TIDMTTAU
21 December 2021
TECTONIC GOLD PLC
("Tectonic Gold" or the "Company")
Final Results to 30 June 2021
CHAIRMAN'S STATEMENT
Dear Shareholders,
The results for Tectonic Gold Plc for the 12 months to 30 June 2021 mark the
third year of your Company as a listed entity and, once again, a year of
challenge and opportunity. COVID-19 and the restrictions on movement eased and
we were able to get into the field on our lead gold project in Queensland where
we executed multiple successful campaigns, advancing our research into
Intrusive Related Gold Systems and our understanding of the Specimen Hill
system itself. We pursued the Southern Copper discovery and made several
rediscoveries of old workings and new discoveries in these various campaigns.
Drilling in December 2020 and January 2021 returned promising results and
attracted the attention of some of the large copper and gold miners. We hosted
several leading experts to site to rigorously challenge our thinking and ensure
our research efforts were robust. Thei r reviews encouraged us to get back into
the field and extend the January findings with additional testing. With your
support in funding our innovative "drill warrant" program, we returned with a
drilling campaign in September and immediately followed up on this with diamond
core drilling in October. The weather again cut our campaign short,
tantalisingly just 100m from our bullseye target below the high grade
Goldsmith's Reef, but we none the less added significantly to our understanding
of the Specimen Hill system and at the time of writing we are waiting on assays
from this last campaign. Every time we go back to the field at Specimen Hill
the project grows in size and potential and shows our initial thesis of
tackling this district scale system to be worthy.
Our diamond and heavy minerals investment in South Africa with Kazera Global
Plc ("Kazera") is advancing. Kazera have been successful in progressing the
diamond mining opportunity and this encouraged them to exercised their option
to acquire 60% of Whale Head Pty Ltd ("Whale Head"). Whale Head holds a mineral
sands mining application over the same diamond bearing alluvial deposit that
Deep Blue is prosecuting. The application is progressing after a COVID driven
hiatus in the South African Mines Department. We supported Kazera by exercising
our share options to assist them in funding the expansion of onsite activities,
including taking operation control over the Government owned diamond processing
plant. We expect this to significantly enhance their production capacity in the
year ahead. As a reminder, Tectonic holds non diluting interests now in both
the diamonds and heavy minerals operations.
In addition to support from shareholders, we have continued to enjoy support
from the Australian Federal Government under their R&D sponsorship program. We
have submitted a claim under this program for a cash rebate on all the
qualifying research on gold exploration this year. It is not only about gold
however as we are now picking up an encouraging copper presence across parts of
the Specimen Hill system near a neighbouring historic copper mine. We will
continue to progress this investigation in the year ahead with a view to
partnering with one of the larger copper-gold mining companies to take Specimen
Hill into the next phase of project development. Tectonic's focus then will
shift to the next asset in the portfolio, Mount Cassidy, which we will also
work up towards a partnership transaction. Alongside this we are always keeping
an eye out for new projects and the opportunity to utilise our research and
expertise on other projects in Australia and around the world.
On 11 March 2020, the World Health Organisation ("WHO") declared COVID-19 a
pandemic. The pandemic has adversely affected the global economy, including an
increase in unemployment, decrease in consumer demand, interruptions in supply
chains, and tight liquidity and credit conditions. Consequently, governments
around the world announced monetary and fiscal stimulus packages to minimise
the adverse economic impact. However, the COVID-19 situation is still evolving,
and its full economic impact remains uncertain.
The Company has several assets where the value may be impacted by COVID-19. At
the date these financial statements were approved by the Directors the extent
of the impact COVID-19 on the Company's assets cannot be reasonably estimated
at this time.
The pandemic has impacted the Company's operations with Government mandated
bans on mass gatherings and social distancing measures resulting in disruption
to the Company's operations; this disruption is expected to negatively impact
the ability for the Company to conduct drilling and its parent entity's ability
to raise capital, refer Going Concern Note 2. The Directors and management are
continually monitoring and managing the Company's operations closely in
response to COVID-19 however the extent of the impact COVID-19 may have on the
Company's future liquidity, financial performance and position and operations
is uncertain and cannot be reasonably estimated at the date these financial
statements were issued.
Thank you to all of our supportive shareholders and stakeholders who have
worked with us over the last year to progress our gold projects and our
exciting South African diamond and heavy minerals investment.
Yours sincerely
Bruce Fulton
CHIEF EXECUTIVE OFFICER'S REPORT
During the year to June 2021 the Company had a very intense level of activity
on its flagship Specimen Hill project. After COVID restricted access to the
site in 2020, we used the opportunity in 2021 to recapture as much momentum as
possible from the success of the 2019 campaigns. Shareholders supported us with
a raise in September 2020 which enabled us to get a drill rig onto site in
December 2020 and follow up again in January 2021. Testing returned positive
results with every hole intersecting mineralisation and some very attractive
grades returned from assays. Follow on field work taking independent experts to
site to add rigour to our Australian Government supported research program also
delivered the rediscovery of the high-grade Goldsmith's Reef workings and a
number of new discoveries.
Shareholders were pleased with the results and supported us again through the
innovative "drill warrant" program devised by our corporate advisers, VSA
Capital, funding the team back into the field for further drilling in September
and October. At the time of writing, we are waiting on the assays from this
latest campaign.
During the year Tectonic divested its interest in Toronto listed VOX Royalty
Corp. ("VOX"), generating over CAD$300,000, which we have recycled into our
technology research and exploration efforts.
In September 2021, Tectonic sold 20 million shares in Kazera and used the
proceeds to exercise 10 million warrants to support their expansion of
operations on our diamond and heavy mineral sands project As an incentive to
hold the shares we are also earning an additional 5 million warrants with a
2.0p conversion price. At the time of writing of this report, Deep Blue
Minerals Pty Ltd ("Deep Blue") is in diamonds production and Whale Head is
progressing its heavy mineral sands mining application.
We have enjoyed the hard work of the field campaigns over the last year and
celebrated the success of new discoveries which keep on expanding the footprint
of the Specimen Hill system. I thank my fellow directors who have rolled up
their sleeves to ensure we have made the most of 2021. Our management team and
advisers have similarly put in a tremendous effort this year and I thank them
as well. Our commitment after such a difficult 2020 was to build shareholder
value which we have made good progress on, but there is more to come and we
expect 2022 to deliver as much again.
Brett Boynton
Chief Executive Officer
15 December 2021
STRATEGIC REPORT
For the year ended 30 June 2021
The Directors present their strategic report for Tectonic Gold Plc ("Tectonic
Gold" and/or "the Company") and its controlled entities ("the Group") for the
year ended 30 June 2021 ("the reporting period").
REVIEW OF THE BUSINESS
Following severe restrictions due to COVID in 2020, the team was able to again
access our flagship Specimen Hill project, where we conducted a number of field
campaigns including drilling, mapping and sampling.
The Company supported our diamond and heavy minerals investment partner, Kazera
Global Plc in taking diamond production forward at Deep Blue in South
Africa.Tectonic Gold holds a non-diluting 10% interest.
On 30 September 2021, Kazera exercised an option to acquire 60% of Whale Head
Minerals Pty Ltd from Tectonic Gold. Whale Head has made an application for a
mining permit to mine (and process) heavy mineral sands coincident with the
diamonds at the Alexkor diamond mining operation.
For further details see the Chief Executive Officer's Report on Page 5.
RESULTS AND COMPARATIVE INFORMATION
The Group reports a loss after tax for the reporting period of £231,564 from
continuing operations (2020: £356,682 profit).
On 17 April 2019, the Company established Deep Blue and as announced on 4 June
2020, the Company sold a majority interest in Deep Blue Minerals Pty Ltd
effective on 17 June 2020. For reporting purposes, Deep Blue was held as an
investment for the period.
On 14 February 2020, the Company established Whale Head Minerals Pty Ltd. For
accounting and reporting purposes, this Company has remained dormant since the
date of incorporation to the end of the reporting period.
DIVIDS
The Directors do not recommend the payment of a dividend and no amount has been
paid or declared by way of a dividend to the date of this report (2021: £nil).
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
STATISTICS 30 June 2021 30 June 2020
Net asset value £3,715,827 £2,809,873
Net asset value per share 0.0039p 0.0040p
Closing share price at the end of the 1.2p 0.32p
reporting period
Market capitalisation £11.285m £2.232m
KEY RISKS AND UNCERTAINTIES
Currently the principal risk lies in securing additional funding as and when
necessary to continue with the core research and exploration business. The
Company's projects are in the exploration phase of development and do not
generate revenue. If the Company is unsuccessful in monetising its research
developments or its exploration projects by attracting development partners or
divesting assets it may need to raise additional capital as other junior
exploration companies do from time to time. This risk is mitigated through the
Company's corporate development efforts and active engagement with a number of
gold mining companies, project funders and other investors for the purpose of
attracting investment in one or more of the Company's projects or acquisition
of one of the assets in line with the business plan.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives and policies are
set out in Note 25 to these financial statements.
ENVIRONMENTAL REGULATIONS
The Group conducts a range of activities in the field which require accessing
remote sites with heavy vehicles and equipment and disturbing the surface with
sample taking to test geological structures. This work is conducted under very
strict regulatory oversight and once completed the test sites are fully
rehabilitated to ensure there is no long-term impact from the Company's
activities on the environment. The Group is subject to environmental
regulations under the laws of the Commonwealth and the State it operates In
Australia. The Board of Directors monitors compliance with environmental
regulations and as at the date of this report the Directors are not aware of
any breach of such regulations during the reporting period.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director's believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
- Consider the likely consequences of any decision in the long
term;
- Act fairly between the members of the Company;
- Maintain a reputation for high standards of business conduct;
- Consider the interests of the Company's employees;
- Foster the Company's relationships with suppliers, customers and
others; and
- Consider the impact of the Company's operations on the community
and the environment.
The Company is quoted on the AQUIS Stock Exchange (formerly NEX) and its
members will be fully aware, through detailed announcements, shareholder
meetings and financial communications, of the Board's broad and specific
intentions and the rationale for its decisions.
When selecting investments, issues such as the impact on the community and the
environment have actively been taken into consideration.
The Group pays its creditors promptly and keeps its costs to a minimum to
protect shareholders funds. Currently, other than the directors, the Group
engages all staff as contractors and has no employees.
The Group acknowledges the Traditional Owners of the land on which it operates
and participates in supporting Native Title. The Group has interests in
projects around the world and supports the basic rights of all people.
The Group adheres to the strictest anti-corruption protocols and does not trade
in any non-compliant or conflict related resources.
The Group utilises its technology platform and expertise to identify and
delineate natural resource projects which it monetises by selling or partnering
to bring into production.
The Group adheres to the 10 principles set out in the QCA Code which it has
adopted.
The Group utilises its technology platform and expertise to identify and
delineate natural resource projects which it monetises by selling or partnering
to bring into production. The Group adheres to the 10 principles set out in the
QCA Code which it has adopted. The outcome of adherence to the QCA Code is the
development of a best practice governance structure in the Group to pursue each
of the 10 principles.
The principal risks identified are a failure to meet stakeholder commitments as
a result of the inappropriate behaviour by members of the Group or the
consultants and contractors which it engages. The Group is aware of its impact
in operating in remote locations and the potential damage it can cause to the
environment and property if its operations are not conducted with the utmost
care. With these risks in mind, all contractors and consultants are vetted for
appropriate expertise and experience prior to engagement and upon engagement
are taken through thorough pre site induction training to ensure all standards
are met in execution of their tasks.
This report was approved by the Board of Directors on 15 December 2021 and
signed on its behalf by:
Brett Boynton
Chief Executive Officer
DIRECTORS' REPORT
For the year ended 30 June 2021
The Directors present their report and the audited consolidated financial
statements of Tectonic Gold Plc ("Tectonic Gold" or the "Company") and its
controlled entities ("Consolidated Entity" or "Group") for the year ended 30
June 2021.
DIRECTORS
The Board comprised the following directors who served throughout the year and
up to the date of this report save where disclosed otherwise:
Name Position Date Appointed/Resignation
Bruce Fulton Non-Executive Appointed 25 June 2018
Chairman
Brett Boynton Chief Executive Appointed 26 May 2015
Officer
Sam Quinn Executive Director Appointed 20 February 2017
Dennis Edmonds Non-Executive Appointed 28 April 2020
Director
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at 30 June 2021,
held either directly or through related parties, were as follows:
Number of ordinary % of ordinary share
Name of director shares capital and
voting rights
Bruce Fulton 6,467,358 0.69
Brett Boynton 137,139,590 14.58
Sam Quinn 2,512,000 0.27
Dennis Edmonds - -
146,118,948 15.54
Details of the options granted to or held by the Directors at 30 June 2021 are
as follows:
Name of Balance 30 Options Options Balance 30 Number Grant Exercise Date of
director or June granted lapsed June vested date price expiry
former 2020 2021
director
B Fulton
Series (i)* 10,000,000 - - 10,000,000 3,333,333 25-Jun-18 £0.002 25-Jun-22
Series (ii) - 14,550,000 - 14,550,000 14,550,000 08-Sep 20 £0.00275 08-Sep 24
Total 10,000,000 14,550,000 - 24,550,000 17,883,333
B Boynton
Series (i)* 12,000,000 - - 12,000,000 4,000,000 25-Jun-18 £0.002 25-Jun-22
Series (ii) - 10,550,000 - 10,550,000 10,550,000 08-Sep 20 £0.00275 08-Sep 24
Total 12,000,000 10,550,000 - 22,550,000 14,550,000
S Quinn
Series (i)* 12,000,000 - - 12,000,000 4,000,000 25-Jun-18 £0.002 25-Jun-22
Series (ii) - 14,550,000 - 14,550,000 14,550,000 08-Sep 20 £0.00275 08-Sep 24
Total 12,000,000 14,550,000 - 26,550,000 18,550,000
D Edmonds
Series (i)* - - - - - - - -
Series (ii) - 7,275,000 - 7,275,000 7,275,000 08-Sep 20 £0.00275 08-Sep 24
Total - 7,275,000 - 7,275,000 7,275,000
* Series (i): The options vest in three tranches as follows:
1/3 of the Options vested on 25 June 2018;
1/3 of the Options vested on 25 December 2018 provided that on or after such
date, certain performance conditions have been satisfied; and
1/3 of the Options vested on 25 June 2019 provided that on or after such date
certain performance condition have been satisfied.
The Company has made qualifying third-party indemnity provisions for the
benefit of the Directors in the form of Directors' and Officers' Liability
insurance during the year which remain in force at the date of this report.
DONATIONS
The Company did not make any political or charitable donations during the
reporting period (30 June 2020: £nil).
EMPLOYEE CONSULTATION
The Company places considerable value on the involvement of its employees and
has continued to keep them informed on matters affecting them as employees and
on various factors affecting the performance of the Company. This is achieved
through formal and informal meetings. Equal opportunity is given to all
employees regardless of their sex, age, religion or ethnic origin.
POST YEAR EVENTS
A list of post year events has been included in Note 28.
GOING CONCERN
The adoption of the going concern basis by the Directors is following a review
of the current position of the Company and Group and the forecasts for at least
the next 12 months from the date of signing of these financial statements. Cash
on hand and tradable securities together with the funds expected from the
Australian Government R&D Tax Incentive and Warrants expiring in February 2022
(See Note 22) are more than sufficient to enable to Company to meet its
obligations as they fall due and continue to operate for at least twelve months
from the date of signing these financial statements. Thus, the Directors
continue to adopt the going concern basis in preparing the financial
statements. It is beyond the scope of the Directors to predict any future
impact of COVID- 19 on any of these funding sources however and if for any
reason it is not possible to sell any tradeable securities or State Government
funding is not secured, this may impact the ability of the Company to meet its
obligations and continue to operate as envisaged. Further details regarding the
adoption of the going concern basis and uncertainty surrounding it can be found
in Note 2 of these financial statements.
In keeping with other investment companies, the growth if the Group is
dependent on its ability to invest in current projects and new opportunities.
The ability to raise additional finance is critical to the group's growth
objective. The Directors are confident in their ability to finance future
projects and opportunities by raising funds in the market.
The Directors and management are continually monitoring and managing the
Company's operations closely in response to COVID-19.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have prepared the Group and
Company financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the UK, and as regards the Company
financial statements, as applied in accordance with the provisions of the
Companies Act 2006. Under company law, the directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss
of the Group and Company for that period. In preparing these financial
statements, the directors are required to:
- select suitable accounting policies and then apply them
consistently;
- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial statements;
- make judgements and accounting estimates that are reasonable and
prudent; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements
comply with the Companies Act 2006.
The directors are also responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each of the persons who are directors of the Company at the date
when this report is approved:
- So far as each director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
- Each of the directors has taken all steps that they ought to
have taken as a director to make themselves aware of any relevant audit
information and to establish that the auditors are aware of the information.
AUDITOR
Moore Kingston Smith LLP were appointed in the year and have expressed their
willingness to continue in office as auditor and it is expected that a
resolution to reappoint them will be proposed at the next annual general
meeting.
The Board as a whole considers the appointment of external auditors, including
their independence, specifically including the nature and scope of non-audit
services provided.
CORPORATE GOVERNANCE
The Company has set out its full Corporate Governance Statement on page 12.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling
the Company. The Board of Directors is responsible for approving Company policy
and strategy. It meets regularly and has a schedule of matters specifically
reserved to it for decision. All Directors have access to advice from
independent professionals at the Company's expense. Training is available for
new and existing Directors, as necessary.
The Board consists of the Non-Executive Chairman, Bruce Fulton, Chief Executive
Officer, Brett Boynton, Executive Director, Sam Quinn and Non-Executive
director, Dennis Edmonds.
Since Admission to the AQUIS Stock Exchange on 25 June 2018, the Board has
established properly constituted audit, remuneration and AQUIS Stock Exchange
compliance committees with formally delegated duties and responsibilities, a
summary of which is set out below.
AUDIT COMMITTEE
The Audit Committee comprises Bruce Fulton (Non-Executive Chairman), Sam Quinn
and the Chief Financial Officer, Anne Adaley. The Committee meets at least
twice a year and is responsible for ensuring the financial performance of the
Company is properly reported on and monitored. It liaises with the auditor and
reviews the reports from the auditor relating to the financial statements.
REMUNERATION COMMITTEE
The Remuneration Committee comprises Bruce Fulton (Non-Executive Chairman) and
Sam Quinn. The Committee meets at least twice a year and is responsible for
reviewing the performance of Executive Directors and sets the scale and
structure of their remuneration on the basis of their service agreements, with
due regard to the interests of the shareholders and the performance of the
Company.
AQUIS STOCK EXCHANGE COMPLIANCE COMMITTEE
The role of the AQUIS Stock Exchange compliance committee is to ensure that the
Company has in place sufficient procedures, resources and controls to enable it
to comply with the AQUIS Stock Exchange Rules. The AQUIS Stock Exchange
compliance committee make recommendations to the Board and proactively liaise
with the Company's AQUIS Stock Exchange Corporate Adviser on compliance with
the AQUIS Stock Exchange Rules. The AQUIS Stock Exchange compliance committee
also monitors the Company's procedures to approve any share dealings by
directors or employees in accordance with the Company's share dealing code. The
members of the AQUIS Stock Exchange compliance committee are Brett Boynton
(Non-Executive Chairman), Sam Quinn and Dennis Edmonds.
SHARE DEALING CODE
The Company has adopted a share dealing code for dealings in securities of the
Company by directors and certain employees which is appropriate for a company
whose shares are traded on the AQUIS Stock Exchange. This will constitute the
Company's share dealing policy for the purpose of compliance with UK
legislation including the Market Abuse Regulation and the relevant part of the
AQUIS Stock Exchange Rules. It should be noted that the insider dealing
legislation set out in the UK Criminal Justice Act 1993, as well as provisions
relating to market abuse, also apply to the Company and dealings in Ordinary
Shares.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority by the management.
In addition to the publication of an annual report and an interim report, there
is regular dialogue with shareholders and analysts. The Annual General Meeting
is viewed as a forum for communicating with shareholders, particularly private
investors. Shareholders may question the Managing Director and other members of
the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Company's system of
internal control and for reviewing the effectiveness of these systems. The risk
management process and systems of internal control are designed to manage
rather than eliminate the risk of the Company failing to achieve its strategic
objectives. It should be recognised that such systems can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Company has well established procedures which are considered adequate given
the size of the business.
REMUNERATION
The remuneration of the directors has been fixed by the Board as a whole. The
Board seeks to provide appropriate reward for the skill and time commitment
required so as to retain the right calibre of director at a cost to the Company
which reflects current market rates.
Details of directors' fees and of payments made to directors for professional
services rendered are set out in Note 8 to the financial statements and details
of the directors' share options are set out in the Directors' Report.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL
REPORT
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
- the Directors' report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
This information is given and should be interpreted in accordance with the
provisions of Section 418 of the Companies Act 2006.
This report was approved by the Board of Directors on 15 December 2021 and
signed on its behalf by:
Brett Boynton
Chief Executive Officer
CORPORATE GOVERNANCE STATEMENT
The Company is committed to maintaining the highest standards in corporate
governance throughout its operations and to ensure all of its practices are
conducted transparently, ethically and efficiently. The Company believes
scrutinising all aspects of its business and reflecting, analysing and
improving its procedures will result in the continued success of the Company
and deliver value to shareholders. Therefore, and in accordance with the Aquis
Growth Market Apex Rule Book, (the "AQSE Rules"), the Company has chosen to
formalise its governance policies by complying with the UK's Quoted Companies
Alliance Corporate Governance Code 2018 (the "QCA Code").
The Board currently consists of four Directors: a Chief Executive Officer
(Brett Boynton) an Executive Director (Sam Quinn), and two independent
Non-Executive Directors (NEDs) being Bruce Fulton as Non-Executive Chairman and
Dennis Edmonds. The Board considers that appropriate oversight of the Company
is provided by the currently constituted Board.
QCA Code
The 10 principles set out in the QCA Code are listed below, with an explanation
of how the Company applies each of the principles and the reason for any aspect
of non-compliance.
Principle 1 - Establish a strategy and business model which promotes long-term
value for shareholders.
The strategic vision of the Company is to successfully finance, manage and
develop its large-scale Intrusion Related Gold System assets in Central and
Northeast Queensland, Australia.
The Company's business model and strategy is outlined on a yearly basis in the
Chief Executive Officer's Statement in the Annual Report.
Principle 2 - Seek to understand and meet shareholder needs and expectations.
The Board values the importance of interacting with our shareholders,
explaining strategy and developments in the businesses and seeking shareholder
views and opinions. We also value the input of our advisers, including our AQSE
Growth Market Corporate Adviser and broker and auditors. The Board is committed
to maintaining good communications and having constructive dialogue with its
shareholders. Institutional shareholders and analysts have the opportunity to
discuss issues and provide feedback at meetings with the Company. As a policy,
all shareholders are encouraged to attend the Company's Annual General Meeting
and any other General Meetings that are held throughout the year, although the
Directors recognise that this has not been possible during the pandemic
lockdown.
Investors also have access to current information on the Company through its
website www.tectonicgold.com and through the Chief Executive Officer who is
available to answer investor relations enquiries at:
admin@signaturegold.com.au. The Company provides regulatory, financial and
business news updates through the Regulatory News Service in accordance with
AQSE Rules.
Principle 3 - Take into account wider stakeholder and social responsibilities
and their implications for long term success.
There are a number of key relationships and resources that are fundamental to
the Company's success, which include, amongst other things, relationships with,
advisors, consultant suppliers, contractors, employees and potential investors.
These relationships are key components to the successful running of the
Company's investments and are reviewed by the Board and management on a regular
basis to ensure that all potential risks are mitigated. To the extent any
issues or concerns come to light following such review, or upon engagement with
such stakeholders, the Company seeks to address matters in an expeditious
manner in order to preserve and strengthen relationships.
The Board recognises that the long-term success of the Company will be enhanced
by good relations with different internal and external groups and to understand
their needs, interest and expectations, the Board has established a range of
processes and systems to ensure that there is ongoing two-way communication,
control and feedback processes in place with to enable appropriate and timely
response.
Principle 4 - Embed effective risk management, considering both opportunities
and threats, throughout the organisation.
The Board regularly reviews the risks to which the Company 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 Company are detailed in the Risk Factors report of the Company's
Admission Document and updated in the annual report and accounts, which are
available on the Company's website www.tectonicgold.com. The Board has
established an audit committee with formally delegated duties and
responsibilities, details of which are included below.
Principle 5 - Maintain the Board as a well-functioning, balanced team led by
the Non-Executive Chairman.
The Board's role is to agree the Company's long-term direction and strategy and
monitor achievement of key milestones against its business objectives. The
Board meets formally at least four times a year for these purposes and holds
additional meetings when necessary to transact other business. The Board
receives reports for consideration on all significant strategic, operational
and financial matters.
The Board is comprised of a Chief Executive Officer, an Executive Director and
two independent Non-Executive Directors (NEDs) of which one is Non-Executive
Chairman. Each Director serves on the Board until the Annual General Meeting
following his election or appointment. Each member of the Board is committed to
spending sufficient time to enable them to carry out their duties as a
Director. The Board meets regularly throughout the year as deemed appropriate
formally and informally, in person and by telephone.
The Company constantly keeps under review the constitution of the Board and may
seek to add more members as required as the Company grows and develops.
The Board as a whole considers the NEDs to be independent of management and
free from any business or other relationship which could materially interfere
with the exercise of their independent judgement.
The Board has implemented an effective committee structure to assist in the
discharge of its responsibilities. All committees of the Board have written
terms of reference dealing with their authority and duties. Membership of the
Audit and Remuneration Committees is comprised exclusively of Non-Executive
Directors. The Company Secretary acts as secretary to each of these committees.
The table below sets out the number of Board and Committee meeting held during
the period and each Director's attendance at those meetings.
BOARD AUDIT REMUNERATION
HELD ATTED HELD ATTED HELD ATTED
B Fulton 9 9 - - 1 1
B Boynton 9 9 2 2 - -
S Quinn 9 9 - - 1 1
D Edmonds 9 9 2 2 - -
Principle 6 - 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 which it embodies is appropriate for the size and stage
of development of the Company and that the Board has the skills and requisite
experience necessary to execute the Company's strategy and business plan whilst
also enabling each Director to discharge their fiduciary duties effectively.
Biographies for each member of the Board is provided on the Company's website
www.tectonicgold.com.
All Directors, through their involvement in other listed companies as well as
the Company, including attendance at seminars, forums and industry events and
through their memberships of various professional bodies, keep their skill sets
up to date.
The Board reviews annually, and when required, the appropriateness of its mix
of skills and experience to ensure that it meets the changing needs of the
Company.
The Company has a professional Company Secretary in the UK who assists the
Chief Executive Officer in preparing for and running effective Board meetings,
including the timely dissemination of appropriate information. The Company
Secretary provides advice and guidance to the extent required by the Board on
the legal and regulatory environment. In addition, the Board's finance function
is supported by a CFO who is engaged by the Company to provide accounting and
finance services.
Principle 7 - Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement.
Review of the Company's progress against the long-term strategy and aims of the
business provides a means to measure the effectiveness of the Board. This
progress is reviewed in Board meetings held at least four times a year. The
Chief Executive Officer's performance is reviewed once a year by the rest of
the Board and measured against a definitive list of short, medium and long-term
strategic targets set by the Board.
The Company conducts periodic reviews of its Board succession planning
protocols which includes an assessment of the number of Board members and
relative experience of each Board member vis-a-vis the Company's requirements
given its stage of development, with the goal of having in place an adequate
and sufficiently experienced Board at all times.
Principle 8 - Promote a corporate culture that is based on ethical values and
behaviours.
The corporate culture of the Company is promoted throughout its employees and
contractors and is underpinned by compliance with local regulations and the
implementation and regular review and enforcement of various policies including
a Share Dealing Policy and Code, Anti-Corruption and Anti-Bribery and Media and
Communications Policy so that all aspects of the Company are run in a robust
and responsible way.
The Board recognises that its decisions regarding strategy and risk will impact
the corporate culture of the Company and that this will impact performance. The
Board is very aware that the tone and culture set by the Board will greatly
impact all aspects of the Company and the way that employees behave. The
exploration for, and development of, mineral resources can have a significant
impact in the areas where the Company and its investments are active and it is
important that the communities view its activities positively. Therefore, the
importance of sound ethical values and behaviours is crucial to the ability of
the Company to successfully achieve its corporate objectives. The Board places
great importance on this aspect of corporate life and seeks to ensure that this
is reflected in all the Company does.
Principle 9 - Maintain governance structures and processes that are fit for
purpose and support good decision- making by the Board.
The Board is responsible for setting the vision and strategy for the Company to
deliver value to the Company's shareholders by effectively putting in place its
business model.
The roles and responsibility of the Chief Executive Officer, Non-Executive
Chairman and other Directors are laid out below:
. The Chief Executive Officer's primary responsibilities are to:
implement the Company's strategy in consultation with the Board; take
responsibility for the Company's projects; run the Company on a day-by-day
basis; implement the decisions of the Board; monitor, review and manage key
risks; act as the Company's primary spokesman; communicate with external
audiences such as investors, analysts and media; and be responsible for the
administration of all aspects of the Company.
. The Non-Executive Chairman's primary responsibilities are to:
lead the Board and to ensure the effective working of the Board; in
consultation with the Board, ensure good corporate governance and set clear
expectations with regards to the Company culture, values and behaviour; set the
Board's agenda and ensures that all Directors are encouraged to participate
fully in the decision-making process of the Board and take responsibility for
relationships with the Company's professional advisers and major shareholders.
. The Company's NED'S participate in all Board level decisions and
play a particular role in the determination and articulation of strategy. The
Company's NED's provide oversight and scrutiny of the performance of the
Executive Directors, whilst both constructively challenging and inspiring them,
thereby ensuring the business develops, communicate and execute the agreed
strategy and operate within the risk management framework.
. The Company Secretary is responsible for ensuring that Board
procedures are followed and applicable rules and regulations are complied with.
The Board is supported by the audit and remuneration committees as described
below.
The Board has not established a Nominations Committee. The Board considers that
a separately established committee is not warranted at this stage of the
Group's development and that the functions of such a committee are being
adequately discharged by the Board as a whole.
Audit Committee
The Audit Committee comprises two non-executive Directors, Bruce Fulton and
Dennis Edmonds and the Chief Executive Officer, Brett Boynton.
The Audit Committee reviews reports from management and from Moore Kingston
Smith LLP, the Company's statutory auditor, relating to the interim and annual
accounts and to the system of internal financial control.
The Audit Committee is responsible for assisting the Board's oversight of the
integrity of the financial statements and other financial reporting, the
independence and performance of the auditor, the regulation and risk profile of
the Company and the review and approval of any related party transactions. The
Audit Committee may hold private sessions with management and the auditor
without management present. Further, the Audit Committee is responsible for
making recommendations to the Board on the
appointment of the auditor and the audit fee and reviews reports from
management and the auditor on the financial accounts and internal control
systems used throughout the Group. The Audit Committee meets at least two times
a year and is responsible for ensuring that the Company's financial performance
is properly monitored, controlled and reported. The Audit Committee is
responsible for the scope and effectiveness of the external audit and
compliance by the Company with statutory and other regulatory requirements.
With respect to the auditor, the Audit Committee:
. monitors in discussion with the auditor the integrity of the
financial statements of the Company, any formal announcements relating to the
Company's financial performance and reviews significant financial reporting
judgments contained in them;
. reviews the Company's internal financial controls and reviews
the Company's internal control and risk management systems;
. considers annually whether there is a need for an internal audit
function and makes a recommendation to the Board;
. makes recommendations to the Board for it to put to the
shareholders for their approval in the general meeting, in relation to the
appointment, re-appointment and removal of the auditor and to approve the
remuneration and terms of engagement of the auditor;
. reviews and monitors the auditor's independence and objectivity
and the effectiveness of the audit process, taking into consideration relevant
professional and regulatory requirements;
. develops and implements policy on the engagement of the auditor
to supply non-audit services, taking into account relevant external guidance
regarding the provision of non-audit services by the auditor; and
. reports to the Board, identifying any matters in respect of
which it considers that action or improvement is needed and making
recommendations as to the steps to be taken.
The Audit Committee also reviews arrangements by which the staff of the Company
and the Company may, in confidence, raise concerns about possible improprieties
in matters of financial reporting or other matters and ensure that arrangements
are in place for the proportionate and independent investigation of such
matters with appropriate follow-up action.
Where necessary, the Audit Committee obtains specialist external advice from
appropriate advisers.
Remuneration Committee
The Remuneration Committee comprises Non-Executive Directors, Sam Quinn and
Bruce Fulton.
The Remuneration Committee is responsible for considering all material elements
of remuneration policy, the remuneration and incentivisation of Executive
Directors and senior management (as appropriate) and to make recommendations to
the Board on the framework for executive remuneration and its cost. The role of
the Remuneration Committee is to keep under review the Company's remuneration
policies to ensure that the Company attracts, retains and motivates the most
qualified talent who will contribute to the long-term success of the Company.
The Remuneration Committee also reviews the performance of the Chief Executive
Officer and sets the scale and structure of his remuneration, including the
implementation of any bonus arrangements, with due regard to the interests of
shareholders.
The Remuneration Committee is also responsible for granting options under the
Company's share option plan and, in particular, the price per share and the
application of the performance standards which may apply to any grant, ensuring
in determining such remuneration packages and arrangements, due regard is given
to any relevant legal requirements, the provisions and recommendations in the
AQSE Rules and The QCA Code.
The Remuneration Committee:
. determines and agrees with the Board the framework or broad
policy for the remuneration of the Chief Executive Officer and senior
management;
. determines the remuneration of Non-Executive Directors;
. determines targets for any performance-related pay schemes
operated by the Company;
. ensures that contractual terms on termination and any payments
made are fair to the individual, the Company, that failure is not rewarded and
that the duty to mitigate loss is fully recognised;
. determines the total individual remuneration package of the
Chief Executive Officer and senior management, including bonuses, incentive
payments and share options;
. is aware of and advises on any major changes in employees'
benefit structures throughout the Company
. ensures that provisions regarding disclosure, including
pensions, as set out in the (Directors' Remuneration Policy and Directors'
Remuneration Report) Regulations 2019, are fulfilled; and
. is exclusively responsible for establishing the selection
criteria, selecting, appointing and setting the terms of reference for any
remuneration consultants who advise the Remuneration Committee.
Principle 10 - Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders.
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. Institutional shareholders and
analysts have the opportunity to discuss issues and provide feedback at
meetings with the Company.
The Company also provides regular updates on the progress of the Company,
detailing recent business and strategy developments, in news releases which is
available on the Company's website www.tectonicgold.com.
The Company's financial reports can be found on its website
www.tectonicgold.com. The Company has elected to preference hosting its AGMs in
London. The Directors believe hosting the AGM in London will enhance engagement
with the Company's shareholders by making the meeting more accessible, however
with consideration for the current COVID related restrictions to Directors
attending in person, the AGM will be held in Sydney for the foreseeable future.
The Company also participates in various investor events including conferences
and presentation evenings, at which shareholders can meet with management in
person to answer queries, provide information on current developments and to
take into consideration shareholder views and suggestions.
The Board is always open to receiving feedback from shareholders. The Chief
Executive Officer has been appointed to manage the relationship between the
Company and its shareholders and will review and report to the Board on any
communications received.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TECTONIC GOLD PLC
For the year ended 30 June 2021
Opinion
We have audited the financial statements of Tectonic Gold Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 June 2021
which comprise the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated and Company Statements of Financial
Position, the Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Statements of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the UK and as regards the parent company financial statements, as
applied in accordance with the provision of the Companies Act 2006.
In our opinion:
- the financial statements give a true and fair view of the state
of the group's and of the parent company's affairs as at 30 June 2021 and of
the group's loss for the year then ended;
- the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
- the parent company financial statements have been properly
prepared in accordance with UK adopted international accounting standards and
as applied in accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the group and
parent company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
An overview of the scope of our audit
The scope of our audit was influenced by our evaluation of materiality and our
assessment of the risks of material misstatement in the group and parent
company financial statements. In particular, we assessed the areas involving
significant accounting estimates and judgement by the directors as risks for
our audit. This included the carrying value of exploration assets and
investments as well as future events that are inherently uncertain and could
have an impact on the group and parent company's ability to continue as a going
concern. These were judged to be the most significant assessed risks of
material misstatement and therefore reported as key audit matters below.
The significant component based in Australia was audited by a component
auditor. We had oversight of, and regular communication with, the component
auditor who was operating under our instructions. The component auditor
supplied their working papers for our review. This, along with further
discussions with the component auditor, gave us sufficient appropriate evidence
for our audit opinion on the Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter How the scope of our audit responded to
the key audit matter
Going concern (group and parent company) We performed the following procedures to
address this risk:
Note 2 of the financial statements sets out Critically assessed the cash flow
the directors assessment of the forecasts and budgets prepared by
appropriateness of the use of the going management for the period ending 31
concern basis of preparation. This explains December 2022;
that the group and parent company expect to Undertook sensitivity analysis on
receive future funding and support to management's forecasts;
enable their obligations to be met and Discussed the matters arising from this
ensure they continue to operate in the critical assessment with management;
foreseeable future. Reviewed the group's assessment of the
There is a risk that the group and parent impact of COVID-19 using our knowledge of
company are unable to access that further the business and the industry that the
funding and support, especially in light of group and parent company operates in; and
the ongoing uncertainties arising from the Evaluated the adequacy of disclosures
COVID- 19 pandemic. made in the financial statements.
Based on the work performed we have
gained reasonable
assurance as to the appropriateness of
the use of the going concern basis in
preparing the financial statements.
Carrying value of mining exploration and Our work in this area included:
evaluation expenditure (group) Confirmation that the group has valid
As disclosed in note 15 of the financial title to the applicable exploration
statements, exploration and evaluation licences, and has fulfilled any specific
expenditure capitalised as an asset in the conditions therein particularly having
statement of financial position as at 30 regard to minimum expenditure
June 2021 was £3,016,512. requirements;
The recoverability of this asset is highly Reviewed and substantively tested
judgemental due to the early stage of the capitalised exploration and evaluation
projects and the contingent nature of expenditure including consideration of
obtaining a mining permit. The impact of its appropriateness for capitalisation
the ongoing COVID-19 pandemic on the under IFRS 6;
current economic climate means there is Critical assessment of progress at the
also a greater risk that the carrying value individual projects during the year and
of exploration and evaluation assets may post year-end; and
not recoverable and thus require Consideration of management's impairment
impairment. reviews in light of any impairment
indicators identified in accordance with
IFRS 6, including corroboration and
challenge thereof.
Based on the work performed we have
gained reasonable assurance that the
carrying value of exploration and
evaluation assets are not materially
misstated.
Recoverability of investments and We performed the following procedures to
subsidiary loans (parent company) address this risk:
The parent company has significant Critically assessed the loan agreement
investments in its subsidiary entities and repayment terms;
which is supported by the underlying Critically assessed the net assets of the
projects. As at 30 June 2021, and as shown underlying subsidiaries and the
in note 17, this investment was £3,605,259. exploration projects therein;
Note 12 also discloses a loan of £1,845,673 Reviewed and challenged the impairment
provided by the parent company to its considerations made by management; and
subsidiary, Signature Gold, as at 30 June Assessed the net realisable value of the
2021. underlying assets of the subsidiary
There is a risk that the investment in the undertaking.
subsidiaries, along with the loan, are Based on the work performed we consider
impaired as the subsidiaries are not that management's assessment in respect
currently generating significant revenues. of the recoverability of the parent
Therefore, it is necessary to assess the company investments and loan to one of
fair value of the holdings at year end. its subsidiaries is materially correct.
There is also a risk of material
misstatement around the recoverability of
the significant loan balance with Signature
Gold Pty Ltd.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which
help us to determine the nature, timing and extent of our audit procedures.
When evaluating whether the effects of misstatements, both individually and on
the financial statements as a whole, could reasonably influence the economic
decisions of the users of the financial statements we take into account the
qualitative nature and the size of the misstatements. Based on our professional
judgement, we determined materiality as follows:
Overall materiality
Our overall Group materiality is £75,000 and the Company materiality is £
72,000. Materiality for the significant component, Signature Gold Pty Ltd, was
set at £47,000 based on 1.4% of gross assets.
Basis for determining overall materiality
Our materiality is based upon 1.7% of gross assets. The rationale for our
materiality calculation is that the Group and Company are still in the
exploration stage and therefore no significant revenues are currently being
generated. Current and potential investors will thus be most interested in the
level and recoverability of the gross assets, in particular the exploration and
evaluation assets. Gross assets is thus considered to be the most appropriate
benchmark for determining overall materiality.
Performance materiality
Our Group, Company and significant component performance materiality figures
have been calculated as £37,500, £36,000 and
£23,500 respectively which have been calculated as 50% of overall materiality.
Reporting of misstatements to the Audit Committee
We agreed with the Audit Committee that we would report all individual audit
differences in excess of £3,750 and £3,600 in respect of the Group and Company
respectively. We also agreed to report differences below that threshold that,
in our view, warranted reporting on qualitative grounds.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information. Our opinion on the group
and parent company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. In connection with our audit
of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Conclusions relating to going concern
In auditing the financial statements we have concluded that the directors' use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors' assessment of the
group and parent company's ability to continue to adopt the going concern basis
of accounting included included critical assessment of the forecasts for twelve
months from the date of approval of the audit report with appropriate
sensitivity analysis, challenging management as to the assumptions used in the
forecasts and consideration of the post-period end performance of the Group
including a review of the available banking and loan facilities available and
assessment of the likelihood of the receipt of the Research & Development Tax
Incentive Claim rebate.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's and company's ability
to continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
Our responsibilities and those of the directors with respect to going concern
are described in the relevant sections of this report.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from branches
not visited by us; or
- the parent company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law
are not made; or
- we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group's and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities is located on the Financial
Reporting Council's website at :https://www.frc.org.uk/auditors/
auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/
description-of- the-auditor's-responsibilities-for.
. This description forms part of our auditor's report.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess
the risks of material misstatement of the financial statements due to fraud; to
obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatemen t due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond appropriately to
instances of fraud or suspected fraud identified during the audit. However, the
primary responsibility for the prevention and detection of fraud rests with
both management and those charged with governance of the company.
Our approach was as follows:
- We obtained an understanding of the legal and regulatory
requirements applicable to the company and considered that the most significant
are the Companies Act 2006, UK adopted international accounting standards, the
rules of the Aquis Exchange and UK and Australian taxation legislation.
- We obtained an understanding of how the company complies with
these requirements by discussions with management and those charged with
governance.
- We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due to fraud and how it
might occur, by holding discussions with management and those charged with
governance.
- We inquired of management and those charged with governance as
to any known instances of non-compliance or suspected non-compliance with laws
and regulations.
- Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws and
regulations. This included making enquiries of management and those charged
with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances of non- compliance with laws and
regulations that are not closely related to events and transactions reflected
in the financial state ments. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Matthew Banton (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP, Statutory Auditor
16 December 2021
Devonshire House
60 Goswell Road
London, EC1M 7AD
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2021
2020 2021 NOTE
£ £
Revenue from continuing operations 5 25,162 294,866
Expenses from continuing operations:
Accounting and audit fees (65,483) (59,715)
Administration and office costs (3,600) (10,496)
Corporate costs (117,087) (71,492)
Amortisation and depreciation (1,578) (1,515)
Employee benefits, management fees and on 8 (139,962) 5,682
costs
Exploration and tenement costs (1,451) (10,231)
Insurance (13,013) (2,429)
Legal expenses 12,511 -
Business development costs - (9,257)
Other expenses (46,736) (5,578)
Net fair value loss on financial assets at (80,327) -
fair value through profit and loss
Net fair value gain on financial assets at 200,000 77,750
fair value through profit and loss
(Loss)/profit from continuing operations (231,564) 207,585
before income tax
Income tax benefit 9 - 149,097
(Loss)/profit for the year from continuing (231,564) 356,682
operations
Discontinued operations
Loss for the year from discontinued 13 - (73,934)
operations
(Loss)/profit for the year attributable to (231,564) 282,748
the owners of the Company
Other comprehensive income:
Items that may be subsequently reclassified
to profit and loss:
Exchange differences on translation of (37,150) 17,416
foreign subsidiaries
Total comprehensive (loss)/profit for the (268,714) 300,164
year
Loss)/earnings per share attributable to
owners of the company
Basic and diluted (pence per share) 10 (0.03) 0.04
The accompanying notes form part of these financial statements.
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30-Jun-21 30-Jun-20 30-Jun-21 30-Jun-20
NOTE GROUP GROUP COMPANY COMPANY
RESTATED
£ £ £ £
ASSETS
NON-CURRENT ASSETS
Property, plant and 14 2,282 5,075 - -
equipment
Exploration and evaluation 15 3,016,512 2,695,681 - -
expenditure
Investments in controlled 17 - - 3,605,259 3,605,254
entities
Financial assets at fair 16 346,040 224,407 346,040 224,407
value through profit and
loss
TOTAL NON-CURRENT ASSETS 3,364,834 2,925,163 3,951,299 3,829,661
CURRENT ASSETS
Cash and cash equivalents 11 541,835 52,734 430,611 26,415
Trade and other receivables 12 47,411 1,865 1,888,688 1,344,409
Other assets 18 363,375 357,792 14,685 5,100
TOTAL CURRENT ASSETS 952,621 412,391 2,333,984 1,375,924
TOTAL ASSETS 4,317,455 3,337,554 6,285,283 5,205,585
EQUITY
Share capital 21 6,124,902 6,100,615 6,124,902 6,100,615
Share premium account 61,157,135 60,146,216 61,157,135 60,146,216
RTO Reserve 23 (57,976,182) (57,976,182) - -
Warrant reserves 23 588,554 95,098 588,554 95,098
Foreign exchange translation 23 (112,415) (75,265) - -
reserves
Accumulated losses (6,066,167) (5,480,609) (61,829,974) (61,261,233)
TOTAL EQUITY 3,715,827 2,809,873 6,040,617 5,080,696
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 19 15,607 16,060 - -
Borrowings 20 322,124 226,908 156,685 56,685
TOTAL NON-CURRENT LIABILITES 337,731 242,968 156,685 56,685
CURRENT LIABILITIES
Trade and other payables 19 263,897 284,713 87,981 68,204
TOTAL CURRENT LIABILITES 263,897 284,713 87,981 68,204
TOTAL LIABILITIES 601,628 527,681 244,666 124,889
TOTAL EQUITY AND LIBAILITIES 4,317,455 3,337,554 6,285,283 5,205,585
As permitted by s408 Companies Act 2006, the Company has not presented its own
profit and loss account and related notes. The Company's loss for the year was
£214,747 (2020: Profit of £178,567).
These financial statements were approved by the Board of Directors on 15
December 2021 and signed on their behalf by:
Brett Boynton
Chief Executive Officer
Company number:
05173250
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
GROUP ISSUED SHARE WARRANT RTO RESERVE FOREIGN ACCUMULATED
FOR THE YEARED 30 JUNE CAPITAL PREMIUM RESERVE CURRENCY LOSSES TOTAL
2020 RESERVE
£ £ £ £ £ £ £
Balance at 1 July 2019 6,100,615 60,146,216 95,098 (57,976,182) (92,681) (5,763,357) 2,509,709
Total comprehensive income - - - - - 282,748 282,748
for the period
Transactions with owners,
recorded directly in
equity:
Foreign Currency - - - - 17,416 - 17,416
Translation Reserve
Fair value of warrants - - - - - - -
issued
Balance at 30 June 2020 6,100,615 60,146,216 95,098 (57,976,182) (75,265) (5,480,609) 2,809,873
GROUP ISSUED SHARE WARRANT RTO RESERVE FOREIGN ACCUMULATED
FOR THE YEARED 30 JUNE CAPITAL PREMIUM RESERVE CURRENCY LOSSES TOTAL
2021 RESERVE
£ £ £ £ £ £ £
Balance at 1 July 2020 6,100,615 60,146,216 95,098 (57,976,182) (75,265) (5,480,609) 2,809,873
Total comprehensive income - - - - - (231,564) (231,564)
for the period
Transactions with owners,
recorded directly in
equity:
Issue of shares 24,287 1,036,219 - - - - 1,060,506
Share issue costs - (25,300) - - - - (25,300)
Foreign Currency - - - - (37,150) - (37,150)
Translation Reserve
Fair value of warrants - - 493,456 - - (353,994) 139,462
issued
Balance at 30 June 2021 6,124,902 61,157,135 588,554 (57,976,182) (112,415) (6,066,167) 3,715,827
The accompanying notes form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
COMPANY SHARE SHARE WARRANT ACCUMULATED TOTAL
FOR THE YEARED 30 JUNE 2020 CAPITAL PREMIUM RESERVES LOSSES EQUITY
£ £ £ £ £
Balance at 1 July 2019 6,100,615 60,146,216 95,098 (61,439,800) 4,902,129
Total comprehensive income for - - - 178,567 178.567
the period
Balance at 30 June 2020 6,100,615 60,146,216 95,098 (61,261,233) 5,080,696
COMPANY SHARE SHARE WARRANT ACCUMULATED TOTAL
FOR THE YEARED 30 JUNE 2021 CAPITAL PREMIUM RESERVES LOSSES EQUITY
£ £ £ £ £
Balance at 1 July 2020 6,100,615 60,146,216 95,098 (61,261,233) 5,080,696
Total comprehensive loss for the - - - (214,747) (214,747)
period
Issue of shares 24,287 1,036,219 - - 1,060,506
Share issue costs - (25,300) - - (25,300)
Fair value of warrants issued - - 493,456 (353,994) 139,462
Balance at 30 June 2021 6,124,902 61,157,135 588,554 (61,829,974) 6,040,617
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
30-JUN-21 30-JUN-20
NOTE GROUP GROUP
£ £
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of - 20,136
operations
Cash payments in the course of (210,063) (242,654)
operations
Research and Development Tax Incentive - 149,097
Claim
Interest received - 5,541
Net cash used in operating activities 24 (210,063) (67,880)
CASH FLOWS USED IN INVESTING ACTIVITIES
Payments for exploration and evaluation (401,113) (58,777)
expenditure
Proceeds from new owner of Deep Blue - 56
Minerals Pty Ltd
Payment for security deposit - (266)
Refund of security deposit - 2,664
Proceeds from sale of financial asset at 123,201 86,844
fair value through profit and loss
Net cash used in investing activities (277,912) 30,521
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 380,000 -
Proceeds from exercise of warrants 599,669 -
Proceeds from borrowings - 66,048
Loans to Deep Blue Minerals Pty Ltd - (10,830)
Net cash provided by financing 979,669 55,218
activities
Net increase in cash held and cash 491,694 17,859
equivalents
Cash and cash equivalents at the 52,734 34,875
beginning of the period
Effects of exchange rate changes on cash (2,593) -
and cash equivalents
Cash and cash equivalents at the end of 541,835 52,734
the period
The accompanying notes form part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
30-JUN-21 30-JUN-20
NOTE COMPANY COMPANY
£ £
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of - 20,136
operations
Cash payments in the course of (147,993) (87,884)
operations
Loan to Signature Gold Pty Ltd - (17,500)
Interest received - 5,179
Net cash used in operating activities 24 (147,993) (80,069)
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds from the sale of investments 123,201 86,844
Loan to Deep Blue Minerals Pty Ltd - (53,206)
Loan to Signature Gold Pty Ltd (550,681) -
Net cash (used in)/provided by (427,480) 33,638
investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - 50,000
Proceeds from issue of shares 380,000 -
Proceeds from exercise of warrants 599,669 -
Net cash provided by financing 979,669 50,000
activities
Net /increase in cash held and cash 404,196 3,569
equivalents
Cash and cash equivalents at the 26,415 22,846
beginning of the period
Cash and cash equivalents at the end of 430,611 26,415
the period
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
1. GENERAL INFORMATION
Tectonic Gold Plc is a company incorporated in England and Wales under the
Companies Act 2006. The nature of the Company's operations and its principal
activities are set out in the Strategic Report and the Directors' Report on
pages 6 and 8.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated and parent company financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the UK applied in accordance with the provisions of the Companies
Act 2006.
The consolidated and parent company financial statements have been prepared
under the historical cost convention, as modified by the revaluation of
financial assets and financial liabilities at fair value through profit or
loss.
IFRS is subject to amendment and interpretation by the International Accounting
Standards Board ("IASB") and the International Financial Standards
Interpretations Committee ("IFRS IC"). The accounts have been prepared on the
basis of the recognition and measurement principles of IFRS that were
applicable at 30 June 2021.
This financial report includes the consolidated financial statement and notes
of Tectonic Gold Plc and its controlled entities.
The principal accounting policies adopted and applied in the preparation of the
Group's financial statements are set out below. These have been consistently
applied to all the years presented unless otherwise stated.
GOING CONCERN
Any consideration of the foreseeable future involves making a judgement, at a
particular point in time, about future events which are inherently uncertain.
The ability of the Group and Company to carry out their planned business
objectives is dependent on the continuing ability to raise adequate financing
from equity investors and/or the achievement of profitable operations.
The adoption of the going concern basis of preparation of the financial
statements by the Directors is following a review of the current position of
the Company and Group and the forecasts for the next 12 months from the date of
signing of these financial statements. Cash on hand and tradable securities
together with the funds expected from the Australian Government R&D Tax
Incentive and Warrants expiring in February 2022 (See Note 22) are more than
sufficient to enable the Company and Group to meet its obligations as they fall
due and continue to operate for at least twelve months from the date of signing
these financial statements. Thus, the directors continue to adopt the going
concern basis in preparing the financial statements. It is beyond the scope of
the Directors to predict any future impact of COVID-19 on any of these funding
sources however and if for any reason it is not possible to sell any tradeable
securities or State Government funding is not secured, this may impact the
ability of the Group and Company to meet their obligations and continue to
operate as envisaged, although the Directors consider this scenario to be
remote.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New standards, amendments and interpretations adopted by the Group and Company
During the reporting period, the Group adopted all of the new and revised
Standards and Interpretations issued that are relevant to its operations and
effective for reporting periods beginning on 1 July 2020. The Group has not
elected to early adopt any new standards or amendments.
The directors note that the impact of the initial application of the Standards
and Interpretations which have been issued but which are not yet effective is
not yet known or is not reasonably estimable and is currently being assessed.
Accounting standards and interpretations not yet effective
At the date of authorisation of the financial statements, the Standards and
Interpretations that were issued but not yet effective are listed below:
. Annual Improvements to IFRS Standards 2018-2020 (effective 1
January 2022)
. IFRS 7, IFRS 9 & IAS 39 (amendments) regarding replacement
issues in the context of the IBOR reform (effective 1 January 2021)
. IFRS 3 Business Combinations amendments (effective 1 January
2022)
. IFRS 16 Amendment to IFRS 16, 'Leases' - Covid-19 related rent
concessions (effective 1 January 2022)
. IFRS 17 Insurance Contracts (effective 1 January 2023)
. IAS 1 (amendments) regarding the presentation of financial
statements on classification of liabilities as Current or Non-current
(effective 1 January 2023)
. IAS 1 (amendments) Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting Policies (effective 1 January
2023)
. IAS 8 Amendments to Accounting Policies, Changes in Accounting
Estimates and Errors (amendments regarding the definition of material)
(effective 1 January 2023)
. IAS 12 Amendments to IAS 12 Income Taxes: Deferred Tax related
to Assets and Liabilities arising from a Single Transaction (effective 1
January 2023)
. IAS 16 (amendments) prohibiting a company from deducting from
the cost of property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use
(effective 1 January 2022)
. IAS 37 (amendments) regarding the costs to include when
assessing whether a contract is onerous (effective 1 January 2022)
None of these is expected to have a significant effect on the consolidated
financial statements of the Group or Company.
BASIS OF CONSOLIDATION
Where the Group has control over an investee, it is classified as a subsidiary.
The Group controls an investee if all three of the following elements are
present: power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at the end of the reporting period. The
financial statements of the subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting date as
for the Company. Consistent accounting policies are applied to like
transactions and events in similar circumstances. All intra-group balances,
balances and unrealised gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue to be consolidated until the date
that such control ceases.
On 25 June 2018, Tectonic Gold (the legal parent) acquired Signature Gold Pty
Ltd (Signature Gold). Although the transaction was not a business combination,
the acquisition has been accounted for as an asset acquisition with reference
to the guidance for reverse acquisition in IFRS 3 Business Combinations and
IFRS 2 Share-based Payment.
On 14 February 2020, the Company established Whale Head Minerals Pty Ltd. This
Company has remained dormant since the date of incorporation to the end of the
reporting period.
The financial information for the reporting period includes that of Tectonic
Gold Plc and its controlled entities for the whole reporting period.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Investments are initially measured at fair value plus directly attributable
incidental acquisition costs. Subsequently, they are measured at fair value in
accordance with IFRS 9. This is either the bid price or the last traded price,
depending on the convention of the exchange on which the investment is quoted.
Investments are recognised as financial assets at fair value through the profit
or loss. Gains and losses on measurement are recognised in other comprehensive
income except for impairment losses and foreign exchange gains and losses on
monetary items denominated in a foreign currency, until the assets are
derecognised, at which time the cumulative gains and losses previously
recognised in other comprehensive income are recognised in the income
statement.
The Company assesses at each year-end date whether there is any objective
evidence that a financial asset or group of financial assets classified as
available-for-sale has been impaired. An impairment loss is recognised if there
is objective evidence that an event or events since initial recognition of the
asset have adversely affected the amount or timing of future cash flows from
the asset. A significant or prolonged decline in the fair value of a security
below its cost shall be considered in determining whether the asset is
impaired.
INVESTMENTS
In the Company's separate financial statements, investments in subsidiaries are
accounted for at cost less impairment losses.
JOINT VENTURE
A joint venture is an arrangement that the Group controls jointly with one or
more other investors, and over which the Group has rights to a share of the
arrangement's net assets rather than direct rights to underlying assets and
obligations for underlying liabilities. A joint arrangement in which the Group
has direct rights to underlying assets and obligations for underlying
liabilities is classified as a joint operation.
FOREIGN CURRENCIES
The Group and Company's financial statements are presented in the currency of
the primary economic environment in which it operates (its functional
currency). For the purpose of these financial statements, the results and
financial position are expressed in Pounds Sterling, which is the presentation
currency of the Group and Company.
Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that
functional currency.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement. Exchange
differences arising on the retranslation of non-monetary items carried at fair
value are included in profit or loss for the period, except for differences
arising on the retranslation of non-monetary items in respect of which gains
and losses are recognised directly in equity. For such non-monetary items, any
exchange component of that gain or loss is also recognised directly in equity.
When a decline in the fair value of a financial asset has been previously
recognised in other comprehensive income and there is objective evidence that
the asset is impaired, the cumulative loss is removed from other comprehensive
income and recognised in the income statement. The loss is measured as the
difference between the cost of the financial asset and its current fair value
less any previous impairment.
For the purpose of presenting the Group and Company financial statements, the
assets and liabilities of any of the Group and Company's operations that are
overseas are translated at exchange rates prevailing on the year-end date.
Income and expense items are translated at the average exchange rates for the
period.
Any translation differences on consolidation are recognised in Other
Comprehensive Income.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the year end date.
The research and development tax incentive claim is recognised as income tax
revenue in the period in which it is received.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and where they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
EXPLORATION AND EVALUATION EXPITURE
Exploration expenditure incurred is accumulated in respect of each identifiable
area of interest, net of any related grant income received. These costs are
only carried forward to the extent that they are expected to be recovered
through the successful development or sale of the area or where activities in
the area have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit or loss in the year in which the decision to abandon the area is
made. When production commences, the accumulated costs for the relevant area of
interest are amortised over the life of the area according to the rate of
depletion of the economically recoverable reserves. A regular review is
undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to the area of interest.
Exploration and evaluation assets are assessed for impairment annually or when
facts and circumstances suggest that the carrying amount of an asset may exceed
its recoverable amount in accordance with IFRS 6.
PROPERTY, PLANT AND EQUIPMENT
Items of property, plant and equipment are recorded at cost and depreciated as
outlined below: Depreciation of Property, Plant and Equipment
Depreciation is calculated on a straight-line basis to write off the net cost
of each item of property, plant and equipment over its expected useful life for
the entity. Estimates of remaining useful lives are made on a regular basis for
all assets with annual reassessments for major items. The expected useful lives
are as follows: Plant and equipment - 5 years.
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT
At each financial year end date, the Company reviews the carrying amounts of
its tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss, if any. Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the cash- generating unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to
be less than its carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount and the impairment
loss is recognised as an expense immediately.
When an impairment loss subsequently reverses, the carrying amount of the asset
or cash-generating unit is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior years. A reversal of an
impairment loss is recognised as income immediately, unless the relevant asset
is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD-FOR-SALE AND DISCONTINUED
OPERATIONS
Non-current assets (or disposal groups) are classified as assets held for sale
when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell. A discontinued
operation is a component of the Group that is classified as held for sale and
that represents a separate line of business or geographical area of operations.
The results of discontinued operations are presented separately in the
Consolidated Income Statement.
TRADE RECEIVABLES, LOANS AND OTHER RECEIVABLES
Trade receivables, loans and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified under 'loans
and receivables. Loans and receivables are measured at amortised cost using the
effective interest method, less any impairment. Interest income is recognised
by applying the effective interest rate, except for short term receivables when
the recognition of interest would be immaterial.
Other receivables, that do not carry any interest, are measured at their
nominal value as reduced by any appropriate allowances for irrecoverable
amounts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and other short-term bank
deposits.
FINANCIAL LIABILITIES
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Financial liabilities
are classified as either financial liabilities 'at FVTPL' or 'other financial
liabilities'.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs. Subsequent measurement is at amortised cost using the
effective interest method. The Group's financial liabilities include trade and
other payables.
A financial liability is held for trading if it meets one of the following
conditions:
. It is incurred principally for the purpose of repurchasing it in
the near term;
. On initial recognition it is part of a portfolio of identified
financial instruments that are managed together and for which there is evidence
of a recent actual pattern of short-term profit-taking; or
. It is a derivative (except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument).
There were no financial liabilities 'at FVTPL' during the current, or
preceding, period.
OTHER FINANCIAL LIABILTIES AND SHORT-TERM BORROWINGS
Interest-bearing loans and overdrafts are recorded at the proceeds received,
net of direct issue costs. Finance charges are accounted for on an accruals
basis in profit or loss using the effective interest rate method and are added
to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise. Other short-term borrowings being
intercompany loans and unsecured convertible loan notes issued in the year are
recognised at amortised cost net of any financing or arrangement fees.
TRADE PAYABLES
Trade payables are initially measured at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for
impairment.
SHARE-BASED PAYMENTS
The Company has applied the requirements of IFRS 2 Share-based Payment.
The Company operates an equity-settled share-based payment scheme under which
share options are issued to certain employees. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market-based
vesting conditions) at the date of grant. The fair value determined at the
grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company's estimate of
shares that will eventually vest and adjusted for the effect of
non-market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. 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.
EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL
Equity instruments issued by the Company are recorded at the proceeds received,
net of incremental costs attributable to the issue of new shares.
An equity instrument is any contract that evidences a residual interest in the
assets of a company after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received net of direct issue
costs. Share capital represents the amount subscribed for shares at nominal
value.
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, net of any related income tax benefits.
Any bonus issues are also deducted from share premium.
The reverse takeover reserve represents the adjustment to reflect the reverse
takeover of Signature Gold.
The foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries on consolidation.
The warrant reserve represents the fair value of warrants granted to employees
and suppliers for services provided to the Group. The fair value of warrants is
expensed over the vesting period or during the period in which the services are
received.
Accumulated losses include all current and prior period results as disclosed in
the Statement of Profit and L:oss and Other Comprehensive Income.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
In the application of the Company's accounting policies, which are described in
note 2, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period. Judgements and
estimates that may affect future periods are as follows:
SHARE BASED PAYMENTS
The calculation of the fair value of equity-settled share-based awards and the
resulting charge to the Statement of Profit and Loss and Other Comprehensive
Income requires assumptions to be made regarding future events and market
conditions. These assumptions include the future volatility of the Company's
share price. These assumptions are then applied to a recognised valuation model
in order to calculate the fair value of the awards. The charge to the Statement
of Profit and Loss and Other Comprehensive Income for the reporting period is £
139,462 (2020: £Nil).
TREATMENT OF EXPLORATION AND EVALUATION COSTS
Exploration expenditure incurred is accumulated in respect of each identifiable
area of interest, net of any related grant income received. These costs are
only carried forward to the extent that they are expected to be recovered
through the successful development or sale of the area or where activities in
the area have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves. The carrying value carried
forward at 30 June 2021 is £3,016,512 (2020: £2,695,681).
Accumulated costs in relation to an abandoned area are written off in full
against profit in the year in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of
interest are amortised over the life of the area according to the rate of
depletion of the economically recoverable reserves. A regular review is
undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to the area of interest.
The value of the Group's exploration and evaluation expenditure will be
dependent upon the success of the Group in discovering economic and recoverable
mineral resources. It is also dependent on the Group successfully renewing its
licences.
The future revenue flows relating to these assets is uncertain and will also be
affected by competition, relative exchange rates and potential new legislation
and related environmental requirements.
3. SEGMENTAL INFORMATION
The Chief Operating Decision Maker of the Group is the Board of Directors. The
Group operates in one industry segment being mineral exploration. Information
is therefore shown for geographical segments.
2021 AUSTRALIA UNALLOCATED TOTAL
£ £ £
Revenue
Gain on sale of investment - 25,162 25,162
Total segment revenue - 25,162 25,162
Segment net loss before tax and other (16,957) (216,831) (233,788)
items
Depreciation and amortisation (1,578) - (1,578)
Net loss before income tax (18,535) (216,831) (235,366)
Income tax benefit - - -
Net loss after income tax (18,535) (216,831) (235,366)
Segment non-current assets at 30 June 3,018,794 346,040 3,364,834
2021
Segment total assets at 30 June 2021 3,483,104 834,351 4,317,455
Segment total liabilities at 30 June 2021 356,970 244,658 601,628
All additions to intangible assets occurred in the Australian reporting
segment.
2020 AUSTRALIA UNALLOCATED TOTAL
£ £ £
Revenue
Interest - 5,180 5,180
Gain on sale of investment - 46,722 46,722
Gain on sale of Deep Blue Minerals - 76,171 76,171
Other fees - 166,793 166,793
Total segment revenue - 294,866 294,866
Segment net (loss)/profit before tax and (59,924) 269,024 209,100
other items
Depreciation and amortisation (1,515) - (1,515)
Net (loss)/profit before income tax (61,439) 269,024 207,585
Income tax benefit 149,097 - 149,097
Net profit after income tax 87,658 269,024 356,682
Segment non-current assets at 30 June 2,700,756 224,407 2,925,163
2020
Segment total assets at 30 June 2020 3,081,631 255,923 3,337,554
Segment total liabilities at 30 June 2020 402,794 124,887 527,681
All additions to intangible assets occurred in the Australian reporting
segment.
4. REVENUE
CONSOLIDATED
2021 2020
£ £
Interest income - 5,180
Gain on sale of royalty - 146,657
Gain on sale of investment 25,162 46,722
Gain on sale of Deep Blue Minerals Plc - 76,171
Option fee - 20,136
Total revenue from continuing operations 25,162 294,866
5. OPERATING (LOSS)/PROFIT
CONSOLIDATED
2021 2020
£ £
Operating (loss)/profit is stated after charging:
Staff costs as per Note 8 (500) (34,155)
Fair value of warrants issued and vested (139,462) -
Depreciation of property plant and equipment (1,578) (1,558)
Impairment of property, plant and equipment (1,130) -
Net foreign exchange (loss)/gain (49,417) 7,093
6. AUDITORS' REMUNERATION
CONSOLIDATED
2021 2020
£ £
The analysis of auditors' remuneration is as follows:
Fees paid to Moore Kingston Smith LLP for:
- Audit-related assurance services 25,000 -
Fees paid to PKF Littlejohn for:
- Audit-related assurance services 6,500 30,500
- Taxation compliance services 11,050 -
Fees paid to auditor of Signature Gold Pty Ltd, MNSA 12,756 -
for:
- Audit-related assurance services
Fees paid to auditor of Signature Gold Pty Ltd, HLB Man
Judd for: - 1,386 10,714
- Audit-related assurance services 5,329
- Taxation compliance services
56,692 46,543
7. STAFF COSTS
CONSOLIDATED
2021 2020
£ £
The average monthly number of employees (including
executive directors) for the continuing operations
was:
Total staff 3 4
Wages and salaries - 70,922
Fair value of warrants issued and vested 139,462 -
Provision for annual leave - 3,295
Provision for long service leave - (10,940)
Superannuation 500 4,168
Staff training costs and other costs - 748
139,962 68,193
Less: staff costs allocated to exploration projects - (34,038)
costs
139,962 34,155
During the comparative reporting period, consulting fees totalling £14,428 was
paid to Zeg Choudhry, former Director of Tectonic Gold Plc. There were no other
fees paid to directors during the reporting period nor in the comparative
reporting period.
8. TAXATION
There is no UK tax charge/credit during the reporting
periods.
Reconciliation of tax charge:
CONSOLIDATED
2021 2020
£ £
Numerical reconciliation of income tax expense to
prima facie tax payable
Tax at the Australian corporation tax rate of 27.5% (4,280) (22,093)
(2019: 30%)
Effects of:
- S.40-800 'Black hole' deductions (18,722) (21,071)
- Other non-allowable items 371 -
- Deferred tax asset on temporary differences 927 -
- Tax effect of tax losses not recognized as benefits 21,704 43,164
including tax effect of differences in the standard
rate of tax in different jurisdictions
- Research and Development Tax Incentive claim - (149,097)
Tax benefit for the period - (149,097)
No deferred tax asset has been recognised in respect of the losses. At the end
of the reporting period the Group had unused tax losses of £2,256,240 (2020: £
2,235,596). Where it is anticipated that future taxable profits will be
available against which these losses will be utilised, a deferred tax asset is
recognised. The total taxation charge in future periods will be affected by any
changes to the corporation tax rates in force in the countries in which the
Group operates.
The Finance Bill in the United Kingdom had its third reading on 24 May 2021 and
is now considered substantially executed. The deferred tax assets have thus
been restated at the 25% main rate of corporation tax which will apply from 1
April 2023.
9. (LOSS)/EARNINGS PER SHARE
The basic (loss)/earnings per share is based on the (loss)/profit for the year
divided by the weighted average number of shares in issue during the reporting
period. The weighted average number of ordinary shares for the reporting
period assumes that all shares have been included in the computation based on
the weighted average number of days since issue.
2021 2020
£ £
(Loss)/ Profit for the year attributable to owners of (231,564) 282,748
the Company
Weighted average number of ordinary shares in issue 834,566,389 697,562,746
for basic earnings
Weighted average number of ordinary shares in issue 834,566,389 710,562,746
for fully diluted earnings
(Loss)/earnings per share (pence per share)
Basic (0.03) 0.04
Diluted (0.03) 0.04
As detailed in note 22 there are 148,161,362 share options/warrants which are
anti-dilutive in the year ended 30 June 2021.
10. CASH AND CASH EQUIVALENTS
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Cash and cash equivalents 541,835 52,734 430,611 26,415
The Directors consider the carrying amount of cash and cash equivalents
approximates to their fair value.
11. TRADE AND OTHER RECEIVABLES
CONSOLIDATED COMPANY
2021 2020 2021 2020
RESTATED
£ £ £ £
Current
Other receivables 291 - - -
Loan to subsidiary undertaking - - 1,845,673 1,344,409
GST and VAT receivable 47,120 1,865 43,015 -
47,411 1,865 1,888,688 1,344,409
No receivables were past due or provided for at the year-end or at the previous
year end. The Directors consider the carrying amount of trade and other
receivables approximates to their fair value.
The loan to subsidiary undertaking is unsecured, interest free and repayable on
demand.
12. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
On 17 June 2020, the Company sold 90% of the investment in Deep Blue Minerals
Pty Ltd to Align Capital via a write- off of the loan from Align of £100,000.
The results of the discontinued operations which have been included in the
Consolidated Statement of Profit and Loss and Other Comprehensive Income, were
as follows:
2021 2020
£ £
Other income - 130,953
Expenses - (204,887)
(Loss) before tax of discontinued operations - (73,934)
Tax - -
(Loss) on discontinued operations attributable to the - (73,934)
owners of the Company
During the 2020 comparative year, Deep Blue Minerals Pty Ltd contributed to the
Group's cash flows as follows:
Operating cash flows 2021 2020
£ £
- (46,936)
Investing cash flows - 56
Financing cash flows - 36,439
Total cash flows - (10,441)
13. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
2021 2020
£ £
Property, Plant and Equipment
- At cost 9,928 16,453
- Less accumulated depreciation (7,646) (11,378)
2,282 5,075
PLANT AND PLANT AND
EQUIPMENT EQUIPMENT
2021 2020
£ £
Carrying amount at the beginning of the period 5,075 6,603
Impairment of plant and equipment (1,130) -
Depreciation (1,578) (1,558)
Foreign exchange (85) 30
Carrying amount at the end of the period 2,282 5,075
14. EXPLORATION AND EVALUATION EXPITURE
CONSOLIDATED
2021 2020
£ £
Non-producing properties
Balance at the beginning of the period 2,695,681 2,663,707
Exploration and evaluation expenditure 396,595 36,402
Foreign exchange (75,764) (4,428)
Balance at the end of the period 3,016,512 2,695,681
The ultimate recoupment of balances carried forward in relation to areas of
interest still in the exploration or valuation phase is dependent on successful
development, and commercial exploitation, or alternatively sale of the
respective areas.
15. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Investment in VOX Royalty Corp Plc 46,040 224,407 46,040 224,407
Investment in Kazera Global t Plc 300,000 - 300,000 -
346,040 224,407 346,040 224,407
Investment in VOX Royalty Corp Plc
On 2 September 2019, the Company announced the sale of its 2.5% royalty
interest in Bass Metals' Graphmada graphite mine to Silverstream SEZC for a
consideration of up to A$550,000 in cash and convertible notes. The Company
received a CAD $250,000 one year 5% unsecured convertible note maturing on 27
August 2020 with the balance of the consideration due in cash subject to
performance milestones.
The Convertible Note of CAD $250,000 was settled on 25 May 2020 with the issue
of 98,039 shares in VOX Royalty Corp (VOX) (formerly Silverstream SEZC) at a
price of CAD $3.00 per share less 15% discount which amounts to CAD
$2.55 per share.
On 1 March 2021, the Company sold 65,539 shares held in VOX at CAD $3.23 per
share raising CAD $211,777 (£123,622). As at 30 June 2021, the Company held
32,500 shares in VOX. The closing price as at 30 June 2021 was CAD $2.43 (2020:
CAD $3.85).
Investment in Kazera Global Plc
On 31 August 2020, the Company acquired 20 million shares in Kazera Global Plc
priced at 0.5p per share, under the terms of the transaction for the sale of
Deep Blue Minerals Pty Ltd announced on 4 June 2020. Funds for the share
purchase were provided by way of a Director's Loan from B Boynton. The loan is
unsecured, interest free and repayable on demand.
The closing price as at 30 June 2021 was 1.5p per share.
Measurement of fair value of financial instruments
The management team of Tectonic Gold perform valuations of financial items for
financial reporting purposes, with everything being a Level 1 listed
investment. Valuation techniques are selected based on the characteristics of
each instrument, with the overall objective of maximising the use of
market-based information.
16. CONTROLLED ENTITIES
Details of controlled entities are as follows:
PARENT ENTITY COUNTRY OF
INCORPORATION
Tectonic Gold Plc England and
25 Bilton Road, Rugby, England, Wales
CV22 7AG
CONTROLLED PRINCIPAL COUNTRY OF PERCENTAGE OF INVESTMENT INVESTMENT
ENTITIES ACTIVITIES INCORPORATION EQUITY HELD HELD BY HELD BY
BY THE THE THE
COMPANY COMPANY COMPANY
2021 2020 2021 2020
% % £ £
Signature Gold Pty
Ltd Mineral Australia 100 100 3,605,254 3,605,254
13/20 Bridge exploration
Street, Sydney
NSW, Australia
2001
Whale Head
Minerals Pty Ltd
6 Reier Avenue, Mineral South Africa 100 - - -
Alexander Bay, Exploration
Northern Cape
Republic of South
Africa, 8290
(i) Signature Gold Pty Ltd was converted from a Public Limited
Company to a Private Limited Company on 3 June 2019.
(ii) Deep Blue Minerals Pty Ltd was incorporated on 17 April 2019 and
90% of the Company's interest in Deep Blue Minerals Pty Ltd was sold on 17 June
2020. The Company retains an interest of 10% in the Company as at 30 June 2021.
(iii) Whale Head Minerals Pty Ltd was incorporated on 14 February
2020.
17. OTHER ASSETS
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Prepayments (i) 339,522 349,341 - -
Other prepayments 20,596 5,100 14,685 5,100
Security deposits 3,257 3,351 - -
363,375 357,792 14,685 5,100
(i) In 2018 the Company paid Titeline Drilling Pty Ltd ACN 096 640
201 (Titeline) for future drilling services in accordance with the heads of
agreement dated 28 March 2018 between Titeline, Signature Gold and Tectonic
Gold.
(ii) Titeline has been engaged to complete 10,000 meters of diamond
drilling to produce core samples for analysis, assay and metallogenic studies
from the Company's Biloela Project site. A review to be completed after 2,500
metres of drilling has been completed and the completion program for the
remaining 7,500 metres to be mutually agreed.
As at 30 June 2021, the balance of the prepayment to Titeline is £339,522
(A$625,386) (2020: £349,341) (A$625,386).
18. TRADE AND OTHER PAYABLES
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Current
Trade payables 199,176 233,667 45,598 18,870
Other payables 3,844 3,962 - -
Accrued expenses 60,877 47,083 42,383 49,333
263,897 284,712 87,981 68,203
Non-Current
Other payables 15,608 16,060 - -
15,608 16,060 - -
The Directors consider the carrying amount of trade payables approximates to
their fair value.
19. BORROWINGS
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Non-Current
Loan payable to director related 170,257 70,650 156,685 56,685
entities(i)
Loan payable to Consolidated 151,867 156,258 - -
Minerals Pte Ltd(ii)
322,124 226,908 156,685 56,685
(i) The loans from 33rd Degree Pty Ltd, a company of which Brett
Boynton is a director and majority shareholder, outstanding at the end of the
reporting period and comparative periods do not accrue interest and are not due
to be repaid on or before 12 months after the end of each reporting period.
(ii) Signature Gold and shareholder Consolidated Minerals Pte Ltd, a
resources and infrastructure investment fund based in Singapore, are evaluating
international IRGS assets as cooperative opportunities. The parties expect to
settle the loan as part of an agreement on one or more of these projects either
in equity via an acquisition or merger or as a joint venture interest via a
farm in. This is not expected to complete prior to 30 June 2022.
The Directors consider the carrying amount of short-term borrowings
approximates to their fair value.
20. ISSUED CAPITAL
2021 2020
£ £
940,421,826 fully paid ordinary shares (2020: 697,562,746 6,124,902 6,100,615
fully paid ordinary shares)
Fully Paid Ordinary Shares
Reconciliation of share issued during the reporting period is set out below:
2021 ISSUE 2021 2020 ISSUE 2020
NUMBER PRICE £ NUMBER PRICE £
Balance at the beginning of 697,562,746 6,100,615 697,562,746 6,100,615
the period
17 Sep 2020: Placement 146,472,721 £ 402,800
0.00275
05 Jan 2021: Exercise of 1,818,181 £0.007 12,727
Warrants
12 Mar 2021: Exercise of 1,818,181 £0.007 12,727
Warrants
23 Mar 2021: Exercise of 4,000,000 £ 11,000
Warrants 0.00275
29 Mar 2021: Exercise of 22,836,361 £0.007 159,854
Warrants
14 Apr 2021: Exercise of 65,913,636 £0.007 461,397
Warrants
Total shares issued during the 242,859,080 1,060,505
reporting period
Less: Amount allocated to (1,036,218)
share premium account
Balance at the end of the 940,421,826 6,124,902 697,562,746 6,100,615
period
Each ordinary share carries the right to be one vote at shareholders' meetings
and is entitled to participate in any dividends or other distributions of the
Company.
21. SHARE BASED PAYMENTS
The following share-based payment arrangements were in existence during the
reporting period:
WARRANTS NUMBER NUMBER GRANT DATE EXPIRY EXERCISE FAIR VALUE
/OPTIONS GRANTED VESTED DATE VESTING PRICE AT GRANT
SERIES DATE DATE
Series 146,472,721 146,472,721 09 Sep -* 09 Sep 7p 0.18p
(i) 2020 2020
Series 64,475,000 64,475,000 09 Sep 09 Sep 09 Sep 2.75p 2.13p
(ii) 2020 2024 2020
Series 83,686,362 83,686,362 09 Apr 09 Sep 09 Apr 1.4p 0.423p
(iii) 2021 2024 2021
*Drill Warrants expired 30 days after the Company published the results of its
drilling programme.
The weighted average remaining contractual life of warrants and share options
outstanding at the end of the reporting period is 2.2 years.
INPUTS INTO THE SERIES (I) SERIES SERIES
MODEL WARRANTS (II) (III)
OPTIONS OPTIONS
Grant date share 3p 3p 1.35p
price
Exercise price 7p 2.75p 1.4p
Expected volatility* 100% 100% 87.34%
Dividends Nil Nil Nil
Warrant/Option life 6 months 4 years 3.42 years
Risk-free interest 1% 2% 2%
rate
*Expected volatility was based on the standard deviation of historic closing
prices from September 2020 to April 2021.
22. RESERVES
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Foreign Currency Translation Reserve
Opening balance (75,265) (92,681) - -
Foreign currency translation (37,150) 17,416 - -
Closing balance (112,415) (75,265) - -
Warrant Reserve
Opening balance 95,098 95,098 95,098 95,098
Additions 493,456 - 493,456 -
Closing balance 588,554 95,098 588,554 95,098
Reverse Takeover Reserve
Opening balance (57,976,182) (57,976,182) -
-
Additions - - -
-
Closing balance (57,976,182) (57,976,182) -
-
The Foreign Currency Translation Reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries on consolidation.
The Option Reserve represents the fair value of options granted to employees
and suppliers for services provided to the Group. The fair value of options is
expensed over the vesting period or during the period in which the services are
received.
The Reverse Takeover Reserve represents the adjustment needed to reflect the
reverse takeover of Signature Gold which was completed on 25 June 2018.
23. CASH FLOW INFORMATION
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in
value.
Cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows is reconciled to the related items in the statement of
financial position as follows:
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
(Loss)/profit for the reporting period (231,564) 282,748 (214,747) 178,567
before taxation
Add/(deduct): Non-cash items
Depreciation and amortisation 1,578 1,515 - -
Gain on sale of Deep Blue Minerals Pty (76,171) - (99,996)
Ltd
Gain on sale of VOX shares (25,162) - (25,162) -
Impairment of property, plant and 1,130 - - -
equipment
Impairment of loan to Deep Blue - - - 117,606
Minerals Pty Ltd
Royalty settled in equity - (224,407) - (224,407)
Share based payment 194,998 - 194,998 -
Foreign exchange 49,418 (8,369) 49,417 (10,414)
Gain on sale of Tirupati - (46,722) - (46,722)
Net fair value gain on financial (200,000) - (200,000) -
assets at fair value though profit and
loss
Net fair value loss on financial 80,327 - 80,327 -
assets at fair value through profit
and loss
Change in assets and liabilities net
of the effect of acquisitions and
disposals associated with business
combinations:
(Increase)/decrease in trade and other (43,016) 6,048 (43,016) -
receivables
(Decrease)/Increase in other assets (18,263) 2,620 (9,584) -
(Decrease)/Increase in trade payables (19,509) (5,142) 19,774 5,297
and accruals
Net cash used in operating activities (210,063) (67,880) (147,993) (80,069)
Non-cash financing and investing activities
There were no non-cash financing and investing activities during the year.
24. FINANCIAL INSTRUMENTS
Financial assets by category
The IFRS 9 categories of financial assets included in the Statement of
Financial Position and the headings in which they are included are as follows:
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Financial assets at fair value 346,040 224,407 346,040 224,407
through profit and loss
Financial assets at amortised cost:
Cash and cash equivalents 541,835 52,734 430,611 26,415
Trade and other receivables 47,411 1,865 43,015 -
935,286 279,006 819,666 250,822
Financial liabilities by category
The IFRS 9 categories of financial liability included in the Statement of
Financial Position and the headings in which they are included are as follows:
CONSOLIDATED COMPANY
2021 2020 2021 2020
£ £ £ £
Financial liabilities at amortised
cost:
Trade and other payables 279,504 300,773 87,981 68,203
Borrowings 322,124 226,908 156,685 -
601,628 527,681 246,666 68,203
The following are the Group's contractual maturities of financial liabilities,
including estimated interest payments:
TOTAL LESS THAN BETWEEN ONE MORE THAN
CARRYING ONE AND FIVE FIVE
AMOUNT YEAR YEARS YEARS
£ £ £ £
30 June 2021
Trade and other payables 279,504 263,897 15,607 -
Borrowings 322,124 - 322,124 -
30 June 2020
Trade and other payables 300,773 284,713 16,060 -
Borrowings 226,908 - 226,908 -
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to stakeholders through the
optimisation of the debt and equity balance. The capital structure of the Group
consists of debt, (previously includes the borrowings) cash and cash
equivalents and equity attributable to equity holders of the Company,
comprising issued capital, reserves and accumulated losses, all as disclosed in
the Statement of Financial Position.
Financial risk management objectives
The Group is exposed to a variety of financial risks which result from both its
operating and investing activities. The Group's risk management is coordinated
by the board of directors and focuses on actively securing the Group's short to
medium term cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial instruments are
credit risk, liquidity risk and market price risk.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies. Hence,
exposures to exchange rate fluctuations arise. Since 25 June 2018. the
Company's major activity is now investment in Australia through its subsidiary
Signature Gold, bringing exposure to the exchange rate fluctuations of GBP/£
Sterling with Australian Dollars.
Exchange rate exposures are managed within approved policy parameters. The
Company does not enter into forward exchange contracts to mitigate the exposure
to foreign currency risk as amounts paid and received in specific currencies
are expected to largely offset one another and the currencies most widely
traded are relatively stable.
The Directors consider the balances most susceptible to foreign currency
movements to be the net assets of Signature Gold for the Group.
CONSOLIDATED 2021 2020
AUD AUD
Net Assets of Signature Gold 2,358,557 2,388,881
COMPANY 2021 2020
£ £
Financial assets at fair value through profit and loss 346,040 224,407
The following table illustrates the sensitivity of the value of the foreign
currency denominated assets in regard to the change in AUD exchange rates.
It assumes a +/- 15% change in the AUD/GBP exchange rate for the year ended 30
June 2021 (2020:15%).
Impact of exchange rate fluctuations
AUD IMPACT AUD IMPACT
2021 2020
£ £
Average movement in exchange rate 15% 15%
Change in equity
Increase in GBP value 192,069 200,164
Decrease in GBP value 192,069 200,164
Result for the period
Increase in GBP value (2,523) 10,868
Decrease in GBP value (2,523) 10,868
Exposure to foreign exchange rates varies during the year depending on the
volume and nature of foreign transactions. Nonetheless, the analysis above is
considered to be representative of the Group's exposure to currency risk.
Interest rate risk management
The Group's exposure to interest rates on financial assets and financial
liabilities is detailed in the liquidity risk management section of this note.
There are no long-term loans or short-term loans that carry any interest and
thus sensitivity analyses have not been provided on the exposure to interest
rates for both derivatives and non-derivative instruments during the year.
There would have been no effect on amounts recognised directly in equity.
Credit risk management
The Group's financial instruments, which are subject to credit risk, are
considered to be cash and cash equivalents and trade and other receivables, and
its exposure to credit risk is not material. The credit risk for cash and cash
equivalents is considered negligible since the counterparties are reputable
banks.
The Group's maximum exposure to credit risk is £589,246 (2020: £54,599)
comprising other receivables, investments and cash.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which monitors the Group's short, medium and long-term funding and
liquidity management requirements on an appropriate basis. The Group manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities. The Group's liquidity risk arises in supporting the
trading operations in the subsidiaries, which hopefully will start to generate
profits and positive cash-flows in the short term. However, as referred to in
Note 3 the Group is currently exposed to significant liquidity risk and needs
to obtain external funding to support the Group going forwards.
25. RELATED PARTY DISCLOSURES
Group and the Company 2021
(i) The remuneration of the Directors, who are the key management
personnel of the Group, is set out in Note 8.
(ii) Loans from the related parties are disclosed in Note 20.
(iii) On 31 August 2020, the Company acquired 20 million shares in
Kazera Global Plc priced at 0.5p per share, under the terms of the transaction
for the sale of Deep Blue Minerals Pty Ltd announced on 4 June 2020. Funds for
the share purchase totalling £100,000 were provided by way of a Director's Loan
from B Boynton. The loan does not accrue interest. For further detail, refer to
Note 16.
As at 30 June 2021, 33rd Degree Pty Ltd had advanced £156,685 (2020: £56,685)
to the Group as detailed in note
20. These loans are interest free and is not required to be repaid on or before
30 June 2022.
2020
(i) During the comparative reporting period, consulting fees
totalling £14,428 were paid to Zeg Choudhry, former Director of Tectonic Gold
Plc.
(ii) As at 30 June 2020, 33rd Degree Pty Ltd had advanced A$25,000
(2019: A$25,000) to Signature Gold Pty Ltd. This loan is interest free and was
not required to be repaid on or before 30 June 2021.
(iii) On 17 June 2020, the balance owing to B Boynton from Deep Blue
Minerals Pty Ltd was £56,685 (2019: £68,124). On the date of sale of Deep Blue
Minerals Pty Ltd being 17 June 2020, this loan was assigned to Tectonic Gold
Plc. This loan is unsecured, interest free and not required to be repaid on or
before 30 June 2022.
26. CAPITAL COMMITMENTS
Exploration Lease Expenditure Commitments
In order to maintain the Company's tenements in good standing with Queensland
Mines and Energy, the Company will be required to incur exploration expenditure
under the terms of each licence. It is likely that the granting of new licences
and changes in the terms of each licence will change the expenditure commitment
from a to time.
2021 2020
£ £
Payable:
- within one year 183,573 280,374
- later than one year but not later than 582,702 679,507
five years
766,275 959,881
27. CONTINGENT ASSET
The Group, through its subsidiary undertaking, Signature Gold Pty Ltd, has
successfully renewed its Australian Federal Tax Government Research &
Development Tax Incentive Scheme participation in November 2021. Whilst there
can be no certainty of a successful claim and rebate under the Scheme the Group
expects an eventual rebate of approximately AUD$275,000 to be received in
respect of the year ended 30 June 2021.
28. EVENTS AFTER THE REPORTING PERIOD
On 17 September 2021, the Company announced that it has issued 2,608,695
ordinary shares at a price of 1.15p per share ("New Ordinary Shares") to
professional advisors for services rendered to the Company.
On 17 September 2021 the Company sold 20 million shares in Kazera Global Plc
and exercised warrants to acquire 10 million shares in Kazera Global Plc with
the right to a further 5 million warrants subject to holding the Kazera shares
for at least of three months.
On 30 September 2021, the Company announced that its diamond and heavy minerals
investment partner, Kazera Global Plc had exercised its option under the 4 June
2020 agreement (June 2020 agreement), to acquire a 60% interest in Whale Head
Minerals Pty Ltd, the Company's South African mineral sands subsidiary.
Under the June 2020 agreement, Tectonic Gold will retain a non-diluting 10%
interest in Whale Head. The Kazera equity being issued as consideration is
being assigned to Consolidated Minerals Pte, the group that laid much of the
groundwork for this project and the issuance of this equity extinguishes a
legacy loan of A$279,732 from Consolidated Minerals Pte to Tectonic Gold.
Consolidated Minerals Pte is a long-term partner and Tectonic Gold will be
holding their equity in trust. For further detail, refer to the Company's
Release on 30 September 2021.
Other than as stated elsewhere in this report, Directors are not aware of any
other matters or circumstances at the date of this report that have
significantly affected or may significantly affect the operations, the results
of the operations or the state of affairs of the Company in subsequent
financial years.
29. PRIOR YEAR ADJUSTMENT
The directors have re assessed the classification of the loan to subsidiary
undertaking, Signature Gold Pty Ltd, at the year-end in the company statement
of financial position and consider that it should be disclosed within current
assets. The prior year comparative has also been restated to reclassify the
loan from non-current to current assets. At the year-end non-current and
current assets have decreased and increased by £1,845,673 respectively. There
is no impact on net assets nor on the net result for the year.
DISTRIBUTION
Copies of these financial statements is available on the Company's website (
www.tectonicgold.com) or directly from the Company at its registered address.
For further information, please contact:
Tectonic Gold plc +61 2 9241 7665
Brett Boynton
Sam Quinn
www.tectonicgold.com
@tectonic_gold
Aquis Stock Exchange Corporate Adviser and
Broker +44 20 3005 5000
VSA Capital Limited
Andrew Raca - Corporate Finance
Andrew Monk - Corporate Broking
Ends
END
(END) Dow Jones Newswires
December 21, 2021 02:00 ET (07:00 GMT)
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