (2,015,343) (251,854) (2,267,197)
----------------------------------------------- ----------- --------- -----------
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaresselkä Gold Project, Finland 260,992 - 260,992
Kiekerömaa Gold Project, Finland 97,887 - 97,887
Lassedalen Fluorspar Project, Norway 430,616 - 430,616
MB Fluorspar Project, USA 1,880,891 - 1,880,891
----------------------------------------------- ----------- --------- -----------
2,670,386 - 2,670,386
Property, plant & equipment - 3,308 3,308
Other investments - 202,328 202,328
----------------------------------------------- ----------- --------- -----------
2,670,386 205,636 2,876,022
----------------------------------------------- ----------- --------- -----------
Current assets
Receivables 23,780 72,873 96,653
Cash and cash equivalents - 218,297 218,297
23,780 291,170 314,950
----------------------------------------------- ----------- --------- -----------
Current liabilities
Trade and other payables (15,299) (49,864) (65,163)
Net current assets 8,481 241,306 249,787
----------------------------------------------- ----------- --------- -----------
Net assets 2,678,867 446,942 3,125,809
----------------------------------------------- ----------- --------- -----------
Other data
Deferred exploration additions 201,622 - 201,622
Exchange rate adjustments to deferred
exploration costs (62,633) - (62,633)
----------------------------------------------- ----------- --------- -----------
3. Loss before income tax
2019 2018
GBP GBP
-------------------------------------------------------- ------ ------
The operating loss is stated after charging
Operating lease rentals - land and buildings 21,081 20,668
Depreciation - owned assets 1,635 4,019
Fees payable to the Group's Auditor for:
The audit of the Group's annual accounts 6,125 6,175
The audit of the Group's subsidiaries, pursuant
to legislation 3,105 3,087
Fees payable to the Group's Auditor and its associates
for other services:
Interim review of accounts 1,000 1,000
Corporation tax fees 1,300 1,300
Corporation tax review fees 3,300 -
VAT review - 2,250
-------------------------------------------------------- ------ ------
4. Directors' emoluments
Remuneration in respect of directors was as follows:
Net cost Income from recharge
to Group to Total Total
2019 Sunrise Resources 2019 2018
GBP plc GBP GBP
2019
GBP
-------------------------- --------- -------------------- ------- -------
P L Cheetham (salary) 18,821 68,067 86,888 114,472
R H Clemmey (salary) 86,183 706 86,889 98,354
D A R McAlister (salary) 16,833 - 16,833 16,000
D Whitehead (deceased)
(salary) - - - 2,500
121,837 68,773 190,610 231,326
-------------------------- --------- -------------------- ------- -------
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 GBP4,677 (2018:
GBP4,224) or Employer's National Insurance contributions of
GBP23,072 (2018: GBP28,050).
There was no bonus in the year 2019. The remuneration amount for
R H Clemmey includes a bonus of GBP12,500 in 2018. Bonus
remuneration is applicable to performance in the previous financial
year.
Pension contributions made during the year on behalf of
Directors amounted to GBP1,061 (2018: GBP599).
The directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP195,287 (2018: GBP235,550).
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 GBP126,514 (2018: GBP136,878).
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
2019 Sunrise Resources 2019 2018
GBP plc GBP GBP
2019
GBP
------------------------ --------- -------------------- ------- -------
Wages and salaries 179,782 139,022 318,804 358,095
Social security costs 18,952 17,141 36,093 39,465
Share-based payments 8,021 - 8,021 8,997
------------------------ --------- -------------------- ------- -------
206,755 156,163 362,918 406,557
------------------------ --------- -------------------- ------- -------
The average monthly number of part-time and full-time 2019 2018
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) 5 5
------------------------------------------------------ ------- -------
8 8
------------------------------------------------------ ------- -------
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.
2019 2018
------------------------------------------- ----------- -----------
Loss (GBP) (831,507) (2,267,197)
Weighted average ordinary shares in issue
(No.) 416,198,199 351,361,810
Basic and diluted loss per ordinary share
(pence) (0.19) (0.65)
------------------------------------------- ----------- -----------
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 (2018: GBPNil).
The tax credit for the period is lower than the credit resulting
from the loss before tax at the standard rate of corporation tax in
the UK - 19% (2018: 19%). The differences are explained below.
2019 2018
GBP GBP
----------------------------------------------- --------- -----------
Tax reconciliation
Loss before income tax (831,507) (2,267,197)
Tax at hybrid rate 19% (2018: 19%) (157,986) (430,767)
----------------------------------------------- --------- -----------
Differences between capital allowances and
depreciation (1,828) (110)
Expenditure disallowed for tax purposes 29,902 79,394
Pre-trading expenditure no longer deductible
for tax purposes 43,625 42,707
----------------------------------------------- --------- -----------
Tax effect at 19% (2018: 19%) 13,623 23,178
----------------------------------------------- --------- -----------
Unrelieved tax losses carried forward (144,363) (407,589)
----------------------------------------------- --------- -----------
Tax recognised on loss - -
----------------------------------------------- --------- -----------
Total losses carried forward for tax purposes 8,689,670 7,859,632
----------------------------------------------- --------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP8,689,670
(2018: GBP7,859,632). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the
future. 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.
Following a review of the 2017 and 2018 tax returns there was a
change in treatment of carried forward losses as excess management
expenses of the Company. This change resulted in the difference of
GBP1,469 between the 2018 and 2019 carried forward balances.
8. Intangible assets
Deferred Deferred
exploration exploration
expenditure expenditure
2019 2018
Group GBP GBP
------------------------------- ------------ ------------
Cost
At start of year 6,009,482 5,870,493
Additions 121,967 201,622
Exchange adjustments 112,536 (62,633)
------------------------------- ------------ ------------
At 30 September 6,243,985 6,009,482
------------------------------- ------------ ------------
Disposals
At start of year (3,339,096) (1,362,478)
Impairment losses during year (442,917) (1,976,618)
Disposals during year - -
------------------------------- ------------ ------------
At 30 September (3,782,013) (3,339,096)
------------------------------- ------------ ------------
Carrying amounts
At 30 September 2,461,972 2,670,386
------------------------------- ------------ ------------
At start of year 2,670,386 4,508,015
------------------------------- ------------ ------------
The directors carried out an impairment review which, with
reference to IFRS6.20(b) and IAS36.12(b), resulted in an impairment
charge, relating to the Tertiary Gold Limited Lassedalen 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
2019 2019 2018 2018
GBP GBP GBP GBP
--------------------- ------------- ------------- ------------- -------------
Cost
At start of year 49,543 34,785 46,577 31,819
Additions 2,509 2,509 2,966 2,966
Disposals (3,900) (3,900) - -
--------------------- ------------- ------------- ------------- -------------
At 30 September 48,152 33,394 49,543 34,785
--------------------- ------------- ------------- ------------- -------------
Depreciation
At start of year (46,235) (31,477) (42,216) (27,478)
Charge for the year (1,635) (1,635) (4,019) (3,999)
Disposals 3,900 3,900 - -
At 30 September (43,970) (29,212) (46,235) (31,477)
--------------------- ------------- ------------- ------------- -------------
Net Book Value
At 30 September 4,182 4,182 3,308 3,308
--------------------- ------------- ------------- ------------- -------------
At start of year 3,308 3,308 4,361 4,341
--------------------- ------------- ------------- ------------- -------------
10. Investments
Subsidiary undertakings
Country of Type and percentage
incorporation/ of shares held at
Company registration 30 September 2019 Principal activity
---------------------- --------------- ----------------------- -------------------
Tertiary Gold Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary (Middle
East) Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary Minerals
US Inc. Nevada, USA 100% of ordinary 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
2019 2018
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 683,947 683,243
Less - Provision for impairment (683,947) (683,243)
Loan - Tertiary Gold Limited 5,302,305 5,246,129
Less - Provision for impairment (5,168,430) (4,681,523)
Loan - Tertiary Minerals US Inc. 1,837,532 1,689,428
--------------------------------------------- ----------- -----------
At 30 September 2,196,297 2,478,924
--------------------------------------------- ----------- -----------
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, totalling GBP1,971,407 has been carried out. This
indicated a potential credit loss arising in the year of GBP486,907
(2018: GBP4,681,523) relating to Tertiary Gold Limited. The
assessment and provision arises from the fact that there has been
an impairment of the underlying exploration assets held by Tertiary
Gold Limited, leading to doubt over recoverability of the loan. The
provision made against the receivable has reduced it to the value
of the underlying development assets.
Other investments - listed investments
Country of Type and percentage
incorporation/ of shares held at
Company registration 30 September 2019 Principal activity
------------------ --------------- ------------------- -------------------
Sunrise Resources 2.71% of ordinary
plc England & Wales shares Mineral exploration
------------------ --------------- ------------------- -------------------
Group Company Group Company
Investment designated at fair value 2019 2019 2018 2018
through OCI GBP GBP GBP GBP
------------------------------------- -------- -------- --------- --------
Value at start of year 202,328 202,328 408,971 266,087
Additions - - - -
Disposal (40,883) (40,883) (134,633) (17,000)
Movement in valuation (71,670) (71,670) (72,010) (46,759)
------------------------------------- -------- -------- --------- --------
At 30 September 89,775 89,775 202,328 202,328
------------------------------------- -------- -------- --------- --------
Disposals in the last financial year comprise a disposal of
52,000,000 Sunrise Resources plc shares (2018: 10,000,000 Sunrise
Resources plc shares and the disposal of the Company's shareholding
of Aurion Resources Limited shares).
The fair value of each investment is equal to the market value
of its shares at 30 September 2019, 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
2019 2019 2018 2018
GBP GBP GBP GBP
------------------- ------ ------- ------ -------
Trade receivables 10,496 10,496 59,690 59,690
Other receivables 20,020 1,725 23,229 1,913
Prepayments 11,052 7,126 13,734 11,146
------------------- ------ ------- ------ -------
At 30 September 41,568 19,347 96,653 72,749
------------------- ------ ------- ------ -------
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
------------------------ --------- -------- -------- ---------
2019 Trade receivables 10,496 10,496 - 10,496
2018 Trade receivables 59,690 59,690 - 59,690
------------------------ --------- -------- -------- ---------
12. Cash and cash equivalents
Group Company Group Company
2019 2019 2018 2018
GBP GBP GBP GBP
-------------------------- ------- ------- -------- -------
Cash at bank and in hand 47,787 26,615 20,944 5,379
Short-term bank deposits 2,830 2,830 197,353 197,353
-------------------------- ------- ------- -------- -------
At 30 September 50,617 29,445 218,297 202,732
-------------------------- ------- ------- -------- -------
13. Trade and other payables
Group Company Group Company
2019 2019 2018 2018
GBP GBP GBP GBP
--------------------------------- ------ ------- ------ -------
Trade payables 11,592 5,737 18,650 6,337
Other taxes and social security
costs 6,481 6,481 14,207 14,207
Accruals 48,055 12,941 30,468 16,220
Other payables 4,558 4,558 1,838 1,838
--------------------------------- ------ ------- ------ -------
At 30 September 70,686 29,717 65,163 38,602
--------------------------------- ------ ------- ------ -------
14. Issued capital and reserves
2019 2019 2018 2018
No. GBP No. GBP
------------------------------- ----------- ------ ----------- ------
Allotted, called up and fully
paid Ordinary Shares
Balance at start of year 359,323,754 35,932 317,076,933 31,708
Shares issued in the year 83,751,911 8,375 42,246,821 4,224
------------------------------- ----------- ------ ----------- ------
Balance at 30 September 443,075,665 44,307 359,323,754 35,932
------------------------------- ----------- ------ ----------- ------
2019 2019 2018 2018
No. GBP No. GBP
-------------------------- ----------- --------- ----------- ---------
Deferred Shares
Balance at start of year 267,076,933 2,644,062 267,076,933 2,644,062
Balance at 30 September 267,076,933 2,644,062 267,076,933 2,644,062
-------------------------- ----------- --------- ----------- ---------
Capital restructure
At a General Meeting on 13 April 2017 the shareholders approved
the subdivision of the Company's ordinary share capital 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 have no significant rights
attached to them and carry no right to vote or to participate in
distribution of surplus assets and are not admitted to trading on
the AIM market of the London Stock Exchange plc or any other stock
exchange. The Deferred Shares effectively carry no value.
Share issues
During the year to 30 September 2019 the following share issues
took place:
An issue of 83,333,333 0.01p ordinary shares at 0.3p per share,
by way of placing, for a total consideration of GBP230,000 net of
expenses (25 January 2019).
An issue of 418,578 0.01p ordinary shares at 0.325p per share to
a director, in satisfaction of director's fees, for a total
consideration of GBP1,360 (21 February 2019).
During the year to 30 September 2018 a total of 42,246,821 0.01p
ordinary shares were issued, at an average price of 1.203p, for a
total consideration of GBP458,158 net of expenses.
The total amount of transaction fees debited to the Share
Premium account in the year was GBP20,000 (2018: GBP50,000).
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, which relate to
subsidiaries only, from their functional currency into the Parent
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 2019
Exercise Expiry
Issue date price Number Exercisable dates
------------ -------- --------- ------------------------ ----------
20/02/2015 4.00p 1,200,000 Any time before expiry 20/02/2020
20/02/2015 4.00p 500,000 Any time before expiry 20/02/2020
11/03/2016 1.40p 200,000 Any time before expiry 11/03/2021
11/03/2016 1.40p 800,000 Any time before expiry 11/03/2021
31/01/2017 1.025p 200,000 Any time before expiry 31/01/2022
31/01/2017 1.025p 800,000 Any time before expiry 31/01/2022
31/01/2018 1.875p 200,000 Any time from 01/02/2019 31/01/2023
31/01/2018 1.875p 800,000 Any time from 01/02/2019 31/01/2023
21/02/2019 0.50p 3,500,000 Any time from 21/02/2020 21/02/2024
21/02/2019 0.35p 3,000,000 Any time from 21/02/2020 21/02/2024
21/02/2019 0.35p 400,000 Any time from 21/02/2020 21/02/2024
21/02/2019 0.35p 1,600,000 Any time from 21/02/2020 21/02/2024
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.
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:
2019 2018
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 9,050,000 7.877 10,050,000 8.425
Granted during the year 8,500,000 0.412 1,000,000 1.875
Exercised during the year - - - -
Forfeited during the year - - - -
Expired during the year (4,350,000) 13.84 (2,000,000) 7.630
------------------------------ --------------- --------- --------------- ---------
Outstanding at 30 September 13,200,000 1.106 9,050,000 7.877
------------------------------ --------------- --------- --------------- ---------
Exercisable at 30 September 4,700,000 2.362 6,850,000 6.717
------------------------------ --------------- --------- --------------- ---------
The warrants outstanding at 30 September 2019 had a weighted
average exercise price of 1.1p (2018: 7.9p), a weighted average
fair value of 0.43p (2018: 1.84p) and a weighted average remaining
contractual life of 3.42 years (2018: 1.76 years).
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. In the year ended 30
September 2018, warrants were granted on 31 January 2018. The
aggregate of the estimated fair values of the warrants granted on
this date is GBP7,082.
There were no warrants exercised in the year ending 30 September
2019.
The inputs into the Black-Scholes-Merton Pricing Model were as
follows:
2019 2018
--------------------------------- ------- -------
Weighted average share price 0.350p 1.875p
Weighted average exercise price 0.388p 1.875p
Expected volatility 75.0% 70.0%
Expected life 4 years 4 years
Risk-free rate 0.827% 1.06%
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 GBP8,021 and GBP8,997
related to equity-settled share based payment transactions in 2019
and 2018 respectively.
16. Operating lease commitments
The Company rents office premises under a short term operating
lease agreement.
Future minimum lease payments under non-cancellable operating
leases are:
2019 2018
Land & buildings Land & buildings
GBP GBP
----------------------- ----------------- -----------------
Office accommodation:
Within one year 3,525 3,456
----------------------- ----------------- -----------------
The Company does not sub-let any of its leased premises.
Lease payments recognised in loss for the period amounted to
GBP21,081 (2018: GBP20,668).
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 2019 At 30 September 2018
Share Warrants Warrant Share
Shares warrants exercise expiry Shares warrants
number number price date number number
----------------- ---------- --------- --------- ---------- ----------- ---------
P L Cheetham* 12,612,113 1,000,000 4.000p 20/02/2020 12,612,113 1,500,000
2,000,000 0.500p 21/02/2024
D A R McAlister 1,295,343 1,500,000 0.500p 21/02/2024 876,765 -
R H Clemmey 977,405 3,000,000 0.350p 21/02/2024 977,405 3,350,000
----------------- ---------- --------- --------- ---------- ----------- ---------
* Includes 2,843,625 shares held by K E Cheetham, wife of P L
Cheetham.
The directors have no beneficial interests in the shares of the
Company's subsidiary undertakings as at 30 September 2019. 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 GBP189,742 (2018:
GBP218,841) to Sunrise Resources plc being shared overheads of
GBP27,025 (2018: GBP24,607), costs paid on behalf of Sunrise
Resources plc of GBP6,554 (2018: GBP5,421), staff salary costs of
GBP78,590 (2018: GBP77,597) and directors' salary costs of
GBP77,574 (2018: GBP111,216), comprising P L Cheetham GBP76,773
(2018: GBP110,790) and R H Clemmey GBP801 (2018: GBP426). 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 GBP10,496 (2018:
GBP59,690) 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 2019 At 30 September 2018
Warrants Warrants
Shares Exercise expiry Shares Warrants
number Number price date number number
----------------- ----------- --------- --------- ---------- ----------- ---------
P L Cheetham* 125,593,683 3,000,000 0.275p 05/02/2020 83,454,885 5,000,000
D A R McAlister 550,000 - - - 550,000 -
R H Clemmey - 750,000 0.275p 05/02/2020 2,750,000
500,000 0.160p 18/02/2021
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.
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 2019, 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 no
financial liabilities other than trade and other payables due
within one year and had no agreed borrowing facilities as at this
date. There is no material difference between the carrying and fair
values of the Group and Company's financial assets and
liabilities.
The carrying amounts for each category of financial instruments
held at 30 September 2019, as defined in IFRS 9, are as
follows:
Group Company Group Company
2019 2019 2018 2018
GBP GBP GBP GBP
------------------------------------- ------ ------- ------- -------
Financial assets at amortised
cost 81,133 41,670 301,215 264,335
Financial assets at fair value
through other comprehensive income 89,775 89,775 202,328 202,328
Financial liabilities at amortised
cost 62,156 21,187 50,276 23,715
------------------------------------- ------ ------- ------- -------
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
2019 2018 2019 2018
GBP GBP GBP GBP
------------------------- ------ ------- ------ -------
United Kingdom Sterling 23,526 203,098 22,438 202,085
United States Dollar 11,628 4,171 6,691 313
Swedish Krona 5,734 483 - 5
Norwegian Krona 4 - 4 -
European Euro 9,664 10,486 303 314
Canadian Dollar 14 15 14 15
Saudi Riyal 47 44 - -
50,617 218,297 29,450 202,732
------------------------- ------ ------- ------ -------
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 2019 would
increase or decrease by GBP581 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. Events after the reporting date
On 8 October 2019, the Swedish tax office informed the Company
that the appeal was not successful with regards to levy of an
incorrect tax return relating to tax year 2013/14 in Tertiary Gold
Sweden Branch. The levy was increased to SEK 296,958 (approximately
GBP24,461) by the interest of SEK 8,703. The Company's tax lawyer
in Sweden is further appealing the decision. This event is treated
as a post balance sheet adjusting event and the full cost of
potential tax levy was accrued.
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 will issue to the Investor 18,000,000 Shares at
par to collateralise the investment ("Collateral Shares"). Investor
may be required to make a further payment to the Company once all
of the obligations of the Company under the Agreement have been
finally met and no amount remains outstanding to the Investor,
depending on the price of Shares at such time; and
(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 18th 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
issue 154,705,883 new ordinary shares at a Conversion Price of 0.17
pence per share.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BDGDDCSBDGGC
(END) Dow Jones Newswires
February 19, 2020 07:53 ET (12:53 GMT)
Grafico Azioni Tertiary Minerals (LSE:TYM)
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Da Mar 2024 a Apr 2024
Grafico Azioni Tertiary Minerals (LSE:TYM)
Storico
Da Apr 2023 a Apr 2024
