TIDMSRES
RNS Number : 2793Z
Sunrise Resources Plc
13 December 2017
SUNRISE RESOURCES PLC
("Sunrise" or "the Group" or "the Company")
13 December 2017
Audited Results for the year to 30 September 2017
The Board of Sunrise Resources plc, the AIM-traded company
focusing on the development of its CS Pozzolan-Perlite Project in
Nevada, USA, is pleased to announce audited results for the year
ended 30 September 2017.
Highlights for 2017
Ø Strategic decision to focus on development of the CS
Pozzolan-Perlite Project in Nevada, USA and progressively valorise
the Company's diverse portfolio of precious and base metal and
industrial minerals projects.
Ø Market for natural pozzolan as a "green" replacement for
Portland cement in cement and concrete mixes is growing as
alternative coal fly ash pozzolan supplies shrink in the USA due to
the continuing closure of coal fired power stations, over 50% of
which have closed or announced closure plans since 2012.
Ø Market for perlite also growing with horticultural market
segment growth driven by increased legalisation of cannabis in the
USA.
Ø Positive Concept Study completed by Company for development of
the CS Project for production of both pozzolan and perlite:
-- Open-pit mining and simple production process envisaged.
-- Preliminary modelling shows attractive financial returns
based on low capital and operating cost estimates.
-- Permitting study suggests a more expeditious Environmental
Assessment process rather than full Environmental Impact Statement
process.
Ø Successful maiden drill programme confirms thick intervals of
pozzolan and perlite in Main Zone and Tuff Zone.
Phase 2 programme approved for additional drill sites to define
open-pit mine areas.
Ø Sale of Junction Gold Project to TSX-V listed VR Resources Ltd
for initial cash and share consideration with further shares due on
reaching certain exploration milestones. The Company retains a 3%
production royalty interest.
Ø Active work programme planned for CS Project in 2018 targeting
production in the first half of 2019.
Commenting on today's results, Patrick Cheetham, Executive
Chairman, said: "I am pleased to report on the evolution and
delivery of our strategic plan in 2017 as we advance our CS Project
towards potential production. We have achieved a number of project
milestones during the year and have an active work programme
planned for 2018 aimed at a start to mining operations in the first
half of 2019. I look forward to reporting further progress and to
meeting shareholders at our upcoming AGM."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Further information
Sunrise Resources plc
Patrick Cheetham, Executive
Chairman Tel: +44 (0)1625 838 884
Northland Capital Partners
Limited
Nominated Adviser & Broker
Edward Hutton/David Hignell
John Howes/Rob Rees Tel: +44 (0)20 3861 6625
Beaufort Securities Limited
Joint Broker
Jon Belliss Tel: +44 (0)20 7382 8300
Chairman's Statement
I am pleased to present the Company's Annual Report and
Financial Statements for the year ended 30 September 2017 and to
report on a year of important developments in the realisation and
evolution of our strategic plan. More discussion of this can be
found in the Strategic Report.
In the early part of the year, work on our CS Project in Nevada,
USA, newly staked this time last year, was successful in
identifying large areas of natural pozzolan, a "green" substitute
for Portland cement which is responsible for 5% of global carbon
emissions. It is a pivotal time in the cement and concrete
industries as traditional supplies of coal fly ash pozzolan dry up
as coal-fired power stations close across the USA. Natural pozzolan
can replace fly ash pozzolan and this is our opportunity.
The CS Project natural pozzolan is in the form of volcanic tuff
and tephra deposits and also perlite. Perlite is a valuable rock in
its own right. It pops like popcorn when heated to a lightweight
material with a number of industrial and horticultural
applications. Favourable test results for both pozzolan and perlite
led to the completion of a positive concept study for a combined
production operation and a Board decision to focus on the
development of the CS Project and valorise other projects held by
the Company through sale or other arrangements.
Subsequent exploration during the year included trenching and a
maiden drill programme and identified large areas and significant
thicknesses of perlite and pozzolan in three zones. The samples
from this work have been extensively tested and results confirm
that the pozzolan is a high quality pozzolan, competitive with
materials currently on the market and that the perlite is suitable
for a range of applications.
Whilst the discovery of new and large deposits of pozzolan and
perlite is exciting, it does mean that testing has been necessarily
more extensive and time consuming than originally expected, as we
work to correctly identify the best areas to start open-pit mining
for both products, either together or separately. The pit and plant
areas need to be tightly constrained to reduce the cost of
permitting studies. We also need to ensure that mine plant and
facilities are not built on top of future reserves.
We believe that the CS Project pozzolan and perlite deposits
could support tens of years of mining. A further phase of drilling
is planned to take place shortly and will form the basis for an
initial mine design for a 5-10 year starter pit. We anticipate
environmental permit baseline studies will start in earnest early
in February 2018, targeting initial production in the first half of
2019. Marketing and customer testing has started and is expected to
continue throughout 2018. Much work lies ahead but it is pleasing
that so much progress has been made and we expect strong news flow
from the CS Project in 2018.
The sale of non-core projects is an ongoing process but we have
made a good start with the sale of the Junction Project in Nevada
to Canadian TSX-V listed VR Resources Ltd. As a result of the sale,
we now have a small shareholding which will increase if certain
exploration milestones are met. We have also retained a royalty on
production from this project and so have ongoing exposure to
exploration success. VR Resources has recently reported high grade
copper-silver-gold mineralisation over a 6km strike length and
anticipates drill testing in 2018. We hope that this will be the
first such project disposal following the evolution of our
strategic focus.
We are also a small shareholder in Block Energy plc, originally
Goldcrest Resources plc. Block Energy is expanding its Georgian oil
interests and is planning to dual list on AIM as well as the NEX
Exchange Growth Market and we are following this investment with
interest.
Our largest shareholder, Tertiary Minerals plc, continues to
provide management services at cost and to take shares in lieu of
payment in cash from time to time. This allows us to reduce the
cash impact of administration costs and the directors continue to
be paid their modest fees in shares. I thank them and our Company
Secretary for their contributions.
We have taken the opportunity to better reflect our strategy and
focus in a re-launch of our website incorporating a new logo and to
make better use of social media. We have seen a significant
increase in investor interest with substantially improved share
trading liquidity in 2017.
Our work programmes at the CS Pozzolan-Perlite Project have
delivered excellent results throughout the year and we will
maintain this momentum as we advance the CS Project towards
potential production. We are expecting strong news flow in 2018 and
look forward to reporting on future progress.
Our Annual General Meeting for the year ended 30 September 2017
will be held in London on Wednesday 31 January 2018 at 10.30 a.m.
and I hope that shareholders will attend.
Patrick Cheetham
Executive Chairman
13 December 2017
Strategic Plan On Track
KEY AIMS from our STRATEGY & BUSINESS PLAN for 2016 and 2017
are summarised here to show how our strategy has evolved and
progressed in 2017. Our targets for 2018 are also set out
below:
AIMS AIMS IN 2017 & TARGETS FOR 2018
IN PROGRESS MADE
2016
----------------- ------------------------------------------------------------------- -----------------------------------------------------------------------
Target advanced Develop the CS Continue advancing
projects which Project towards CS Project towards
have the production: production:
potential
to generate a * Positive Concept Study. * Open pit definition drilling on the Main Zone & Tuff
sustaining cash Zone.
flow.
* Discovery of Tuff & Northeast Zones.
* Resource definition.
* Drill testing of Main Zone & Tuff Zone - thick zones
of pozzolan and perlite demonstrated. * Mine, plant and pit design.
* Pozzolan testing confirms high quality of natural * Permitting.
pozzolan.
* Logistic studies.
* Perlite testing shows potential in a number of
industrial applications.
* Marketing.
* Feasibility studies.
----------------- ------------------------------------------------------------------- -----------------------------------------------------------------------
Target advance Having secured To maintain existing
drill stage a valuable portfolio projects at minimum
projects of projects - to costs.
where there is seek progressive
potential for valorisation of Sell or otherwise
significant the Company's existing valorise additional
mineral precious metal projects maintaining
discovery. and other industrial exposure to future
minerals projects value creation and
and unlock the production where
inherent value possible.
in the Company:
* Junction Project sold for cash, shares and contingent
share consideration. Royalty interest retained.
----------------- ------------------------------------------------------------------- -----------------------------------------------------------------------
To run the To run the Company Continue cost sharing
Company with low overheads and strive for exploration
with low and be a low cost cost efficiencies.
overheads explorer:
and be a low
cost explorer. * Corporate overheads shared with Tertiary Minerals
plc.
* Directors' fees continue to be taken in shares.
* Tertiary Minerals plc has taken part payment byway of
shares in lieu of cash for management charges.
----------------- ------------------------------------------------------------------- -----------------------------------------------------------------------
Our Strategic Plan is on Track
A review of the AIMS and STRATEGY set out in our 2016 Annual
Report highlights the advance and evolution of our strategic plan
in 2017.
Our long-stated AIM has been to develop profitable mining
operations to sustain the Company's wider exploration efforts and
create value for shareholders through the discovery of world-class
mineral deposits.
OUR STRATEGY includes the targeting of advanced projects, in
particular industrial minerals projects which the company believes
offer a faster route to cash flow than conventional precious or
base metals projects due to lower permitting thresholds. Our
strategy also targets near-drill stage projects where there is a
potential for significant mineral discovery.
The strategic plan is on track. Our CS industrial mineral
project, targeting the production of natural pozzolan and perlite,
has quickly risen to become the key focus for the Company in
delivering on that strategy and the Company is now focused on
developing that project through to production, targeting a mine
start up in the first half of 2019.
Over the past few years the Company has established a valuable
portfolio of drill-ready precious metal, base metal and industrial
mineral projects and our strategy with respect to those projects
has evolved following a decision to focus on development of the CS
Project. We will now seek to valorise those projects through sale
or other arrangements seeking, wherever possible, free-carried
exposure to increases in value and production from the projects.
Our agreement to sell the Junction Project to VR Resources Ltd. is
an early example of success in implementing this evolved
strategy.
Strategic Report
The Directors of the Company and its subsidiary undertakings
(which together comprise "the Group") present their Strategic
Report for the year ended 30 September 2017.
Principal Activities
The Company's objective is to develop profitable mining
operations at the CS Pozzolan-Perlite Project in Nevada and unlock
the value inherent in our diverse portfolio of industrial minerals,
precious metals and base metal projects.
Organisation Overview
The Group's business is directed by the Board and is managed by
the Executive Chairman. The Company has a Management Services
Agreement with Tertiary Minerals plc ("Tertiary") which is a
significant shareholder in the Company (as defined under the AIM
Rules). Under this cost sharing agreement Tertiary provides all of
the Company's administration and technical services, including the
services of the Executive Chairman, at cost. Day-to-day activities
are managed from Tertiary's offices in Macclesfield in the United
Kingdom, but the Group operates in three other countries. The
corporate structure of the Group reflects the historical pattern of
acquisition by the Group and the need, where appropriate, for
fiscal and other reasons, to have incorporated entities in
particular territories.
The Group's exploration activity in Nevada, USA, is undertaken
through two local subsidiaries, SR Minerals Inc. and Westgold
Inc.
In Australia the Company operates through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd. The Company
maintains a branch in Finland as a result of historical exploration
activities in Finland and its mineral project in Ireland is held by
the Group Parent company, Sunrise Resources plc.
The Board of Directors comprises two non-executive directors and
the Executive Chairman. The Executive Chairman is also Chairman of
Tertiary Minerals plc, but otherwise the Board is independent of
Tertiary.
Financial & Performance Review
The Group is not yet producing minerals and so has no income
other than a small amount of bank interest. Consequently, the Group
is not expected to report profits until it disposes of or is able
to profitably develop or otherwise turn to account its exploration
and development projects.
The Group reports a loss of GBP311,046 for the year (2016:
GBP369,587) after administration costs of GBP276,568 (2016:
GBP285,092) and after crediting interest receivable of GBP70 (2016:
GBP532). The loss includes expensed pre-licence and reconnaissance
exploration costs of GBP21,161 (2016: GBP45,316), impairment of
deferred costs of GBP3,077 (2016: GBP39,711) and impairment of
available for sale investment of GBP13,338 (2016: GBPNil).
Administration costs include an amount of GBP1,507 (2016: GBP4,323)
as non-cash costs for the value of certain share warrants held by
employees, as required by IFRS 2. Cash administration costs are
therefore GBP275,061 (2016: GBP280,769). The sale of the Junction
Project rights, produced a surplus on disposal of GBP3,028.
The Financial Statements show that, at 30 September 2017, the
Group had net current assets of GBP183,422 (2016: GBP94,748). This
represents the cash position after allowing for receivables and
trade and other payables. These amounts are shown in the
Consolidated and Company Statements of Financial Position and are
also components of the Net Assets of the Group. Net assets also
include various "intangible" assets of the Company. As the name
suggests, these intangible assets are not cash assets but include
some of this year's and previous years' expenditure on mineral
projects where that expenditure meets the criteria in Note 1(d) of
the accounting policies. The intangible assets total GBP1,302,404
(2016: GBP1,072,571) and a breakdown by project is shown in Note 2
to the financial statements.
Details of intangible assets, property, plant and equipment and
investments are also set out in Notes 8, 9 and 10 of the financial
statements.
As shown in Note 8, an additional Group investment was acquired
in the reporting period, being shares in VR Resources Ltd valued at
GBP8,021, as part consideration for the sale of the Junction
Project in Nevada.
For the Interim Accounts for the six month period to 31 March
2017 an impairment review was undertaken by the Directors to
ascertain whether the decline in fair value of the investment in
Block Energy plc could be considered to be significant or
prolonged, as required under IAS 39. It was decided that, by
comparison to the small amount of the initial investment of
GBP25,000, the decline in fair value of Block Energy plc was likely
to be deemed significant under IAS 39; therefore an amount of
GBP13,338 was impaired and charged to the Consolidated Income
Statement, thereby increasing the loss for that period (see Note
1(k) in the Notes to the Financial Statements.
An amount of GBP10,795 has been recognised in the Available for
Sale Investment Reserve in Equity comprising a GBP10,962 increase
in the fair value of the shareholding in Block Energy in the
following six month period to 30 September 2017, and a decrease of
GBP167 in the fair value of the VR Resources Ltd. shares.
Expenditures which do not meet the criteria in Note 1(d), such
as pre-licence and reconnaissance costs, are expensed and add to
the Company's loss. The loss reported in any year can also include
expenditure for specific projects carried forward in previous
reporting periods as an intangible asset but which the Board
determines is "impaired" in this reporting period.
It is a consequence of the Company's business model that there
will be regular impairments of unsuccessful exploration projects.
The extent to which expenditure is carried forward as intangible
assets is a measure of the extent to which the value of the
Company's expenditure is preserved.
The intangible asset value of a project should not be confused
with the realisable or market value of a particular project which
will, in the Directors' opinion, be at least equal in value and
often considerably higher. Hence the Company's market
capitalisation on the AIM Market is usually in excess of the net
asset value of the Group.
The Company finances its activities through periodic capital
raisings, via share placings and, in the past, through other
innovative equity based financial instruments. As the Company's
projects become more advanced there may be strategic opportunities
to obtain funding for some projects from future customers, via
production sharing, royalty and other marketing arrangements. The
Company's agreement with VR Resources Ltd is such an example.
Key Performance Indicators
The financial statements of a mineral exploration company can
provide a moment in time snapshot of the financial health of the
Company but do not provide a reliable guide to the performance of
the Company or its Board.
The usual financial key performance indicators ("KPIs") are
neither applicable nor appropriate to measurement of the value
creation of a company which is involved in mineral exploration and
which currently has no turnover. The Directors consider that the
detailed information in the Operating Review is the best guide to
the Group's progress and performance during the year.
In addition, the Directors highlight the following KPIs and
expect that further KPIs will be reported as the Company progresses
through development:
Health & The Group has not lost any man-days through
Safety injury and there have been no Health and
Safety incidents or reportable accidents
during the year.
Environment No Group company has had or been notified
of any instance of non-compliance with environmental
legislation in any of the countries in which
they work.
Fundraising The Company raised GBP635,580 before expenses
through the Placing and Subscription of
shares in the reporting period and issued
equity to the value of GBP15,736 in consideration
of fees payable to Directors and to the
value of GBP52,735 to Tertiary Minerals
plc in consideration of at-cost management
fees.
------------ ------------------------------------------------------
In exploring for valuable mineral deposits, we accept that not
all our exploration will be successful but also that the rewards
for success can be high. We therefore expect that our shareholders
will be invested for the potential for capital growth taking a
long-term view of management's good track record in mineral
discovery and development.
Fundraising
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Company's cash position at year end (GBP234,181), these
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and the Group as going concerns. The Company
raised GBP500,000 before expenses on 6 December 2017.
Impairment
A bi-annual review is carried out by the Directors as to whether
there are any indications of impairment. The bi-annual impairment
indication reviews were conducted in March 2017 and October 2017
and the directors do not consider that there are any indications of
impairment in the intangible assets.
Operating Review
Following early exploration success at the CS Project and the
completion of a positive Concept Study by the Company for
development of the project, the Board carried out a strategic
review of the Company's projects and a decision was made to focus
management time and expenditure on advancement of the CS Project
towards production and to seek value for the Company's other
projects through sale or joint venture.
The CS Project is held in the Company's 100% owned subsidiary,
SR Minerals Inc.
The Company's other Nevada projects are held through SR Minerals
Inc. and Westgold Inc. The Company's Australian projects are held
through an Australian subsidiary Sunrise Minerals Australia Pty
Ltd. The Company's Derryginagh Barite Project is held directly in
the name of Sunrise Resources plc.
SR MINERALS INC.
POZZ PROJECT
CS Pozzolan-Perlite Project, Nevada, USA
The CS Project is located near Tonopah, in Nevada, USA, and has
developed out of the Company's broader Pozz Project, an umbrella
initiative to search for and acquire, at low-cost, deposits having
potential for the production of natural pozzolan. The Pozz Project
also includes the Pozz Ash Project and the newly discovered NewPerl
Project. Natural pozzolans are seeing increased use in cements and
concrete as a "greenhouse gas friendly" substitute for Portland
cement.
The CS Project contains deposits of both natural pozzolan and
perlite and further details on the Company's opportunity in these
two commodities are set out in the boxes below.
At the CS Project three main zones of interest have been
defined. In the Main Zone thick deposits of perlite have formed on
the rapidly cooled margins of crystalline rhyolite lava flows in
the inner parts of a volcanic complex. Further out from the core,
on the margins of the Main Zone and in the Northeast Zone, deposits
zones of "tephra" (semi-consolidated fragmental material ejected
from the volcano) formed as air fall deposits, possibly in water
courses and marginal lakes (Lahar). Still further away from the
core of the volcano, finer grained pyroclastic material fell to the
ground to form volcanic tuffs in the Tuff Zone.
The Main Zone is being evaluated for both pozzolan and perlite
whereas the Northeast and Tuff Zones are being tested primarily as
pozzolan.
Concept Study
After a positive initial testwork programme in January 2017, the
Company initiated an internal concept study to scope out the
potential for commercial development of the project. It was
prepared primarily for internal management purposes and, in
particular, to help inform a decision as to whether to commit the
Company to the next stages of exploration and development for the
CS Project.
This was completed in April 2017 and included a preliminary
evaluation of the markets and market opportunities for the Company
in both perlite and pozzolan and identified a low capital and
operating cost strategy for market entry as well as future
opportunities to grow the business. Simple financial modelling of a
preliminary development plan suggests the potential for a very low
capital and operating costs project with attractive financial
returns and it also identified potential to grow with the markets
and to make step changes in the value of the business through
downstream processing.
The Concept Study also set out a road map for development of the
project and includes an initial evaluation of the requirements and
broad timelines for permitting the project with the various
regulatory authorities. An extract from the Concept Study is
available on the Company's website.
Trenching & Drilling
Following the completion of a positive concept study the Company
carried out trenching and a maiden drill programme in July
2017.
Seven holes were drilled targeting pozzolan and perlite in the
Main Zone and two holes tested the pozzolanic tuff in the east end
of the Tuff Zone. Thick intervals of pozzolan and perlite were
intersected in the Main Zone, comparable to those reported from
many commercial deposits currently in production. Drill holes in
the Main Zone are currently too widely spaced to confirm
correlation between holes but the target zones were intersected in
all drill holes with no significant overburden. Drilling on the
Tuff Zone encountered thick intervals of the target tuff.
Trenches were excavated in areas covered by colluvium and scree
and in most cases exposed bedrock that, on further testing showed
perlitic and/or pozzolanic properties. This work suggests that the
Main Zone remains open to the south, extends further north and east
than previously defined and that the current definition of three
main zones may be artificial, representing only specific areas of
outcrop surrounded by additional areas of pozzolan and perlite
thinly covered with alluvium and colluvium.
The Company has recently received acceptance of an amendment to
its Notice level permit to allow drilling at a further 22 drill
sites in order to define the boundaries for one or more open-pit
mine locations.
Pozzolan Testing
In order to qualify as a natural pozzolan a material has to meet
the specifications of ASTM Standard C618 which applies to both
natural pozzolans and coal fly ash. This specifies a minimum
content of combined silica, alumina and iron oxide which are the
reactive compounds and minimum strength requirements for mortars
made with partial substitution of Portland cement by natural
pozzolan. The relative strength of the mortar is compared to an
"index" mortar produced using only Portland Cement after 7 and 28
days.
Chemical analysis of a range of samples shows that all of our
materials met the chemical specification of ASTM C618. Over 80
surface samples, composite drill samples and trench samples have
been "pre-certification" strength tested by independent laboratory
Magmatics Inc. whose principal, Joe Thomas, is an acknowledged
expert on the application of natural pozzolans and is a voting
member of both the ASTM and ACI pozzolan committees. All but one of
these samples passed the strength requirements of ASTM C618
indicating that material from all three zones at the CS Project are
quality natural pozzolans competitive with natural pozzolans
available on the market today.
Pozzolan testing is now moving on to more extensive testing of
three composite samples from areas that are expected to fall within
potential starter-pit operations. Not all marketable natural
pozzolans command the same selling price and these tests will help
determine a number of properties than can affect value. This
includes water demand (a low water demand improves concrete
workability and negates the need for expensive plasticizers),
mitigation of the deleterious alkali silica reaction that occurs in
concrete between Portland cement and certain reactive aggregates (a
cause of "concrete cancer"), sulphate resistance and long-term
strength.
Because the "curing" of concrete takes place over a long period,
well after it has set, some of these tests span periods up to 12
months and will take place concurrent with further exploration and
mine permitting. ASTM certification testing will also take place at
an appropriate independent laboratory to confirm Magmatics'
pre-certification testing results.
Perlite Testing
The Company's perlite samples are being tested primarily at
independent laboratory In-Mat-Lab in Greece with a number of
quality control samples tested at a second independent perlite
testing laboratory at the New Mexico Bureau of Geology and Mineral
Resources (NMBGMR).
To date over 70 samples from the surface, drill holes and
trenches have been subjected to basic testing, mostly from the Main
Zone. This has allowed the Company to identify different areas
having potential for the production of perlite for different
industrial applications. Different applications require different
raw material properties and testing has now progressed to
application specific testing.
These more advanced stages of perlite testing will allow the
Company to better define the target markets for its perlite,
provide further information for potential customers and allow the
development of a mine plan based on the best performing
materials.
Marketing
During the year preliminary meetings have been held with a
number of potential customers for perlite and pozzolan in the USA.
These discussions have been kept low key whilst testing has been in
progress, but will be expanded significantly in 2018.
The potential for new sources of perlite and pozzolan was well
received and samples are currently being tested by a number of
interested parties in their own laboratories. It is anticipated
that customers may want to test larger bulk samples as part of
their decision process.
Forward Work Programme
In the remainder of 2017 and in 2018 work on the project is
planned to include:
1. Open pit definition drilling on the Main Zone and Tuff Zone
2. Resource definition
3. Mine, plant and pit design
4. Permitting
5. Logistic studies
6. Marketing
7. Financial Modelling
The Company is targeting production in the first half of 2019
but this will depend on the speed at which permitting progresses
through the US Bureau of Land Management.
Pozz Ash Deposit
Ongoing testwork on a composite sample from the Pozz Ash Deposit
confirmed a marginally acceptable strength value and a higher water
demand due to the high clay content. Preliminary clay separation
testwork carried out during the year was not successful suggesting
that the Pozz ash will require calcining for use as a natural
pozzolan. This process route is unlikely to be commercially
competitive.
NewPerl Pozzolan-Perlite Project, Nevada, USA
The Company's original discovery of the CS Project was made
through the application of a specific proprietary exploration
technique. As part of its regional Pozz Project the Company has
refined the technique and is now applying it over other
geologically prospective areas in Nevada to identify targets of
interest.
Over the past few months a number of targets were selected for
follow-up sampling and as a result of that work a new
pozzolan-perlite occurrence has been discovered and secured with
mining claims.
A sample from the deposit has been tested for its perlitic
expansion properties with very good results and application
specific testing is now underway. Deposits of pozzolan also occur
in the same area and are currently being tested.
Bay State Silver Project, Nevada, USA
The historic Bay State Silver Mine is located in the Newark
Mining District, 15km east of the town of Eureka in central
Nevada.
A second phase of drilling was underway at the start of the year
but met with mixed results due to the severe directional deviation
of a key drill hole. No additional drilling was carried out as work
shifted to the CS Project, but the results from the first two drill
programmes, taken together with extensive surface and underground
sampling, are highly encouraging and justify further drilling.
Following the decision to focus on the CS Project a partner is
now being sought for the Bay State Project. In order to reduce
holding costs the Company has negotiated a two-year standstill on
lease payments on the leased portions of the property.
County Line Diatomite Project, Nevada, USA
The claims cover a large deposit of the industrial mineral
diatomite, an industrial raw material mainly used in filtration, as
an industrial filler and in various agricultural and horticultural
applications.
At the start of the year this project was under lease to EP
Minerals, LLC, a significant diatomite producer, who carried out a
programme of trenching in one area of the claim block and
subsequently permitted a programme of follow up drill testing. In
February 2017 EP Minerals terminated its lease prematurely without
completing the proposed drill programme or adequately testing the
project.
The Company's 8 sq km licence area is underlain entirely by
diatomite and whilst diatomite is widespread throughout the western
USA, large and pure deposits are less common and represent an
attractive target and so a new partner is being sought.
Junction Copper-Gold Project, Nevada, USA
The Junction Gold (-Copper) Project is located in Humboldt
County in northern Nevada.
In line with the Board's decision to focus on the CS Project,
the Company sold the project to TSX-V listed VR Resources Ltd
("VR") in August 2017. The Company has received an initial payment
US$10,000 and was issued with 50,000 shares. It will be issued with
a further 50,000 shares in VR should drilling take place and a
further payment of 250,000 shares should VR complete and file a
43-101 compliant report containing a resource estimate for the
project. Sunrise has also retained a royalty equal to 3% of the Net
Smelter Return, subject to VR's right to buy up to half of the
royalty entitlement (1.5%) for US$500,000 per half-percent.
There is no record of modern or systematic exploration on the
property, but prospector scale diggings target copper
mineralisation in quartz veins and pegmatite dykes in shear zones
hosted within Cretaceous age granite. Sunrise had also identified a
new gold zone on the property, some 250 m northwest from the
historic copper zone.
VR has moved quickly to start exploration on the project and
recently announced that mapping, prospecting and soil sampling has
resulted in the discovery of high-grade copper-silver-gold
mineralisation at surface along a strike length of 6km. VR
anticipates completion of a high resolution airborne
magnetic/electromagnetic survey in 2018, in order to test
along-strike sub-surface continuity of the outcropping
mineralisation, and in preparation for a first pass diamond drill
program.
Ridge Limestone Project, Nevada, USA
The Ridge Limestone Project, north of Austin, Nevada, was staked
to cover a large area of limestone where reconnaissance samples
indicated a high purity with industrial potential.
A programme of follow up sampling was completed during the year
with mixed results; lower grade limestone having been found
interbedded with the purer areas of limestone. A Joint Venture
partner is sought to continue the evaluation of the project.
Garfield Gold, Silver & Copper Project, Nevada, USA
The Garfield Project, located near Hawthorne in Nevada, offers
the potential for a new copper discovery based on a small trenching
programme carried out by the Company.
WESTGOLD INC.
The Company's Westgold subsidiary holds three projects in
Nevada, available for joint venture, - Stonewall, Clayton and
Newark. No work has been carried out on these projects to date but
all have drill-ready targets, for epithermal gold, silver and
Carlin style deposits respectively.
SUNRISE MINERALS AUSTRALIA PTY LTD
The Company's tenure over the Cue Diamond Project and the
Baker's Gold Project were maintained in 2017 but no work was
carried out due to competing priorities.
OTHER PROJECTS
Derryginagh Barite Project, Ireland
The Derryginagh Barite Project in Ireland was renewed in 2015
for a 6 year period but is subject to review by the Irish
government every two years.
The current government review is underway but no results have
not yet been notified to the Company.
Risks & Uncertainties
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this
stage in its development and in the foreseeable future are detailed
below together with risk mitigation strategies employed by the
Board.
RISK MITIGATION STRATEGIES
------------------------------------ ------------------------------------------
Exploration Risk
The Group's business is The directors bring many years
mineral exploration and of combined mining and exploration
evaluation which are speculative experience and an established
activities. There is no track record in mineral discovery.
certainty that the Group
will be successful in The Company targets advanced
the definition of economic and drill-ready exploration
mineral deposits, or that projects in order to avoid
it will proceed to the higher risk grass roots exploration.
development of any of
its projects or otherwise
realise their value.
------------------------------------ ------------------------------------------
Resource Risk
All mineral projects have Resources and reserves are
risk associated with defined estimated by independent specialists
grade and continuity. on behalf of the Group in accordance
Mineral Reserves are always with accepted industry standards
subject to uncertainties and codes. The directors are
in the underlying assumptions realistic in the use of metal
which include geological and mineral price forecasts
projection and price assumptions. and impose rigorous practices
in the QA/QC programmes that
support its independent estimates.
------------------------------------ ------------------------------------------
Development Risk
Delays in permitting, The Company's permitting requirements
financing and commissioning are limited at this stage to
a project may result in its exploration activities,
delays to the Group meeting but to reduce development risk
production targets. Changes in future the directors will
in commodity prices can ensure that its permit and
affect the economic viability financing applications are
of mining projects and robust and thorough and will
affect decisions on continuing seek to position the Company
exploration activity. as a low quartile cost producer.
------------------------------------ ------------------------------------------
Commodity Risk
Changes in commodity prices The Company consistently reviews
can affect the economic commodity prices and trends
viability of mining projects for its key projects throughout
and affect decisions on the development cycle.
continuing exploration
activity.
------------------------------------ ------------------------------------------
Mining and Processing
Technical Risk From the earliest stages of
Notwithstanding the completion exploration the directors look
of metallurgical testwork, to use consultants and contractors
test mining and pilot who are leaders in their field
studies indicating the and in future will seek to
technical viability of strengthen the executive and
a mining operation, variations the Board with additional technical
in mineralogy, mineral and financial skills as the
continuity, ground stability, Company transitions from exploration
groundwater conditions to production.
and other geological conditions
may still render a mining
and processing operation
economically or technically
non-viable.
------------------------------------ ------------------------------------------
Environmental Risk
Exploration and development Mineral exploration carries
of a project can be adversely a lower level of environmental
affected by environmental liability than mining. The
legislation and the unforeseen Company has adopted an Environmental
results of environmental Policy and the directors avoid
studies carried out during the acquisition of projects
evaluation of a project. where liability for legacy
Once a project is in production environmental issues might
unforeseen events can fall upon the Company.
give rise to environmental
liabilities.
------------------------------------ ------------------------------------------
Political Risk
All countries carry political The Company's strategy restricts
risk that can lead to its activities to stable, democratic
interruption of activity. and mining friendly jurisdictions.
Politically stable countries
can have enhanced environmental The Company has adopted a strong
and social permitting Anti-corruption Policy and
risks, risks of strikes Code of Conduct and this is
and changes to taxation, strictly enforced.
whereas less developed
countries can have, in
addition, risks associated
with changes to the legal
framework, civil unrest
and government expropriation
of assets.
------------------------------------ ------------------------------------------
Partner Risk
Whilst there has been The Board's policy is to maintain
no past evidence of this, control of certain key projects
the Group can be adversely so that it can control the
affected if joint venture pace of exploration and reduce
partners are unable or partner risk.
unwilling to perform their
obligations or fund their For projects where other parties
share of future developments. are responsible for critical
payments and expenditures the
Company's agreements legislate
that such payments and expenditures
are met.
------------------------------------ ------------------------------------------
Financing & Liquidity
Risk The Company maintains a good
The Company has an ongoing network of contacts in the
requirement to fund its capital markets that has historically
activities through the met its financing requirements.
equity markets and in The Company's low overheads
future to obtain finance and cost effective exploration
for project development. strategies help reduce its
There is no certainty funding requirements and currently
such funds will be available the directors take their fees
when needed. in shares. Nevertheless further
equity issues will be required
over the next 12 months.
------------------------------------ ------------------------------------------
Financial Instruments
Details of risks associated The directors are responsible
with the Group's Financial for the Group's systems of
Instruments are given internal financial control.
in Note 18 to the financial Although no systems of internal
statements. financial control can provide
absolute assurance against
material misstatement or loss,
the Group's systems are designed
to provide reasonable assurance
that problems are identified
on a timely basis and dealt
with appropriately.
In carrying out their responsibilities,
the directors have put in place
a framework of controls to
ensure as far as possible that
ongoing financial performance
is monitored in a timely manner,
that corrective action is taken
and that risk is identified
as early as practically possible,
and they have reviewed the
effectiveness of internal financial
control.
The Board, subject to delegated
authority, reviews capital
investment, property sales
and purchases, additional borrowing
facilities, guarantees and
insurance arrangements.
------------------------------------ ------------------------------------------
Forward-Looking Statements
This Annual Report contains certain forward-looking statements
that have been made by the directors in good faith based on the
information available at the time of the approval of the Annual
Report. By their nature, such forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that will or may occur in the future. Actual results
may differ from those expressed in such statements.
This Strategic Report was approved by the Board of Directors on
13 December 2017 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Publication of Statutory Accounts
The financial information set out in this announcement does not
constitute the Company's Statutory Accounts for the period ended 30
September 2017 or 2016. The financial information for 2016 is
derived from the Statutory Accounts for 2016. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2017 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditors have reported on the 2017 and
2016 accounts. Neither set of accounts contain a statement under
section 498(2) or (3) the Companies Act 2006 and both received an
unqualified audit opinion. However, there was an emphasis of matter
in relation to a requirement that the Company raise funds in the
future to continue as a going concern.
Availability of Financial Statements
The Annual Report containing the full financial statements for
the year to 30 September 2017 will be posted to shareholders on or
around 21 December 2017, a soft copy of which will then be
available to download from the Company's website
https://www.sunriseresourcesplc.com.
Consolidated Income Statement
for the year ended 30 September 2017
2017 2016
Notes GBP GBP
-------------------------------------- ------ ----------------------- ------------------
Pre-licence exploration costs 21,161 45,316
Impairment of deferred exploration
cost 9 3,077 39,711
Administrative expenses 276,568 285,092
-------------------------------------- ------ ----------------------- ------------------
Operating loss (300,806) (370,119)
Impairment of available for sale (13,338) -
investment
Gain on disposal of intangible asset 3,028 -
Interest receivable 70 532
-------------------------------------- ------ ----------------------- ------------------
Loss before income tax 3 (311,046) (369,587)
Income tax 7 - -
-------------------------------------- ------ ----------------------- ------------------
Loss for the year attributable to
equity holders of the parent (311,046) (369,587)
-------------------------------------- ------ ----------------------- ------------------
Loss per share - basic and diluted
(pence) 6 (0.02) (0.04)
-------------------------------------- ------ ----------------------- ------------------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2017
2017 2016
GBP GBP
----------------------------------------------- --------- ---------
Loss for the year (311,046) (369,587)
----------------------------------------------- --------- ---------
Items that could be reclassified subsequently
to the income statement:
Foreign exchange translation differences
on foreign currency net investments in
subsidiaries (35,169) 193,942
Fair value movement on available for
sale investment 12,471 (1,676)
----------------------------------------------- --------- ---------
(22,698) 192,266
----------------------------------------------- --------- ---------
Total comprehensive loss for the year
attributable to equity holders of the
parent (333,744) (177,321)
----------------------------------------------- --------- ---------
Consolidated and Company Statements of Financial Position
at 30 September 2017
Company Registration Number: 05363956
Group Company Group Company
2017 2017 2016 2016
Notes GBP GBP GBP GBP
------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 9 1,302,404 - 1,072,571 -
Investment in subsidiaries 8 - 1,601,574 - 1,311,874
Available for sale investment 8 30,478 22,624 23,324 23,324
------------------------------- ----- ----------- ----------- ----------- -----------
1,332,882 1,624,198 1,095,895 1,335,198
Current assets
Receivables 11 62,142 25,079 43,606 27,081
Cash and cash equivalents 12 234,181 215,339 223,268 102,865
------------------------------- ----- ----------- ----------- ----------- -----------
296,323 240,418 266,874 129,946
Current liabilities
Trade and other payables 13 (112,901) (96,829) (172,126) (98,468)
------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 183,422 143,589 94,748 31,478
------------------------------- ----- ----------- ----------- ----------- -----------
Net assets 1,516,304 1,767,787 1,190,643 1,366,676
------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up share capital 14 1,804,016 1,804,016 1,119,910 1,119,910
Share premium account 4,792,790 4,792,790 4,818,998 4,818,998
Share warrant reserve 14 89,248 89,248 119,899 119,899
Available for sale investment
reserve 10,795 10,962 (1,676) (1,676)
Foreign currency reserve 14 19,749 1,359 54,918 1,176
Accumulated losses (5,200,294) (4,930,588) (4,921,406) (4,691,631)
------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to
owners of the parent 1,516,304 1,767,787 1,190,643 1,366,676
------------------------------- ----- ----------- ----------- ----------- -----------
The Company reported a loss for the year ended 30 September 2017
of GBP271,115 (2016: 277,151).
These financial statements were approved and authorised for
issue by the Board of Directors on 13 December 2017 and were signed
on its behalf.
P L Cheetham D J Swan
Executive Chairman Director
Consolidated Statement of Changes in Equity
Share Share Available Foreign
Share premium warrant for sale currency Accumulated
capital account reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2015 691,149 4,761,776 322,820 - (139,024) (4,790,072) 846,649
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (369,587) (369,587)
Change in fair
value - - - (1,676) - - (1,676)
Exchange differences - - - - 193,942 - 193,942
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - (1,676) 193,942 (369,587) (177,321)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 428,761 57,222 31,009 - - - 516,992
Share-based
payments expense - - 4,323 - - - 4,323
Transfer of
expired warrants - - (238,253) - - 238,253 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2016 1,119,910 4,818,998 119,899 (1,676) 54,918 (4,921,406) 1,190,643
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (311,046) (311,046)
Change in fair
value - - - 12,471 - - 12,471
Exchange differences - - - - (35,169) - (35,169)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - 12,471 (35,169) (311,046) (333,744)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 684,106 (26,208) - - - - 657,898
Share-based
payments expense - - 1,507 - - - 1,507
Transfer of
expired warrants - - (32,158) - - 32,158 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2017 1,804,016 4,792,790 89,248 10,795 19,749 (5,200,294) 1,516,304
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Company Statement of Changes in Equity
Share Share Available Foreign
Share premium warrant for sale currency Accumulated
capital account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2015 691,149 4,761,776 322,820 - - (4,652,733) 1,123,012
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (277,151) (277,151)
Change in fair
value - - - (1,676) - - (1,676)
Exchange differences - - - - 1,176 - 1,176
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - (1,676) 1,176 (277,151) (277,651)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 428,761 57,222 31,009 - - - 516,992
Share-based
payments expense - - 4,323 - - - 4,323
Transfer of
expired warrants - - (238,253) - - 238,253 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2016 1,119,910 4,818,998 119,899 (1,676) 1,176 (4,691,631) 1,366,676
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (271,115) (271,115)
Change in fair
value - - - 12,638 - - 12,638
Exchange differences - - - - 183 - 183
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - 12,638 183 (271,115) (258,294)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 684,106 (26,208) - - - - 657,898
Share-based
payments expense - - 1,507 - - - 1,507
Transfer of
expired warrants - - (32,158) - - 32,158 -
At 30 September
2017 1,804,016 4,792,790 89,248 10,962 1,359 (4,930,588) 1,767,787
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2017
Group Company Group Company
2017 2017 2016 2016
Notes GBP GBP GBP GBP
--------------------------------- ----- --------- --------- --------- ---------
Operating activity
Operating loss (300,806) (261,797) (370,119) (279,805)
Share-based payment charge 1,507 1,507 4,323 4,323
Shares issued in lieu of
net wages 15,736 15,736 19,720 19,720
Impairment charge - exploration 3,077 - 39,711 -
Accrued income 7,854 - - -
(Increase)/decrease in
receivables 11 (18,536) 2,002 (9,123) (5,702)
Increase/(decrease) in
trade and other payables 13 (59,225) (1,639) 63,475 14,346
--------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from operating
activity (350,393) (244,191) (252,013) (247,118)
--------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 70 4,020 532 2,654
Disposal of development
asset 7,467 - - -
Development expenditures 9 (273,814) - (183,767) -
Loans to subsidiaries - (289,701) - (256,468)
Net cash outflow from investing
activity (266,277) (285,681) (183,235) (253,814)
--------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital
(net of expenses) 642,162 642,162 497,272 497,272
--------------------------------- ----- --------- --------- --------- ---------
Net cash inflow from financing
activity 642,162 642,162 497,272 497,272
--------------------------------- ----- --------- --------- --------- ---------
Net increase/(decrease)
in cash and cash equivalents 25,492 112,290 62,024 (3,660)
Cash and cash equivalents
at start of year 223,268 102,865 142,079 105,349
Exchange differences (14,579) 184 19,165 1,176
--------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at 30 September 12 234,181 215,339 223,268 102,865
--------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2017
Background
Sunrise Resources plc is a public company incorporated and
domiciled in England. It is traded on the AIM Market of the London
Stock Exchange - EPIC: SRES.
The Company is a holding company (together, "the Group") for one
company incorporated in Australia, and two companies incorporated
in Nevada, in the United States of America. The Group's financial
statements are presented in Pounds Sterling (GBP) which is also the
functional currency of the Company.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
1. Accounting policies
(a) Basis of preparation
The financial statements have been prepared on the basis of the
recognition and measurement requirements of International Financial
Reporting Standards (IFRS), as adopted by the European Union. They
have also been prepared in accordance with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
(b) Going concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at year end (GBP234,181), these
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the
Company has been successful in raising finance in the past, there
is no assurance that it will obtain adequate finance in the future.
This represents a material uncertainty related to events or
conditions which may cast significant doubt on the Group's and
Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
This expectation is strengthened by recent investor interest in
the Company, resulting in a successful placing on 6 December 2017,
which raised GBP500,000 before expenses.
(c) Basis of consolidation
Investments, including long-term loans, in the subsidiaries are
valued at the lower of cost or recoverable amount, with an ongoing
review for impairment.
The Group's financial statements consolidate the financial
statements of Sunrise Resources plc and its subsidiary undertakings
using the acquisition method and eliminate intercompany balances
and transactions.
In accordance with section 408 of the Companies Act 2006,
Sunrise Resources plc is exempt from the requirement to present its
own statement of comprehensive income. The amount of the loss for
the financial year recorded within the financial statements of
Sunrise Resources plc is GBP271,115 (2016: GBP277,151).
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in
relation to separate areas of interest (which may comprise more
than one exploration licence or exploration licence applications)
are capitalised and carried forward where:
(1) such costs are expected to be recouped through successful
exploration and development of the area, or alternatively by its
sale; or
(2) exploration and/or evaluation activities in the area have
not yet reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to the
areas are continuing.
A bi-annual review is carried out by the directors to consider
whether there are any indications of impairment in capitalised
exploration and development costs. The bi-annual impairment reviews
were conducted in March 2017 and October 2017.
Accumulated costs, where the Group does not yet have an
exclusive exploration licence and in respect of areas of interest
which have been abandoned, are written off to the income statement
in the year in which the pre-licence expense was incurred or in
which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the
lower of cost and expected net recoverable amount. On reaching a
mining development decision, exploration and evaluation costs are
reclassified as development costs and all development costs on a
specific area of interest will be amortised over the useful
economic life of the projects, once they become income generating
and the costs can be recouped.
(e) Trade and other receivables and payables
Trade and other receivables and payables are measured at initial
recognition at fair value and subsequently measured at amortised
cost.
(f) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand
and short-term bank deposits with a maturity of three months or
less.
(g) Deferred taxation
Deferred taxation, if applicable, is provided in full in respect
of taxation deferred by temporary differences between the treatment
of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are
regarded as recoverable.
(h) Foreign currencies
The Group's consolidated financial statements are presented in
Pounds Sterling (GBP), being the functional currency of the
Company, and the currency of the primary economic environment in
which the Company operates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of
exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign
operations and the assets and liabilities of overseas subsidiaries,
associated undertakings and joint arrangements, that have a
functional currency different from the Group's presentation
currency, are translated at the closing exchange rates. Income
statements of overseas subsidiaries, that have a functional
currency different from the Group's presentation currency, are
translated at exchange rates at the date of transaction. Exchange
differences arising on opening reserves are taken to the foreign
currency reserve.
(i) Share warrants and share based payments
The Company issues warrants to employees and third parties. The
fair value of the warrants is recognised as a charge measured at
fair value on the date of grant and determined in accordance with
IFRS 2 or IAS 39, adopting the Black-Scholes-Merton model. The fair
value is recognised on a straight-line basis over the vesting
period, with a corresponding adjustment to equity, based on the
management's estimate of shares that will eventually vest. The
expected life of the warrants is adjusted, based on management's
best estimates, for the effects of non-transferability, exercise
restrictions and behavioural considerations. The details are shown
in Note 15.
The Company also issues shares in order to settle certain
liabilities, including payment of fees to directors. The fair value
of shares issued is based on the closing mid-market price of the
shares on the AIM Market on the day prior to the date of settlement
and it is expensed on the date of settlement with a corresponding
increase in equity.
(j) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies
above, management has identified the judgemental areas that have
the most significant effect on the amounts recognised in the
financial statements:
Intangible assets - exploration and evaluation
Capitalisation of exploration and evaluation costs requires that
costs be assessed against the likelihood that such costs will be
recoverable against future exploitation or sale or alternatively,
where activities have not reached a stage which permits a
reasonable estimate of the existence of mineral reserves, a
judgement that future exploration or evaluation should continue.
This requires management to make estimates and judgements and to
make certain assumptions, often of a geological nature, and most
particularly in relation to whether or not an economically viable
mining operation can be established in future. Such estimates,
judgements and assumptions are likely to change as new information
becomes available. When it becomes apparent that recovery of
expenditure is unlikely the relevant capitalised amount is written
off to the Income Statement.
Impairment
Impairment reviews for deferred exploration and evaluation costs
are carried out on a project by project basis, with each project
representing a potential single cash generating unit. The Group
will look to evidence produced by its exploration activities to
indicate whether the carrying value is impaired. Assessment of the
impairment of assets is a judgement based on analysis of the future
likely cash flows from the relevant project, including
consideration of:
(a) the period for which the entity has the right to explore in
the specific area has expired during the period or will expire in
the near future, and is not expected to be renewed.
(b) substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area.
(d) sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Impairment reviews for investments are carried out on an
individual basis. The Group will look to performance indicators of
the investment, such as market share price, to indicate whether the
carrying value is impaired.
Going concern
The preparation of financial statements requires an assessment
of the validity of the going concern assumption. The validity of
the going concern assumption is dependent on finance being
available for the continuing working capital requirements of the
Group. Based on the assumption that such finance will become
available, the directors believe that the going concern basis is
appropriate for these accounts.
Share warrants and share-based payments
The estimates of costs recognised in connection with the fair
value of share warrants requires that management selects an
appropriate valuation model and make decisions on various inputs
into the model including the volatility of its own share price, the
probable life of the warrants before exercise, and behavioural
consideration of warrant holders.
(k) Available for sale investments
Available for sale financial assets include non-derivative
financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial
assets. Available for sale investments are initially measured at
cost and subsequently at fair value, being the equivalent of market
value, with changes in value recognised in equity. Gains and losses
arising from available for sale investments are recognised in the
income statement when they are sold or impaired.
(l) Standards, amendments and interpretations not yet
effective
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and in
some cases have not yet been adopted by the EU.
The directors do not expect that the adoption of these standards
will have a material impact on the financial statements of the
Group in future periods. Specifically, the adoption of IFRS 9 will
have minimal impact for both the measurement and disclosures of
existing financial instruments. As the Group does not have any
turnover, IFRS 15 will not have any significant impact on revenue
recognition and related disclosures. Finally, the adoption of IFRS
16 will not have any impact on the financial statements of the
Group as all lease contracts are for periods of less than one
year.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors.
The Board considers the business has one reportable segment, the
management of exploration projects, which is supported by a Head
Office function. For the purpose of measuring segmental profits and
losses the exploration segment bears only those direct costs
incurred by or on behalf of those projects, no Head Office cost
allocations are made to this segment. The Head Office function
recognises all other costs.
Exploration Head
projects office Total
2017 GBP GBP GBP
----------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Impairment of deferred exploration
cost 3,077 - 3,077
Pre-licence exploration costs 21,161 - 21,161
Share-based payments - 1,507 1,507
Other expenses - 275,061 275,061
----------------------------------------------- ------------ ---------- ----------
Operating loss (24,238) (276,568) (300,806)
Impairment of available for sale
investment - (13,338) (13,338)
Disposal of intangible asset 3,028 - 3,028
Interest receivable - 70 70
----------------------------------------------- ------------ ---------- ----------
Loss before income tax (21,210) (289,836) (311,046)
Income tax - - -
----------------------------------------------- ------------ ---------- ----------
Loss for the year attributable
to equity holders of the parent (21,210) (289,836) (311,046)
----------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets:
Deferred exploration costs:
Cue Diamond Project, Australia 480,204 - 480,204
Baker's Gold Project, Australia 53,558 - 53,558
County Line Diatomite Project,
USA 114,525 - 114,525
Garfield Silver-Gold-Copper Project,
USA 25,264 - 25,264
Bay State Silver Project, USA 368,205 - 368,205
Pozz Ash Project, USA 18,088 - 18,088
Ridge Limestone Project, USA 14,523 - 14,523
CS Pozzolan-Perlite Project,
USA 184,926 - 184,926
Clayton Gold Project, USA 12,894 - 12,894
Newark Silver-Gold Project, USA 21,541 - 21,541
Stonewall Gold Project, USA 8,676 - 8,676
----------------------------------------------- ------------ ---------- ----------
1,302,404 - 1,302,404
Available for sale investment - 30,478 30,478
----------------------------------------------- ------------ ---------- ----------
1,302,404 30,478 1,332,882
----------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 26,319 35,823 62,142
Cash and cash equivalents - 234,181 234,181
----------------------------------------------- ------------ ---------- ----------
26,319 270,004 296,323
----------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (34,976) (77,925) (112,901)
----------------------------------------------- ------------ ---------- ----------
Net current assets/(liabilities) (8,657) 192,079 183,422
----------------------------------------------- ------------ ---------- ----------
Net assets 1,293,747 222,557 1,516,304
----------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 273,814 - 273,814
Deferred exploration disposal (20,315) - (20,315)
Exchange rate adjustments to deferred
exploration costs - (20,590) (20,590)
----------------------------------------------- ------------ ---------- ----------
Exploration Head
projects office Total
2016 GBP GBP GBP
----------------------------------------------- ------------ ---------- ----------
Consolidated Income Statement
Impairment of deferred exploration
costs:
Corona Gold Project, Australia (32,930) - (32,930)
Strike Copper-Gold Project, USA (6,781) - (6,781)
----------------------------------------------- ------------ ---------- ----------
(39,711) - (39,711)
Pre-licence exploration costs (45,316) - (45,316)
Share-based payments - (4,323) (4,323)
Other expenses - (280,769) (280,769)
----------------------------------------------- ------------ ---------- ----------
Operating loss (85,027) (285,092) (370,119)
Bank interest received - 532 532
----------------------------------------------- ------------ ---------- ----------
Loss before income tax (85,027) (284,560) (369,587)
Income tax - - -
----------------------------------------------- ------------ ---------- ----------
Loss for the year attributable
to equity holders (85,027) (284,560) (369,587)
----------------------------------------------- ------------ ---------- ----------
Non-current assets
Intangible assets:
Deferred exploration costs:
Cue Diamond Project, Australia 478,348 - 478,348
Baker's Gold Project, Australia 49,040 - 49,040
County Line Diatomite Project,
USA 102,888 - 102,888
Garfield Silver-Gold-Copper Project,
USA 24,691 - 24,691
Bay State Silver Project, USA 362,961 - 362,961
Junction Gold Project, USA 14,189 - 14,189
Pozz Ash Project, USA 12,113 - 12,113
Clayton Gold Project, USA 8,645 - 8,645
Newark Silver-Gold Project, USA 13,427 - 13,427
Stonewall Gold Project, USA 6,269 - 6,269
----------------------------------------------- ------------ ---------- ----------
1,072,571 - 1,072,571
Available for sale investment - 23,324 23,324
----------------------------------------------- ------------ ---------- ----------
1,072,571 23,324 1,095,895
----------------------------------------------- ------------ ---------- ----------
Current assets
Receivables 15,122 28,484 43,606
Cash and cash equivalents - 223,268 223,268
----------------------------------------------- ------------ ---------- ----------
15,122 251,752 266,874
----------------------------------------------- ------------ ---------- ----------
Current liabilities
Trade and other payables (82,062) (90,064) (172,126)
----------------------------------------------- ------------ ---------- ----------
Net current assets/(liabilities) (66,940) 161,688 94,748
----------------------------------------------- ------------ ---------- ----------
Net assets 1,005,631 185,012 1,190,643
----------------------------------------------- ------------ ---------- ----------
Other data
Deferred exploration additions 183,767 - 183,767
Exchange rate adjustments to deferred
exploration costs - 174,777 174,777
----------------------------------------------- ------------ ---------- ----------
3. Loss before income tax
2017 2016
The operating loss is stated after charging: GBP GBP
---------------------------------------------- ----- -----
Fees payable to the Company's auditor
for:
The audit of the Company's annual accounts 6,000 6,000
Other services 1,000 1,000
---------------------------------------------- ----- -----
4. Directors' emoluments
Remuneration in respect of directors 2017 2016
was as follows: GBP GBP
-------------------------------------- ------ ------
P L Cheetham (salary) 12,000 12,000
F P H Johnstone (salary) - 7,295
D J Swan (salary) 12,000 12,000
R D Murphy (salary) 12,000 4,710
-------------------------------------- ------ ------
36,000 36,005
-------------------------------------- ------ ------
The above remuneration amounts do not include non-cash share
based payments charged in these financial statements in respect of
share warrants issued to the directors amounting to GBPNil (2016:
GBP2,223) or Employer's National Insurance Contributions of GBPNil
(2016: GBPNil).
Patrick Cheetham is also a director of Tertiary Minerals plc and
under the terms of the Management Services Agreement (see Note 5) a
total of GBP104,324 was charged to the Company for his services
during the year (2016: GBP99,775). These services are provided at
cost.
The directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP36,000 (2016: GBP38,228).
5. Staff costs
Staff costs for the Group and Company, 2017 2016
including directors, were as follows: GBP GBP
---------------------------------------- ------ ------
Wages and salaries 40,128 39,078
Social security costs - -
Share-based payments 390 2,756
---------------------------------------- ------ ------
40,518 41,834
---------------------------------------- ------ ------
The average monthly number of employees employed by the Group
and Company during the year was as follows:
The average monthly number of employees 2017 2016
employed by the Group and Company during Number Number
the year was as follows:
------------------------------------------- ------- -------
Directors 3 3
Other Officers 1 1
------------------------------------------- ------- -------
4 4
------------------------------------------- ------- -------
The Company does not employ any staff directly apart from the
directors and a company secretary. The services of technical and
administrative staff are provided by Tertiary Minerals plc as part
of the Management Services Agreement between the two companies (see
Note 16). The Company issues share warrants to Tertiary Minerals
plc staff from time to time and these non-cash share based payments
resulted in a charge within the financial statements of GBP1,117
(2016: GBP1,567).
6. Loss per share
Loss per share has been calculated using the loss for the year
attributable to equity holders of the Parent and the weighted
average number of shares in issue during the year.
2017 2016
---------------------------------- ------------- -----------
Loss (GBP) (311,046) (369,587)
Weighted average shares in issue
(No.) 1,418,016,156 869,068,238
---------------------------------- ------------- -----------
Basic and diluted loss per share
(pence) (0.02) (0.04)
---------------------------------- ------------- -----------
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share are identical to those used
for the basic earnings per ordinary share. This is because the
exercise of share warrants would have the effect of reducing the
loss per ordinary share and is therefore anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2016: GBPNil).
The tax credit for the period is lower than the credit resulting
from the loss before tax at the standard rate of corporation tax in
the UK - 19% (2016: 20%). The differences are explained below.
2017 2016
Tax reconciliation GBP GBP
---------------------------------------------- ----------- -----------
Loss before income tax (311,046) (369,587)
---------------------------------------------- ----------- -----------
Tax at hybrid rate 19.5% (2016: 20%) (60,654) (73,917)
---------------------------------------------- ----------- -----------
Pre-trading expenditure no longer deductible
for tax purposes 540,158 214,830
---------------------------------------------- ----------- -----------
Tax effect at 19.5% (2016: 20%) 105,331 42,966
---------------------------------------------- ----------- -----------
Unrelieved tax losses carried forward (44,677) 30,951
---------------------------------------------- ----------- -----------
Tax recognised on loss - -
---------------------------------------------- ----------- -----------
Total losses carried forward for tax
purposes (3,493,492) (3,722,605)
---------------------------------------------- ----------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP3,493,492
(2016: GBP3,722,605). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the
future. The deferred tax asset has not been recognised as the
future recovery is uncertain given the exploration status of the
Group. The carried tax loss is adjusted each year for amounts that
can no longer be carried forward.
8. Investments
Subsidiary undertakings
Date of Type and percentage
incorporation of shares
Country /registration held at
of 30 September Principal
Company incorporation/registration 2017 activity
----------------- --------------------------- -------------- ------------------- ------------
Sunrise Minerals 7 October
Australia Pty 2009 100% of ordinary Mineral
Ltd Australia shares exploration
Nevada, 12 January 100% of ordinary Mineral
SR Minerals Inc. USA 2014 shares exploration
Nevada, 13 April 100% of ordinary Mineral
Westgold Inc. USA 2016 shares exploration
The registered office of Sunrise Minerals Australia Pty Ltd is
Level 4, 35-37 Havelock Street West, Perth, WA 6005.
The registered office of SR Minerals Inc. and Westgold Inc. is
241 Ridge Street, Suite 210, Reno, NV 89501.
Company Company
2017 2016
Investment in subsidiary undertakings GBP GBP
---------------------------------------------- --------- ---------
Ordinary Shares - Sunrise Minerals Australia
Pty Ltd 61 61
Loan - Sunrise Minerals Australia Pty
Ltd 710,374 705,676
Ordinary Shares - SR Minerals Inc. 1 1
Loan - SR Minerals Inc. 809,053 558,392
Ordinary Shares - Westgold Inc. 1 1
Loan - Westgold Inc. 82,084 47,743
---------------------------------------------- --------- ---------
At 30 September 1,601,574 1,311,874
---------------------------------------------- --------- ---------
Available for sale investments
Type and percentage
of shares held
Country of at
incorporation 30 September Principal
Company /registration 2017 activity
------------- --------------- ------------------- -------------------
Block Energy England & Wales 0.44% of ordinary Mineral exploration
plc* shares
------------- --------------- ------------------- -------------------
VR Resources Canada 0.14% of ordinary Mineral exploration
Ltd shares
------------- --------------- ------------------- -------------------
* On 5 May 2017 Goldcrest Resources Plc changed its name to
Block Energy plc.
Group Company Group Company
2017 2017 2016 2016
Available for sale investments GBP GBP GBP GBP
-------------------------------- ------ ------- ------- -------
Value at start of year 23,324 23,324 25,000 25,000
Additions to available
for sale investment 8,021 - - -
Movement in valuation of
available for sale investment (867) (700) (1,676) (1,676)
-------------------------------- ------ ------- ------- -------
At 30 September 30,478 22,624 23,324 23,324
-------------------------------- ------ ------- ------- -------
The fair value of each available for sale investment is equal to
the market value of its shares at 30 September 2017, based on the
closing mid-market price of shares on its equity exchange
market.
Shares of Block Energy plc were suspended from trading on 25
September 2017, following its move to 100% working interest in the
Norio oil field, deemed to be a reverse takeover. The fair value of
Block Energy shares was not considered to be impaired as a result
of the acquisition.
These are level one inputs for the purpose of the IFRS 13 fair
value hierarchy.
9. Intangible assets
Group Company Group Company
2017 2017 2016 2016
Deferred exploration expenditure GBP GBP GBP GBP
---------------------------------- ----------- ----------- ----------- -----------
Cost
At start of year 3,239,882 2,203,594 3,056,115 2,203,594
Additions 273,814 - 183,767 -
---------------------------------- ----------- ----------- ----------- -----------
At 30 September 3,513,696 2,203,594 3,239,882 2,203,594
---------------------------------- ----------- ----------- ----------- -----------
Disposals
At start of year (2,167,311) (2,203,594) (2,302,377) (2,203,594)
Impairment losses during
year (3,077) - (39,711) -
Disposal during year (20,315) - - -
Foreign currency exchange
adjustments (20,589) - 174,777 -
---------------------------------- ----------- ----------- ----------- -----------
At 30 September (2,211,292) (2,203,594) (2,167,311) (2,203,594)
---------------------------------- ----------- ----------- ----------- -----------
Carrying amounts
At 30 September 1,302,404 - 1,072,571 -
---------------------------------- ----------- ----------- ----------- -----------
At start of year 1,072,571 - 753,738 -
---------------------------------- ----------- ----------- ----------- -----------
During the year the Group carried out an impairment review which
resulted in an impairment charge being recognised in the
Consolidated Income Statement as part of operating expenses. Refer
to accounting policy 1(j) for a description of the assumptions used
in the impairment review.
10. Property, plant and equipment
The Group has the use of tangible assets held by Tertiary
Minerals plc as part of the Management Services Agreement between
the two companies.
11. Receivables
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
------------------- ------ ------- ------- -------
Prepayments 14,224 11,348 15,844 14,166
Accrued income 7,854 - - -
Other receivables 40,064 13,731 27,762 12,915
------------------- ------ ------- ------- -------
62,142 25,079 43,606 27,081
------------------- ------ ------- ------- -------
12. Cash and cash equivalents
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Cash at bank and in hand 234,181 215,339 223,268 102,865
-------------------------- ------- ------- ------- -------
13. Trade and other payables
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
--------------------------- ------- ------- ------- -------
Amounts owed to Tertiary
Minerals plc 61,275 61,275 64,724 64,724
Trade creditors 13,871 6,247 63,045 8,227
Accruals 19,617 11,169 44,357 25,517
Net pay due in shares 11,065 11,065 - -
Social security and taxes 7,073 7,073 - -
--------------------------- ------- ------- ------- -------
112,901 96,829 172,126 98,468
--------------------------- ------- ------- ------- -------
14. Issued capital and reserves
2017 2017 2016 2016
Number GBP Number GBP
--------------------------- ------------- --------- ------------- ---------
Allotted, called up and
fully paid
Ordinary shares of 0.1p
each
Balance at start of year 1,119,910,379 1,119,910 691,148,682 691,149
Shares issued in the year 684,105,288 684,106 428,761,697 428,761
Balance at 30 September 1,804,015,667 1,804,016 1,119,910,379 1,119,910
--------------------------- ------------- --------- ------------- ---------
During the year to 30 September 2017 the following share issues
took place:
An issue of 11,887,558 0.1p ordinary shares at 0.19p per share
to Tertiary Minerals plc, for a total consideration of GBP22,587,
by way of settlement of an invoice issued to Sunrise Resources plc
for management fees (15 November 2016).
An issue of 60,580,000 0.1p ordinary shares at 0.10p per share,
by way of placing and subscription, for a total consideration of
GBP57,551 net of expenses (24 January 2017).
An issue of 22,332,230 0.1p ordinary shares at 0.135p per share
to Tertiary Minerals plc, for a total consideration of GBP30,149,
by way of settlement of an invoice issued to Sunrise Resources plc
for management fees (1 February 2017).
An issue of 250,000,000 0.1p ordinary shares at 0.10p per share,
by way of placing, for a total consideration of GBP231,250 net of
expenses (7 March 2017).
An issue of 14,305,500 0.1p ordinary shares at 0.11p per share
to three directors, for a total consideration of GBP15,736, in
satisfaction of directors' fees (3 April 2017).
An issue of 325,000,000 0.1p ordinary shares at 0.10p per share,
by way of placing, for a total consideration of GBP300,625 net of
expenses (29 June 2017).
During the year to 30 September 2016 a total of 428,761,697 0.1p
ordinary shares were issued, at an average price of 0.125p per
share, for a total consideration of GBP516,992 net of expenses.
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, which relate to
subsidiaries only, from their functional currency into the Parent's
functional currency, being Sterling, are recognised directly in the
foreign currency reserve.
Share warrant reserve
The share warrant reserve is used to recognise the value of
equity-settled share warrants provided to employees, including key
management personnel, as part of their remuneration, and to third
parties in connection with fundraising. Refer to Note 15 for
further details.
15. Share warrants granted
Warrants not exercised at 30 September 2017
Issue Exercise Exercisable Expiry
date price Number dates
Any time before
19/12/12 0.850p 5,750,000 expiry 19/03/18
Any time before
14/01/14 0.550p 5,750,000 expiry 14/01/19
Any time before
05/02/15 0.275p 6,750,000 expiry 05/02/20
Any time before
05/02/15 0.275p 2,625,000 expiry 05/02/20
Any time before
18/02/16 0.160p 750,000 expiry 18/02/21
Any time before
18/02/16 0.160p 2,500,000 expiry 18/02/21
Any time before
10/06/16 0.240p 16,666,667 expiry 10/12/18
Any time before
10/06/16 0.240p 233,333,333 expiry 10/12/18
Any time from
01/02/17 0.135p 750,000 01/02/18 01/02/22
Any time from
01/02/17 0.135p 2,500,000 01/02/18 01/02/22
Share warrants are issued for nil consideration and are
exercisable as disclosed above. They are exchangeable on a one for
one basis for each ordinary share of 0.1p at the exercise price on
the date of conversion.
Share warrant transactions
The Company issues share warrants on varying terms and
conditions.
Details of the share warrants outstanding during the year are as
follows:
2017 2016
---------------------- -----------------------
Weighted Weighted
Number average average
of exercise Number exercise
share price of share price
warrants (Pence) warrants (Pence)
------------------------- ----------- --------- ------------ ---------
Outstanding at start
of year 279,625,000 0.28 98,708,332 0.79
Granted during the year 3,250,000 0.135 253,250,000 0.239
Forfeited during the - - - -
year
Exercised during the - - - -
year
Expired during the year (5,500,000) 1.25 (72,333,332) 0.84
------------------------- ----------- --------- ------------ ---------
Outstanding at end of
year 277,375,000 0.26 279,625,000 0.28
------------------------- ----------- --------- ------------ ---------
Exercisable at end of
year 274,125,000 0.26 276,375,000 0.28
------------------------- ----------- --------- ------------ ---------
The share warrants outstanding at 30 September 2017 had a
weighted average exercise price of 0.26p (2016: 0.28p), a weighted
average fair value of 0.03p (2016: 0.05p) and a weighted average
remaining contractual life of 1.28 years.
In the year ended 30 September 2017 warrants were granted on 1
February 2017 to an officer of the Company and employees of
Tertiary Minerals plc with an aggregate estimated fair value of
GBP1,348. Note 5 explains the value recognised in the reporting
period in respect of Tertiary Minerals plc.
In the year ended 30 September 2016 warrants were granted on 18
February 2016 to an officer of the Company and employees of
Tertiary Minerals plc with an aggregate estimated fair value of
GBP1,599.
In the year to 30 September 2017 the Company recognised expenses
of GBP1,507 (2016: GBP4,323) related to issuing of share warrants
in connection with equity-settled share-based payment transactions.
The fair value is charged to administrative expenses on a
straight-line basis over the vesting period, together with a
corresponding increase in equity, based on the management's
estimate of shares that will eventually vest.
In the year ended 30 September 2017 no share warrants were
exercised.
The inputs into the Black-Scholes-Merton Pricing Model were as
follows:
2017 2016
--------------------------------- -------- --------
Weighted average share price 0.135p 0.12p
Weighted average exercise price 0.135p 0.24p
Expected volatility 70.0% 70.0%
Expected life 4 years 2 years
Risk-free rate 0.62% 0.36%
Expected dividend yield 0% 0%
--------------------------------- -------- --------
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous 3 years.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
16. Related party transactions
Key management personnel
The directors holding office at the year end and their warrants
held in the share capital of the Company are:
At 30 September 2017 At 30 September
2016
Share Warrant Warrant Share
Shares warrants exercise expiry Shares warrants
number Number price date number number
--------------- ---------- ---------- --------- -------- ---------- ----------
P L Cheetham* 79,741,326 2,000,000 0.85p 19/03/18 75,776,599 9,000,000
2,000,000 0.55p 14/01/19
3,000,000 0.275p 05/02/20
D J Swan 12,862,863 1,000,000 0.85p 19/03/18 8,710,863 3,500,000
1,000,000 0.55p 14/01/19
1,500,000 0.275p 05/02/20
R D Murphy 23,491,621 16,666,667 0.24p 10/12/18 17,302,848 16,666,667
*Includes 5,500,000 shares held by K E Cheetham, wife of P L
Cheetham.
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the
consolidated accounts of Tertiary Minerals plc, which held 7.56% of
the issued share capital on 30 September 2017 (2016: 9.13%).
Tertiary Minerals plc provides management services to Sunrise
Resources plc and consequently during the year the Group incurred
costs of GBP204,110 (2016: GBP190,124) recharged at cost from
Tertiary Minerals being overheads of GBP24,874 (2016: GBP23,488),
costs paid on behalf of the Group of GBP4,646 (2016: GBP4,288),
Tertiary staff salary costs of GBP69,957 (2016: GBP61,866) and
Tertiary directors' salary costs of GBP104,633 (2016:
GBP100,482).
At the balance sheet date an amount of GBP61,275 (2016:
GBP64,724) was due to Tertiary Minerals plc.
Patrick Cheetham, the Executive Chairman of the Company, is also
a director of Tertiary Minerals plc.
At 30 September 2017 and at the date of this report, Donald
McAlister, a director of Tertiary Minerals plc, held 550,000 shares
in the Company, and at 30 September 2017, David Whitehead, now
deceased, formerly a director of Tertiary Minerals plc, held
250,000 shares in the Company.
17. Capital management
The Group's capital requirements are dictated by its project and
overhead funding requirements from time to time. Capital
requirements are reviewed by the Board on a regular basis.
The Group manages its capital to ensure that entities within the
Group will be able to continue as going concerns, to increase the
value of the assets of the business and to provide an adequate
return to shareholders in the future when exploration assets are
taken into production.
The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of its assets. In order to maintain or adjust the
capital structure the possibilities open to the Group in future
include issuing new shares, consolidating shares, returning capital
to shareholders, taking on debt, selling assets and adjusting the
amount of dividends paid to the shareholders.
18. Financial instruments
At 30 September 2017, the Group's and Company's financial assets
consisted of receivables due within one year, available for sale
investments and cash and cash equivalents. At the same date, the
Group and Company had no financial liabilities other than trade and
other payables due within one year and had no agreed borrowing
facilities as at this date. There is no material difference between
the carrying and fair values of the Group's and Company's financial
assets and liabilities.
The carrying amounts for each category of financial instrument
held at 30 September 2017, as defined in IAS 39, are as
follows:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
-------------------------------- ------- ------- ------- -------
Loans & receivables 274,245 229,070 251,030 115,780
Available for sale investments 30,478 22,624 23,324 23,324
Financial Liabilities at
amortised cost 94,763 78,691 162,990 89,331
-------------------------------- ------- ------- ------- -------
Risk management
The principal risks faced by the Group and Company resulting
from financial instruments are liquidity risk, foreign currency
risk and, to a lesser extent, interest rate risk and credit risk.
The directors review and agree policies for managing each of these
risks as summarised below. The policies have remained unchanged
from previous periods as the risks are assessed not to have
changed.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars,
Australian Dollars, Canadian Dollars and Euros to provide funding
for exploration and evaluation activity, whilst the Company holds
cash balances in Sterling, US Dollars, Canadian Dollars and
Euros.
The Company is dependent on equity fundraising through private
placings which the directors regard as the most cost-effective
method of fundraising. The directors monitor cash flow in the
context of their expectations for the business to ensure sufficient
liquidity is available to meet foreseeable needs.
Currency risk
The Group's financial risk management objective is broadly to
seek to make neither profit nor loss from exposure to currency or
interest rate risks. The Group is exposed to transactional foreign
exchange risk and takes profits and losses as they arise as, in the
opinion of the directors, the cost of hedging against fluctuations
would be greater than the related benefit from doing so.
Fluctuations in the exchange rate are not expected to have a
material effect on reported loss or equity.
Group Company Group Company
Bank balances were held in 2017 2017 2016 2016
the following denominations: GBP GBP GBP GBP
-------------------------------- ------- ------- ------ -------
United Kingdom Sterling 187,946 187,946 93,749 93,749
Australian Dollar 10,431 - 25,871 -
Canadian Dollar 347 347 5,874 5,874
United States Dollar 34,699 26,288 96,448 1,916
Euro 758 758 1,326 1,326
-------------------------------- ------- ------- ------ -------
Interest rate risk
The Company finances operations through equity fundraising and
therefore does not carry borrowings.
Fluctuating interest rates have the potential to affect the loss
and equity of the Group and the Company insofar as they affect the
interest paid on financial instruments held for the benefit of the
Group. The directors do not consider the effects to be material to
the reported loss or equity of the Group or the Company presented
in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such
as VAT refunds, invoices issued to related parties and its joint
arrangements for management charges. The amounts outstanding from
time to time are not material other than for VAT refunds which are
considered by the directors to be low risk.
The Company has exposure to credit risk in respect of its cash
deposits with NatWest bank and this exposure is considered by the
directors to be low risk.
19. Events after the balance sheet date
Subsequent to the year end, on 6 December 2017, there was an
allotment of 333,333,333 ordinary shares of 0.1p by way of
conditional placing at 0.15 pence per share for a total
consideration of GBP500,000 before expenses. The issue of the
Placing Shares is conditional, inter alia, on their admission to
trading on AIM ("Admission"). Application has been made for the
Placing Shares to be admitted to trading on AIM and Admission is
expected to occur on or around 20 December 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TJBFTMBBBBBR
(END) Dow Jones Newswires
December 13, 2017 11:22 ET (16:22 GMT)
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