TIDMSRES
RNS Number : 5309J
Sunrise Resources Plc
13 December 2022
SUNRISE RESOURCES PLC
("the Company")
AIM Announcement 13 December 2022
Audited Results for the year to 30 September 2022
The Board of Sunrise Resources plc, the AIM-traded company, is
pleased to announce its audited results for the year ended 30
September 2022. The Company will announce posting of its results
which will be published on the Company's website along with the
Notice of the AGM in due course.
Operational Highlights for 2022
-- Focus continues on development of the fully mine permitted CS
natural pozzolan and perlite deposit in Nevada.
-- New developments during the year at the Hazen pozzolan and
Pioche sepiolite project as Company's business evolves in the
industrial minerals sector in Nevada.
-- The depth of the Company's project portfolio of industrial
mineral and precious metal projects underlined this year with
agreements signed with major companies at our Pioche and Jackson's
Wash projects.
CS Pozzolan-Perlite Project, Nevada, USA
Pozzolan
-- Discussions held with multiple parties aimed at joint
development, custom testwork programmes completed by interested
parties.
-- Board is working on strategies to maximise the value of the
project and to demonstrate this value to our shareholders.
-- CS Natural Pozzolan has now been conditionally approved by
the California Department of Transport ("Caltrans") for use in
California State infrastructure projects, having successfully
passed compliance testing.
-- Industry feedback continues to highlight the use of natural
pozzolan in key strategies being employed in the cement and
concrete industries towards net-zero CO2 emissions.
Perlite
-- Customer testing continues including, most recently, by one
of the country's largest consumers of raw perlite.
Hazen Pozzolan Project, Nevada, USA
-- Targeting distinct regional markets in northern California and northern Nevada.
-- Collaborative arrangement with an existing processor of
natural pozzolan for bulk sampling and commercial scale test
grind
-- 250-ton sample extracted; test grinding in progress, results awaited.
Pioche Sepiolite Project, Nevada, USA
-- Option to Purchase granted to US subsidiary of Spanish
company Tolsa S.A. ("Tolsa"), the world's largest producer of
Sepiolite.
-- Option can be exercised by payment of US$1.25 in cash and 3%
net revenue royalty for a 25-year period from the commencement of
commercial production (20% Finders fees payable to an independent
third party).
-- Surface mapping programme completed by Tolsa in July has
identified multiple sepiolite horizons throughout the project
area.
-- Trenching programme completed; samples being tested in Spain, results awaited
-- Sepiolite, an industrial mineral, has unique characteristics,
is scarce, with very few commercial deposits in the world.
Other Projects
Jacksons Wash, Nevada, USA
-- Lease/purchase option agreement signed with Kinross early in
the reporting period. Active exploration planned for 2023.
Baker's Gold Project, Western Australia
-- Mining lease application in progress. Agreement with Native
Title holder required prior to grant, and strategy under
review.
More detailed information follows.
Further information:
Sunrise Resources plc Tel: +44 (0)1625 838 884
Patrick Cheetham, Executive
Chairman
Tel: +44 (0)207 628 3396
Beaumont Cornish Limited
Nominated Adviser
James Biddle/Roland Cornish
Tel: +44 (0)207 469 0930
Peterhouse Capital Limited
Broker
Lucy Williams/Duncan Vasey
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 which forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via a
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
Qualified Person Information:
The information in this release has been compiled and reviewed
by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a qualified person
for the purposes of the AIM Note for Mining and Oil & Gas
Companies. Mr. Cheetham is a Member of the Institute of Materials,
Minerals & Mining and also a member of the Australasian
Institute of Mining & Metallurgy.
Chairman's Statement
Dear Shareholders,
I am pleased to present your Annual Report for 2022 which covers
the financial year ended 30 September 2022.
Our strategy continues to be to advance our fully mine permitted
CS natural pozzolan and perlite deposit in Nevada, whilst new
developments during the year at the Hazen pozzolan and Pioche
sepiolite projects have seen the Company's business evolve more
broadly in the industrial minerals space in Nevada.
In the first half of this year, following successful commercial
trials of CS natural pozzolan with a large cement and ready-mix
company, our expectations were high that a joint development
agreement would be reached with that company. However, we
terminated negotiations after they became unnecessarily protracted
and have since prioritised discussions with other potential
partners. These companies have all required further samples for
testing with their own cements and concrete blends. This work has
progressed throughout the year and has now been successfully
completed in each case confirming CS pozzolan's high quality as a
natural pozzolan. The Board is working hard to capitalise this
third-party interest and now that additional funds have been
secured, the Board is working on strategies to maximise the value
of the project and to demonstrate this value to our
shareholders.
For example, a significant milestone for the CS Project this
year was the conditional approval of the CS natural pozzolan by the
California Department of Transport ("Caltrans"), the Government
body responsible for the award of State funded infrastructure
construction projects in California. Caltrans mandates the use of
supplementary cementitious materials ("SCMs") such as natural
pozzolan in order to improve the durability and sustainability of
their projects and many concrete specifiers also look to this list
as an independent endorsement when specifying for a wider range of
non-Caltrans projects.
We also continue to advance the testing of the perlite from our
CS Project and further details are provided in the Operating
Review. Previous testwork has identified a number of potential
customers and others are in the process of testing our material
including, most recently, one of the largest consumers of raw
perlite in the US.
In October I was pleased to announce the start of a
collaborative arrangement with an existing processor of natural
pozzolan for mining and commercial scale test grinding of a bulk
sample from our second pozzolan project at Hazen, Nevada. The CS
Project is targeting the cement and concrete markets of southern
California and southern Nevada-Las Vegas, whilst our newer Hazen
Pozzolan Project is more favourably located for the cement and
concrete markets in northern California and northern Nevada.
Approximately 250 tons of natural pozzolan have been extracted from
Hazen at no cost to Sunrise and is currently being processed. The
collaborative partner has the processing facilities and marketing
network to commercialise the Hazen deposit in the future.
In May this year we issued an article through RNS Reach that
highlighted the key role that natural pozzolan has in cement
decarbonisation in the western USA and within multiple CO(2)
net-zero strategies in the cement and concrete industries, as well
as its function in building more durable and sustainable concrete
structures. The energy crisis this year has served to reduce the
rate of decline of fly ash availability as some coal-fired power
stations due to close have been temporarily kept open, but this
declining trend is set to continue and our pozzolans are a natural
replacement.
The depth of the Company's project portfolio of industrial
mineral and precious metal projects was underlined this year with
agreements signed with major companies at our Pioche and Jackson's
Wash projects.
The Pioche Sepiolite Project has quickly risen to prominence
after the world's largest sepiolite producer, the Spanish company
Tolsa S.A., took an option to purchase the project. Sepiolite is a
rare and valuable clay with unique absorptive and gelling
properties and only a handful of commercial deposits around the
world.
We have been very encouraged by the rapid start Tolsa has made
in its evaluation of the Pioche Project. In the summer, Tolsa
completed a thorough programme of surface mapping and evaluation,
identifying multiple horizons of sepiolite below our original
discovery level and this autumn has completed a programme of
trenching to provide further exposures of the mineralisation to
enable a better evaluation of the thicknesses and quality of the
Pioche sepiolite deposits. Sepiolite samples from the trenching are
being tested in Spain and results are eagerly awaited. Tolsa must
make an election to continue its option by the end of this December
2022.
Earlier this year we granted a lease/option to purchase our
Jackson's Wash claims to global gold producer Kinross Gold U.S.A.
Inc. who is actively exploring in the vicinity of our Jackson's
Wash claims. If Kinross elect to purchase the claims, we will hold
a 2.5% Net Smelter Royalty on production. We continue to hold
royalty interests in the Garfield and Stonewall projects in Nevada
held by AIM aspirant Golden Metal Resources Ltd, and in the
Junction Copper Project held by TSX-V listed VR Resources
Limited.
The Company is progressing its mining lease application at the
Bakers Gold Project in Western Australia where the mining law
requires that the Company reach agreement with the regional Native
Title holder for its application to be granted . The Company could
face high legal costs to progress this application but is
considering options to defer those costs until such time as the
project is more advanced. Whilst the Company has yet to progress
discussions with the Native Title holder, in view of these
potential costs, it has taken the prudent step to impair the value
for this project in the Company's accounts until such time as the
position is clearer when the impairment could be reversed.
Similarly, the value of the Myrtle Project was impaired following
the receipt of drilling results from a prior explorer which
downgraded the prospectivity of the Company's claim block.
Our activities this year have been funded out of existing cash
resources, a modest fund raise of GBP100,000 in July and the sale
of the majority of our shares in Power Metal Resources. After the
year end, we closed an up to GBP480,000 two-year convertible note
financing facility with Net Zero Strategies LLC, a US investment
fund focused on the green economy. This provides options on the
amount we drawdown and the number of shares that may need to be
issued under the arrangement will, by-and-large, be based on our
future share price performance which was preferable to the prospect
of a placing at a discount to the current price.
At our next Annual General Meeting, to be held in London on 17
February 2023, we will be proposing Mr Murphy for re-election and
seeking approval for resolutions to allow for the issue of new
shares. I urge shareholders to support these resolutions as,
without their approval, the Company cannot raise the funds it needs
to continue as a going concern. For those who cannot attend the AGM
we are encouraging shareholders to appoint the Chairman as their
proxy.
With the CS Project, Hazen and Pioche, we now have three key
projects moving forward as well as a strong portfolio of royalty
interests and wholly owned projects available for joint venture or
disposal. There are several potential value catalysts within the
Company's project portfolio and your Board believes we can look
forward to productive developments in 2023. I look forward to
reporting further progress.
Patrick Cheetham
Executive Chairman
9 December 2022
Strategic Report
The Directors of the Company and its subsidiary undertakings
(which together comprise "the Group") present their Strategic
Report for the year ended 30 September 2022.
The principal activity of the Company is the acquisition,
exploration and development of mineral projects, primarily in the
western USA.
Our strategy is to develop the CS Pozzolan-Perlite Project and
other key projects through to profitable production in order that
the Company's activities become self-funding and to unlock the
value inherent in its portfolio of mineral projects through sale,
joint venture or other arrangements, retaining royalty interests
where possible.
The Company's Business Model is to acquire 100% ownership of
mineral assets at minimal expense. This usually involves staking
claims as was the case for the CS and NewPerl Projects or applying
for exploration licences from the relevant authority, as was the
case in Australia. In other cases, rights are negotiated with
existing project owners for initially low periodic payments that
rise over time as confidence in the project value increases and
this was the case for the Bay State Silver Project.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on value adding exploration and
development activities. The Company's administration costs are
reduced via a cost sharing Management Services Agreement with
Tertiary Minerals plc.
The Strategic Plan is on track although the timeframe for first
commercial production from the CS Project has moved out due to
delays in customer trials and protracted offtake negotiations.
Further details of our progress on the CS Project are given in the
Operating Review.
The Company's activities are financed by periodic capital
raisings, through private share placings and the issue of other
financial instruments. For more advanced projects such as the CS
Project the Board will seek to secure additional funding from a
range of sources, for example debt funding, pre-financing through
offtake agreements and other joint arrangements.
Over the past few years, the Company has established a valuable
portfolio of drill-ready precious metal, base metal and industrial
mineral projects. Our strategy remains to valorise those projects
through sale or other arrangements seeking, wherever possible,
free-carried exposure to increases in value and production from the
projects. Examples during the year include the agreement with
Kinross Gold on the Jacksons Wash Project and the agreement with
Tolsa USA Inc. on the Pioche Sepiolite Project as detailed in the
Operating Review , both of which include retained royalty
interests.
Organisation Overview
The Group's business is directed by the Board and is managed by
the Executive Chairman. The Company has a Management Services
Agreement with Tertiary Minerals plc ("Tertiary") which was the
original parent of the Company. Under this cost sharing agreement,
Tertiary provides all of the Company's administration and technical
services, including the technical and management services of the
Executive Chairman, at cost. Day-to-day activities are managed from
Tertiary's offices in Macclesfield in the United Kingdom, but the
Group operates in two other countries and the corporate structure
of the Group reflects the historical pattern of project acquisition
by the Group and the need, where appropriate, for fiscal and other
reasons, to have incorporated entities in particular
territories.
The Group's exploration activity in Nevada, USA, is undertaken
through two local subsidiaries, SR Minerals Inc. and Westgold
Inc.
In Australia the Company operates through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd.
The Board of Directors comprises two independent non-executive
directors and the Executive Chairman. The Executive Chairman is
also Executive Chairman of Tertiary, but otherwise the Board is
independent of Tertiary. Tertiary is not a significant shareholder
(as defined under the AIM Rules) in the Company.
Financial & Performance Review
The Group is not yet producing minerals and so has no income
other than a small amount of bank interest. Consequently, the Group
is not expected to report profits until it disposes of or is able
to profitably develop or otherwise realise the value of its
exploration and development projects.
The Group reports a loss of GBP478,223 for the year (2021:
GBP335,252) after administration costs of GBP291,860 (2021:
GBP318,630). The loss includes expensed pre-licence and
reconnaissance exploration costs of GBP5,638 (2021: GBP17,320),
impairment of exploration assets of GBP194,247 (2021: GBP30,021)
and other income of GBP13,474. Administration costs include a
charge of GBP1,087 (2021: GBP19,663) relating to the value of
certain share warrants held by employees of Tertiary Minerals Plc
and by third parties calculated in accordance with IFRS 2. Cash
administration costs were GBP290,773 (2021: GBP298,967).
The Financial Statements show that, at 30 September 2022, the
Group had net current assets of GBP155,776 (2021: GBP399,384). This
represents the cash position and receivables, less trade and other
payables. These amounts are shown in the Consolidated and Company
Statements of Financial Position and are also components of the Net
assets of the Group. Net assets also include various "intangible"
assets of the Company. As the term suggests, these intangible
assets are not cash assets but include some of this year's and
previous years' expenditure on mineral projects where that
expenditure meets the criteria in Note 1(d) of the accounting
policies. The intangible assets total GBP2,503,812 (2021:
GBP2,133,137) and a breakdown by project is shown in Note 2 to the
financial statements. Sterling weakness at the end of the reporting
period has had a positive effect on the value of intangible assets
denominated in US Dollars in the Company's US subsidiaries.
Details of intangible ass ets, property, plant and equipment,
investments and right of use assets are also set out in Notes 8, 9,
10 and 17 of the financial statements.
Net assets also include the market value at year end of shares
in VR Resources Ltd and Power Metal Resources plc which are held as
"available for sale" investments as set out in Note 8.
Impairment
Expenditures which do not meet the criteria for capitalisation
as exploration and evaluation costs according to Note 1(d), such as
pre-licence and reconnaissance costs, are expensed and added to the
Company's loss. The loss reported in any year can also include
expenditure for specific projects carried forward in previous
reporting periods as an intangible asset but which the Board
determines is "impaired" in this reporting period.
It is a consequence of the Company's business model that there
will be impairments of unsuccessful exploration projects from time
to time. The extent to which expenditure is carried forward as
intangible assets is a measure of the extent to which the value of
the Company's expenditure is preserved.
Biannual reviews are carried out by the Directors as to whether
there are any indications of impairment of the Group's assets.
An impairment review of the carrying values of exploration and
development projects (and in the Company, the associated
intercompany loans) as at 30 September 2022 was undertaken by the
Directors under IFRS 6 and IAS 36. As a result of the year-end
review it was judged that the Bakers Project and Myrtle Project
expenditure were impaired. In the Company, the Sunrise Mineral
Australia Pty Ltd loan was also fully provided against. Further
information on the reasons for impairment can be found in the
Operating Review. Projects which are held for sale or joint venture
have not been impaired as it is anticipated that their carrying
values will be recovered through sale or through residual joint
venture interests in future.
The intangible asset value of a project, shown at cost, should
not be confused with the realisable or market value of a particular
project which will, in the Directors' opinion, be at least equal in
value and often considerably higher. Hence the Company's market
capitalisation on the AIM Market is usually in excess of the net
asset value of the Group.
The Company finances its activities through periodic capital
raisings and asset sales. As the Company's projects become more
advanced there may be strategic opportunities to obtain funding for
some projects through joint venture, production sharing, royalty
and other marketing arrangements.
Key Performance Indicators
The financial statements of a mineral exploration and
development company can provide a moment in time snapshot of the
financial health of a company but do not provide a reliable guide
to the performance of the Company or its Board.
The usual financial key performance indicators ("KPIs") are
neither applicable nor appropriate to measurement of the value
creation of a company which is involved in mineral exploration and
development which currently has no turnover. The Directors consider
that the detailed information in the Operating Review is the best
guide to the Group's progress and performance during the year.
Company does seek to reduce overhead costs, where practicable,
and is reporting administrative costs this financial year of
GBP291,860 (2021: 318,630).
In exploring for valuable mineral deposits, we accept that not
all our exploration will be successful but also that the rewards
for success can be high. We therefore expect that our shareholders
will be invested for the potential for capital growth taking a
long-term view of management's track record in mineral discovery
and development.
Fundraising
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of approval of this
report. Given the Group's cash position at year end (GBP96,126),
these projections include the proceeds of future fundraising
necessary within the next 12 months to meet the Group's overheads
and planned discretionary project expenditure. The successful
raising of finance is required based on projections to enable the
Group and Company to meet their liabilities as they fall due and
continue to operate on a going concern basis.
Operating Review
The Company has continued its operations in Nevada, USA and
Western Australia with progress made on three key projects during
the year.
Our focus continues to be the development of the CS
Pozzolan-Perlite Project but progress has also been made on our
Hazen Pozzolan Project and our Pioche Sepiolite Project, and the
Company continues to unlock its valuable portfolio of precious and
base metal projects that can provide potential additional growth
and value accretion opportunities in future.
The CS Project is held in the Company's 100% owned subsidiary,
SR Minerals Inc. The Group's other Nevada projects are held through
SR Minerals Inc. and Westgold Inc. and its Baker's Gold project in
Australia is held through an Australian subsidiary, Sunrise
Minerals Australia Pty Ltd.
SR MINERALS INC.
CS Pozzolan-Perlite Project, Nevada
The CS Project is located near Tonopah, in Nevada, USA, and
contains deposits of both natural pozzolan and perlite in three
separate zones - the Main Zone, the Tuff Zone and the Northeast
Exploration Area.
The project is "mine ready" with the key permits required to
operate the CS Project in place and with no time constraints on
when mining must start, save for periodic renewals of the air
quality permit and payment of annual claim fees.
Natural Pozzolan
Natural pozzolan is a cementitious material that is used to
partially replace and reduce the use of Portland cement in concrete
and mortars, a major source of greenhouse gas. Natural pozzolan
takes the place of coal fly ash pozzolans, the supply of which is
rapidly declining in the western world due to the closure of
coal-fired power stations.
The use of natural pozzolan in cement and concrete mixes
requires that the pozzolan be ground to a fine size before use and
so the production options being considered by the Company are:
-- Direct use of run-of-mine or crushed ore and by-product
perlite by cement companies in their grinding facilities.
-- Construction of a fixed process plant to grind the crushed
natural pozzolan for sale to cement companies and ready-mix
concrete companies.
Pozzolan can be crushed, if necessary, using the same mobile
plant used for perlite crushing and so the first of these options
has the lowest capital and operating cost but a fewer number of
potential customers who would need to have their own pozzolan
grinding capacity.
Perlite
Perlite is a glassy raw material which expands on heating by up
to 20 times in volume into a white or pale coloured low-density
material. Expanded perlite is used in various industrial and
household applications such as insulation, paint texturing, plaster
and concrete fillers, building materials fillers, formed insulation
and fire proofing. It also has application as filter aids,
insulating industrial cryogenic storage vessels and as a potting
medium in gardening and horticulture to aid water retention and
aeration of the soil. One of the largest areas of growing demand is
for large scale hydroponic farming resultant of the legalisation of
cannabis in many states. Perlite is also a natural pozzolan.
According to the United States Geological Survey ("USGS"),
860,000 tons of raw perlite was mined in the USA in 2021, up by 2%
on 2020. The consumers of raw perlite are split between independent
expanders and downstream integrated mining-perlite expanding
companies.
Two production options have been considered for perlite:
-- Production of coarse horticultural grade perlite using mobile
crushing and screening equipment and use of undersized perlite as
natural pozzolan; and
-- Construction of a fixed perlite processing plant to produce a
range of raw perlite products in coarse, medium and fine
grades.
The first of these two options is attractive as production can
start quickly at a relatively low capital cost as the mobile plant
is available from the quarry industry and can be bought, rented or
leased, subject to availability. The Company's air quality permit,
which primarily applies to an on-site process plant, is based on
the first of these options.
Different grinding technologies, plant capital and operating
costs have been considered for the second option of a stand-alone
perlite grinding plant.
The Company has permission to construct the onsite fixed perlite
processing plant set out in the second option . This option has
already been designed and costed. However, it may be preferable to
construct this at a more suitable, rail-linked site elsewhere in
Nevada.
Customer Trials and Discussions with Potential Customers
Natural pozzolan
The value of the market for pozzolan is substantially larger
than that for perlite and so the Company's focus to date has been
on securing a partner from within the cement and concrete industry
that has existing grinding capacity such that raw pozzolan can be
supplied as direct mined ore.
During the first half of the reporting period, and for a
protracted period last year, the Company had been working with a
large cement and ready-mix company ("CRMC") in providing samples
for industrial-scale application testing, holding regular
negotiations and discussing terms for a joint development of the CS
Natural Pozzolan-Perlite Project. However, in March this year the
Company terminated further negotiations with that CRMC as the
already extended discussions had failed to reach a satisfactory
conclusion.
The Company has since been prioritising discussions with other
potential partners for the CS Project including other cement and
ready-mix companies, fly ash distributers, building materials
companies and a new cement clean-tech company.
Invariably these companies all need to test CS natural pozzolan
with their own specific in-house cements, blends and concrete
mixes. These tests have been time consuming but are now largely
complete and, in all cases, have been successful, confirming CS
natural pozzolan as a versatile high quality pozzolan.
Perlite
Due to the focus on natural pozzolan and limited budgets, the
Company's work on, the perlite side of the business has been more
limited. Customer trials of horticultural grade perlite from the CS
Project continue and, following interest from a very large consumer
of raw perlite, a specific, tailored, finer grade of raw perlite
was produced at SGS Lakefield in Canada from the Company's
horticultural fines and supplied to that consumer for testing.
Results are awaited.
California Department of Transport ("Caltrans")
Certification
A significant development during the year was the conditional
approval by the California Department of Transport ("Caltrans") of
the use of CS natural pozzolan in California State infrastructure
projects after successfully passing Caltrans's own independent
compliance testing. As a result, CS natural pozzolan is now listed
on the Caltrans List of Approved Materials for Cementitious
Materials for use in Concrete.
Caltrans is the Government body responsible for the award of
State funded infrastructure construction projects in California.
Caltrans Standard Specifications for concrete mandate the use of
supplementary cementitious materials ("SCMs") such as natural
pozzolan in order to improve the durability and sustainability of
its concrete structures.
It has only recently become possible for new sources of
construction materials to be approved on a conditional basis. Full
approval is conditional until six monthly test results from
production runs have been submitted by the Company showing
compliance with specifications.
This is good news for the CS Project as California State
Infrastructure projects usually specify the use of material from
the Approved Materials List and many concrete specifiers look to
this list as an independent endorsement when specifying for a wider
range of non-Caltrans projects.
Other Developments
The Company's claims at the CS Project include a number of
claims that were not a part of the permitted Mine Plan of
Operations but which were staked on a speculative basis to cover a
deposit of diatomite.
The Company has been approached by an industrial producer of
diatomite to sell these claims. If an agreement for sale is
reached, it will not affect the existing permits or the ability of
the Company to extract and process pozzolan and perlite at the CS
Project.
The Company notes that Allegiant Gold Limited is continuing
exploration for gold on its claim block that lies immediately south
of the Company's CS Project claims and has so far defined a deposit
containing resource of 1.1 million ounces and 8.8 million ounces of
silver just 380m away from the southern boundary of the Company's
CS Project claim block.
NewPerl Perlite Project, Nevada
The NewPerl Project is located approximately 85km from the CS
Project in Nevada, USA and contains a number of areas where surface
samples have shown excellent test results for production of
horticultural grades of perlite. Subject to further testing, this
could be suitable for feed into the CS Project in the future.
Drill testing of the NewPerl Project is scheduled for 2023.
Jackson Wash Perlite Project, Nevada
The Jackson Wash Project is located 16km from the NewPerl
Project in Nevada and is also a target for horticultural grade
perlite.
Earlier in the reporting period the Company granted Kinross Gold
U.S.A Inc. a Lease and Option to purchase the Company's 25 Jackson
Wash mining claims in Nevada, USA. The Company retains the right to
mine perlite on the project claims during the lease/option
period.
In addition to hosting large surface occurrences of perlite, the
project claims are located adjacent to the historic Montezuma
silver, gold and mercury mining centre being explored by Kinross.
Kinross produces more than 2 million ounces per year gold
(equivalent) on a global basis.
Hazen Pozzolan Project, Nevada
The Hazen Pozzolan Project is located in Churchill County in
Northern Nevada, 20 miles by road from the town of Fernley and 24
miles by road from the County town of Fallon. Situated 9km from a
rail siding on the arterial east-west Union Pacific line, it is
well positioned for rail transport to the regional markets of
northern California, points east, as well as the local markets
around Reno and northern Nevada.
The Hazen Project is therefore targeting different regional
markets to the CS Project.
The Company's mining claims were staked in June 2021 to cover a
deposit of glassy pumice targeted as a natural pozzolan. Pumice is
currently mined elsewhere in the US as natural pozzolan and at
Hazen was mined as a lightweight aggregate from a shallow open pit
some decades ago. Further work is required to determine the extent
of the Hazen deposit although indications are that the pumice
extends several hundred meters beyond the limits of the existing
open pit.
Whilst the Hazen Project is less advanced than the CS Project,
the Company's laboratory testwork to date has shown that the
material present in the pit is of similar high quality to the CS
Project pozzolan. It exceeds the specifications of ASTM standard
C618 and mitigates the deleterious alkali silica reaction that
occurs when concrete is made using reactive aggregates.
During the year a number of companies made field visits and
tested samples from Hazen. As a result the Company recently entered
into a collaborative arrangement with an existing processor of
natural pozzolan for mining and test grinding of a bulk sample from
Hazen. Approximately 250 tons of natural pozzolan was extracted and
is being processed at no cost to the Company. The owner of the
process plant has the processing facilities and marketing network
in those regions targeted by the Hazen Project to commercialise the
Hazen deposit in the future. Results are awaited.
Pioche Sepiolite Project, Nevada
Despite being a relatively new project for the Company, the
Pioche Project is progressing quickly.
Sepiolite is a non-swelling, lightweight, porous clay with
outstanding sorption capacity. The largest market globally for
sepiolite is for use in lightweight non-clumping pet litters, where
it has superior properties compared to other clays used in this
application. It is also used extensively in agriculture as a
slow-release absorbent and adsorbent carrier for chemicals and
pesticides, in animal feeds as a binder and carrier for nutrients
and growth promoter. It is also used as a suspending agent in
paints, medicines, pharmaceuticals and cosmetics, and in high
temperature drilling muds.
Sepiolite is a very uncommon clay and there are very few
commercial deposits in the world, and, with one exception, there
are no significant sepiolite deposits known in the USA, so a large
potential market would exist for any new US producer of
sepiolite.
The Pioche claims were staked to cover a historically documented
occurrence of sepiolite which was subsequently confirmed by the
Company's initial prospecting work. Following a field visit in
December 2021, the Company reached an agreement with Spanish
company Tolsa S.A., the world's largest producer of sepiolite,
granting Tolsa an up to 18-month option to purchase the Pioche
Project for $1.25 million and an ongoing payment to Sunrise of a 3%
royalty. This option expires in December 2023, but Tolsa must make
a payment to Sunrise of $50,000 by 28 December 2022 to continue the
exploration beyond this payment date.
Tolsa has completed a detailed mapping and sampling programme at
Pioche which has defined multiple beds of sepiolite and this has
guided a follow up trenching programme which was recently
completed. Samples are now being tested in Spain and results are
awaited.
Other SR Minerals Inc. Projects
SR Minerals Inc. continues to hold mining claims at a number of
additional projects in Nevada including the Bay State Silver
Project, the County Line Diatomite Project and the Ridge Limestone
Project. These projects are available for sale or joint
venture.
An agreement was reached with the underlying owners of the Bay
State Silver Project claims to reduce the annual lease payments to
a nominal amount for the next three years.
SR Minerals Inc. also holds a 2% NSR royalty interest from
Golden Metal Resources plc ("GMR") on GMR's Garfield Copper-Gold
Project. This is a key project for GMR in its plans to list on AIM.
The Garfield Project is considered to be prospective for sediment
hosted skarn and porphyry-style copper-gold mineralisation.
SR Minerals Inc. also holds a 3% NSR royalty interest in the
Junction Copper-Gold-Silver Project held by VR Resources Ltd,
although it is understood that no work is currently planned for
this Project.
WESTGOLD INC.
Westgold Inc. was set up under the project generator model and
currently holds interests in four projects in Nevada - Clayton,
Myrtle , Newark and Stonewall.
Clayton Silver-Gold Project, Nevada
The property lies in the Walker Lane Mineral Belt. It is some 19
miles southeast of the producing Mineral Ridge Gold Mine and 19
miles southwest of the major historic mining centre of Goldfield,
where a number of large gold-silver deposits are currently under
development.
The mineralisation at the Clayton Project was discovered in the
1980s when drilling programmes were conducted by Freeport-McMoRan
Gold and Coeur Exploration. Wide intervals of low-grade silver
mineralisation were intersected and it was postulated that
gold-silver values were under-reporting due to loss of fines from
the reverse circulation drilling method. The most promising
intersections were not followed up.
This historical drilling loss of silver was corroborated by the
Company when a twin diamond drill hole delivered an 84% increase in
the silver grade compared to an original Freeport hole.
The Clayton Project is available for joint venture although the
Company will consider follow up drilling as resources become
available. No exploration was conducted at the Clayton Project in
the reporting period.
Newark Gold Project, Nevada
The Newark Gold Project is located at the southern end of the
Battle Mountain-Eureka (Cortez) gold trend. It lies 40 km south of,
and along the same structural zone as, the past-producing Alligator
Ridge Mine, 13 km southwest of the past producing Illipah Gold Mine
and 20 km east of the Pan Gold Mine.
The Newark Project was originally targeted for Carlin-style gold
mineralisation by Freeport in the 1980s following the discovery of
gold anomalous values in silicified rocks in a favourable
structural and stratigraphic setting. Carlin-style deposits can be
both large (e.g. Goldstrike which contains 39 million ounces gold
at a grade of 3.3 g/t) and high-grade (e.g. Barrick's recent
Goldrush discovery which contains 21 million ounces gold at a grade
of 6.9 g/t).
Freeport drilled a total of 16 holes. Significantly, hole NWK8
intersected 47m of low-level gold (average 0.14 ppm gold) in
jasperoid from 75m to the end of the hole at 122m. Drilling is
warranted to test this gold bearing jasperoid and to deepen the
hole through to about 400m depth to test the underlying Joana
Limestone which can be a significant host for Carlin-style gold
mineralisation.
The Company will consider a joint venture partner for this
project . No exploration was conducted at the Newark Project in the
reporting period.
Myrtle Gold Project, Nevada
The Myrtle Gold-Silver Project (the "Project") is located 25km
northwest of Hawthorne, the administrative centre for Mineral
County, Nevada.
The Project was acquired by claim staking in 2021 . Promising
assay results have been obtained from reconnaissance field mapping
and sampling but recently obtained drill logs from exploration by a
previous operator downgraded the potential of Company's claims.
The Company has retained its claims but the carrying value for
the Myrtle Project has been fully impaired in this year's
accounts.
Stonewall Gold Project, Nevada
Westgold Inc. holds a 2% Net Smelter Return Royalty from GMR in
the Stonewall project, also a key project for GMR's AIM listing.
Stonewall is prospective for epithermal-style gold-silver
mineralisation.
SUNRISE MINERALS AUSTRALIA PTY LTD
Baker's Gold Project
The Baker's Gold Project comprises two adjacent prospecting
licences P51/2837 and P51/2884 located 25km southeast of
Meekatharra in the Murchison Goldfield of Western Australia.
Since acquiring the Project the Company has carried out soil
sampling and a preliminary programme of drilling with significant
mineralisation being intersected in drill hole 21SBRC002 (2m
interval from 64m down hole grading 14.4 g/t gold including 1m
grading 26.5 g/t gold). The Company has recently applied for mining
Leases M51/903 and M51/904 to cover this mineralisation and ensure
the continuity of tenure before the expiry of the Company's
prospecting licences.
Since the Company completed its drill programme the Australian
Federal Court determined in favour of the Yugunga-Nya Aboriginal
People ("YN PBC") Part A native title claim. The determination of
Native Title grants the claimants official title and rights to the
land along with government funding to support the right to defend
title.
The Company is required by law to reach agreement with YN PBC on
compensation for any loss of native title rights that might result
from future mining activities. YN PBC has provided the Company with
a Draft Standard Negotiation Protocol. It is open ended with
respect of costs to be met by Sunrise with Sunrise having to pay
all of YN PBC's fees relating to legal advice, its 10-man
negotiating team, in-person negotiations, environmental and
technical consultants, etc.
The Company is currently considering if the possible costs of
negotiating a Native Title agreement can be justified by the
exploration results obtained to date or if these negotiations can
be deferred whilst further exploration is carried out.
No discussions have yet been held with YN PBC but as a prudent
measure, until the position becomes clearer, the Company has
impaired in full the carrying value of the Bakers Project in this
year's accounts. This impairment can be reversed if justified by
future developments.
The Role Of Natural Pozzolan In CO(2) Net-Zero Strategies
The development of the Company's natural pozzolan projects is
taking place against a background of fundamental change in the
cement and concrete industries; a change which is being driven by
climate change targets to achieve net-zero CO(2) emissions.
After water, concrete is the most used substance on Earth.
Whilst 14 billion cubic metres of concrete were poured globally in
2020, this is forecast to increase to 20 billion cubic metres
annually by 2050 with continuing global urbanisation and population
growth. This activity is currently responsible for 8% of the
world's man-made emissions, half of which comes from the burning of
fuel and the other half by direct release of CO(2) from burning
limestone in the cement clinker making process.
Net-zero CO(2) targets are therefore a major challenge for the
cement and concrete industries but one they must meet. In the US,
as elsewhere around the world, these targets are enshrined in State
legislation, industry-body commitments and are increasingly driven
by cement and concrete customers and specifiers. In addition, one
of the Implementation Priorities in US President Biden's November
2021 Executive Order "Implementation of the $1.2 trillion
Infrastructure Investment and Jobs Act" is "building infrastructure
that is resilient and that helps combat the crisis of climate
change". It seems likely then that priority will be given to
greener and more sustainable building materials in contracts
awarded under the Infrastructure Bill.
Another significant development which advances the potential of
natural pozzolan was the enactment of The Inflation Reduction Act
of 2022. This act includes a $5.8 billion package of grants,
rebates and loans for decarbonisation of heavy industries like
steel and cement. A key element for the transition of large cement
companies to a lower carbon footprint is to incorporate SRMs into
their cement formulations. The packages introduced by The Inflation
Reduction Act of 2022 specifically provide funding for
manufacturers that install equipment capable of slashing greenhouse
gas emissions.
Southern California is a major target market for the Company's
CS Project and California has the largest economy of all the US
States. In September 2021, in the first law of its kind in the US,
California's Carbon Cap-and-Trade scheme was signed into
legislation and directly targets greenhouse gas emissions
associated with the cement industry. This Cement Decarbonization
legislation is focused on achieving net-zero emissions from the
industry by the end of 2045. It works by putting a periodically
declining limit on carbon emissions for a given entity, allows
those entities to trade unused allowances but imposes fines on any
entity exceeding its allowance. Experts believe this will pave the
way for similar Federal legislation in the US. 2021 also saw the
publication by The US Portland Cement Association of its road map
to carbon neutrality. A key component for this road map is the
reduction in the quantity of cement used in cement and concrete
mixes through the use of supplementary cementitious materials
("SCMs") such as natural pozzolan.
It is important to understand how the cement industry is
addressing net-zero carbon targets and how natural pozzolan can
play a key role. There are a number of strategies currently being
employed in the cement industry, including:
-- Use of alternative clean(er) fuels. e.g. biomass, chemical
and hazardous waste, and petroleum-based fuels but also natural
gas; wind energy; hydroelectric power; solar energy; hydrogen; and
nuclear energy.
-- Carbon capture and storage. In its most basic form CO(2) is
captured from the cement kiln where the fuel is burned and where
CO(2) is released from burnt limestone. The captured CO(2) is
stored in underground geological reservoirs such as spent oil or
gas fields.
-- Carbon curing. CO(2) is captured at the cement plant then
liquified and transported with cement to the concrete ready-mix
plant where it is reinjected into the concrete mix in the mixing
truck. Here it combines with the concrete mix and becomes locked
into the concrete mix and assists in concrete curing.
-- Manufacture of so-called "clean-tech" cements. These cement
technologies do not produce Ordinary Portland Cement ("OPC") but
produce alternative cements by innovative carbon-neutral methods
rather than OPC. These cements can be used in partial or full
replacement of OPC.
-- Production of 1L (limestone) cement. C.10% limestone blended
with OPC with clinker. 10% reduction in CO(2) emission per ton of
cement produced. An easy win for the cement companies as limestone
is always available locally as the main source of cement
clinker.
-- Production of cements containing natural pozzolan or slag, e.g.
-- 1P (pozzolan) cement. Up to 30% natural pozzolan blended with
OPC. Up to 30% reduction in CO(2) emission per ton of cement.
Natural pozzolan can replace fly ash pozzolan in cement or
concrete. Fly ash supply is declining due to the ongoing closure of
coal-fired power stations.
-- 1S (slag) cement. Up to 30% blast furnace slag pozzolan
blended with OPC. Up to 30% reduction in CO(2) emission per ton of
cement. Blast furnace slag is restricted in production quantities
and locations.
The Role Of Natural Pozzolan In Sustainable Development
In addition to building greener structures, a key part of
sustainability in the concrete industry is the building of more
durable structures with longer life.
Whereas "Roman concrete" structures made with natural pozzolan
have survived for millennia, some concrete structures from parts of
the 20(th) century made with OPC are susceptible to "concrete
cancer". This is due to reaction of alkalis in OPC with "reactive"
silica in concrete aggregates and results in expansion, cracking
and spalling of the concrete (Alkali Silica Reaction or "ASR").
As high-quality aggregate supplies for concrete become scarcer,
the concrete industry is having to use more reactive aggregates
that can severely impact the quality of the resulting concrete.
The use of high quality SCMs such as natural pozzolan will
mitigate ASR by tying up and immobilising the alkalis in cement,
preventing their reaction with silica in the aggregates. So much so
that the use of pozzolans is often mandated by State Departments of
Transport for public infrastructure construction work to ensure
more sustainable structures.
Sustainability, and ASR mitigation in particular, is therefore a
significant factor in choosing the use of natural pozzolan in
net-zero CO(2) strategies.
Of all the strategies being adopted by the cement and concrete
industries, only the use of SCMs can mitigate ASR and so we expect
to see natural pozzolan used in conjunction with other CO(2)
reduction strategies.
Use Of Natural Pozzolan Is A Win-Win For Cement Companies
In order for cement companies to reduce the embodied carbon in
their cements it helps if there is a strong business case for doing
so. Cap-and-Trade is a "carrot and stick" approach and customers
and specifiers are increasingly looking for greener cements.
The use of 1P cement not only provides for more durable and
sustainable concrete with lower embodied carbon but it also allows
the cement company to sell more cement per ton of OPC clinker
capacity. The production of cement clinker in the cement kiln is
often the volume limiting step to cement production at a cement
plant.
This is an important consideration particularly as cement
companies are currently operating at capacity and are all sold
out.
These ongoing developments serve to strengthen the place of
natural pozzolans in future cement formulations and the CS and
Hazen Projects are well placed, being fully permitted and ready to
mine.
Risks & Uncertainties
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this
stage in its development and in the foreseeable future are detailed
below together with risk mitigation strategies employed by the
Board.
Risk Mitigation Strategies
Exploration Risk
The Group's business is mineral The directors bring many years of combined
exploration and development which mining and exploration experience and
are speculative activities. There an established track record in mineral
is no certainty that the Group discovery.
will be successful in the definition
of economic mineral deposits, The Company maintains a portfolio of
or that it will proceed to the exploration projects, including projects
development of any of its projects at the drill stage, in order to spread
or otherwise realise their value. the risk associated with mineral exploration.
---------------------------------------------------
Resource/Reserve Risk
All mineral projects have risk When relevant, Mineral Resources and
associated with defined grade Reserves are estimated by independent
and continuity. Mineral Resources specialists on behalf of the Group and
and Reserves are always subject reported in accordance with accepted
to uncertainties in the underlying industry standards and codes. The directors
assumptions which include the are realistic in the use of metal and
quality of the underlying data, mineral price forecasts and impose rigorous
geological interpretations, technical practices in the QA/QC programmes that
assumptions and price forecasts. support its independent estimates.
---------------------------------------------------
Development and Marketing Risk
Delays in permitting, financing, To reduce development risk the directors
mine commissioning and marketing will ensure that its permitting, financial
a project and its products may evaluation and financing and market
result in delays to the Group mechanisms are robust and thorough and
meeting production targets. will seek to position the Company as
a low-cost producer.
---------------------------------------------------
Commodity Price Risk
Changes in commodity prices can The Company consistently reviews commodity
affect the economic viability prices and trends for its key projects
of mining projects and affect throughout the development cycle.
decisions on continuing exploration
activity.
---------------------------------------------------
Mining and Processing Technical
Risk From the earliest stages of exploration,
Notwithstanding the completion the directors look to use consultants
of metallurgical testwork, test and contractors who are leaders in their
mining and pilot studies indicating field and in future will seek to strengthen
the technical viability of a mining executive management and the Board with
operation, variations in mineralogy, additional technical and financial skills
mineral continuity, ground stability, as the Company transitions from exploration
groundwater conditions and other to production.
geological conditions may still
render a mining and processing
operation economically or technically
non-viable.
---------------------------------------------------
Environmental and Social Governance The development of industrial minerals
(ESG) Risk projects such as the CS Project carry
Exploration and development of a lower level of environmental and social
a project can be adversely affected liability than gold or base metal projects
by environmental and social legislation due to low levels of toxic contaminants
and the unforeseen results of in the ore and processing chemicals.
environmental and social impact
studies carried out during evaluation The Company has adopted an Environmental,
of a project. Once a project is Social and Governance Policy (the "ESG
in production unforeseen events Policy") and avoids the acquisition
can give rise to environmental of projects where liability for legacy
liabilities. environmental issues might fall upon
the Company.
The ESG Policy will be updated in future
to reflect the status of the Company's
projects.
---------------------------------------------------
Political Risk
All countries carry political The Company's strategy restricts its
risk that can lead to interruption activities to stable, democratic and
of activity. Politically stable mining friendly jurisdictions.
countries can have enhanced environmental
and social permitting risks, risks The Company has adopted a strong Bribery
of strikes and changes to taxation, & Anti-Corruption Policy and a Code
whereas less developed countries of Conduct and these are strictly enforced.
can have, in addition, risks associated
with changes to the legal framework,
civil unrest and government expropriation
of assets.
---------------------------------------------------
Partner Risk
Whilst there has been no past The Board's policy is to maintain control
evidence of this, the Group can of certain key projects so that it can
be adversely affected if joint control the pace of exploration and
venture partners are unable or development and reduce partner risk.
unwilling to perform their obligations
or fund their share of future For projects where other parties are
developments. responsible for critical payments and
expenditures the Company's agreements
legislate that such payments and expenditures
are met.
---------------------------------------------------
Financing & Liquidity Risk
The Company has an ongoing requirement The Company maintains a good network
to fund its activities through of contacts in the capital markets that
the equity markets and in future has historically met its financing requirements.
to obtain finance for project The Company's low overheads and cost-effective
development. There is no certainty exploration strategies help reduce its
such funds will be available when funding requirements and currently the
needed. outstanding directors' fees are settled
in shares. Nevertheless, further equity
issues will be required over the next
12 months.
---------------------------------------------------
Financial Instruments
Details of risks associated with The directors are responsible for the
the Group's Financial Instruments Group's systems of internal financial
are given in Note 19 to the financial control. Although no systems of internal
statements. financial control can provide absolute
assurance against material misstatement
or loss, the Group's systems are designed
to provide reasonable assurance that
problems are identified on a timely
basis and dealt with appropriately.
In carrying out their responsibilities,
the directors have put in place a framework
of controls to ensure as far as possible
that ongoing financial performance is
monitored in a timely manner, that corrective
action is taken and that risk is identified
as early as practically possible, and
they have reviewed the effectiveness
of internal financial control.
The Board, subject to delegated authority,
reviews capital investment, property
sales and purchases, additional borrowing
facilities, guarantees and insurance
arrangements.
---------------------------------------------------
Exchange Rate Risk
The value of the Company's assets The Company's project expenditures are
held in overseas subsidiaries discretionary and subject to constant
will vary with exchange rate fluctuations, review and changing priorities. The
especially in the US Dollar/Pound Company does not speculate on exchange
Sterling exchange rate. rates or hedge its foreign currency
exposures but will consider doing so
As much of the Company's exploration once expenditures become more predictable
costs are incurred in US Dollars, and locked in.
the Company's budget costs will
be subject to exchange rate variations
when actually incurred.
---------------------------------------------------
Forward-Looking Statements
This Annual Report may contain certain statements and
expressions of belief, expectation or opinion which are
forward-looking statements, and which relate, inter alia, to the
Company's proposed strategy, plans and objectives or to the
expectations or intentions of the Company's directors. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the control of the
Company that could cause the actual performance or achievements of
the Company to be materially different from such forward-looking
statements.
Section 172 (1) Statement
Section 172 of the Companies Act 2006 requires a director of a
company to act in the way he or she considers, in good faith, would
be most likely to promote the success of the company for the
benefit of its members as a whole. This requires a director to have
regard, among other matters, to: the likely consequences of any
decision in the long term; the interests of the Company's
employees; the need to foster the Company's business relationships
with suppliers, clients, joint arrangement partners and others; the
impact of the Company's operations on the community and the
environment; the desirability of the Company maintaining a
reputation for high standards of business conduct; and the need to
act fairly with members of the Company.
The Company's directors give careful consideration to these
factors in discharging their duties. The stakeholders we consider
are our shareholders, employees, suppliers (including consultants
and contractors), our joint arrangement partners, the regulatory
bodies that we engage with and those that live in the societies and
geographical areas in which we operate. The directors recognise
that building strong, responsible and sustainable relationships
with our stakeholders will help us to deliver our strategy in line
with our long-term objectives.
Having regard to:
The likely consequences of any decision in the long-term:
The Company's Aims and Business Model are set out at the head of
this Strategic Report and in the Chairman's Statement. The
Company's mineral exploration and development business is, by its
very nature, long-term and so the decisions of the Board always
consider the likely long-term consequences and take into
consideration, for example, trends in metal and minerals supply and
demand, the long-term political stability of the countries in which
the Company operate and the potential impact of its decisions on
its stakeholders and the environment. As the Company aims to
transition the CS Project into production other projects also
become important to the long-term future of the Company and this
has framed the Board's decision to allocate a portion of capital to
the testing of some of the Company's precious metal projects and to
acquiring new projects. The Board's approach to general strategy
and long-term risk management are set out in the Corporate
Governance Statement (Principle 1) and the section on Risks and
Uncertainties.
The interests of the Company's employees:
Other than the Board, the Company has no employees. It relies on
the employees of Tertiary Minerals plc who are engaged through a
services agreement, but all of these employees have daily access to
the Executive Chairman and their views are considered in the
Board's decision making. Further details on the Board's employment
policies, health and safety policy and employee engagement are
given in the Corporate Governance Statement (Principle 8).
The need to foster the Company's business relationships with its
stakeholders:
The sustainability of the Company's business long-term is
dependent on maintaining strong relationships with its
stakeholders. The factors governing the Company's decision making
and the details of stakeholder engagement are set out in the
Corporate Governance Statement (Principles 2, 3, 8 and 10).
Having regard to the impact of the Company's operations on the
community and the environment:
The Company requires a "social licence" to operate sustainably
in the mining industry and so the Board makes careful consideration
of any potential impacts of its activities on the local community
and the environment. The Board strives to maintain good relations
with the local communities in which it operates and with local
businesses. For example, in permitting the CS Project for
production the Board has carried out extensive work and
consultation with regulators and the local community
representatives to evaluate the benefits and impacts of its CS
Project. Further discussion of these activities and Board
considerations can be found in the Environmental, Social and
Governance ("ESG") Statement and in the Corporate Governance
Statement (Principle 3).
The desirability of the Company maintaining a reputation for
high standards of business contact:
The Board recognises that its reputation is key to its long-term
success and depends on maintaining high standards of corporate
governance. It has adopted the QCA Code of Corporate Governance and
sets out in detail how it has complied with the 10 key principles
of the QCA Code in the Corporate Governance Statement. This
contains details of various Company policies designed to maintain
high standards of business conduct such as the Share Dealing
Policy; ESG Policy; Health and Safety Policy, and Bribery &
Anti-Corruption Policy and Code of Conduct.
The need to act fairly between Members of the Company:
The Board ensures that it takes decisions in the interests of
the members (shareholders) as a whole and aims to keep shareholders
fully informed of significant developments, ensuring that all
shareholders receive Company news at the same time. The Executive
Chairman devotes time to answering genuine shareholder queries, no
individual or group of shareholders is given preferential
treatment. Further information is provided in the Corporate
Governance Statement (Principles 2 and 10).
This Strategic Report was approved by the Board of Directors on
9 December 2022 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Directors' Responsibilities
The directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires directors to prepare financial statements
for a company for each financial year. Under that law the directors
have elected to prepare the Group and Company financial statements
in accordance with applicable law and UK adopted International
Accounting Standards Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for that period.
The directors are also required to prepare the financial statements
in accordance with the AIM Rules of the London Stock Exchange for
companies trading securities on the AIM market.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
applicable law and UK adopted International Accounting Standards,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
Report and the Directors' Report and other information included in
the Annual Report and financial statements are prepared in
accordance with applicable law in the United Kingdom.
Website Publication
The maintenance and integrity of the Sunrise Resources plc
website is the responsibility of the directors. Legislation in the
United Kingdom governing the preparation and dissemination of the
accounts and the other information included in annual reports may
differ from legislation in other jurisdictions.
Information from the Directors' Report
The directors are pleased to submit their Annual Report and
audited financial statements for the year ended 30 September
2022.
The Strategic Report contains details of the principal
activities of the Company and includes the Operating Review which
provides detailed information on the development of the Group's
business during the year and indications of likely future
developments and events that have occurred after the financial year
end.
Going Concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at the year-end of GBP96,126 (2021:
GBP371,740) these projections include the proceeds of future
fundraising necessary within the next 12 months to meet the Group's
overheads and planned discretionary project expenditures and to
maintain the Company and its subsidiaries as going concerns.
Although the Company has been successful in raising finance in the
past, there is no assurance that it will obtain adequate finance in
the future. This represents a material uncertainty related to
events or conditions which may cast significant doubt on the Group
and Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
Dividend
The directors do not recommend the payment of any dividend.
Financial Instruments and Other Risks
The business of mineral exploration and evaluation has inherent
risks. Details of the Group's financial instruments and risk
management objectives and of the Group's exposure to risk
associated with its financial instruments are given in Note 19 to
the financial statements.
Details of risks and uncertainties that affect the Group's
business are given in the Strategic Report.
Directors
The directors holding office in the period were:
Mr P L Cheetham - Chairman of the Board and Chairman of the
Nomination Committee.
Mr R D Murphy - Chair of the Remuneration Committee and a member
of the Nomination and Audit Committees.
Mr J Cole - Chair of the Audit Committee and member of the
Nomination and Remuneration Committees
Attendance at Board and Committee Meetings
The Board retains control of the Group with day-to-day
operational control delegated to the Executive Chairman. The full
Board meets four times a year and on any other occasions it
considers necessary.
Board Meetings Nomination Audit Committee Remuneration
Committee Committee
--------------
Director Attended Held Attended Held Attended Held Attended Held
---------- ----- --------- ----- ----------- ----- -----
P L Cheetham 11 11 2 2 3 3 1 1
---------- ----- --------- ----- ----------- ----- --------- -----
R D Murphy 11 2 3 1
---------- ----- --------- ----- ----------- ----- --------- -----
J Cole 11 2 3 1
---------- ----- --------- ----- ----------- ----- --------- -----
The directors' shareholdings are shown in Note 16 to the
financial statements.
Events After The Year-End
On 29 November 2022 the Company raised GBP280,000 through a
placement of 80,000,000 new ordinary shares and the issue of a
GBP200,000 convertible security. The agreement, with US
institutional investor Towards Net Zero LLC, allows the Company to
issue a further convertible security within 6 months of the Closing
Date, 6 December 2022, to raise a further GBP200,000 subject to
certain conditions precedent.
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 9 December 2022 of shares capital
Interactive Investor Services Nominees Limited SMKTISAS 381,926,048 9.76
----------- ----------
Barclays Direct Investing Nominees Limited CLIENT1 354,368,893 9.05
----------- ----------
Interactive Investor Services Nominees Limited SMKTNOMS 337,994,996 8.64
----------- ----------
Smith & Williamson Nominees Limited 292,784,545 7.48
----------- ----------
Hargreaves Lansdown (Nominees) Limited VRA 259,185,379 6.62
----------- ----------
Hargreaves Lansdown (Nominees) Limited 15942 248,498,152 6.35
----------- ----------
Interactive Investor Services Nominees Limited TDWHSIPP 177,343,871 4.53
----------- ----------
HSDL Nominees Limited 145,495,033 3.72
----------- ----------
Hargreaves Lansdown (Nominees) Limited HLNOM 139,952,577 3.58
----------- ----------
Disclosure of Audit Information
Each of the directors has confirmed that so far as they are
aware, there is no relevant audit information of which the
Company's Auditor is unaware, and that they have taken all the
steps that they ought to have taken as a director in order to make
themselves aware of any relevant audit information and to establish
that the Company's Auditor is aware of that information.
Auditor
A resolution to reappoint Crowe U.K. LLP as Auditor of the
Company will be proposed at the forthcoming Annual General
Meeting.
Charitable and Political Donations
During the year, the Group made no charitable or political
donations.
Annual General Meeting
The Company's Annual General Meeting will be held on Friday 17
February 2023 at 10.00 a.m.
Conflicts of Interest
The Companies Act 2006 permits directors of public companies to
authorise directors' conflicts and potential conflicts, where
appropriate, where the Articles of Association contain a provision
to this effect. The Company's Articles contain such a provision.
Procedures are in place in order to avoid any conflict of interest
between the Company and Tertiary Minerals plc. Tertiary provides
corporate and project management services to Sunrise.
Approved by the Board on 9 December 2022 and signed on its
behalf.
Patrick Cheetham
Executive Chairman
Board of Directors
The Directors and Officers of the Company during the financial
year were:
Patrick Cheetham
Executive Chairman
Key Strengths:
-- Founding director
-- Mining geologist with 40 years' experience in mineral exploration
-- 35 years in public company management
Appointed: March 2005
Committee Memberships: Chairman of the Nomination Committee
External Commitments: Executive Chairman of Tertiary Minerals
plc
Roger Murphy
Non-Executive Director
Key Strengths:
-- Career focus in capital raising for mining and oil & gas companies
-- Former MD, Investment Banking, of Dundee Securities Europe Ltd
-- Geologist
Appointed: May 2016
Committee Memberships: Chairman of the Remuneration Committee
and Member of Audit and Nomination Committees
External Commitments : Partner and non-executive Director of
Maini Minerals, Executive Director of Zamari Minerals Ltd, Sarn
Helen Gold Limited and TREO Minerals Ltd.
James Cole
Non-Executive Director
Key Strengths:
-- Chartered Accountant with strong commercial background and
track record of success in fundraising, mergers, disposals and
acquisitions in resource sector
-- Previously Finance Director for the Goal Group Limited.
Formerly Chief Financial Officer Cominco Resources Ltd, AIM/TSX
traded European Minerals Corporation plc and TSX/OSE traded Crew
Gold Corporation.
Appointed: May 2021
Committee Memberships: Chairman of the Audit Committee and a
Member of the Remuneration and Nomination Committees
External Commitments: Not applicable.
Rod Venables
Company Secretary
Key Strengths:
-- Qualified company/commercial solicitor
-- Director and Head of Company Secretarial Services at City Group PLC
-- Experienced in both Corporate Finance and Corporate Broking
Appointed: July 2019
External Commitments: Company Secretary for Tertiary Minerals
plc and other clients of City Group PLC
Corporate Governance
Chairman's Overview
There is no prescribed corporate governance code for AIM
companies and the London Stock Exchange prefers to give companies
the flexibility to choose from a range of codes which suit their
specific stage of development, sector and size.
The Board considers the corporate governance code published by
the Quoted Companies Alliance to be the most suitable code for the
Company. Accordingly, the Company has adopted the principles set
out in the QCA Corporate Governance Code (the "QCA Code") and
applies these principles wherever possible, and where appropriate
given its size and available resources. The Company's Corporate
Governance Statement was reviewed by the Board on 9 December 2022.
The Company has set out on its website and in its Corporate
Governance Statement the 10 principles of the QCA Code and details
of the Company's compliance.
Patrick Cheetham, in his capacity as Chairman, has overall
responsibility for the corporate governance of the Company and the
Board is responsible for delivering on our well-defined business
strategy having due regard for the associated risks and
opportunities.
The Company's corporate governance arrangements now in place are
designed to deliver a corporate culture that understands and meets
shareholder and stakeholder needs and expectations whilst
delivering long-term value for shareholders.
The Board recognises that its principal activity, mineral
exploration and development, has potential to impact on the local
environment and communities and consequently has adopted an
Environmental, Social and Governance ("ESG") Policy to ensure that
the Group's activities have minimal environmental and social
impact. Where appropriate the Group's contracts with suppliers and
contractors legally bind those suppliers and contractors to do the
same. The Group's activities, carried out in accordance with the
ESG Policy, have had only minimal environmental and social impact
at present and this policy is regularly reviewed. Where
appropriate, all work is carried out after advance consultation
with affected parties.
The Board recognises the benefits that social media engagement
can have in helping the Company reach out to shareholders and other
stakeholders, but it also recognises that misuse or abuse of social
media can bring the Company into disrepute. To facilitate the
responsible use of social media the Company has adopted a Social
Media Policy.
The Board has also adopted a Share Dealing Code for dealings in
shares of the Company by directors and employees and a Bribery
& Anti-Corruption Policy and Code of Conduct applicable to
employees, suppliers and contractors.
The Group recognises that the goodwill of its contractors,
consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings.
The Group has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers. The
amount shown in the Consolidated and Company Statements of
Financial Position in respect of trade payables at the end of the
financial year represents 13 days of average daily purchases (2021:
4 days). This amount is calculated by dividing the creditor balance
at the year end by the average daily Group spend in the year.
The Board recognises it has a responsibility to provide
strategic leadership and direction in the development of the
Group's health and safety strategy in order to protect all of its
employees and other stakeholders. The Company has developed a
Health and Safety Policy to clearly define roles and
responsibilities and in order to identify and manage risk.
Your Board currently comprises three directors of which two are
non-executive and considered by the Board to be independent of
management. We believe that this balance provides an appropriate
level of independent oversight. The Board has the ability to seek
independent advice although none was deemed necessary in the year
under review. The Board is aware of the need to refresh its
membership from time to time and to match its skill set to those
required for the development of its mineral interests and will
consider appointing additional independent non-executive directors
in the future.
Patrick Cheetham
Executive Chairman
Environmental, Social and Governance Statement
Sunrise Resources plc and its subsidiaries ("the Company")
practice responsible exploration as reflected in this
Environmental, Social and Governance ("ESG") policy statement and
as demonstrated by our actions. By doing so we reduce project risk,
avoid adverse environmental and social impacts, optimising benefits
for all stakeholders while adding value to our projects.
Our business associates, consultants and contractors
("Associated Parties") perform much of our primary activities at
our projects and therefore we require that all Associated Parties
working on our behalf or for our subsidiaries accept and adhere to
the principles set out in this policy. We encourage input from
those with local knowledge and we review this policy on a regular
basis.
Our ESG policy is guided by the Prospectors & Developers
Association of Canada's (PDAC) Framework for Responsible
Exploration (known as e3 Plus) which encourages mineral exploration
companies to support and improve social, environmental and health
and safety performance across all exploration activities around the
world.
Adopting Responsible Governance and Management
The Company is committed to environmentally and socially
responsible mineral exploration and has developed and implemented
policies and procedures for corporate governance and ethics. We
ensure that all staff and key Associated Parties are familiar with
these and have appropriate level of knowledge of these policies and
procedures.
The Company employs persons and engages contractors with the
required experience and qualifications relevant to their specific
tasks and, where necessary, seeks the advice of specialists to
improve the understanding and management of social, environmental,
human rights and security, health and safety, and in the
application of traditional knowledge.
The Company's Corporate Governance Statement and Bribery &
Anti-Corruption policies can be viewed on our website here:
https://www.sunriseresourcesplc.com/corporate-governance .
Applying Ethical Business Practices
As well as our shareholders and staff, our stakeholders include
local communities and local leadership, local, regional and
national government and regulatory authorities, suppliers,
contactors and consultants, our local business partners and other
interested parties. Our corporate culture and policies require
honesty, integrity, transparency and accountability in all aspects
of our work and when interacting with all stakeholders.
The Company takes all necessary steps to ensure that activities
in the field minimise or mitigate any adverse impacts on both the
environment and on local communities.
Commitment to Project Due Diligence and Risk Assessment
We make sure we are informed of the laws, regulations, treaties
and standards that are applicable with respect to our activities.
We ensure that Associated Parties are informed and prepared before
going into the field in order to minimise the risk of
miscommunication, unnecessary costs and conflict, and to understand
the potential for creating opportunities with local communities
where possible.
Engaging Host Communities and Other Affected and Interested
Parties
Sunrise is committed to engaging positively with local
communities, regulatory authorities, suppliers and other
stakeholders in its project locations, and encourages feedback
through this engagement. Through this process the Company develops
and fosters the relationships on which our business relies for
success.
Respecting Human Rights
The exploration activities of Sunrise are carried out in line
with applicable laws on human rights in its home jurisdiction and
those of the countries in which it works. The Company does not
engage in activities that have adverse human rights impacts.
Protecting the Environment
We are committed to ensuring that environmental standards are
met or exceeded in the course of our exploration activities.
Applicable laws and local guidelines in all project jurisdictions
are followed diligently and exploration programmes are only carried
out once relevant permits and approvals have been secured from the
appropriate regulatory bodies.
In Nevada, USA, most of our exploration is carried out on
Federally owned land administered by the Bureau of Land Management
(BLM) which requires the submission of financial bonds for
reclamation of exploration activities and which holds the Company
to account. Provisions are made in the financial statements for
reclamation costs in accordance with calculations set by the BLM.
When operating on private lands the Company applies the same
rigorous standards for reclamation.
In Australia field exploration activity requires prior approval
from the Department of Mines, Industry Regulation and Safety which
imposes environmental reclamation obligations on any such
approvals.
Where our activities create ground disturbance, we ensure that
full rehabilitation is carried out in accordance with regulations
and we take care to minimise the impact of our activities on local
flora and fauna, choosing where possible less impactful exploration
methods.
Safeguarding the Health and Safety of Workers and the Local
Population
Company activities are carried out in accordance with its Health
and Safety Policy which adheres to all applicable laws. It ensures
that its Associated Parties are made aware of and follow these
policies where relevant.
Corporate Governance Statement
The QCA Code sets out ten principles which should be applied.
The principles are set out below with an explanation of how the
Company applies each principle, and the reasons for any aspect of
non-compliance.
Principle One: Establish a strategy and business model which
promote long-term value for shareholders.
The Company has a clearly defined strategy and business model
that has been adopted by the Board and is set out in the Strategic
Report . Details of the challenges to the execution of the
Company's strategy and business model and how those will be
addressed can be found in Risks and Uncertainties in the Strategic
Report.
Principle Two: Seek to understand and meet shareholder needs and
expectations.
The Board is committed to maintaining good communication with
its shareholders and investors. The Chairman and members of the
Board from time to time meet with shareholders and investors
directly or through arrangements with the Company's brokers to
understand their investment requirements and expectations and to
address their enquiries and concerns.
All shareholders are encouraged to attend the Company's Annual
General Meetings where they can meet and directly communicate with
the Board. After the close of business at the Annual General
Meeting, the Chairman makes an up-to-date corporate presentation
and opens the floor to questions from shareholders.
Shareholders are also welcome to contact the Company via email
at info@sunriseresourcesplc.com with any specific queries.
The Company also provides regulatory, financial and business
news updates through the Regulatory News Service (RNS) and various
media channels such as Twitter. Shareholders also have access to
information through the Company's website,
www.sunriseresourcesplc.com , which is updated on a regular basis
and which includes the latest corporate presentation on the Group.
Contact details are also provided on the website.
Principle Three: Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
The Board takes regular account of the significance of social,
environmental and ethical matters affecting the business of the
Group. The Board has adopted an Environmental, Social and
Governance ("ESG") Policy, which can be found on the Company
website and an ESG Statement can be found in this Annual Report.
The Company engages positively with local communities, regulatory
authorities, suppliers and other stakeholders in its project
locations and encourages feedback through this engagement. Through
this process the Company identifies the key resources and fosters
the relationships on which the business relies.
Principle Four: Embed effective risk management, considering
both opportunities and threats, throughout the organisation.
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible whilst recognising
that its business opportunities carry an inherently high level of
risk. The principal risks and uncertainties facing the Group at
this stage in its development and in the foreseeable future are
detailed in Risks and Uncertainties in the Strategic Report,
together with risk mitigation strategies employed by the Board.
Principle Five: Maintain the board as a well-functioning,
balanced team led by the chair.
The Board's role is to agree the Group's long-term direction and
strategy and monitor achievement of its business objectives. The
Board meets formally four times a year for these purposes and holds
additional meetings when necessary to transact other business. The
Board receives regular and timely reports for consideration on all
significant strategic, operational and financial matters. Relevant
information for consideration by the Board is circulated in advance
of its meetings.
The Board met eleven times during the year to consider such
matters. Further details are provided in the Directors' Report. The
Board is supported by the Audit, Remuneration and Nomination
Committees.
The Board currently consists of the Executive Chairman (Patrick
Cheetham), and two non-executive directors (Roger Murphy and James
Cole). The current Board's preference is that independent
non-executive directors comprise the majority of Board members.
Patrick Cheetham is currently the Chairman and Chief Executive.
Patrick Cheetham has a service contract as Chairman of the Company
and his services as Chief Executive are provided to the Company, at
cost, through a Management Services Agreement with Tertiary
Minerals plc ("Tertiary"), in which he is a shareholder and where
he is also employed as Chairman. In 2022, Patrick Cheetham
dedicated over 62% of his working time to the Company. The combined
role of Chairman and Chief Executive results in cost savings and is
considered acceptable whilst there is a majority of independent
directors on the Board and having regard to the fact that the
Company is not yet revenue generating.
The non-executive directors have committed the time necessary to
fulfil their roles during the year. The attendance record of the
directors at Board and Board Committee meetings are detailed in the
Directors' Report.
The current non-executive directors are considered independent
of management and free from any business or other relationship
which could materially interfere with the exercise of their
independent judgement.
Principle Six: Ensure that between them the directors have the
necessary up to date experience, skills and capabilities.
The Board considers the current balance of sector, financial and
public market skills and experience of its directors are relevant
to the Company's business and are appropriate for the current size
and stage of development of the Company and the Board considers
that it has the skills and experience necessary to execute the
Company's strategy and business plan and discharge its duties
effectively.
The directors maintain their skills through membership of
various professional bodies, attendance at mining conferences and
through their various external appointments.
All Directors have access to the advice and services of the
Company Secretary who is responsible for ensuring that Board
procedures and applicable rules and regulations are observed. All
directors are able to take independent professional advice, if
required, in relation to their duties and at the Company's
expense.
Principle Seven: Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement.
The ultimate measure of the effectiveness of the Board is the
Company's progress against the long-term strategy and aims of the
business. This progress is reviewed in Board meetings held at least
four times a year. The Executive Chairman's performance is
regularly reviewed by the rest of the Board.
The Nomination Committee, currently consisting of the Executive
Chairman and the two non-executive directors, meets once a year to
lead the formal process of rigorous and transparent procedures for
Board appointments. During this meeting the Nomination Committee
reviews the structure, size and composition of the Board;
succession planning; leadership; key strategic and commercial
issues; conflicts of interest; time required from non-executive
directors to execute their duties effectively; overall
effectiveness of the Board and its own terms of reference.
Under the Articles of Association, new directors appointed to
the Board must stand for election at the first Annual General
Meeting of the Company following their appointment. Under the
Articles of Association, existing directors retire by rotation and
may offer themselves for re-election.
Principle Eight: Promote a corporate culture that is based on
ethical values and behaviours.
The Board recognises and strives to promote a corporate culture
based on strong ethical and moral values. The Group is currently
managed via a service agreement with Tertiary. It has no employees
but encourages Tertiary's employees to understand all aspects of
the Group's business and Tertiary seeks to remunerate its employees
fairly, being flexible where practicable. In future, the Group will
give full and fair consideration to applications for employment
received regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs, transgender status or sexual
orientation. The Board takes account of Tertiary's employees'
interests when making decisions, and suggestions from those
employees aimed at improving the Group's performance are
welcomed.
The corporate culture of the Company is promoted to Tertiary's
employees, suppliers and contractors and is underpinned by the
implementation and regular review, enforcement and documentation of
various policies: Health and Safety Policy; Environmental, Social
and Governance ("ESG") Policy; Share Dealing Policy; Bribery &
Anti-Corruption Policy & Code of Conduct; Privacy and Cookies
Policy and Social Media Policy. These procedures enable the Board
to determine that ethical values are recognised and respected.
The Board recognises that its principal activity, mineral
exploration and development, has potential to impact on local
environments and communities, and as such an ESG Policy was
developed with this in mind and this replaces the previous to
ensure that, wherever they take place, the Group's activities have
minimal environmental and social impact. Where appropriate the
Group's contracts with suppliers and contractors legally bind those
suppliers and contractors to do the same. The Group's activities
carried out in accordance with the ESG Policy have had only minimal
environmental and social impact and this policy is regularly
reviewed. Where appropriate, all work is carried out after advance
consultation with affected parties.
Principle Nine: Maintain governance structures and processes
that are fit for purpose and support good decision-making by the
Board.
The Board has overall responsibility for all aspects of the
business. The Chairman is responsible for overseeing the running of
the Board, ensuring that no individual or group dominates the
Board's decision-making, and that the non-executive directors are
properly briefed on all operational and financial matters. The
Chairman has overall responsibility for corporate governance
matters in the Group and chairs the Nomination Committee. The
Chairman has the responsibility for implementing the strategy of
the Board and managing the day-to-day business activities of the
Group. The Company Secretary is responsible for ensuring that Board
procedures are followed, and applicable rules and regulations are
complied with. Key operational and financial decisions are reserved
for the Board through quarterly project reviews, annual budgets,
and quarterly budget and cash-flow forecasts and on an ad hoc basis
where required.
The two non-executive directors are responsible for bringing
independent and objective judgment to Board decisions. The Board
has established Audit, Remuneration and Nomination Committees with
formally delegated duties and responsibilities. James Cole
currently chairs the Audit Committee, Roger Murphy chairs the
Remuneration Committee and Patrick Cheetham chairs the Nomination
Committee.
This Corporate Governance statement will be reviewed at least
annually to ensure that the Company's corporate governance
framework evolves in line with the Company's strategy and business
plan.
Principle Ten: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
The Company regularly communicates with, and encourages feedback
from, its shareholders who are its key stakeholder group. The
Company's website is regularly updated and users, including all
stakeholders, can register to be alerted via email when material
announcements are made. The Company's contact details are on the
website should stakeholders wish to make enquiries of
management.
The Group's financial reports for at least the past five years
can be found here:
https://www.sunriseresourcesplc.com/financial-reports and contains
past Notices of Annual General Meetings.
The results of voting on all resolutions in general meetings are
posted to the Company's website, including any actions to be taken
as a result of resolutions for which votes against have been
received from at least 20 per cent of independent votes.
Audit Committee Report
The Audit Committee is a sub-committee of the Board, comprised
of the independent non-executive directors and assists the Board in
meeting responsibilities in respect of external financial reporting
and internal controls. The Audit Committee also keeps under review
the scope and results of the audit. It also considers the
cost-effectiveness, independence and objectivity of the auditors
taking account of any non-audit services provided by them. James
Cole is Chair of the Audit Committee.
The specific objectives of the Committee are to:
a) maintain adequate quality and effective scope of the external
audit of the Group including its branches where applicable and
review the independence and objectivity of the auditors.
b) ensure that the Board of Directors has adequate knowledge of
issues discussed with external auditors.
c) ensure the financial information and reports issued by the
Company to AIM, shareholders and other recipients are accurate and
contain proper disclosure at all times.
d) maintain the integrity of the Group's administrative
operating and accounting controls and internal control
principles.
e) ensure proper accounting policies are adhered to by the Group.
The Committee has unlimited access to the external auditors, to
senior management of the Group and to any external party deemed
necessary for the proper discharge of its duties. The Committee may
consult independent experts where it considers necessary to perform
its duties.
The Audit Committee reviews the financial controls of the
Company on a regular basis and is satisfied that the Group's
financial controls and reporting procedures are robust and
sufficient to ordinarily prevent fraud and ensure that senior
management, the Committee and the Board are fully aware of the
Company's financial position at all times.
The Audit Committee met three times in the last financial year,
on 10 December 2021, 24 May 2022 and 8 August 2022. Significant
reporting issues considered during the year included the
following:
1. Impairments
The Committee has reviewed the carrying values of the Group
projects as at 30 September 2022, and recoverability of loans from
the Parent Company to subsidiary undertakings and carried out
impairment reviews. The project carrying values are assessed
against the IFRS 6 criteria set out in Note 1(k). Loans to
subsidiary undertakings are assessed for impairment under IFRS
9.
As a result of this, it was judged that the Bakers and Myrtle
Project expenditure should be impaired and that the Group's
inter-company loan to Sunrise Minerals Australia Pty Ltd should be
fully impaired.
2. Going Concern
The Committee also considered the Going Concern basis on which
the accounts have been prepared (see Note 1(b)). The directors are
satisfied that the Going Concern basis is appropriate for the
preparation of the financial statements.
James Cole
Chair - Audit Committee
Remuneration Committee Report
The Remuneration Committee is a sub-committee of the Board and
comprises the independent non-executive directors. Mr Murphy is
Chairman of the Remuneration Committee.
The primary objective of the Committee is to review the
performance of the executive directors and review the basis of
their service agreements and make recommendations to the Board
regarding the scale and structure of their remuneration.
However, the Company does not currently remunerate any of the
directors other than in their capacity as directors. Whilst the
Chairman of the Board, Patrick Cheetham, does have an executive
role, his technical and managerial services are provided under a
general service agreement with Tertiary Minerals plc and his
remuneration is fixed by Tertiary Minerals plc. Nonetheless, it is
the role of the Remuneration Committee to ensure that the executive
director is appropriately incentivised and rewarded for his
services to the Company and this is considered as part of the
Committee's review of any Long-Term Incentive Plan.
The Remuneration Committee met once during the financial year
under review, on 8 August 2022.
Roger Murphy
Chair - Remuneration Committee
Nomination Committee Report
The Nomination Committee comprises the Chairman and the
independent non-executive directors. Patrick Cheetham is Chair of
the Nomination Committee.
The primary objective of the Nomination Committee is to lead the
formal process of reviewing and making recommendations as to Board
appointments and other board changes and to make appropriate
recommendations to the Board.
The Committee is required, amongst other things, to:
(a) Review the structure, size and composition (including the
skills, knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to Board appointments and
any Board changes.
(b) Give full consideration to succession planning for directors
and other senior executives in the course of its work, taking into
account the challenges and opportunities facing the Company, and
the skills and expertise needed on the Board in the future.
(c) Keep under review the leadership needs of the organisation
to compete effectively in the marketplace.
(d) Review annually the time required from non-executive
directors and non-executive directors. Performance evaluation
should be used to assess whether the executive directors and
non-executive directors are spending enough time in fulfilling
their duties.
(e) Arrange periodic reviews of the Committee's own performance
and, at least annually, review its constitution and terms of
reference to ensure it is operating at maximum effectiveness and
recommend any changes it considers necessary to the Board for
approval.
(f) Ensure that prior to the appointment of a director, the
proposed appointee should be required to disclose any other
business interests that may result in a conflict of interest and be
required to report any future business interests that may result in
a conflict of interest.
The Committee carries out its duties for the Parent Company,
major subsidiary undertakings and the Group as a whole and met
twice during the period under review, on 29 April 2022 and 8 August
2022 to review the Terms of Reference for the Committee and to
consider their continuing suitability.
The Committee is satisfied that the current Board has a depth of
experience and level and range of skills appropriate to the Company
at this stage in its development. It is however recognised that the
Company is likely to need additional expertise as it moves forward
into commercial production and so the composition of the Board will
be kept under careful review to ensure that the Board can deliver
long-term growth in shareholder value.
Patrick Cheetham
Chair - Nomination Committee
Publication of Statutory Accounts
The financial information set out in this announcement does not
constitute the Company's Annual Accounts for the period ended 30
September 2022 or 2021. The financial information for 2021 is
derived from the Statutory Accounts for 2021. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2022 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The Auditors have reported on the 2022 and
2021 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 2022 will be uploaded to the Shareholders
Documents section of the Company's website on or around 22 December
2022: https://www.sunriseresourcesplc.com/shareholder-documents
.
Consolidated Income Statement
for the year ended 30 September 2022
2022 2021
Notes GBP GBP
-------------------------------------------------- ------ ---------------------- ----------
Pre-licence exploration costs 5,638 17,320
Impairment of deferred exploration expenditure 194,247 30,021
Administration costs 291,860 318,630
Other income 22 (13,474) -
-------------------------------------------------- ------ ---------------------- ----------
Operating loss (478,271) (365,971)
Gain on sale of exploration assets 9 - 30,658
Interest receivable 48 61
-------------------------------------------------- ------ ---------------------- ----------
Loss before taxation 3 (478,223) (335,252)
Tax on loss 7 - -
-------------------------------------------------- ------ ---------------------- ----------
Loss for the year attributable to equity holders
of the parent (478,223) (335,252)
-------------------------------------------------- ------ ---------------------- ----------
Loss per share - basic and diluted (pence) 6 (0.013) (0.009)
-------------------------------------------------- ------ ---------------------- ----------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2022
2022 2021
GBP GBP
----------------------------------------------------- --------- ---------
Loss for the year (478,223) (335,252)
----------------------------------------------------- --------- ---------
Items that could be reclassified subsequently to
the income statement:
Foreign exchange translation differences on foreign
currency net investments in subsidiaries 441,434 (86,770)
Items that will not be reclassified to the income
statement:
Changes in the fair value of equity investments (22,962) (9,651)
----------------------------------------------------- --------- ---------
418,472 (96,421)
----------------------------------------------------- --------- ---------
Total comprehensive loss for the year attributable
to equity holders of the parent (59,751) (431,673)
----------------------------------------------------- --------- ---------
Consolidated and Company Statements of Financial Position
at 30 September 2022
Company Registration Number: 05363956
Group Company Group Company
2022 2022 2021 2021
Notes GBP GBP GBP GBP
-------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 9 2,503,812 - 2,133,137 -
Right of use assets 17 11,147 - 13,423 -
Investment in subsidiaries 8 - 2,609,413 - 2,753,586
Other investments 8 20,075 11,250 63,503 45,675
-------------------------------- ----- ----------- ----------- ----------- -----------
2,535,034 2,620,663 2,210,063 2,799,261
Current assets
Receivables 11 167,425 49,164 130,805 22,701
Cash and cash equivalents 12 96,126 73,644 371,740 337,817
-------------------------------- ----- ----------- ----------- ----------- -----------
263,551 122,808 502,545 360,518
Current liabilities
Trade and other payables 13 (104,936) (90,061) (100,861) (80,357)
Lease liabilities 17 (2,839) - (2,300) -
-------------------------------- ----- ----------- ----------- ----------- -----------
(107,775) (90,061) (103,161) (80,357)
-------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 155,776 32,747 399,384 280,161
-------------------------------- ----- ----------- ----------- ----------- -----------
Non current liabilities
Lease liabilities 17 (2,874) - (4,715) -
Provisions for liabilities and
charges 20 (32,079) - (26,665) -
-------------------------------- ----- ----------- ----------- ----------- -----------
(34,953) - (31,380) -
-------------------------------- ----- ----------- ----------- ----------- -----------
Net assets 2,655,857 2,653,410 2,578,067 3,079,422
-------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up share capital 14 3,833,559 3,833,559 3,701,805 3,701,805
Share premium account 5,680,316 5,680,316 5,675,616 5,675,616
Share warrant reserve 14 40,101 40,101 40,164 40,164
Fair value reserve 10,140 17,500 33,102 28,662
Foreign currency reserve 14 404,103 1,321 (37,331) 1,321
Accumulated losses (7,312,362) (6,919,387) (6,835,289) (6,368,146)
-------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to owners
of the parent 2,655,857 2,653,410 2,578,067 3,079,422
-------------------------------- ----- ----------- ----------- ----------- -----------
The Company reported a loss for the year ended 30 September 2022
of GBP552,391 (2021: GBP256,473).
These financial statements were approved and authorised for
issue by the Board on 9 December 2022 and were signed on its
behalf.
P L Cheetham J Cole
Executive Chairman Director
Consolidated Statement of Changes in Equity
Share Share Fair Foreign
Share premium warrant value currency Accumulated
capital account reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2020 3,677,997 5,655,781 33,893 42,753 49,439 (6,513,429) 2,946,434
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (335,252) (335,252)
Change in fair
value - - - (9,651) - - (9,651)
Exchange differences - - - - (86,770) - (86,770)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (9,651) (86,770) (335,252) (431,673)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 23,808 19,835 - - - - 43,643
Share-based payments
expense - - 19,663 - - - 19,663
Transfer of expired
warrants - - (13,392) - - 13,392 -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2021 3,701,805 5,675,616 40,164 33,102 (37,331) (6,835,289) 2,578,067
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (478,223) (478,223)
Change in fair
value - - - (22,962) - - (22,962)
Exchange differences - - - - 441,434 - 441,434
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (22,962) 441,434 (478,223) (59,751)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 131,754 4,700 - - - - 136,454
Share-based payments
expense - - 1,087 - - - 1,087
Transfer of expired
warrants - - (1,150) - - 1,150 -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2022 3,833,559 5,680,316 40,101 10,140 404,103 (7,332,550) 2,655,857
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Company Statement of Changes in Equity
Share Share Fair Foreign
Share premium warrant value currency Accumulated
capital account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2020 3,677,997 5,655,781 33,893 36,987 1,319 (6,125,065) 3,280,912
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (256,473) (256,473)
Change in fair
value - - - (8,325) - - (8,325)
Exchange differences - - - - 2 - 2
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (8,325) 2 (256,473) (264,796)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 23,808 19,835 - - - - 43,643
Share-based payments
expense - - 19,663 - - - 19,663
Transfer of expired
warrants - - (13,392) - - 13,392 -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
At 30 September
2021 3,701,805 5,675,616 40,164 28,662 1,321 (6,368,146) 3,079,422
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Loss for the year - - - - - (552,391) (552,391)
Change in fair
value - - - (11,162) - - (11,162)
Exchange differences - - - - - - -
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Total comprehensive
loss for the year - - - (11,162) - (552,391) (563,553)
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Share issue 131,754 4,700 - - - - 136,454
Share-based payments
expense - - 1,087 - - - 1,087
Transfer of expired
warrants - - (1,150) - - 1,150 -
At 30 September
2022 3,833,559 5,680,316 40,101 17,500 1,321 (6,939,575) 2,653,410
---------------------- --------- --------- -------- -------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2022
Group Company Group Company
2022 2022 2021 2021
Notes GBP GBP GBP GBP
------------------------------------------- ----- --------- --------- --------- ---------
Operating activity
Operating (loss)/profit before
interest (478,271) (570,441) (365,971) (285,413)
Depreciation/interest charge 17,20 5,595 - 4,744 -
Share-based payment charge 1,087 1,087 19,663 19,663
Shares issued in lieu of net wages 31,279 31,279 30,818 30,818
Impairment charge - deferred exploration
expenditure 9 194,247 - 30,021 -
Gain on disposal of exploration
assets after non cash consideration 9 - - 23,342 -
Non cash addition to equity investment 8 - - - (54,000)
Reclamation liability 20 - - (26,665) -
Increase/(decrease) in provision
for impairment of loans to subsidiaries 8 - 318,100 - -
(Increase)/decrease in receivables 11 (36,620) (26,463) (78,825) 3,969
Increase/(decrease) in trade and
other payables 13 4,075 (9,704) 10,184 (429)
------------------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from operating
activity (278,608) (256,142) (352,689) (285,392)
------------------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 48 18,003 60 28,941
Cash receipt from disposal of exploration
assets - - 20,000 -
Cash receipt from disposal of equity
investments 8 23,263 23,263 - -
Development expenditures 9 (137,490) - (391,061) -
Loans to subsidiaries - (173,926) - (484,038)
Net cash outflow from investing
activity (114,179) (132,660) (371,001) (455,097)
------------------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital (net of
expenses) 104,500 104,500 - -
Lease payments 17 (2,874) - (2,378) -
Shares issued via exercise of warrants 675 675 12,825 12,825
------------------------------------------- ----- --------- --------- --------- ---------
Net cash inflow from financing
activity 102,301 105,175 10,447 12,825
------------------------------------------- ----- --------- --------- --------- ---------
Net increase/(decrease) in the
year (290,486) (283,627) (713,243) (727,664)
Cash and cash equivalents at start
of year 371,740 337,817 1,089,417 1,065,480
Exchange differences 14,872 19,454 (4,434) 1
------------------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents at 30
September 12 96,126 73,644 371,740 337,817
------------------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2022
Background
Sunrise Resources plc (the "Company") is a public company
incorporated and domiciled in England. It is traded on the AIM
Market of the London Stock Exchange - EPIC: SRES.
The Company is a holding company (together, "the Group") for one
company incorporated in Australia, and two companies incorporated
in Nevada, in the United States of America. The Group's financial
statements are presented in Pounds Sterling (GBP) which is also the
functional currency of the Company.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
1. Accounting policies
(a) Basis of preparation
The financial statements have been prepared on the basis of the
recognition and measurement requirements of applicable law and UK
adopted International Accounting Standards .
(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 (GBP96,126), these
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the
Company has been successful in raising finance in the past, there
is no assurance that it will obtain adequate finance in the future.
This represents a material uncertainty related to events or
conditions which may cast significant doubt on the Group's and
Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
(c) Basis of consolidation
Investments, including long-term loans, in the subsidiaries are
valued at the lower of cost or recoverable amount, with an ongoing
review for impairment.
The Group's financial statements consolidate the financial
statements of Company and its subsidiary undertakings using the
acquisition method and eliminate intercompany balances and
transactions.
In accordance with section 408 of the Companies Act 2006, the
Company is exempt from the requirement to present its own statement
of comprehensive income. The amount of the loss for the financial
year recorded within the financial statements of the Company is
GBP552,391 (2021: GBP256,473).
(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. Full impairment reviews were
carried out in order to assess the carrying values of each project
as at 31 March 2022 and 30 September 2022. This involved
consideration of changes in circumstances and evidence including
and exploration results, changes in tenure of mineral rights,
economic circumstances such as market prices, opportunities for
realisation such as sale or joint ventures and viability, comparing
anticipated future costs with expected recoverable value. For each
project, based upon the relevant considerations, the directors
formed a view regarding the recoverability of capitalised
expenditure and continued compliance with the IFRS 6 criteria for
recognition and deferral.
Where an indication of impairment is identified, the relevant
value is written off to the income statement in the period for
which the impairment was identified. An impairment of exploration
and development costs may be subsequently reversed in later periods
should conditions allow.
Accumulated costs, where the Group does not yet have an
exclusive exploration licence and in respect of areas of interest
which have been abandoned, are written off to the income statement
in the year in which the pre-licence expense was incurred or in
which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the
lower of cost and expected net recoverable amount. On reaching a
mining development decision, for example, the commitment of capital
to mine development, exploration and evaluation costs are
reclassified as development costs and all development costs on a
specific area of interest will be amortised over the useful
economic life of the projects, once they become income generating
and the costs can be recouped.
(e) Trade and other receivables and payables
Trade and other receivables and payables are measured at initial
recognition at fair value and subsequently measured at amortised
cost.
(f) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand
and short-term bank deposits with a maturity of three months or
less.
(g) Leases
IFRS 16 requires the recognition of lease commitments as right
of use assets and the recognition of a corresponding liability.
Lease costs are recognised in the income statement in the form of
depreciation of the right of use asset over the lease term and
interest charges representing the unwind of the discount on the
lease liability.
Short term leases, which fall outside the IFRS 16 requirements,
having a duration of 12 months or less, are charged to the income
statement on straight line basis.
(h) Deferred taxation
Deferred taxation, if applicable, is provided in full in respect
of taxation deferred by temporary differences between the treatment
of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are
regarded as recoverable.
(i) Foreign currencies
The Group's consolidated financial statements are presented in
Pounds Sterling (GBP), being the functional currency of the
Company, and the currency of the primary economic environment in
which the Company operates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of
exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign
operations and the assets and liabilities of overseas subsidiaries,
associated undertakings and joint arrangements, that have a
functional currency different from the Group's presentation
currency, are translated at the closing exchange rates. Income
statements of overseas subsidiaries, that have a functional
currency different from the Group's presentation currency, are
translated at exchange rates at the date of transaction. Exchange
differences arising on opening reserves are taken to the foreign
currency reserve in equity.
(j) Share warrants and share-based payments
The Company issues warrants to employees (including directors)
and third parties. The fair value of the warrants is recognised as
a charge measured at fair value on the date of grant and determined
in accordance with IFRS 9, adopting the Black-Scholes-Merton model.
The fair value is recognised on a straight-line basis over the
vesting period, with a corresponding adjustment to equity, based on
the management's estimate of shares that will eventually vest. The
expected life of the warrants is adjusted, based on management's
best estimates, for the effects of non-transferability, exercise
restrictions and behavioural considerations. The details are shown
in Note 15.
The Company also issues shares in order to settle certain
liabilities, including payment of fees to directors. The fair value
of shares issued is based on the closing mid-market price of the
shares traded on the AIM market on the day prior to the date of
settlement and it is expensed on the date of settlement with a
corresponding increase in equity.
(k) 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.
(l) Reclamation costs
The Group's mining and exploration activities are subject to
various governmental laws and regulations relating to the
protection of the environment. The Group records a liability for
the estimated future rehabilitation costs and decommissioning of
its development projects at the time a constructive obligation is
determined.
When provisions for closure and environmental rehabilitation are
initially recognised, the corresponding cost is capitalised as an
intangible asset, representing part of the cost of acquiring the
future economic benefits of the operation. The capitalised cost of
closure and environmental rehabilitation activities is recognised
in mining interests and, from the commencement of commercial
production, is amortised over the expected useful life of the
operation to which it relates. Any change in the value of the
estimated expenditure is reflected in an adjustment to the
provision and asset.
(m) Standards, amendments and interpretations not yet
effective
At the date of authorisation of these financial statements,
there are no amended reporting standards and interpretations that
impact the Group as they are either not relevant to the Group's
activities or require accounting which is consistent with the
current accounting policies.
(n) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies
above, management has identified the judgemental areas that have
the most significant effect on the amounts recognised in the
financial statements:
Intangible assets - exploration and evaluation
IFRS 6 "Exploration for and Evaluation of Mineral Resources"
requires that exploration and evaluation assets shall be assessed
for impairment when facts and circumstances suggest that the
carrying amount may exceed recoverable amount.
In practical terms, this requires that project carrying values
are regularly monitored and assessed for recoverability whether
from future exploitation of resources or realised by sale to a
third party.
Where activities have not reached a stage, which permits
reasonable confirmation of the existence of mineral reserves, the
directors must form a judgement whether future exploration and
evaluation should continue. This requires management to use their
sector experience, apply their specialist expertise and form a
conclusive judgement whether or not, on the balance of evidence
that further exploration is justified to determine if an
economically viable mining operation can be established in future.
Such estimates, judgements and assumptions are likely to change as
new information and evidence becomes available. If it becomes
apparent, in the judgement of the directors, that recovery of
capitalised expenditure is unlikely, the carrying value should be
considered as impaired and treated as detailed below.
Impairment
Impairment reviews for deferred exploration and evaluation costs
are carried out on a project-by-project basis, with each project
representing a potential single cash generating unit. The directors
are required to continually monitor and review the carrying values
by reference to new developments, stages in the exploration process
and new circumstances. Assessment of the potential impairment of
assets requires an updated judgement of the probability of adequate
future cash flows from the relevant project. It includes
consideration of:
(a) The period for which the entity has the right to explore in
the specific area and whether this right will expire in the near
future, and whether the right is expected to be renewed.
(b) Whether substantive expenditure on further exploration for
and evaluation of mineral resources for the specific project is
either budgeted or planned.
(c) Whether exploration for and evaluation of mineral resources
on the specific project has led to the discovery of commercially
viable quantities of mineral resources and whether the entity has
decided to discontinue such activities on the project.
(d) Whether sufficient data exist to indicate that, although a
development on the specific project is likely to proceed, the
carrying amount of the exploration and evaluation asset is likely
to be recovered in full from successful development of a mine or by
the sale of the project.
The judgements in respect of key projects are as follows;
The CS Project in Nevada is the Group's lead project with a
carrying value of GBP1,505,188. In the judgement of the directors,
this is justified as, following the successful grant of various
mining and production permits, the focus is on the mine start up
and production.
Further exploration at the Bay State Project, Nevada (carrying
value GBP497,398), is budgeted and project leases and claims are
being maintained. In the judgement of the directors further
evaluation and exploration is justified as, despite some drilling
issues, positive drilling results have been obtained so far. In the
opinion of the directors this asset is not impaired.
Although there has been no exploration during the reporting
period on the County Line Project, Nevada (carrying value
GBP168,990), in the judgement of the directors further evaluation
of the production potential is justified in view of its proximity
to the CS Project and project synergies. The mining claims have
been renewed for a further 12--month period and the project is not
impaired.
Positive drilling results have been obtained from the Clayton
Project, Nevada (carrying value of GBP144,187) and in the opinion
of the directors further drilling is justified and the project is
not impaired.
The Bakers Project, Australia is impaired (full impairment value
of GBP170,745), pending a decision on negotiations with the
regional Native Title holder with whom agreement is required in
order to progress the Company's mining lease applications.
The Myrtle Project, Nevada is also impaired (full impairment
value of GBP23,501), as information on historical exploration
results has been found that downgrades the prospectivity of the
Company's Myrtle mining claims.
Also, in relation to other projects, the exploration rights are
being maintained and further exploration and/or drilling is
budgeted therefore the directors have reached the conclusion that
no other impairments are required.
Going concern
The preparation of financial statements requires an assessment
of the validity of the going concern assumption. This in turn is
dependent on finance being available for the continuing working
capital requirements of the Group. Based on the assumption that
such finance will become available, the directors believe that the
going concern basis is appropriate for these accounts.
Share warrants and share-based payments
The estimates of costs recognised in connection with the fair
value of share warrants requires that management selects an
appropriate valuation model and make decisions on various inputs
into the model including the volatility of its own share price, the
probable life of the warrants before exercise, and behavioural
consideration of warrant holders.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors.
The Board considers the business has one reportable segment, the
management of exploration projects, which is supported by a Head
Office function. For the purpose of measuring segmental profits and
losses the exploration segment bears only those direct costs
incurred by or on behalf of those projects, no Head Office cost
allocations are made to this segment. The Head Office function
recognises all other costs.
Exploration Head
projects office Total
2022 GBP GBP GBP
---------------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Pre-licence exploration costs 5,638 - 5,638
Share-based payments - 1,087 1,087
Impairment of deferred exploration expenditure 194,247 - 194,247
Other expenses - 290,773 290,773
Other income (13,474) - (13,474)
---------------------------------------------------- ------------ ---------- ----------
Operating loss (186,411) (291,860) (478,271)
Interest receivable - 48 48
---------------------------------------------------- ------------ ---------- ----------
Loss before tax (186,411) (291,812) (478,223)
Taxation tax - - -
---------------------------------------------------- ------------ ---------- ----------
Loss for the year attributable to equity
holders of the parent (186,411) (291,812) (478,223)
---------------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets :
Deferred exploration costs:
County Line Diatomite Project, USA 168,990 - 168,990
Bay State Silver Project, USA 497,398 - 497,398
NewPerl Project/Jackson Wash Project, USA 79,419 - 79,419
Ridge Limestone Project, USA 36,997 - 36,997
CS Pozzolan-Perlite Project, USA 1,505,188 - 1,505,188
Clayton Gold Project, USA 144,187 - 144,187
Newark Silver-Gold Project, USA 38,013 - 38,013
Hazen Pozzolan Project, USA 18,748 - 18,748
Pioche Sepiolite, USA 14,872 - 14,872
---------------------------------------------------- ------------ ---------- ----------
2,503,812 - 2,503,812
Right of use assets 11,147 - 11,147
Other investments - 20,075 20,075
---------------------------------------------------- ------------ ---------- ----------
2,514,959 20,075 2,535,034
---------------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 110,099 52,835 162,934
Cash and cash equivalents - 96,126 96,126
---------------------------------------------------- ------------ ---------- ----------
110,099 148,961 259,060
---------------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (16,132) (84,313) (100,445)
Lease liabilities (2,839) - (2,839)
---------------------------------------------------- ------------ ---------- ----------
Net current assets 91,128 64,648 155,776
---------------------------------------------------- ------------ ---------- ----------
Non-current liabilities
Reclamation liabilities (32,079) - (32,079)
Lease liabilities (2,874) - (2,874)
---------------------------------------------------- ------------ ---------- ----------
Net assets 2,571,134 84,723 2,655,857
---------------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 138,054 - 138,054
Exchange rate adjustments to deferred exploration
costs 427,432 - 427,432
---------------------------------------------------- ------------ ---------- ----------
Exploration Head
projects office Total
2021 GBP GBP GBP
---------------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Pre-licence exploration costs 17,320 - 17,320
Share-based payments - 19,663 19,663
Impairment of deferred exploration expenditure 30,021 - 30,021
Other expenses - 298,967 298,967
---------------------------------------------------- ------------ ---------- ----------
Operating loss (47,341) (318,630) (365,971)
Gain on disposal of exploration assets 30,658 - 30,658
Interest receivable - 61 61
---------------------------------------------------- ------------ ---------- ----------
Loss before tax (16,683) (318,569) (335,252)
Taxation - - -
---------------------------------------------------- ------------ ---------- ----------
Loss for the year attributable to equity
holders of the parent (16,683) (318,569) (335,252)
---------------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets :
Deferred exploration costs:
Baker's Gold Project, Australia 144,343 - 144,343
County Line Diatomite Project, USA 136,665 - 136,665
Bay State Silver Project, USA 410,686 - 410,686
NewPerl Project/Jackson Wash Project, USA 66,153 - 66,153
Ridge Limestone Project, USA 29,262 - 29,262
CS Pozzolan-Perlite Project, USA 1,187,489 - 1,187,489
Clayton Gold Project, USA 117,771 - 117,771
Newark Silver-Gold Project, USA 31,470 - 31,470
Myrtle Project, USA 9,298 - 9,298
---------------------------------------------------- ------------ ---------- ----------
2,133,137 - 2,133,137
Right of use assets 13,423 - 13,423
Other investments - 63,503 63,503
---------------------------------------------------- ------------ ---------- ----------
2,146,560 63,503 2,210,063
---------------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 105,178 25,627 130,805
Cash and cash equivalents - 371,740 371,740
---------------------------------------------------- ------------ ---------- ----------
105,178 397,367 502,545
---------------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (29,973) (70,888) (100,861)
Lease liabilities (2,300) - (2,300)
---------------------------------------------------- ------------ ---------- ----------
Net current assets 72,905 326,479 399,384
---------------------------------------------------- ------------ ---------- ----------
Non-current liabilities
Reclamation liabilities (26,665) - (26,665)
Lease liabilities (4,715) - (4,715)
---------------------------------------------------- ------------ ---------- ----------
Net assets 2,188,085 389,982 2,578,067
---------------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 391,061 - 391,061
Exchange rate adjustments to deferred exploration
costs (80,880) - (80,880)
---------------------------------------------------- ------------ ---------- ----------
3. Loss before income tax
2022 2021
The operating loss is stated after charging: GBP GBP
---------------------------------------------- ------ -----
Fees payable to the Company's auditor for:
The audit of the Company's annual accounts 13,421 8,200
Other Services:
Interim review of accounts 1,200 1,050
Corporation tax fees 998 767
4. Directors' emoluments
2022 2021
Remuneration in respect of directors was as follows: GBP GBP
------------------------------------------------------ ------ ------
P L Cheetham (salary) 16,000 16,000
D J Swan (salary) - 10,540
J Cole (salary) 16,000 5,523
R D Murphy (salary) 16,000 16,000
------------------------------------------------------ ------ ------
48,000 48,063
------------------------------------------------------ ------ ------
In the year ended 30 September 2022 the cost of Employer's
National Insurance Contributions for directors was GBPNil (2021:
GBPNil).
During the year ended 30 September 2022 the value of non-cash
share-based payments in respect of share warrants issued to the
directors was GBP262 (2021: GBP17,979).
The directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP48,262 (2021: GBP66,337).
5. Staff costs
Staff costs for the Group and the Company, including 2022 2021
directors, were as follows: GBP GBP
------------------------------------------------------ ------ ------
Wages and salaries 48,000 48,063
Social security costs - -
Pension - 295
Share-based payments 262 17,979
------------------------------------------------------ ------ ------
48,262 66,337
------------------------------------------------------ ------ ------
The average monthly number of employees employed 2022 2021
by the Group and the Company during the year was Number Number
as follows:
-------------------------------------------------- ------- -------
Directors 3 3
Other Officers 0 0
-------------------------------------------------- ------- -------
3 3
-------------------------------------------------- ------- -------
The Company does not employ any staff directly apart from the
directors. The services of technical and administrative staff are
provided by Tertiary Minerals plc as part of the Management
Services Agreement between the two companies (see Note 16).
The Company issues share warrants to employees of Tertiary
Minerals plc from time to time and these non-cash share-based
payments resulted in a charge within the financial statements of
GBP157 (2021: GBP1,686).
Company secretarial services are provided by Mr R. Venables
through City Group plc.
6. Loss per share
Loss per share has been calculated using the loss for the year
attributable to equity holders of the Company and the weighted
average number of shares in issue during the year.
2022 2021
------------------------------------------ ------------- -------------
Loss (GBP) (478,223) (335,252)
Weighted average shares in issue (No.) 3,734,454,207 3,693,084,489
------------------------------------------ ------------- -------------
Basic and diluted loss per share (pence) (0.013) (0.009)
------------------------------------------ ------------- -------------
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share are identical to those used
for the basic earnings per ordinary share. This is because the
exercise of share warrants would have the effect of reducing the
loss per ordinary share and is therefore anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2021: 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% (2021: 19%). The differences are explained below.
2022 2021
Tax reconciliation GBP GBP
------------------------------------------------ ----------- -----------
Loss before tax (478,223) (335,252)
------------------------------------------------ ----------- -----------
Tax at 19% (2021: 19%) (90,862) (63,698)
------------------------------------------------ ----------- -----------
Pre-trading expenditure not deductible for tax
purposes 17,563 9,624
------------------------------------------------ ----------- -----------
Expenditure not deductible for tax purposes 268 3,772
------------------------------------------------ ----------- -----------
Unrelieved losses carried forward (73,031) (50,302)
------------------------------------------------ ----------- -----------
Tax charge/credit for year - -
------------------------------------------------ ----------- -----------
Total losses carried forward (4,158,554) (3,774,180)
------------------------------------------------ ----------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP4,158,554
(2021: GBP3,774,180). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the
future capped to GBP5m per annum allowance. The deferred tax asset
has not been recognised as the future recovery is uncertain given
the exploration status of the Group. The carried forward tax loss
is adjusted each year for amounts that can no longer be carried
forward.
8. Investments
Subsidiary undertakings
Date of Type and percentage
incorporation of shares held
Country /registration at
of 30 September Principal
Company incorporation/registration 2022 activity
--------------------------- --------------------------- -------------- ------------------- -------------------
Sunrise Minerals Australia 7 October 100% of ordinary
Pty Ltd Australia 2009 shares Mineral exploration
Nevada, 12 January 100% of ordinary
SR Minerals Inc. USA 2014 shares Mineral exploration
Nevada, 13 April 2016 100% of ordinary
Westgold Inc. USA shares Mineral exploration
=========================== =========================== ============== =================== ===================
The registered office of Sunrise Minerals Australia Pty Ltd is
Level 4, 35-37 Havelock Street West, Perth, WA 6005.
The registered office of SR Minerals Inc. and Westgold Inc. is
241 Ridge Street, Suite 210, Reno, NV 89501.
Company Company
2022 2021
Investment in subsidiary undertakings GBP GBP
--------------------------------------- --------- ---------
Value at start of year 2,753,586 2,269,548
Additions 173,927 484,038
Movement in provision (318,100) -
At 30 September 2,609,413 2,753,586
--------------------------------------- --------- ---------
Investments in share capital of subsidiary undertakings
The directors consider that the carrying value of the Company's
investments in shares of subsidiary undertakings totalling GBP63 is
not material and therefore does not require an impairment
review.
Loans to Group undertakings
Amounts owed by subsidiary undertakings are unsecured and
payable in cash. Loan interest is charged to US subsidiaries on
intercompany loans with Parent Company.
A review of the recoverability of investments in and loans to
subsidiary undertakings totalling GBP2,609,413 has been carried out
in accordance with IFRS 9. This indicated potential credit losses
arising in the year which have been provided. Sunrise Minerals
Australia Pty Ltd provision increased by GBP318,100 to fully impair
the loan balance following the impairment of Bakers project. The
assessment has been based upon a review of the underlying
exploration assets held by the subsidiary undertakings.
Other investments - listed investments
Country of Type and percentage
incorporation of shares held at
Company /registration 30 September 2022 Principal activity
---------------------- -------------- ------------------- -------------------
VR Resources Ltd Canada 0.10% of ordinary Mineral exploration
shares
Power Metal Resources United Kingdom 0.05% of ordinary Mineral exploration
plc shares
---------------------- -------------- ------------------- -------------------
Group Company Group Company
Investment designated at fair 2022 2022 2021 2021
value through OCI GBP GBP GBP GBP
------------------------------- -------- -------- -------- -------
Value at start of year 63,503 45,675 19,765 -
Additions - - 54,000 54,000
Disposals (23,263) (23,263) - -
------------------------------- -------- -------- -------- -------
Movement in valuation (20,165) (11,162) (10,262) (8,325)
------------------------------- -------- -------- -------- -------
At 30 September 20,075 11,250 63,503 45,675
------------------------------- -------- -------- -------- -------
The fair value of each investment is equal to the market value
of its shares at 30 September 2022, based on the closing mid-market
price of shares on its equity exchange market.
These are level one inputs for the purpose of the IFRS 13 fair
value hierarchy.
9. Intangible assets
Group Company Group Company
2022 2022 2021 2021
Deferred exploration expenditure GBP GBP GBP GBP
--------------------------------------- ----------- ----------- ----------- -----------
Cost
At start of year 4,861,613 2,203,594 4,565,673 2,203,594
Reclamation (564) - 26,239 -
Additions 138,054 - 391,061 -
Disposals during the year - - (40,480) -
Foreign currency exchange adjustments 427,432 - (80,880) -
--------------------------------------- ----------- ----------- ----------- -----------
At 30 September 5,426,535 2,203,594 4,861,613 2,203,594
--------------------------------------- ----------- ----------- ----------- -----------
Impairment
At start of year (2,728,476) (2,203,594) (2,698,455) (2,203,594)
Impairment losses during the year (194,247) - (30,021) -
At 30 September (2,922,723) (2,203,594) (2,728,476) (2,203,594)
--------------------------------------- ----------- ----------- ----------- -----------
Net book value
At 30 September 2,503,812 - 2,133,137 -
--------------------------------------- ----------- ----------- ----------- -----------
At start of year 2,133,137 - 1,867,218 -
--------------------------------------- ----------- ----------- ----------- -----------
During the year the directors carried out an impairment review
with reference to IFRS 6.20 (a) which resulted in the impairment of
the Bakers and Myrtle Project expenditure. Refer to accounting
policy 1(d) and 1(j) for a description of the considerations used
in the impairment review.
10. Property, plant and equipment
The Group has the use of tangible assets held by a related
undertaking, Tertiary Minerals plc, under a Management Services
Agreement between the two companies.
11. Receivables
Group Company Group Company
2022 2022 2021 2021
GBP GBP GBP GBP
------------------- ------- ------- ------- -------
Prepayments 41,052 37,506 13,677 11,037
Other receivables 126,373 11,658 117,128 11,664
------------------- ------- ------- ------- -------
At 30 September 167,425 49,164 130,805 22,701
------------------- ------- ------- ------- -------
12. Cash and cash equivalents
Group Company Group Company
2022 2022 2021 2021
Cash at bank and in hand GBP GBP GBP GBP
-------------------------- ------ ------- ------- -------
At 30 September 96,126 73,644 371,740 337,817
========================== ====== ======= ======= =======
13. Trade and other payables
Group Company Group Company
2022 2022 2021 2021
GBP GBP GBP GBP
------------------------------------- ------- ------- ------- -------
Amounts owed to related undertaking
- Tertiary Minerals plc 46,233 46,233 44,147 44,147
Trade creditors 10,450 9,057 6,070 2,841
Accruals 19,762 10,771 26,434 9,159
Deferred income 4,491 - - -
Other payables 20,116 20,116 18,147 18,147
Other taxation and social security 3,884 3,884 6,063 6,063
------------------------------------- ------- ------- ------- -------
At 30 September 104,936 90,061 100,861 80,357
------------------------------------- ------- ------- ------- -------
14. Share capital and reserves
2022 2022 2021 2021
Number GBP Number GBP
---------------------------------- ------------- --------- ------------- ---------
Share capital - Allotted, called
up and fully paid
Ordinary shares of 0.1p each
Balance at start of year 3,701,804,687 3,701,805 3,677,996,870 3,677,997
Shares issued in the year 131,754,400 131,754 23,807,817 23,808
Balance at 30 September 3,833,559,087 3,833,559 3,701,804,687 3,701,805
---------------------------------- ------------- --------- ------------- ---------
During the year to 30 September 2022 the following share issues
took place:
An issue of 8,781,779 0.1p ordinary shares at 0.19p per share to
three directors, for a total consideration of GBP16,685, in
satisfaction of directors' fees (10 January 2022).
An issue of 500,000 0.1p ordinary shares at 0.135p per share,
via exercise of warrants for a total of GBP675 (31 January
2022).
An issue of 100,000,000 0.1p ordinary shares at 0.1p per share,
via placing for a total of GBP100,000 (12 July 2022).
An issue of 9,500,000 0.1p ordinary shares at 0.1p per share, as
settlement of broker placing commission and broker quarterly fee
for a total of GBP9,500 (12 July 2022).
An issue of 12,972,621 0.1p ordinary shares at 0.113p per share
to three directors, for a total consideration of GBP14,594, in
satisfaction of directors' fees (8 August 2022).
During the year to 30 September 2021 a total of 23,807,817 0.1p
ordinary shares were issued, at an average price of 0.18p per
share, for a total consideration of GBP43,643 net of expenses.
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, which relate to
subsidiaries only, from their functional currency into the Parent's
functional currency, being Sterling, are recognised directly in the
foreign currency reserve.
Share warrant reserve
The share warrant reserve is used to recognise the value of
equity-settled share warrants provided to employees, including key
management personnel, as part of their remuneration, and to third
parties in connection with fundraising. Refer to Note 15 for
further details.
Share premium reserve
The share premium account represents premiums received on the
initial issuing of the share capital. Any
transaction costs associated with the issuing of shares are
deducted from share premium.
Fair value reserve
Fair value reserve represents the cumulative fair value changes
of available-for-sale equity investment assets.
15. Share warrants granted
Warrants not exercised or expired at 30 September 2022
Issue Exercise Exercisable
date price Number Expiry dates
---------- -------- ----------- ---------------------- ------------
Any time before
31/01/18 0.160p 3,250,000 expiry 31/01/23
Any time before
21/02/19 0.160p 4,000,000 expiry 21/02/24
Any time before
21/02/19 0.110p 4,000,000 expiry 21/02/24
*Any time from
06/08/20 0.195p 35,000,000 05/08/21 05/08/25
05/08/22 0.1125p 8,000,000 Any time from 05/08/23 05/08/23
Any time before
18/07/22 0.2p 109,500,000 expiry 18/01/23
Any time before
18/07/22 0.2p 5,000,000 expiry 18/07/23
---------- -------- ----------- ---------------------- ------------
Total 168,750,000
---------- -------- ----------- ---------------------- ------------
*Of these 15,000,000 warrants cannot be exercised before the
Company makes the first sustainable sales of perlite/pozzolan
product from the CS Project.
Share warrants are issued for nil consideration and are
exercisable as disclosed above. They are exchangeable on a one for
one basis for each ordinary share of 0.1p at the exercise price on
the date of conversion.
Share warrant movements:
2022 2021
---------------------- --------------------------
Weighted Weighted
Number average average
of exercise exercise
share price Number of price
warrants (Pence) share warrants (Pence)
------------------------------ ----------- --------- --------------- ---------
Outstanding at start of year 49,500,000 0.18 92,948,052 0.18
Granted during the year 122,500,000 0.19 - -
Forfeited during the year - - - -
Exercised during the year (500,000) 0.135 (11,090,909) 0.12
Expired during the year (2,750,000) 0.135 (32,357,143) 0.20
------------------------------ ----------- --------- --------------- ---------
Outstanding at end of year 168,750,000 0.19 49,500,000 0.18
------------------------------ ----------- --------- --------------- ---------
Exercisable at end of year 160,750,000 0.19 49,500,000 0.18
------------------------------ ----------- --------- --------------- ---------
The share warrants outstanding at 30 September 2022 had a
weighted average exercise price of 0.19p (2021: 0.18p), a weighted
average fair value of 0.02p (2021: 0.064p) and a weighted average
remaining contractual life of 1.11 years.
In the year ended 30 September 2021 no warrants were
granted.
In the year ended 30 September 2022 warrants were granted on 18
July 2022 as part of fundraise and to Peterhouse Capital Limited as
settlement of broker commission and broker quarterly fee with an
aggregate estimated fair value of GBP667.
In the year ended 30 September 2022 warrants were granted on 5
August 2022 to non-executive directors of the Company and employees
of Tertiary Minerals plc with an aggregate estimated fair value of
GBP2,735. Note 5 explains the value recognised in the reporting
period in respect of Tertiary Minerals plc.
In the year to 30 September 2022 the Company recognised expenses
of GBP1,087 (2021: GBP19,664) related to issuing of share warrants
in connection with equity-settled share-based payment transactions.
The fair value is charged to administrative expenses and where
there is a vesting period it is charged on a straight-line basis
over the vesting period, together with a corresponding increase in
equity, based on the management's estimate of shares that will
eventually vest.
The fair values of warrants are estimated using a
Black-Scholes-Merton Pricing Model and charged to administrative
expenses on a straight-line basis over the vesting period, together
with a corresponding increase in equity, based on the management's
estimate of shares that will eventually vest.
The inputs into the Black-Scholes-Merton Pricing 2022 2021
Model were as follows:
------------------------------------------------- ------ -----
Weighted average share price 0.11p -
Weighted average exercise price 0.19p -
Expected volatility 60% -
Expected life 0.75 -
Risk-free rate 0.02% -
Expected dividend yield 0% -
------------------------------------------------- ------ -----
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous 3 years.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
In the year ended 30 September 2022 the following share warrants
were exercised:
On 31 January 2022 500,000 warrants at an exercise price of
0.135p were exercised for a consideration of GBP675.
16. Related party transactions
Key management personnel
The directors holding office at the year end and their warrants
held in the share capital of the Company are:
At 30 September
At 30 September 2022 2021
Share Warrant Warrant
Shares warrants exercise expiry Shares Share warrants
number number price date number number
--------------- ----------- ---------- --------- -------- ----------- --------------
P L Cheetham* 247,532,996 30,000,000 0.195p 05/08/25 234,293,916 30,000,000
J Cole 6,863,763 2,500,000 0.113p 05/08/27 - -
R D Murphy 65,093,787 2,000,000 0.160p 21/02/24 54,942,230 4,000,000
2,000,000 0.195p 05/08/25
2,500,000 0.113p 05/08/27
--------------- ----------- ---------- --------- -------- ----------- --------------
*Includes 5,500,000 shares held by K E Cheetham, wife of P L
Cheetham
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the
consolidated accounts of Tertiary Minerals plc, which held 0.57% of
the issued share capital on 30 September 2022 (2021: 0.59%).
Tertiary Minerals plc provides management services to Sunrise
Resources plc and consequently during the year the Group incurred
costs of GBP 171,052 (2021: GBP 165,058 ).
At the balance sheet date an amount of GBP46,232 (2021:
GBP44,147) was due to Tertiary Minerals plc, included in trade and
other payables (Note 13).
Patrick Cheetham, the Executive Chairman of the Company, is also
a director of Tertiary Minerals plc.
At 30 September 2022 and at the date of this report Donald
McAlister, a director of Tertiary Minerals plc, held 550,000 shares
in the Company.
17. Leases
Group Group
2022 2021
Right of use assets GBP GBP
--------------------------------------- -------- -------
Cost
At start of year 21,010 21,970
Additions - -
Disposals - -
Foreign currency exchange adjustments 4,389 (960)
--------------------------------------- -------- -------
At 30 September 25,399 21,010
--------------------------------------- -------- -------
Depreciation
At start of year (7,587) (3,539)
Charge for the year (5,080) (4,202)
Disposals - -
Foreign currency exchange adjustments (1,585) 154
--------------------------------------- -------- -------
At 30 September (14,252) (7,587)
--------------------------------------- -------- -------
Carrying amounts
At 30 September 11,147 13,423
--------------------------------------- -------- -------
At start of year 13,423 18,431
--------------------------------------- -------- -------
Group Group
2022 2021
Lease liabilities GBP GBP
--------------------------------------- ------- -------
Cost
At start of year 7,015 9,700
Additions - -
Lease payments (2,874) (2,378)
Interest charge 106 117
Foreign currency exchange adjustments 1,466 (424)
--------------------------------------- ------- -------
At 30 September 5,713 7,015
--------------------------------------- ------- -------
Minimum
lease Present
payments Interest value
GBP GBP GBP
---------------------------------- --------- -------- -------
No later than one year 2,874 (35) 2,839
Later than one year and no later
than 5 years 2,874 - 2,874
Later than five years - - -
---------------------------------- --------- -------- -------
Total lease liabilities 5,713
---------------------------------- --------- -------- -------
Current liabilities 2,839
Non-current liabilities 2,874
---------------------------------- --------- -------- -------
The right of use assets and related lease liabilities are for
the lease of water rights for use in conjunction with the CS
Project in Nevada, USA. Total cash flow outflow amount is
GBP5,186.
18. Capital management
The Group's capital requirements are dictated by its project and
overhead funding requirements from time to time. Capital
requirements are reviewed by the Board on a regular basis.
The Group manages its capital to ensure that entities within the
Group will be able to continue as going concerns, to increase the
value of the assets of the business and to provide an adequate
return to shareholders in the future when exploration assets are
taken into production.
The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of its assets. In order to maintain or adjust the
capital structure the possibilities open to the Group in future
include issuing new shares, consolidating shares, returning capital
to shareholders, taking on debt and selling assets.
19. Financial instruments
At 30 September 2022, the Group's and Company's financial assets
consisted of receivables due within one year, other investments and
cash and cash equivalents. At the same date, the Group and Company
had no financial liabilities other than trade and other payables
due within one year and had no agreed borrowing facilities as at
this date. There is no material difference between the carrying and
fair values of the Group's and Company's financial assets and
liabilities.
The carrying amounts for each category of financial instrument
held at 30 September 2022, as defined in IFRS 9, are as
follows:
Group Company Group Company
2022 2022 2021 2021
GBP GBP GBP GBP
------------------------------------- ------- ------- ------- -------
Financial assets at amortised cost 245,433 108,238 488,868 349,481
Financial assets at fair value
through other comprehensive income 20,075 11,250 63,503 45,675
Financial Liabilities at amortised
cost 118,728 66,061 110,331 56,146
------------------------------------- ------- ------- ------- -------
Risk management
The principal risks faced by the Group and Company resulting
from financial instruments are liquidity risk, foreign currency
risk and, to a lesser extent, interest rate risk and credit risk.
The directors review and agree policies for managing each of these
risks as summarised below. The policies have remained unchanged
from previous periods as the risks are assessed not to have
changed.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars,
Australian Dollars and others to provide funding for exploration
and evaluation activity, whilst the Company holds cash balances in
Sterling, US Dollars, Australian Dollars and small amounts in other
currencies.
The Company is dependent on equity fundraising through private
placings which the directors regard as the most cost-effective
method of fundraising. The directors monitor cash flow in the
context of their expectations for the business to ensure sufficient
liquidity is available to meet foreseeable needs.
Currency risk
The Group's financial risk management objective is broadly to
seek to make neither profit nor loss from exposure to currency or
interest rate risks. The Group is exposed to transactional foreign
exchange risk and takes profits and losses as they arise as, in the
opinion of the directors, the cost of hedging against fluctuations
would be greater than the related benefit from doing so.
Fluctuations in the exchange rate may have a material effect on
reported loss or equity.
Group Company Group Company
Bank balances were held in the following 2022 2022 2021 2021
denominations: GBP GBP GBP GBP
-------------------------------------------- ------ ------- ------- -------
United Kingdom Sterling 49,959 49,959 328,133 328,133
Australian Dollar 8,588 4,381 19,544 9,568
United States Dollar 37,501 19,226 23,986 39
Other 78 78 77 77
-------------------------------------------- ------ ------- ------- -------
Interest rate risk
The Company finances operations through equity fundraising and
therefore does not carry borrowings.
Fluctuating interest rates have the potential to affect the loss
and equity of the Group and the Company insofar as they affect the
interest paid on financial instruments held for the benefit of the
Group. The directors do not consider the effects to be material to
the reported loss or equity of the Group or the Company presented
in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such
as VAT refunds, invoices issued to related parties and its joint
arrangements for management charges. The amounts outstanding from
time to time are not material other than for VAT refunds which are
considered by the directors to be low risk.
The Company has exposure to credit risk in respect of its cash
deposits with NatWest bank and this exposure is considered by the
directors to be low risk.
20. Provision for liabilities and charges
2022 2021
Group GBP GBP
----------------------- ------- ------
Reclamation Liability
At start of year 26,665 -
Additions 2,915 26,665
Reduction/reversal (3,479) -
Interest 409 -
Exchange adjustments 5,569 -
At 30 September 32,079 26,665
----------------------- ------- ------
The Group makes provision for future reclamation costs relating
to exploration projects. Provisions are calculated based upon
internal estimates and expected costs based upon past experience
and expert guidance where appropriate.
21. Contingent Assets
The Company has the following contingent assets:
Power Metal Resources plc
2.25 million warrants and 2% Net Smelter Return Royalty,
received as part of the consideration for the disposal of Stonewall
and Garfield exploration projects in June 2021.
VR Resources
3% Net Smelter Return Royalty received as part of the
consideration for the sale of the Junction Gold-Copper exploration
project to in August 2017.
No values have been assigned to these contingent assets on the
basis that realisation is uncertain and considered to be
unpredictable.
22. Other income
Lease Option agreement with Kinross
In October 2021, the Company entered into a lease/option
agreement with reserved royalty 2.5% Net Smelter Return Royalty
with Kinross Gold U.S.A Inc. granting Kinross a Lease and Option to
purchase the Company's 25 Jackson Wash mining claims in Nevada,
USA. Under the terms of the Agreement Kinross a lease payment was
made to the Company of USGBP5,000 and signing bonus of $10,000.
23. Events after the year-end
On 29 November 2022, the Company raised GBP280,000 through a
placement of 80,000,000 new ordinary shares and the issue of a
GBP200,000 convertible security. The agreement, with US
institutional investor Towards Net Zero LLC, allows the Company to
issue a further convertible security within 6 months of the Closing
Date, 6 December 2022, to raise a further GBP200,000 subject to
certain conditions precedent.
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FR MZMMZLFVGZZG
(END) Dow Jones Newswires
December 13, 2022 04:23 ET (09:23 GMT)
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