REG - SolGold PLC - Audited Full Year Results
29/09/2022 07:00
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RNS Number : 0919B SolGold PLC 29 September 2022
28 September 2022
SolGold plc
("SolGold" or the "Company")
Audited Full Year Results
The Board of Directors of SolGold (LSE & TSX: SOLG) is pleased to announce
the release of its Audited Full Year Results for the year ended 30 June 2022.
An abridged version of the Full Year Results is included below.
For Canadian purposes, the Company has also filed its audited financial
statements, Management Discussion and Analysis ("MD&A") and Annual
Information Form ("AIF") for the year ended 30 June 2022 on SEDAR.
The Board advises all shareholders and interested investors that the Company's
website www.solgold.com.au (http://www.solgold.com.au) contains access to a
copy of the audited financial statements, MD&A and AIF for the year ended
30 June 2022. A copy of the Annual Report will be available on the website
shortly.
This announcement was approved for release by Rufus Gandhi - Company Secretary
FINANCIAL REVIEW
HIGHLIGHTS
The Group achieved several milestones during the financial year ended 30 June
2022. These have helped to progress the development of SolGold, in particular
the development of the Cascabel project and the exploration of the surrounding
licence areas, and have included:
· Exploration and evaluation expenditure of US$66,294,083 for the
year;
· Continued acquisition of US$3,836,561 in landholdings in the
Cascabel project area in anticipation of infrastructure requirements for
project development, with another US$561,293 spent on advance payments for
critical land parcels;
· Operating loss after tax of US$1,701,565 representing a decrease of
US$22,070,524 over the prior year. The decrease in the loss is attributable to
the remeasurement of the NSR financial liability offset by the tax expense;
· US$26,102,133 cash balance (2021: US$109,562,103).
RESULTS
The Group incurred a loss after tax of US$1,701,565 for the year (2021: loss
US$23,772,089 restated). The decrease in the loss after tax is due to the
remeasurement of the NSR financial liability, which represents an amortised
gain of US$35,003,704 for the year ended 30 June 2022. The remeasurement was
triggered by Board approval in April 2022 of the Preliminary Feasibility Study
("PFS") resulting in amendments to anticipated cash flows of the NSR agreement
due to changes in the timing of construction and the mine life and updated
production volumes. This remeasurement is a non-cash flow book entry
accounting for the financial liability at amortised cost. This remeasurement
is offset by the associated deferred tax liability which in turn increased the
income tax expense. Overall administrative expenses remained consistent from
2021, although there are some noteworthy costs. Employee benefits expenses
increased by US$1,930,187 as a result of the employment of additional senior
management in Australia and London. Additionally, the exploration costs
written off increased by US$2,973,693, foreign exchange losses increased by
US$2,755,619, and the revaluation on the BHP derivative increased by
US$1,152,476.
An income tax expense of US$4,540,103 (2021: US$151,173) was recognised. This
amount is offset by an income tax benefit of US$11,111 recognised directly in
equity associated with capital raising costs, and an income tax benefit of
US$267,087 recognised in other comprehensive income relating to the fair value
movement of the Company's investment in Cornerstone Capital Resources Inc. The
balance of the tax expense is associated with the deferred tax liability on
the remeasurement of the NSR liability.
The Group recognised total other comprehensive loss of US$1,742,845 (2021:
gain US$1,818,657) for the financial year ended 30 June 2022. A loss of
US$1,205,636 (2021: gain of US$1,198,986) was recognised representing the
mark-to-market adjustment on the Company's investment in Cornerstone Capital
Resources Inc. For the financial year ended 30 June 2022 the Group recognised
a loss of US$702,938 (2021: gain of US$670,049) on translation of foreign
operations. The average exchange rate used to convert Australian dollars to
United States dollars was 0.7256 for the financial year ended 30 June 2022
compared to 0.7470 for the financial year ended 30 June 2021. The Group also
recognised a decrease in the Ecuadorian post-employment benefits of
US$165,729.
STATEMENT OF FINANCIAL POSITION
Total assets at 30 June 2022 were US$429,162,611 compared to US$452,553,338 at
30 June 2021 representing a decrease of US$23,392,727.
Current assets overall decreased by US$87,212,401, which was primarily cash
used to fund the Group's flagship Cascabel project and related overheads, the
Group's regional exploration programme and general overhead expenses. Other
receivables and prepayments decreased by US$809,792 as a result of land
deposits being capitalised during the year. Initial deposits and payments for
land purchases are classified as other receivables until such time as the land
processes in Ecuador are finalised and title deeds re issued, whereupon they
are capitalised. Loans receivable and other current assets decreased by
US$2,942,639, mainly as a result of certain employees repaying their Company
Funded Loan Plans.
Non-current assets increased by US$63,819,674 mainly due to increases in
exploration and evaluation assets, classified as intangible assets.
Exploration assets increased by US$61,739,591 (net of written off expenditure)
predominantly due to the exploration expenditure incurred at the Alpala
project (US$35.03 million net of written off expenditure) and the various
regional projects (US$27.14 million net of written off expenditure) in Ecuador
as identified in this report, during the twelve months ended 30 June 2022.
Exploration assets decreased by US$4.6 million, reflecting the written off
misappropriation of funds after the Company instructed EY Ecuador to commence
a forensic investigation into the alleged misappropriation of funds. The
investigation brought to light the material misstatement of exploration assets
as a result of false expenses being capitalised which was announced in Q3.
Financial assets held at fair value through other comprehensive income ("OCI")
decreased by US$1,473,198 representing the mark to market adjustments that the
Company makes on its investment in Cornerstone Capital Resources Inc.
Property, plant and equipment increased by US$3,261,392 primarily due to
strategic land purchases at the Cascabel project.
Total liabilities at 30 June 2022 were US$97,914,105 compared to
US$118,290,836 at 30 June 2021 representing a decrease of US$20,376,731
largely as a result of the remeasurement of the NSR royalty, accounted for at
amortised cost.
Current liabilities at 30 June 2022 were US$6,924,204 compared to US$8,183,405
at 30 June 2021 representing a decrease of US$1,259,201. Trade and other
payables decreased by US$1,338,584.
Non-current liabilities decreased by US$19,117,536 mainly due to the
remeasurement of the NSR financial liability and the associated deferred tax
liability, which was offset by accrued interest and by a decrease in the value
of the derivative liability associated with the BHP options issued in December
2019.
Given that the Company will need to secure further funding to meet the Group's
18-month future exploration and working capital commitments, the situation
gives rise to a material uncertainty as there can be no assurance the Company
will be able to raise the required financing in the future. The auditors'
report on our financial statements contains a 'material uncertainty related to
going concern' paragraph to this effect. Notwithstanding this material
uncertainty, the Directors consider it appropriate to adopt the going concern
basis of accounting in the preparation of the financial statements and prepare
the financial statements on a going concern basis given the Company's proven
ability to raise necessary funding.
CASH FLOW
Cash expenditure (before financing activities) for the year ended 30 June 2022
was US$82,658,324 (2021: US$95,812,231). Most of this cash spend relates to
cash expenditure on the Group's exploration expenditure in Ecuador
(US$69,455,961) and property, plant and equipment and strategic land
purchases, that are currently still in the negotiation stages (US$2,195,892).
During the financial year ended 30 June 2022, nil cash was received from the
issue of shares via private placements or the exercise of share options (2021:
US$76,113,126). Accordingly, the net cash outflow of the Group for the year
ended 30 June 2022 was US$83,143,710 (2021: inflow of US$61,589,969).
As mentioned above, cash of US$69,455,961 (2021: US$75,611,280) was invested
by the Group on exploration expenditure during the year.
EXPLORATION HIGHLIGHTS
The Company continues to pursue its strategy as an integrated explorer and
developer, aiming to create maximum value for all shareholders. The Company is
applying its exploration blueprint of systematically evaluating its
exploration assets across Ecuador, which are held by four wholly owned
subsidiaries that are exploring throughout the country. SolGold has identified
several high priority copper and gold resource targets, some of which the
Company believes have the potential to reach resource definition and
feasibility levels in close succession.
Early-stage results from the Company's regional exploration programmes are
testament to this approach following the discovery of significant copper-gold
mineralisation at surface at the Cacharposa porphyry copper-gold target at
Porvenir as well as discovery of significant geochemical and geophysical
hallmarks of large porphyry systems identified at several project areas,
including the Helipuerto, Rio Amarillo and Cisne Loja projects.
SolGold's regional exploration programme in Ecuador coordinates multiple
highly skilled field teams systematically exploring its concessions throughout
the country. The Company's regional concessions are located along the prolific
Andean Copper Belt which is renowned as the production base for a significant
portion of the world's copper and gold resources. The regional exploration
programme currently focusses on a number of high priority projects identified
for targeted exploration, of which several are considered core targets that
are drill ready.
SolGold has regulatory licencing approvals for scout drilling at five projects
including Porvenir and Rio Amarillo. This has been made possible with the
government recognising and approving the need, in the Initial Exploration
phase, for initial drilling to identify any potential deposit. During the
period the Company obtained authorisation to collect water for the Rio
Amarillo project.
During the period, SolGold has focused on completing the critical study work
and data collection for the Preliminary Feasibility Study ("PFS") at its
Cascabel project, which is based on the Alpala deposit containing 9.9Mt Cu,
21.7Moz Au and 92.2Moz Ag. The results of the PFS were announced on 20 April
2022. The Company also concentrated on continuing to uncover the value in the
Company's vast regional exploration portfolio throughout Ecuador and announced
the Mineral Resource Estimates ("MRE") for the Tandayama-America deposit at
Cascabel and the Cacharposa deposit at the Porvenir project.
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2022
Group Group
2022 2021
Notes US$ US$
restated(1)
Expenses
Exploration costs written-off 13 (3,858,024) (884,330)
Administrative expenses 3 (17,569,179) (12,860,193)
Operating loss 3 (21,427,203) (13,744,523)
Other income 454,077 344,565
Finance income 6 839,140 454,575
Finance costs 6 (12,570,180) (10,061,787)
Movement in fair value of derivative liability 22 539,000 (613,746)
Remeasurement of amortised cost of financial liability 21 35,003,704 -
Profit / (loss) before tax 2,838,538 (23,620,916)
Tax expense 7 (4,540,103) (151,173)
Loss for the year (1,701,565) (23,772,089)
Other comprehensive (loss)/profit
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (702,938) 670,049
Items that will not be reclassified to profit or loss 165,729 (50,378)
Remeasurement of post-employment benefits
Change in fair value of financial assets, net of tax 11a / 15/7 (1,205,636) 1,198,986
Other comprehensive (loss)/profit, net of tax (1,742,845) 1,818,657
Total comprehensive loss for the year (3,444,410) (21,953,432)
Loss for the year attributable to:
Owners of the parent company (1,587,497) (23,558,390)
Non-controlling interest (114,068) (213,699)
(1,701,565) (23,772,089)
Total comprehensive loss for the year attributable to:
Owners of the parent company (3,330,342) (21,739,733)
Non-controlling interest (114,068) (213,699)
(3,444,410) (21,953,432)
Loss per share Cents per share Cents per share
Basic loss per share 8 (0.1) (1.1)
Diluted loss per share 8 (0.1) (1.1)
The above Consolidated Statement of Profit or Loss and Other Comprehensive
Income should be read in conjunction with the accompanying notes. (1) Refer
Note 1(b)(i)
Consolidated Statement of Financial Position
As at 30 June 2022
Registered Number 5449516
Notes Group Group
2022 2021
US$ US$
Restated(1)
Assets
Intangible assets 13 365,579,484 303,839,893
Property, plant and equipment 12 22,084,490 18,823,098
Financial assets held at fair value through OCI 11(a) 5,351,844 6,825,042
Financial assets at amortised cost 14 1,749,213 1,457,324
Total non-current assets 394,765,031 330,945,357
Other receivables and prepayments 16 4,742,156 5,551,948
Loans receivable and other current assets 14 3,553,291 6,495,930
Cash and cash equivalents 17 26,102,133 109,562,103
Total current assets 34,397,580 121,609,981
Total assets 429,162,611 452,555,338
Equity
Share capital 18 32,350,699 32,350,699
Share premium 18 426,793,240 426,819,162
Other reserves 18 10,931,758 19,412,591
Accumulated loss (132,587,252) (138,895,017)
Foreign currency translation reserve (5,048,767) (4,345,829)
Equity attributable to owners of the parent company 332,439,678 335,341,606
Non-controlling interest (1,191,172) (1,077,104)
Total equity 331,248,506 334,264,502
Liabilities
Trade and other payables 19 6,509,078 7,847,656
Lease liability 20 415,132 335,749
Total current liabilities 6,924,210 8,183,405
Lease liability 20 326,374 607,214
Other financial liabilities 22 2,387,000 2,926,000
Deferred tax liabilities 15 4,200,444 -
Borrowings 21 84,076,077 106,574,217
Total non-current liabilities 90,989,895 110,107,431
Total liabilities 97,914,105 118,290,836
Total equity and liabilities 429,162,611 452,555,338
The above Consolidated Statements of Financial Position should be read in
conjunction with the accompanying notes.
(1) Refer Note 1(b)(i)
The financial statements were approved and authorised for issue by the Board
and were signed on its behalf on 28 September 2022.
Darryl Cuzzubbo
Chief Executive Officer
Company Statement of Financial Position
As at 30 June 2022
Registered Number 5449516
Notes Company Company
2022 2021
US$ US$
Restated(1)
Assets
Property, plant and equipment 12 598,919 958,850
Investment in subsidiaries 9 152,964,303 120,045,844
Loans with subsidiaries 10 185,599,916 167,399,767
Financial assets held at fair value through OCI 11(a) 5,346,323 6,819,046
Financial assets at amortised cost 14 756,332 756,332
Total non-current assets 345,265,793 295,979,839
Other receivables and prepayments 16 1,061,583 1,938,616
Loans receivable and other current assets 14 3,553,291 6,495,930
Cash and cash equivalents 17 21,032,524 72,918,016
Total current assets 25,647,398 81,352,562
Total assets 370,913,191 377,332,401
Equity
Share capital 18 32,350,699 32,350,699
Share premium 18 426,793,240 426,819,162
Other reserves 18 11,398,063 20,044,625
Accumulated loss (99,567,549) (102,203,496)
Foreign currency translation reserve (5,006,473) (5,006,473)
Equity attributable to owners of the parent company 365,967,980 372,004,517
Total equity 365,967,980 372,004,517
Liabilities
Trade and other payables 19 1,944,970 1,475,395
Lease liability 20 309,668 319,275
Total current liabilities 2,254,638 1,794,670
Lease liability 20 303,573 607,214
Other financial liabilities 22 2,387,000 2,926,000
Total non-current liabilities 2,690,573 3,533,214
Total liabilities 4,945,211 5,327,884
Total equity and liabilities 370,913,191 377,332,401
The above Company Statements of Financial Position should be read in
conjunction with the accompanying notes.
(1) Refer Note 1(b)(i)
A separate statement of comprehensive income for the parent company has not
been presented as permitted by section 408 of the Companies Act 2006. The
Company's loss for the year was US$5,259,315 (2021: US$4,147,229).
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Notes Share capital Share premium Financial assets held at fair value through other comprehensive income Share based payment reserve Other reserves Accumulated loss Foreign currency translation reserve Total Non-controlling interests Total Equity
US$
US$
US$ US$
US$ US$ US$ US$ US$
US$
Balance at 30 June 2020 29,281,511 353,220,481 2,054,043 36,859,263 (581,656) (133,331,591) (5,015,878) 282,486,173 (498,139) 281,988,034
Adjustment to retained earnings (Note 1) ( ) - - - (7,213,338) - 4,099,833 - (3,113,505) (365,612) (3,479,117)
Balance 1 July 2020 restated 29,281,511 353,220,481 2,054,043 29,645,925 (581,656) (129,231,758) (5,015,878) 279,372,668 (863,751) 278,508,917
Loss for the year restated - - - - - (23,558,390) - (23,558,390) (213,699) (23,772,089)
Other comprehensive income - - 1,198,986 - (50,378) - 670,049 1,818,657 - 1,818,657
Total comprehensive loss for the year - - 1,198,986 - (50,378) (23,558,390) 670,049 (21,739,733) (213,699) (21,953,432)
New share capital subscribed 3,048,487 75,695,147 - - - - - 78,743,634 - 78,743,634
Options exercised 20,701 496,834 - - - - - 517,535 - 517,535
Share issue costs (net of deferred tax) - (2,593,300) - - - - - (2,593,300) - (2,593,300)
Options expired - - - (13,169,765) - 13,169,765 - - - -
Value of shares and options issued to Directors, employees and consultants - - - 315,436 - - - 315,436 - 315,436
Other - - - - - 725,366 - 725,366 346 725,712
Balance at 30 June 2021 restated 32,350,699 426,819,162 3,253,029 16,791,596 (632,034) (138,895,017) (4,345,829) 335,341,606 (1,077,104) 334,264,502
Loss for the year - - - - - (1,587,497) - (1,587,497) (114,068) (1,701,565)
Other comprehensive loss - - (1,205,636) - 165,729 - (702,938) (1,742,845) - (1,742,845)
Total comprehensive loss for the year - - (1,205,636) - 165,729 (1,587,497) (702,938) (3,330,342) (114,068) (3,444,410)
New share capital subscribed 18 - - - - - - - - - -
Options exercised 18 - - - - - - - - - -
Share issue costs (net of deferred tax) 18 - (25,922) - - - - - (25,922) - (25,922)
Options expired - - - (7,895,262) - 7,895,262 - - - -
Value of share and options issued to Directors, employees and consultants 23 - - - 454,336 - - - 454,336 - 454,336
Balance at 30 June 2022 32,350,699 426,793,240 2,047,393 9,350,670 (466,305) (132,587,252) (5,048,767) 332,439,678 (1,191,172) 331,248,506
The above statement of changes in equity should be read in conjunction with
the accompanying notes.
Company Statement of Changes in Equity
For the year ended 30 June 2022
Notes Share capital Share premium Financial assets held at fair value through other comprehensive income Share-based payment reserve Accumulated loss Foreign currency translation reserve Total
US$
US$
US$ US$
US$ US$ US$
Balance at 1 July 2020 29,281,511 353,220,481 2,054,043 36,859,263 (119,164,736) (5,006,473) 297,244,089
Adjustment to retained earnings (Note 1) - - - (7,213,338) 7,213,338 - -
Balance 1 July 2020 restated 29,281,511 353,220,481 2,054,043 29,645,925 (111,951,398) (5,006,473) 297,244,089
Loss for the year - - - - (4,147,229) - (4,147,229)
Other comprehensive income - - 1,198,986 - - - 1,198,986
Total comprehensive loss for the year - - 1,198,986 - (4,147,229) - (2,948,243)
New share capital subscribed 3,048,487 75,695,147 - - - - 78,743,634
Options exercised 20,701 496,834 - - - - 517,535
Share issue costs (net of deferred tax) - (2,593,300) - - - - (2,593,300)
Options expired - - - (13,169,765) 13,169,765 - -
Value of shares and options issued to Directors, employees and consultants - - 315,436 - - 315,436
Adjustment to retained earnings - - - 725,366 - 725,366
Balance at 30 June 2021 restated 32,350,699 426,819,162 3,253,029 16,791,596 (102,203,496) (5,006,473) 372,004,517
Loss for the year - - - - (5,259,315) - (5,259,315)
Other comprehensive loss - - (1,205,636) - - - (1,205,636)
Total comprehensive loss for the year - - (1,205,636) - (5,259,315) - (6,464,951)
New share capital subscribed 18 - - - - - - -
Options exercised 18 - - - - - - -
Share issue costs (net of deferred tax) 18 - (25,922) - - - - (25,922)
Options expired - - - (7,895,262) 7,895,262 - -
Value of shares and options issued to Directors, employees and consultants 23 - - - 454,336 - - 454,336
Balance at 30 June 2022 32,350,699 426,793,240 2,047,393 9,350,670 (99,567,549) (5,006,473) 365,967,980
The above statement of changes in equity should be read in conjunction with
the accompanying notes.
Consolidated and Company Statements of Cash Flows
For the year ended 30 June 2022
Notes Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
restated
Cash flows from operating activities
Loss for the year (1,701,565) (23,772,089) (5,259,315) (4,147,229)
Depreciation 12 619,048 582,026 314,071 341,626
Interest on lease liability 20 64,325 67,730 57,907 62,787
Interest on bridging loan 21 - 371,275 - 371,275
Interest on NSR 21 12,505,564 9,619,242 - -
Interest on loan to SolGold Finance AG 10 - - (5,694,637) (4,519,889)
Share based payment expense 5 / 23 454,336 315,436 454,336 315,436
Write-off of exploration expenditure 13 3,858,024 884,330 - -
Foreign exchange loss / (gain) 965,386 (1,790,028) 938,423 (1,797,341)
Movement in fair value of derivative liability 22 (539,000) 613,746 (539,000) 613,746
Remeasurement of amortised cost of financial liability 21 (35,003,704) - - -
Tax expense 7 4,540,103 151,173 278,198 64,375
Non cash employee benefit expense - company funded loan plan 14 669,211 - 669,211 -
Accretion of interest - company funded loan plan 14 (789,946) (449,613) (789,946) (449,613)
Decrease in other receivables and prepayments 2,978,509 175,544 3,449,370 1,211,109
Increase / (decrease) in trade and other payables 373,238 124,682 469,369 (1,028,881)
Net cash outflow from operating activities (11,006,471) (13,106,546) (5,652,013) (8,962,599)
Cash flows from investing activities
Exercise of Cornerstone Capital Resources warrants 11(a) - (813,927) - (813,927)
Acquisition of property, plant and equipment (2,195,892) (6,280,482) (13,726) (18,255)
Acquisition of exploration and evaluation assets (69,455,961) (75,611,280) - -
Loans advanced to subsidiaries - - (12,505,512) (5,001,463)
Advances in investment in subsidiaries - - (33,082,285) (34,155,941)
Net cash outflow from investing activities (71,651,853) (82,705,689) (45,601,523) (39,989,586)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital 18 - 76,113,126 - 76,113,126
Payment of issue costs (37,033) (333,629) (37,033) (333,629)
Net proceeds from NSR financing 21 - 84,380,422 - -
Payment of NSR costs 20 - (2,318,598) - -
Repayments of lease liability (448,353) (439,116) (310,503) (348,912)
Net cash (outflow)/inflow from financing activities (485,386) 157,402,205 (347,536) 75,430,585
(83,143,710) 61,589,970 (51,601,072) 26,478,400
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year 17 109,562,103 46,895,243 72,918,016 45,356,423
Effect of foreign exchange on cash and cash equivalents (316,260) 1,076,890 (284,420) 1,083,193
Cash and cash equivalents at end of year 17 26,102,133 109,562,103 21,032,524 72,918,016
The above statements of cash flows should be read in conjunction with the
accompanying notes.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies
SolGold Plc ("the Company" or "SolGold") and its subsidiaries (the "Group") is
a mineral exploration and development company headquartered in Brisbane,
Australia. The Company is a UK incorporated (on 11 May 2005), public company
limited by shares, with the company registration number 05449516. SolGold is
dual listed on the London Stock Exchange and the Toronto Stock Exchange. The
address of the Company's registered office is 1 King Street, London EC2V 8AU,
United Kingdom.
(a) Statement of compliance
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
SolGold plc transitioned to UK-adopted International Accounting Standards in
its consolidated financial statements on 1 July 2021. This change constitutes
a change in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the year reported as a result of the change in
framework.
The consolidated financial statements and company financial statements have
been prepared in accordance with International Financial Reporting Standards
("IFRS") and their interpretations issued by the International Accounting
Standards Board ("IASB"), in accordance with UK adopted International
Accounting Standards and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdoms' Financial Conduct Authority.
They have also been prepared in accordance with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS. The consolidated
financial statements also comply with IFRS as issued by the IASB, as is
required as a result of the company's listing on the TSX in Canada. The
accounting policies set out below have been applied consistently throughout
these consolidated financial statements.
The preparation of the Group Financial Statements in compliance with IFRS
requires management to make estimates and exercise judgment in applying the
Group's accounting policies. In preparing the Group Financial Statements, the
significant judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty are disclosed in Note
1.v.
(b) Basis of preparation of financial statements and going concern
The consolidated financial statements are presented in United States dollars
("US$"), rounded to the nearest dollar. Refer to Note 1 (d) for further
details relating to the foreign exchange translation.
The Company was incorporated on 11 May 2005. From incorporation the Group has
prepared the annual consolidated financial statements in accordance with IFRS.
(i) Prior year restatements and reclassifications
Investigation into Ecuadorian business
During the year the investigation into the Ecuadorian business identified a
misappropriation of funds. The effect of the prior years misappropriation on
the balance sheet is set out in note 13. The Company instructed EY Ecuador to
commence a forensic investigation into the alleged misappropriation of funds.
SolGold's Internal Audit function was engaged to provide independent oversight
of the investigation, and the ARC oversaw the entire process. In total the
forensic investigation identified a misappropriation that amounted to US$4.6
million during the years 2017 to 2021.
This misappropriation resulted in the overstatement of our exploration assets
by US$4.6 million, with the associated false expenses having been capitalised
in-line with SolGold's accounting policy. SolGold concluded that it was
appropriate to write-down the value of these assets accordingly and restate
our financial statements. The profit and loss impact for the year ended 30
June 2022 amounted to US$227,846k (2021: US$879,977, 2017-2020: US$3,479,117),
reflecting the fact that most losses were incurred in prior years. Though the
misstatements are material to the quantum of exploration assets, the Company
does not consider the misstatements to be material to the financial statements
as a whole, either on an individual or cumulative basis. The overstatement of
the exploration assets is cumulative and is made up of smaller annual
misstatements that were not material in the respective years.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies - continued
Reclassification of land deposits
During the 2022 audit, it was identified that US$3.1 million of land
deposits had been booked as of 30 June 2021 in 'Other receivables and
prepayments', when these should have been considered as Land and disclosed as
part of Property, plant and equipment. Management concluded that it was
appropriate to reclassify this figure and have restated the balance
accordingly, impacting these two financial statement line items.
Reclassification of share based payment reserve
During the 2022 audit, it was identified that US$7.2 million of options which
had expired prior to 30 June 2020, had not been transferred to Accumulated
Losses from the Share-based payment reserve in line with the Group's
accounting policies. Opening balance of the Share-based payment reserve has
been reduced by UD$7.2 million.
Detail of adjustments and impact in the comparative periods
Balance sheet (extract) 30 June 2020 Increases / (decrease) 30 June 2020 30 June 2021 Increases / (decrease) 30 June 2021
US$ US$ US$ US$ US$ US$
Restated restated
Intangible assets 230,256,153 (3,479,117) 226,777,036 308,432,012 (4,592,119) 303,839,893
Property plant and equipment - - - 15,682,120 3,140,978 18,823,098
Total non-current assets 257,019,289 (3,479,117) 253,540,172 332,396,498 (1,451,141) 330,945,357
Other receivables and prepayments - - - 8,458,494 (2,906,546) 5,551,948
Total Current assets - - - 124,516,527 (2,906,546) 121,609,981
Total assets 306,798,448 (3,479,117) 303,319,331 456,913,025 (4,357,687) 452,555,338
Net assets 281,988,034 (3, 479,117) 278,508,917 338,622,195 (4,357,693) 334,264,502
Profit and loss (extract) 30 June 2021 Increases / (decrease) 30 June 2021
US$ US$ US$
restated
Exploration costs written-off (4,353) (879,977) (884,330)
Administration expenses (12,861,248) 1,055 (12,860,193)
Operating loss (12,865,601 (878,922) (13,744,523)
Loss before tax (22,741,994) (878,922) (23,620,916)
Loss for the year (22,893,167) (878,922) (23,772,089)
Cashflow (extract) 30 June 2021 Increases / (decrease) 30 June 2021
US$ US$ US$
restated
Cashflows from operating activities
Loss for the year (22,893,167) (878,922) (23,772,089)
Exploration costs written-off 4,353 879,977 884,330
Decrease / (increase) in other receivables (765,607) 941,151 175,544
Net cash outflow from operating activities (14,048,752) 942,206 (13,106,546)
Cashflows from investing activities
Security deposits (Payments)/refunds (126,407) 126,407 -
Acquisition of exploration and evaluation assets (75,607,912) (3,368) (75,611,280)
Proceeds from payment of company funded loan plan 1,065,245 (1,065,245) -
Net cash outflow from investing activities (81,763,483) (942,206) (82,705,689)
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies - continued
(ii) Going concern
At the year end, the Group has cash on hand of US$26.1 million and net current
assets of US$27.47 million. The Directors have reviewed the cash position of
the Group and the Company for the period to 31 December 2023 and consider it
appropriate that the Group and the Company financial statements are prepared
on the going concern basis, which contemplates the continuity of normal
business activities and the realisation of assets and discharge of liabilities
in the ordinary course of business, for the reasons set out below.
The Group has not generated revenues from operations in its history and, in
common with many exploration companies, the Group raises finance for its
exploration and appraisal activities in discrete tranches. As such, the
ability of the Group to continue as a going concern depends on its ability to
secure this additional financing.
Management continues to monitor and manage its liquidity risks closely and
regularly produces cash flow forecasts. Under the base case scenario, the
Group would have sufficient funds until December 2022 without applying any of
the mitigating actions that have included within the severe but plausible
scenario outlined below. SolGold's severe but plausible scenario considers no
access to financial markets, caused by a continued inflationary environment
and ensuing recession that is not conducive to further capital raises when
necessary. In such a situation the Company would cease all exploration
activities, terminate most technical services and dramatically reduce
overheads to reduce costs. Under its severe but plausible scenario, the Group
would have sufficient funds at least until January 2023, although there would
be a significant impact on the Group's operations.
Together with their brokers and financial advisers, the Directors and
Management continuously monitor the conditions in the relevant capital markets
and regularly consider various forms of financing available to SolGold. The
Directors and Management are in regular touch with equity investors and
actively participate in investor conferences and other forms of investor
engagements as there is a need to secure further funding to meet their
exploration and working capital commitments.
The Company has a proven ability to execute equity and other financings
successfully as demonstrated by the equity placings and royalty agreement
completed in the 2020-21 financial years, totalling approximately US$240
million in gross proceeds. Accordingly, the Directors have a reasonable
expectation that the Group will be able to raise funds when necessary and, as
has been the case previously, the Directors expect that future funding will
likely be provided by equity investors, debt funding or via other strategic
arrangements.
In the event that the Company is unable to secure sufficient funding, it may
not be able to fully develop its projects, and this may have a consequential
impact on the carrying value of the related exploration assets and the
investment of the parent company in its subsidiaries as well as the going
concern status of the Group and the Company. Given the nature of the Group's
current activities, it will remain dependent on equity and/or debt funding or
other strategic arrangements until such time as the Group becomes self-
financing from the commercial production of its mineral resources. Should
raising additional finance prove challenging, the Company has alternative
options such as the acceleration of cost reductions, farm-outs or the
relinquishment of licences across Ecuador, Australia and the Solomon
Islands.
Given that the Company will need to secure further funding to meet the Group's
future exploration and working capital commitments, and no firm funding
commitments have been received at the date of approval of these financial
statements, the situation gives rise to a material uncertainty as there can be
no assurance the Company will be able to raise the required financing in the
future. This material uncertainty may cast significant doubt upon the Group's
and the Company's ability to continue as a going concern. Notwithstanding this
material uncertainty, the Directors consider it appropriate to adopt the going
concern basis of accounting in the preparation of the financial statements
given the Company's proven ability to raise necessary funding. The financial
statements do not include the adjustments that would result if the Group and
Company were unable to continue as a going concern.
(iii) Historical cost convention
The consolidated financial statements have been prepared on a historical cost
base modified by revaluation of financial assets held at fair value through
OCI and financial liabilities at fair value through profit or loss.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 30 June each year.
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated in
full.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of profit or loss from the date on which control is obtained. They
are deconsolidated from the date on which control ceases.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of profit or loss from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies in line with those used by the
Group.
Non-controlling interests are allocated their share of net profit after tax
and share of other comprehensive income in the statement of profit or loss and
comprehensive income and presented within equity in the consolidated statement
of financial position, separately from the equity of the owners of the parent.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and
expenses arising from intra-group transactions, are eliminated in preparing
the consolidated financial statements.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(d) Foreign currency
Translation into the functional currency
Transactions entered into by Group entities in a currency other than the
currencies of the primary economic environment in which they operate (the
"functional currency") are translated at the foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the year-end are translated into the functional currency
at the foreign exchange rate ruling as of that date. Non-monetary assets and
liabilities denominated in foreign currencies are translated at the historical
foreign exchange rate. Any resultant foreign exchange currency translation
amount is taken to the profit and loss.
Management reconsiders the functional currency where there is a change in
events or conditions used in initial determination. Where the assessment
indicates that a change in functional currency is required, the change is
applied prospectively from the date it is deemed to have occurred.
The functional currency of the Company and subsidiaries of the Group are
detailed in the table below:
Functional Currency Functional Currency Exchange rate at 30 June 2022 used in preparation of Financials Exchange rate at 30 June 2021 used in preparation of Financials Average exchange rate for the year ended 30 June 2022 Average exchange rate for the year ended 30 June 2021
2022 2021
SolGold Plc US$ US$ n/a n/a n/a n/a
Australian Resource Management (ARM) Pty Ltd A$ A$ 0.6902 0.7495 0.7256 0.7470
Acapulco Mining Pty Ltd A$ A$ 0.6902 0.7495 0.7256 0.7470
Central Minerals Pty Ltd A$ A$ 0.6902 0.7495 0.7256 0.7470
Solomon Operations Ltd SBD$ SBD$ 0.1785 0.1245 0.1709 0.1245
Honiara Holdings Pty Ltd A$ A$ 0.6902 0.7495 0.7256 0.7470
Guadalcanal Exploration Pty Ltd A$ A$ 0.6902 0.7495 0.7256 0.7470
SolGold Finance AG US$ US$ n/a n/a n/a n/a
SolGold Canadian Callco Corp. CAD$ CAD$ 0.7768 0.8067 0.7902 0.7804
SolGold Canadian Exchangeco Corp. CAD$ CAD$ 0.7768 0.8067 0.7902 0.7804
Exploraciones Novomining S.A. US$ US$ n/a n/a n/a n/a
Carnegie Ridge Resources S.A. US$ US$ n/a n/a n/a n/a
Green Rock Resources S.A. US$ US$ n/a n/a n/a n/a
Valle Rico Resources S.A. US$ US$ n/a n/a n/a n/a
Cruz del Sol S.A. US$ US$ n/a n/a n/a n/a
SolGold Ecuador S.A. US$ US$ n/a n/a n/a n/a
Novoproyectos-Sustentables S.A. US$ US$ n/a n/a n/a n/a
Translation into presentation currency
The assets and liabilities of the entities are translated into the Group
presentation currency being the US$ at rates of exchange ruling at the
reporting date. Income and expense items are translated at average rates for
the period. Any resultant foreign exchange currency translation amount is
taken to other comprehensive income. On disposal of an entity, cumulative
exchange differences are recognised in the income statement as part of the
profit or loss on sale. Exchange differences recognised in profit or loss in
Group entities' separate financial statements, on the translation of long-term
monetary items forming part of the Group's net investment in the overseas
operation concerned, are reclassified to other comprehensive income and
accumulated in the foreign exchange reserve on consolidation. Considering that
these relate to loans and receivables that are not expected to be settled in
the foreseeable future they have been included as Investments in Subsidiaries
in the Company, see section v.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated
depreciation (see below) and impairment losses (see accounting policy (h)
below).
(ii) Leased assets
Items of property, plant and equipment that are accounted for under IFRS 16
Leases are recognised when contracts are entered into at an amount equal to
the corresponding lease liability (see accounting policy (q) below).
(iii) Subsequent costs
The Group recognises in the carrying amount of property, plant and equipment
the cost of replacing part of such an item when that cost is incurred if it is
probable that the future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when
replaced. All other costs are recognised in the statement of profit or loss as
an expense as incurred.
(iv) Depreciation
Depreciation is charged to the statement of profit or loss on a straight-line
basis over the estimated useful lives of each item of property, plant and
equipment used in corporate and administrative operations. Depreciation is
capitalised to exploration on a straight-line basis over the estimated useful
lives of each item of property, plant and equipment used in exploration
operations included within Intangible Assets. The estimated useful lives of
all categories of assets are:
Office Equipment 3 years
Furniture and Fittings 5 years
Motor Vehicles 5 years
Plant and Equipment 5 years
Buildings
12 years
Land
Not depreciated
Depreciation charged on leased assets is charged to the statement of profit or
loss on a straight-line basis over the term of the lease where it relates to
corporate leases and capitalised to exploration when used in exploration
operations.
The residual values and useful lives are assessed annually. Gains and losses
on disposal are determined by comparing proceeds with carrying amounts and are
included in the statement of profit or loss.
(f) Intangible assets (as per IFRS 6 - Exploration for and Evaluation of
Mineral Resources)
Costs incurred in relation to the acquisition of, or application for, a
tenement area are capitalised where there is a reasonable expectation that the
tenement will be acquired or granted. Where the Group is unsuccessful in
acquiring or being granted a tenement area, any such costs are immediately
expensed.
All other costs incurred prior to obtaining the legal right to undertake
exploration and evaluation activities on a project are written-off as
incurred.
Exploration and evaluation costs arising following the acquisition of an
exploration licence are capitalised on a project-by-project basis as
exploration and evaluation assets, pending determination of the technical
feasibility and commercial viability of the project. Costs incurred include
appropriate technical and administrative overheads. Exploration and
evaluation assets are carried at historical cost less any impairment losses
recognised.
Once the work completed to date on an area of interest is sufficient such that
the technical feasibility and commercial viability of extracting the mineral
resource has been determined, the property is considered to be an evaluated
mineral property.
Following determination of the technical feasibility and commercial viability
of a mineral resource, the relevant expenditure is transferred from
exploration and evaluation assets to evaluated mineral property.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(f) Intangible assets (as per IFRS 6 Exploration for and Evaluation of Mineral
Resources) (continued)
Further development costs are capitalised to evaluated mineral properties, if
and only if, it is probable that future economic benefits associated with the
item will flow to the entity; and the cost can be measured reliably. Cost is
defined as the purchase price and directly attributable costs. Once the asset
is considered to be capable of operating in a manner intended by management,
commercial production is declared, and the relevant costs are amortised.
Evaluated mineral property is carried at cost less accumulated amortisation
and accumulated impairment losses.
(g) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.
(h) Impairment of non-financial assets
Whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable the asset is reviewed for impairment. An
asset's carrying value is written down to its estimated recoverable amount
(being the higher of the fair value less costs to sell and value in use) if
that is less than the asset's carrying amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are taken into account. If
no such transactions can be identified, an appropriate valuation model is
used. These calculations are corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available fair value indicators.
Impairment reviews for deferred exploration costs are carried out on a
project-by-project basis, with each project representing a potential single
cash generating unit. As the material value of the Group's property, plant and
equipment is associated with the exploration and evaluation these are also
considered within the impairment review. An impairment review is undertaken
when indicators of impairment arise, typically when one of the following
circumstances apply:
§ 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;
§ Substantive expenditure on further exploration for and evaluation of
mineral resources in the specific area is neither budgeted nor planned;
§ 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; and
§ Sufficient data exists 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.
(i) Share capital
(i) Ordinary share capital
The Company's ordinary shares are classified as equity.
(ii) Shares issued to settle liabilities
The Group from time to time settles financial liabilities by issuing shares.
The Group considers these equity instruments as 'consideration paid' and
accordingly derecognises the financial liability.
The equity instruments issued are measured at fair value, with the difference
being taken to the statement of profit or loss, unless the creditor is also a
direct or indirect shareholder and is acting in their capacity as direct or
indirect shareholder. When the creditor is acting in their capacity as a
direct or indirect shareholder the value of shares issued is deemed to be the
carrying value of the liability.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(j) Employee benefits
(i) Share based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied. Share based payments to
non-employees are measured at the fair value of goods or services rendered or
the fair value of the equity instrument issued, if it is determined the fair
value of the goods or services cannot be reliably measured. Estimating fair
value for share based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and conditions of
the grant. This estimate also requires determining the most appropriate
inputs to the valuation model including the expected life of the share option,
volatility and dividend yield and making assumptions about them. The
assumptions and model used for estimating fair value for share based payment
transactions are disclosed in Note 23.
(ii) Retirement benefits
For the employees of subsidiaries in Ecuador, the Group operates a long-term
benefit for years of service plan which represents the accrued benefits to be
paid to employees (in accordance with the Ecuadorian labour code), that have
completed twenty-five years of service. This is paid in the form of a special
remuneration equivalent to the monthly salary in the month that the year of
service conditions are met.
The cost of providing this benefit is recognised as a liability and an expense
over the period in which the employee's services are received. The cost is
determined using the projected unit credit method and is based on actuarial
advice.
The change in the net defined benefit liability arising from employee service
during the year is recognized as an employee cost. The cost of plan
introductions, benefit changes, settlements and curtailments are recognized as
an expense in measuring profit or loss in the period in which they arise.
Remeasurement changes comprise actuarial gains and losses, are recognised
immediately in other comprehensive income in the period in which they occur.
(iii) Company Funded Loan Plan
The Group has put in place a Company Funded Loan Plan ("CFLP") to provide
financial assistance to employees in exercising share options. The financial
assistance provided to employees is by way of a full recourse interest free
loan. The CFLP is secured by the SolGold shares issued upon the exercise of
share options under the CFLP to that employee. These shares are held in
custody by the Company's broker.
CFLP loans to employees are initially recognised at fair value, which is
determined by discounting loans to their net present value using the risk-free
interest rate at the time the loan is granted and an estimated repayment
schedule. Following initial recognition, they are carried at amortised cost
using the effective interest rate method. Changes in the carrying value of
the CFLP loans are recognised within interest income in the profit or loss.
The cost of providing the benefit to employees is recognised as an employee
expense in the statement of profit or loss on a straight-line basis over the
expected life of the CFLP loan.
Further details on the CFLP are disclosed in Note 14.
(iv) Derivative Financial Instruments
The options issued to BHP as part of the share subscription on 2 December 2019
fall outside the scope of IFRS 2. As such these options are treated as
derivative liabilities which are measured initially at fair value and gains or
losses on subsequent re-measurement are recorded in the profit or loss. This
subsequent remeasurement is valued using the Monte Carlo method.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(k) Provisions
Provisions are recognised when the Group has a legal or constructive
obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation, and the amount
can be reliably estimated.
Contingent liabilities are possible obligations whose existence will be
confirmed by uncertain future events that are not wholly within the control of
the entity. Contingent liabilities also include obligations that are not
recognised because their amount cannot be measured reliably or because
settlement is not probable. Contingent liabilities do not include provisions
for which it is certain that the entity has a present obligation that is more
likely than not to lead to an outflow of cash or other economic resources,
even though the amount or timing is uncertain. A contingent liability is not
recognised in the statement of financial position. However, unless the
possibility of an outflow of economic resources is remote, a contingent
liability is disclosed in the notes.
Contingent assets are possible assets whose existence will be confirmed by the
occurrence or non-occurrence of uncertain future events that are not wholly
within the control of the entity. Contingent assets are not recognised, but
they are disclosed when it is more likely than not that an inflow of benefits
will occur. However, when the inflow of benefits is virtually certain an asset
is recognised in the statement of financial position, because that asset is no
longer considered to be contingent.
(l) Trade and other payables
Trade and other payables are not interest bearing and are stated at amortised
cost, unless settled with shares as per (i) above. The effect of discounting
is immaterial.
(m) Financing costs and income
(i) Financing costs
Financing costs comprise interest payable on borrowings calculated using the
effective interest rate method.
(ii) Finance income
Interest income is recognised in the statement of profit or loss as it
accrues, using the effective interest method.
(n) Taxation
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill
not deductible for tax purposes, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax benefit will be
realised.
Deferred tax assets are recognised for unused tax losses to the extent that it
is probable that taxable profit will be available against which the losses can
be utilised. Significant management judgement is required to determine the
amount of deferred tax that can be recognised, based upon the likely timing
and the level of future taxable profits, together with future tax planning
strategies.
The Group has US$69,682,242 (2021: US$73,362,323 restated) of tax losses
carried forward. These losses relate to subsidiaries that have a history of
losses and may not be used to offset taxable income elsewhere in the Group.
The subsidiaries neither have any taxable temporary difference nor any tax
planning opportunities available that could partly support the recognition of
these losses as deferred tax assets. On this basis, the Group has determined
that it cannot recognise deferred tax assets on the tax losses carried
forward.
Further details on taxes are disclosed in Note 7.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(o) Segment reporting
The Group determines and presents operating segments based on information that
is internally provided to the Board of Directors, who are the Group's chief
operating decision makers.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's
other components. An operating segment's operating results and asset
position are reviewed regularly by the Board to make decisions about resources
to be allocated to the segment and assess its performance, for which discrete
financial information is available.
Segment results that are reported to the Board include items directly
attributable to a segment, as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly corporate office assets,
head office expenses, and income tax assets and liabilities.
(p) Project Financing
The Group, from time to time, enters into funding arrangements with third
parties in order to progress specific projects. The Group financial
statements accounted for the related exploration costs in line with the terms
of the specific agreement. Costs incurred by SolGold plc are recognised as
intangible assets within the financial statements. Costs incurred by third
parties are not recognised by SolGold plc.
(q) Leases
For any contracts entered into, the Group considers whether the contract is or
contains a lease. For those contracts that fall within the exemptions of IFRS
16 and are classified as short term, these are charged as expenses on a
straight-line basis over the period of the lease. For all other leases, the
Group recognises a right-of-use asset ("ROUA") and a lease liability on the
balance sheet.
The ROUA is measured at cost at an amount equal to the lease liability. The
process to adopt this approach can be summarised as follows:
· Calculate the lease liability at commencement date of the lease.
At the initial adoption of the standard this was calculated as at the date on
initial application of IFRS 16.
· Set the ROUA as an amount equal to the lease liability in line
with the above dates.
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
implicit interest rate in the lease. Where the implicit rate cannot be easily
determined the Group's incremental borrowing rate is used instead. As there is
no implicit rate in the leases the Group had chosen to use 8% per the discount
rate used in the historic economic project studies. For new leases entered
into this rate will be reassessed to reflect the current economic project
studies.
The Group depreciates the ROUA on a straight-line basis from the lease
commencement date to the earlier of the end of the useful life of the ROUA or
the end of the lease term.
Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest. The liability is remeasured to reflect any
reassessment or modification. Where the lease liability is remeasured, the
corresponding adjustment is reflected in the profit and loss if the ROUA is
already reduced to zero.
In the statement of financial position, ROUA have been included in property,
plant and equipment and lease liabilities have been included in both current
and non-current liabilities, under Lease Liability.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(r) Financial Instruments
Recognition and Initial Measurement
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognised in the Group
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial
liabilities are only offset and the net amount reported in the consolidated
statement of financial position and consolidated statement of profit or loss
when there is a currently enforceable legal right to offset the recognised
amounts and the Group intends to settle on a net basis or realise the asset
and liability simultaneously.
Financial instruments are generally measured at initial recognition at fair
value and adjusted for transactions costs where the instrument is not
classified as at fair value through profit or loss. Transaction costs related
to instruments classified as at fair value through profit or loss are expensed
to profit or loss immediately. Financial instruments are classified and
measured as set out below.
Financial assets
The classification of financial assets at initial recognition depends on the
purpose for which the financial asset was issued and its characteristics. All
purchases and or sales of financial assets are recorded on trade date, being
the date on which the Group becomes party to the contractual requirements of
the financial asset. Unless otherwise indicated the carrying amounts of the
Group's financial assets approximate to their fair values.
Financial assets at amortised cost
Financial assets are measured at amortised cost if both of the following
conditions are met:
o The financial asset is held within a business model with the objective to
hold financial assets in order to collect contractual cash flows; and
o The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised costs are subsequently measured using the
effective interest (EIR) method and are subject to an impairment assessment.
Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
Financial assets designated at fair value through OCI with no recycling of
cumulative gains and losses upon derecognition (equity instruments)
Upon initial recognition SolGold can elect to classify irrevocably its equity
investments as equity instruments designated at fair value through OCI when
they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on
an instrument-by-instrument basis. Gains and losses on these financial assets
are never recycled to profit or loss. Dividends are recognised as other income
in the statement of profit or loss when the right of payment has been
established, except when the Group benefits from such proceeds as a recovery
of part of the cost of the financial asset, in which case, such gains are
recorded in OCI. Equity instruments designated at fair value through OCI are
not subject to impairment assessment.
SolGold elected to classify irrevocably 'Investments in equity excluding
subsidiaries' under this category.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial
assets which are measured at amortised cost or fair value through other
comprehensive income (when these are not equity instruments). The measurement
of the loss allowance depends upon the Group's assessment at the end of each
reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to
obtain.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(r) Financial Instruments (continued)
Where there has not been a significant increase in exposure to credit risk
since initial recognition, a twelve-month expected credit loss allowance is
estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the
next twelve months. Where a financial asset has become credit impaired or
where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount
of expected credit loss recognised is measured on the basis of the probability
weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate. Please refer to
Note 14 for the CFLP.
Financial liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics. All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the contractual
requirements of the financial liability. Unless otherwise indicated the
carrying amounts of the Group's financial liabilities approximate to their
fair values.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer
in a business combination, (ii) held-for-trading, or (iii) designated at
FVTPL, are measured subsequently at amortised cost. The Group's financial
liabilities comprise of trade and other payables, current and non-current
lease liabilities and borrowings (Franco-Nevada NSR Financing Agreement refer
Note 21) which are measured at amortised cost.
Financial liabilities measured at fair value through profit or loss
Financial liabilities that are (i) held for trading, or (ii) designated by the
entity as being at FVTPL are measured at fair value through profit or loss.
The Group's financial liabilities at FVTPL comprise of the Derivative
Liability associated with the share issuance to BHP in December 2019.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised when:
· The rights to receive cash flows from the asset have expired: or
· SolGold has transferred its right to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a "pass-through' arrangement;
and either (a) SolGold has transferred substantially all the risks and rewards
of the asset, or (b) SolGold has neither transferred nor retained
substantially all the risks and rewards of the asset; but has transferred
control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the statement of profit or loss.
(s) Accounting policies for the Company
The accounting policies applied to the Company are consistent with those
adopted by the Group with the exception of the following:
(i) Subsidiary investments
Investments in subsidiary undertakings are stated at cost less impairment
losses. Expenditure incurred by the Company on behalf of a subsidiary, and
where the subsidiary does not reimburse the Company for assets that could be
capitalised in accordance with IFRS 6, is recorded within investments in
subsidiary undertakings. Where investments are passed down into the underlying
operating subsidiaries where no reimbursement is expected this is recorded as
an investment in subsidiary
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(s) Accounting policies for the Company (continued)
undertakings. Within Investments in Subsidiaries we also include Loans with
subsidiaries where settlement is neither planned nor likely to occur in the
foreseeable future.
(ii) Intercompany loans
Intercompany loans with its subsidiary undertakings are measured in line with
the Group's policy mentioned in (r) Financial instruments above. That is at
amortised cost, with all subsequent measures using the effective interest
method and are subject to an impairment assessment. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or
impaired. Refer Note 1(v).
(t) Nature and purpose of reserves
(i) Financial assets at fair value through other comprehensive reserve
Changes in the fair value and exchange differences arising on translation of
investments, such as equities, classified as financial assets at fair value
through OCI, are recognised in other comprehensive income and accumulated in a
separate reserve within equity.
(ii) Share-based payment reserve
The share-based payment reserve is used to recognise:
· the grant date fair value of options issued to employees that
have vested but not been exercised; and
· the grant date fair value of shares issued to employees.
(iii) Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities
where the functional currency differs from the presentational currency are
recognised in other comprehensive income and accumulated in a separate reserve
within equity. The cumulative amount is reclassified to profit or loss when
the net investment is disposed of.
At a Company level the foreign currency translation reserve relates to the
change in presentational currency performed in previous periods.
(iv) Other reserves
This reserve is used to both adjust the actuarial assessed fair value for the
defined benefit pension obligation linked to the Group's employees in Ecuador
and to record the differences which may arise as a result of transactions with
non‑controlling interests that do not result in a loss of control.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(u) Changes in accounting policies
New standards and amendments in the year
The Group has adopted the following revised and amended standard. The list
below includes only standards and interpretations that could have an impact on
the Consolidated Financial Statements of the Group.
Effective period commencing on or after
IFRS 9, IAS 39, IFRS7, IFRS4 & IFRS 16 Interest Rate Benchmark Reform Phase 2 1 Jan 2021
Details of the impact that these standards had is detailed below. Other new
and amended standards and Interpretations issued by the IASB do not impact the
Group or Company as they are either not relevant to the Group's activities or
require accounting which is consistent with the Group's current accounting
policies.
IFRS 9, IAS 39, IFRS 7, IFRS 4 & IFRS 16: Interest Rate Benchmark Reform
Phase 2
In September 2020, the International Accounting Standards Board ("IASB")
published Interest Rate Benchmark Reform Phase 2 (amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16) finalising its response to the ongoing reform
of interest rate benchmarks around the world. The amendments aim to assist
reporting entities to provide investors with useful information about the
effects of the reform on their financial statements.
Many IBORs are expected to be replaced by new benchmark Risk-Free-Rates in
future reporting periods. This second set of amendments focus on issues
arising post replacement, ie, when the exiting interest rate benchmark is
actually replaced with alternative benchmark rates. The main amendments in
this second stage are as follows:
o Highly probable requirement and prospective assessments of hedge
effectiveness
o Designating a component of an item as the hedged item
The amendment is effective for periods beginning on or after 1 January 2021
with early application permitted. Management has assessed the effects of
applying the amendment on the Group's financial statements and has determined
that there is no material impact.
As at year end, the following amendments to the standards that could be
applicable to the Group, had been issued but was not mandatory for reporting
period ended 30 June 2022:
IAS 16: Property, Plant and Equipment - proceeds before intended use: The
proposed amends the standard to prohibit deducting from the cost of a item of
property, plant and equipment any proceeds from selling items produced while
bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Instead, an entity
recognises the proceeds from selling such items, and the cost of producing
those items, in profit or loss. The amendment is effective for periods
beginning on or after 1 January 2022 with early application permitted.
Management has made a preliminary assessment to not apply this change early
considering the stage of the projects.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 1 Accounting Policies (continued)
(v) Critical Accounting Estimates and Judgements
In application of the Group's accounting policies, described in Note 1, the
Directors have made the following judgments and estimates which may have a
significant effect on the amounts recognised in the Group and Company
Financial Statements.
The Directors evaluate estimates and judgements incorporated into the
financial statements based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and
within the Group.
Accounting Estimates
NSR royalty interest - Group
The NSR royalty has been valued using the amortised cost basis. IFRS 9
requires that amortised cost is calculated using the effective interest
method, which allocates interest expense at a constant rate over the term of
the instrument. The effective interest rate of a financial liability is
calculated at initial recognition and is the rate that exactly discounts the
estimated future cash flows through the expected life of the financial
liability, based on the then current mine plan and project development study
assumptions.
In the case of the Franco Nevada NSR royalty, the Company arrived at an
effective interest rate ("EIR") of 11.84%. Total interest for the financial
year is estimated at US$12,505,564 (2021: US$9,619,242), see Note 6. Should
there be a 2% increase in the EIR this would have an impact on the accounts
and increase the finance expenses by US$2,372,846.
Accounting Judgements
Exploration and evaluation expenditure - Group
The Group capitalises expenditure relating to exploration and evaluation where
it is considered likely to be recoverable or where the activities have not
reached a stage that permits a reasonable assessment of the existence of
reserves.
The carrying values of exploration and evaluation expenditure were assessed
for indicators of impairment based on an estimation of the recoverability from
expected future development and production. In forming this assessment, the
Group considered the external Mineral Resources Estimate, the status of its
permits and internal economic models and financing which supported the
carrying value of the project.
The Directors have carried out an assessment of the carrying values of
exploration and evaluation expenditure and indicators of impairment. No
triggers of impairment were identified at 30 June 2022, apart from the
decision to relinquish 10 concessions as detailed in Note 13.
Intercompany loan - Company
Management has made a judgement relating to those loans with subsidiaries
where settlement is neither planned nor likely to occur in the foreseeable
future and it has considered those loans as Investments in subsidiaries.
The carrying values of exploration and evaluation expenditure were assessed
for indicators of impairment based on an estimation of the recoverability from
expected future development and production. In forming this assessment, the
Company considered the external Mineral Resources Estimate, the status of its
permits and internal economic models and financing which supported the
carrying value of the project.
No triggers of impairment were identified at 30 June 2022 on the carrying
values of the Cascabel exploration and evaluation asset, which is directly
linked to the repayment of the loan from SolGold Finance AG. All recovery
strategies indicate that the loan will be fully recovered, therefore no loss
allowances have been made.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 2 Segment Reporting
The Group determines and separately reports operating segments based on
information that is internally provided to the Board of Directors, who are the
Group's chief operating decision makers. The Group's operating segments are
aligned to those business units that are evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance. Operating segments with similar economic
characteristics are aggregated into reportable segments.
The Group has outlined below the separately reportable operating segments,
having regard to the quantitative threshold tests provided in IFRS 8, namely
that the relative, asset or profit / (loss) position of the operating segment
equates to 10% or more of the Group's respective total. The Group reports
information to the Board of Directors along these project category lines.
The financial information of the other projects that do not exceed the
thresholds outlined above, and is therefore not reported separately, is
aggregated as Other Projects.
30 June 2022 Finance Income Depreciation Impairment of E&E Loss for the year Assets Liabilities Share Based Payments Non-current asset additions
US$ US$ US$ US$ US$ US$ US$ US$
Cascabel project * - 140,989 227,847 (1,014,326) 270,791,351 2,411,948 - 35,308,857
Other Ecuadorian projects 48,581 163,834 3,466,350 (5,272,198) 114,262,932 1,793,313 - 33,907,523
Other projects 30 24 - (20,273) 10,463,708 390 - 259,717
Corporate 790,529 314,201 163,827 4,605,232 33,644,619 93,708,453 454,336 8,174
Total 839,140 619,048 3,858,024(1) (1,701,565) 429,162,611 97,914,105 454,336 69,484,271
30 June 2021 Finance Income Depreciation Impairment of E&E Loss for the year Assets Liabilities Share Based Payments Non-current asset additions
restated
US$ US$ US$ US$ US$ US$ US$ US$
Cascabel project * - 104,200 879,608 (1,423,604) 233,169,906 3,153,211 - 43,129,562
Other Ecuadorian projects - 136,175 4,722 (1,525,682) 89,212,722 1,968,707 - 29,245,227
Other projects 246 25 - (16,907) 10,502,442 20,513 - 255,325
Corporate 454,329 341,626 - (20,805,896) 119,670,268 113,148,405 315,436 -
Total 454,575 582,026 884,330(1) (23,772,089) 452,555,338 118,290,836 315,436 72,630,114
* The Cascabel project is held by the subsidiary Exploraciones Novomining S.A.
which is 15% owned by a non-controlling interest. See further details of the
subsidiary in Note 9.
(1) Includes written off exploration expenditure due to the misappropriation
of funds. Please refer note 13
Geographical information
Non-current assets 2022 2021
US$ US$
restated
Switzerland 8,174 -
Australia 12,540,078 16,285,847
Solomon Islands 599,559 433,708
Ecuador 381,617,220 314,225,802
394,765,031 330,945,357
The Group had no revenue during the current and prior year.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 3 Operating Loss
Group Group
2022 2021
US$ US$
The operating loss is stated after charging (crediting)
Auditors' remuneration:
Amounts received or due and receivable by Group auditors for audit of the 773,363 -
Company and Group's annual accounts(1)
Amounts received or due and receivable by Group auditors for the audit of the 80,987 347,165
Company and Group's annual accounts BDO
Other non-audit services
- Agreed upon procedures on quarterly and half year financial - 103,686
statements
- Translation services - 27,585
- Incorporation of SolGold Finance AG - 18,130
- Tax compliance - Ecuador - 5,000
Employee Expenses 5,112,716 3,182,529
Insurance (largely political risk) 3,215,136 3,464,139
Director fees 1,373,471 1,490,282
Consultancy fees 1,369,647 1,059,336
Legal fees 765,599 746,590
Regulatory and compliance 612,459 637,808
Depreciation 619,048 582,026
Foreign exchange losses /(gains) 965,591 (1,790,028)
Share based payments (Note 23) 454,336 315,436
(1) PricewaterhouseCoopers LLP were appointed as auditors 11 November 2021
Note 4 Staff Numbers and Costs (monthly averages for the year)
Group Group Company Company
2022 2021 2022 2021
Finance and administration 33 37 11 14
Technical - permanent 497 456 8 7
Technical - temporary 364 329 - -
894 822 19 21
The aggregate payroll costs of employees were:
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Wages and salaries 26,464,580 23,566,670 5,758,733 5,020,454
Contributions to superannuation 242,403 191,064 242,403 191,064
Share based payments 454,336 315,436 454,336 315,436
Total staff costs 27,161,319 24,073,170 6,455,472 5,526,954
Included within total staff costs is US$21,844,082 (2021: US$20,176,654) which
has been capitalised as part of deferred exploration costs.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 5 Remuneration of Key Management Personnel
Basic Annual Salary Bonus Other Benefits(1) Pensions Total Remuneration
US$ US$ US$ US$
US$
2022
Directors
Darryl Cuzzubbo(2) 260,301 - - 10,951 271,252
Keith Marshall(3) 258,549 117,982 - - 376,531
Nicholas Mather 72,205 - - - 72,205
Jason Ward(4) 334,653 - - - 334,653
Brian Moller(5) 33,255 - - - 33,255
James Clare 72,305 - - - 72,305
Liam Twigger 118,931 - - 11,893 130,824
Elodie Grant Goodey 85,965 - - - 85,965
Kevin O'Kane 79,331 - - - 79,331
Maria Amparo Alban 72,423 - - - 72,423
Other key management personnel(6) 1,694,266 336,436 - 80,335 2,111,037
Total paid to key management personnel 3,082,184 454,418 - 103,179 3,639,781
Other staff and contractors 22,578,392 349,587 454,336 139,225 23,521,540
Total 25,660,576 804,005 454,336 242,404 27,161,321
(1) Other Benefits represents the fair value of the share options granted
during the year based on the Black-Scholes model considering the effects of
the vesting conditions.
(2) Darryl Cuzzubbo appointed as CEO and Managing Director effective 1
December 2021.
(3) Keith Marshall acted as interim CEO until 1 December 2021.
(4) Jason Ward's Basic Annual Consultancy Fees includes total remuneration
paid for the year including payments post his resignation as an Executive
Director 13 May 2022. Payments post resignation US$33,352.
(5) Brian Moller was not re-elected to the Board on 15 December 2021
(6) Other key management personnel consist of the aggregated remuneration of
Dennis Wilkins (Company Secretary), Ayten Saridas (Chief Financial Officer,
appointed May 2022, resigned July 2022), Benn Whistler (Technical Services
Manager-resigned), Chris Connell (Regional Exploration Manager, resigned
February 2022), Peter Holmes (Director of Studies-resigned), Ingo Hofmaier
(Interim Chief Financial Officer to May 2022, Executive General Manager
Projects and Corporate Finance-resigned) , Tania Cashman (Chief Human
Resources Officer, appointed January 2022), and Geoff Woodcroft ( Chief Human
Resources Officer, resigned 29 October 2021).
(
)
( )
Notes to the Financial Statements
For the year ended 30 June 2022
Note 5 Remuneration of Key Management Personnel (continued)
Basic Annual Salary Bonus Other Benefits(1) Pensions Total Remuneration
US$ US$ US$ US$
US$
2021
Directors
Keith Marshall(4) 212,145 - - - 212,145
Nicholas Mather (highest paid director)(6) 827,381 - - - 827,381
Brian Moller 64,628 - - - 64,628
Robert Weinberg(2) 23,506 - - - 23,506
James Clare 61,824 - - - 61,824
Jason Ward(3) 304,352 - - - 304,352
Liam Twigger 93,075 - - 8,972 102,047
Elodie Grant Goodey(4) 71,756 - - - 71,756
Kevin O'Kane(4) 51,202 - - - 51,202
Maria Amparo Alban(4) 47,326 - - - 47,326
Other key management personnel(5) 1,745,060 193,739 - 111,021 2,049,821
Total paid to key management personnel 3,502,255 193,739 - 119,993 3,815,987
Other staff and contractors 19,778,314 92,363 315,436 71,071 20,257,184
Total 23,280,569 286,102 315,436 191,064 24,073,171
(1) Other Benefits represents the fair value of the share options granted
during the year based on the Black-Scholes model considering the effects of
the vesting conditions.
(2) Robert Weinberg resigned as a Director effective 17 December 2020.
(3) Jason Ward's Basic Annual Consultancy Fees includes total remuneration
paid for the year including payments prior to Director appointment.
(4)Elodie Grant Goodey was appointed as a non-executive Director on 17 July
2020. Keith Marshall, Kevin O'Kane and Maria Amparo Alban were all appointed
as non-executive Directors on 21 October 2020.
(5) Other key management personnel consist of the aggregated remuneration of
Karl Schlobohm (Company Secretary, retired in June 2021), Priy Jayasuriya
(Chief Financial Officer, resigned in November 2020), Benn Whistler (Technical
Services Manager), Chris Connell (Regional Exploration Manager), Peter Holmes
(Director of Studies), Ingo Hofmaier (Interim Chief Financial Officer,
Executive General Manager Projects and Corporate Finance), Nadine Dennison
(Chief Human Resources Officer, resigned in March 2021), Peter Holmes
(Director of Studies), Steve Belohlawek (General Manager Underground
Development and Mining, resigned in October 2020) and Eduardo Valenzuela
(Executive General Manager of Studies, deceased).
(6) Nick Mather received a severance pay-out during the year ended 30 June
2021 upon retiring from the position of CEO, US$477,871 (AUD$600,000).
Note 6 Finance Income and Costs
Group Group
2022 2021
US$ US$
Interest income 49,194 4,962
Accretion of Interest on company funded loan plan (Note 14) 789,946 449,613
Finance income 839,140 454,575
Group Group
2022 2021
US$ US$
General interest 291 3,540
Interest on lease liability 64,325 67,730
Interest on bridging loan - 371,275
Interest on NSR (Note 21) 12,505,564 9,619,242
Finance costs 12,570,180 10,061,787
Notes to the Financial Statements
For the year ended 30 June 2022
Note 7 Tax Expense
Factors affecting the tax charge for the current year
SolGold's headquarters is in Australia and as the Company has its central
management and control in Australia, the applicable tax rates are
Australian. The tax profit for the year is higher than the credit resulting
from the application of the standard rate of corporation tax in Australia of
30% (2021: 30%) being applied to the profit before tax arising during the
year. The differences are explained below.
Group Group
2022 2021
US$ US$
restated
Tax reconciliation
Profit / (loss) before tax(1) 2,838,538 (23,620,916)
Tax at 30% (2021: 30%) 851,561 (7,086,275)
Add / (less) tax effect of:
Permanent differences 917,878 737,930
Derecognise current year tax losses - 4,483,039
(Recognise) / derecognise prior year losses (215,502) 7,879,110
Prior year tax expense attributable to Ecuador - 6,504
Current year tax expense attributable to Ecuador 61,460 80,294
Prior period adjustments to true-up tax return 2,921 10,979
Other 19,600 7,448
Impact of tax rate differences (3,417,092) 2,500,519
Temporary differences not recognised 6,319,277 (8,468,375)
Income tax expense on loss 4,540,103 151,173
Components of tax (expense) / benefit on other comprehensive income comprise
of:
Tax on valuation (loss) / gain on investments held at fair value through OCI (267,087) 692,474
(see note 15)
Income tax (expense) / benefit on other comprehensive income (267,087) 692,474
Amounts recognised directly in equity
Attributable to prior periods - 11,695
Net deferred tax credited directly to equity (11,111) (768,544)
Income tax (expense) recognised directly in equity (11,111) (756,849)
(1) Impacted by the restatement as detailed in Note 1.
Deferred tax assets are recognised only to the extent of deferred tax
liabilities. Where deferred tax assets exceed deferred tax liabilities,
deferred tax assets on carried forward tax losses are derecognised in the
first instance considering their recoverability.
Factors that may affect future tax charges
The Group has carried forward gross tax losses of approximately US$100.0
million (2021: US$88.8 million restated). These losses may be deductible
against future taxable income dependent upon the on-going satisfaction by the
relevant Group Company of various tax integrity measures applicable in the
jurisdiction in which the tax loss has been incurred. The jurisdictions in
which tax losses have been incurred include Australia, Ecuador, Switzerland
and the Solomon Islands. Tax losses in Australia (US$69.68 million) can be
carried forward indefinitely while in Ecuador (US$30.39 million), tax losses
may be carried forward and offset against profits in the following five years,
provided that the amount offset does not exceed 25% of the year's profits.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 8 Loss Per Share
2022 2021
Cents per share Cents per share
restated
Basic loss per share (0.1) (1.1)
Diluted loss per share (0.1) (1.1)
2022 2021
US$ US$
restated
(a) Loss
Loss used to calculate basic and diluted loss per share (1,701,565) (23,772,089)
Number of shares Number of shares
(b) Weighted average number of shares
Used in calculating basic LPS 2,293,816,433 2,115,829,663
Weighted average number of dilutive options - -
Weighted average number of ordinary shares and potential ordinary shares used 2,293,816,433 2,115,829,663
in calculating dilutive LPS
Options granted are not included in the determination of diluted earnings per
share as they are considered to be anti-dilutive. These out of the money
options may become dilutive in the future.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 9 Investment in subsidiaries
(1) Reporting date is 31 December Country of incorporation and operation Registered Address Principal activity SolGold plc's
effective interest
2022 2021
Australian Resource Management (ARM) Pty Ltd Australia Level 27, 111 Eagle Street Exploration 100% 100%
Brisbane, QLD, 4000
Australia
Acapulco Mining Pty Ltd Australia Level 27, 111 Eagle Street Exploration 100% 100%
Brisbane, QLD, 4000
Australia
Central Minerals Pty Ltd Australia Level 27, 111 Eagle Street Exploration 100% 100%
Brisbane, QLD, 4000
Australia
Solomon Operations Ltd Solomon c/- Morris & Sojnocki Chartered Accountants Exploration 100% 100%
Islands 1st Floor
City Centre Building, Mendana Avenue, Honiara
Solomon Islands
Honiara Holdings Pty Ltd Australia Level 27, 111 Eagle Street Exploration 100% 100%
Brisbane, QLD, 4000
Australia
Guadalcanal Exploration Pty Ltd Australia Level 27, 111 Eagle Street Exploration 100% 100%
Brisbane, QLD, 4000
Australia
Exploraciones Novomining S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Exploration 85% 85%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Carnegie Ridge Resources S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Exploration 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Green Rock Resources S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Exploration 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Valle Rico Resources S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Exploration 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Cruz del Sol S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Exploration 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
SolGold Ecuador S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Services Management 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Novoproyectos-Sustentables S.A.(1) Ecuador Avenida La Coruña E25-58 y San Ignacio, Project development 100% 100%
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
SolGold Canadian Callco Corp.(1) Canada 4500, 855 - 2nd Street S.W, Investment 100% 100%
Calgary, Alberta T2P 4K7
SolGold Canadian Exchangeco Corp. Canada 4500, 855 - 2nd Street S.W, Investment 100% 100%
Calgary, Alberta T2P 4K7
SolGold Finance AG Switzerland Baarerstrasse 21, Investment 100% 100%
6300 Zug
Notes to the Financial Statements
For the year ended 30 June 2022
Note 9 Investment in subsidiaries (continued)
Investment in subsidiary undertakings
Investment
US$
Cost
Balance at 30 June 2020 295,129,525
Acquisitions and advances in the year(1) 33,592,422
Reallocation to SolGold Finance AG (173,497,993)
Balance at 30 June 2021 155,223,954
Acquisitions and advances in the year 32,918,459
Balance at 30 June 2022 188,142,413
Amortisation and impairment losses
Balance at 30 June 2020 (35,178,110)
Balance at 30 June 2021 (35,178,110)
Balance at 30 June 2022 (35,178,110)
Carrying amounts
Balance at 30 June 2020 259,951,415
Balance at 30 June 2021 120,045,844
Balance at 30 June 2022 152,964,303
(1)During the year ended 30 June 2021, the intercompany loans between SolGold
plc and Exploraciones Novomining S.A./SolGold Ecuador S.A. were reallocated to
a newly established intermediary company (SolGold Finance AG).
Included in Investments with subsidiaries there are U$S126,545,135 (2021 U$S
94,536,862) from Loans with related parties.
Note 10 Intercompany Loans with Subsidiaries
Intercompany Loans with Subsidiaries
Loan
US$
Cost
Balance at 30 June 2020 -
Reallocation of loans 173,497,993
BLA Offset (15,619,579)
Advances in the year 5,001,463
Interest accrued in the year 4,519,890
Balance at 30 June 2021 167,399,767
Advances in the year 12,505,512
Interest accrued in the year 5,694,637
Balance at 30 June 2022 185,599,916
Amortisation and impairment losses
Balance at 30 June 2020 -
Balance at 30 June 2021 -
Balance at 30 June 2022 -
Carrying amounts
Balance at 30 June 2020 -
Balance at 30 June 2021 167,399,767
Balance at 30 June 2022 185,599,916
Notes to the Financial Statements
For the year ended 30 June 2022
Note 10 Intercompany Loans with Subsidiaries (continued)
In September 2020 SolGold plc transferred its investments and associated
intercompany loans in ENSA (85%) and SolGold Ecuador S.A. (100%) to a newly
established wholly-owned subsidiary called SolGold Finance AG.
Upon the transfer of the investments and associated intercompany loans from
ENSA and SolGold Ecuador S.A. to SolGold Finance AG, a new back-to-back loan
agreement was implemented between SolGold plc and SolGold Finance AG. The key
terms of this new back-to-back loan agreement include:
· 10 year loan maturity period
· 3.5% annual interest rate, calculated daily
· Interest accrues and is due on or before 10 years, or thereafter
by agreement between the parties
· SolGold plc has the ability to call the loan for repayment at any
point on or before 10 years from the date of issue
· SolGold Finance AG may prepay the whole or any part of the
advances made by SolGold plc at any point without notice, penalty or bonus
The Company has assessed the receivable and no loss allowances have been made,
refer Note 1(v).
Note 11 Investments
(a) Investments accounted for as financial assets held at fair value through
OCI
Group Company
2022 2021 2022 2021
US$ US$ US$ US$
Movements in financial assets
Opening balance at 1 July 6,825,042 4,119,179 6,819,046 4,113,660
Additions - 813,927 - 813,927
Fair value adjustment through OCI (1,473,198) 1,891,936 (1,472,723) 1,891,459
Balance at 30 June 5,351,844 6,825,042 5,346,323 6,819,046
Financial assets comprise an investment in the ordinary issued capital of
Cornerstone Capital Resources Inc., listed on the TSX Venture Exchange and an
investment in the ordinary issued capital of Aus Tin Mining Ltd, a company
listed on the Australian Securities Exchange.
(b) Fair value
Fair value hierarchy
The following table details the Group's assets, measured or disclosed at fair
value, using a three-level hierarchy, based on the lowest level of input that
is significant to the entire fair value measurement being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The fair values of financial assets approximate their carrying amounts
principally due to their short-term nature or the fact that they are measured
and recognised at fair value.
The following table represents the Group's financial assets measured and
recognised at fair value.
US$ US$ US$ US$
Level 1 Level 2 Level 3 Total
2022
Financial assets held at fair value through OCI 5,351,844 - - 5,351,844
2021
Financial assets held at fair value through OCI 6,825,042 - - 6,825,042
The financial assets are measured based on the quoted market prices at 30 June
and therefore are classified as Level 1.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 12 Property, Plant and Equipment
Group Company
Land(2) Property, Plant and Equipment Motor Vehicles Office Equipment Furniture & Fittings Total Total (1)
US$ US$ US$ US$ US$ US$ US$
Cost
Balance 1 July 2020 12,399,525 2,904,105 1,104,237 729,314 264,914 17,402,095 1,644,111
Effect of foreign exchange on opening balance - 124,554 4,596 2,776 877 132,803 119,635
Additions (restated) 4,113,935 457,182 - 187,496 9,400 4,768,013 19,304
IFRS 16 transition additions - (12,645) - - - (12,645) -
Disposals - - (35,155) - - (35,155) -
Balance 30 June 2021 (restated) 16,513,460 3,473,196 1,073,678 919,586 275,191 22,255,111 1,783,050
Effect of foreign exchange on opening balance - (123,985) (4,578) (2,767) (873) (132,203) (119,085)
Additions 3,836,561 406,964 - 80,751 5,719 4,329,995 14,772
Disposals - - (38,490) - - (38,490) -
Balance 30 June 2022 20,350,024 3,756,175 1,030,610 997,570 280,037 26,414,413 1,678,737
Depreciation and impairment losses
Balance 1 July 2020 - (995,434) (712,955) (577,497) (175,221) (2,461,107) (456,920)
Effect of foreign exchange on opening balance - (29,513) (4,595) (2,858) (877) (37,843) (24,606)
Depreciation charge for the year - (482,064) - (93,615) (6,347) (582,026) (341,626)
Depreciation capitalised to exploration - (123,839) (188,182) (37,907) (36,264) (386,192) (1,048)
Disposals - - 35,155 - - 35,155 -
Balance 30 June 2021 - (1,630,850) (870,577) (711,877) (218,709) (3,432,013) (824,200)
Effect of foreign exchange on opening balance - 64,391 4,577 2,766 873 72,607 59,500
Depreciation charge for the year - (490,621) - (121,419) (7,008) (619,048) (314,071)
Depreciation capitalised to exploration - (194,668) (166,686) (5,313) (18,185) (384,851) (1,047)
Disposals - - 33,379 - - 33,379 -
Balance 30 June 2022 - (2,251,748) (999,307) (835,843) (243,029) (4,329,927) (1,079,818)
(1) Company assets include fixture and fittings and office equipment
(2) Includes restatement of $3,140,978 for land. See restatement in Note 1
Carrying amounts
At 30 June 2020 12,399,525 1,908,671 391,282 151,817 89,693 14,940,988 1,187,191
At 30 June 2021 16,513,460 1,842,346 203,101 207,709 56,482 18,823,098 958,850
At 30 June 2022 20,350,024 1,504,427 31,303 161,728 37,008 22,084,490 598,919
Notes to the Financial Statements
For the year ended 30 June 2022
Note 13 Intangible Assets
Group deferred exploration costs (Restated) (1)
US$
Cost
Balance at 30 June 2020 267,852,937
Incorrect capitalised costs (3,479,117)
Balance at 30 June 2020 restated(1) 264,373,820
Effect of foreign exchange on opening balances 434,222
Additions - expenditure 77,512,965
Incorrect capitalised costs (879,977)
Balance at 30 June 2021 restated(1) 341,441,030
Effect of foreign exchange on opening balances (696,468)
Additions - expenditure 66,294,083
Incorrect capitalised costs (2) (227,846)
Balance at 30 June 2022 406,810,799
Impairment losses
Balance at 30 June 2020 (37,596,784)
Impairment charge (4,353)
Balance at 30 June 2021 (37,601,137)
Impairment charge (3,630,178)
Balance at 30 June 2022 (41,231,315)
Carrying amounts
At 30 June 2020 - restated 226,777,036
At 30 June 2021 - restated 303,839,893
At 30 June 2022 365,579,484
(1) As of 30 June 2022, the group has restated its intangible assets for the
year end 30 June 2021 and 2020 as detailed in Note 1.
(2) These costs were previously reported as of 31 December 2022 as additions.
Recoverability of the carrying amount of exploration assets is dependent on
the successful development and commercial exploitation of areas of interest,
and the sale of minerals or the sale of the respective areas of interest. An
impairment charge of US$3,630,178 (2021: US$4,353) was recognised in the year
for exploration expenditure associated with concessions in Ecuador that the
board decided to relinquish, as per the announcement on 7 September 2021. In
addition to this, US$227,846 (2021: US$879,977) was recognised in association
with the misappropriation of funds (refer Note 3).
In December 2021, the Company commissioned EY Ecuador to conduct a forensic
investigation into alleged misappropriation of funds. SolGold's Internal Audit
function was engaged to provide independent oversight of the investigation,
reporting directly to the Chair of the Audit & Risk Committee. The
forensic investigation revealed that during the years 2017 to 2021 US$4.6
million was misappropriated.
This misappropriation resulted in the overstatement of our exploration assets
by US$4.6 million, with the associated false expenses having been capitalised
in-line with SolGold's accounting policy. SolGold concluded that it was
appropriate to write-down the value of these assets accordingly and restate
our financial statements. The profit and loss impact for the year ended 30
June 2022 amounted to US$227,846, reflecting the fact that most losses were
incurred in prior years.
An assessment of the carrying values of deferred exploration costs is provided
below.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 13 Intangible Assets (continued)
Cascabel project (85% Ownership)
The Alpala deposit, discovered at Cascabel, is in northern Ecuador, lying upon
the gold rich section of the northern section of the prolific Andean Copper
belt, renowned as the base for nearly half of the world's copper production.
The project area hosts mineralisation from the Eocene age, the same age as
numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to the
south. The project is a three-hour drive north of Quito, close to water, power
supply and Pacific ports.
The Alpala Porphyry Copper-Gold-Silver Deposit, at a cut-off grade of 0.21%
CuEq, comprises 2,663 Mt at 0.53% CuEq in the Measured plus Indicated
categories, which includes 1,192 Mt at 0.72% CuEq in the Measured category and
1,470 Mt at 0.37% CuEq in the Indicated category. The Inferred category
contains an additional 544 Mt at 0.31% CuEq.
The estimate comprises a contained metal content of 9.9 Mt Cu and 21.7 Moz Au
in the Measured plus Indicated categories, which includes 5.7 Mt Cu and 15 Moz
Au in the Measured category, and 4.2 Mt Cu and 6.6 Moz Au in the Indicated
category. The Inferred category contains an additional 1.3 Mt Cu and 1.9 Moz
Au.
Based on the exploration work conducted to date at the Cascabel project, the
Company:
· continues to have the right to explore in the area
· has met its expenditure commitments
· remains positive around the prospectivity of the project area,
with encouraging geological results encountered to date
· the company is not aware of any data that would require or demand
to abandon or relinquish the project
Accordingly, management is of the opinion that the exploration and evaluation
assets capitalised at 30 June 2022 are recoverable and fairly stated and that
no impairment provision is required.
Accordingly, management have assessed that there are no indicators of
impairment for the aggregate carrying value of US$259.9 million.
SolGold 100% owned projects
Regional concessions granted for 100% SolGold Ecuador subsidiaries
The four 100% owned subsidiary companies in Ecuador: Carnegie Ridge Resources
S.A., Green Rock Resources S.A., Cruz del Sol S.A. and Valle Rico Resources
S.A. hold 72 mining concessions in Ecuador for which the companies were
successful in bidding as part of the auction process in 2016 and 2017.The
Company has carried out initial exploration work programs on these concessions
and delineated 10 priority projects. The ongoing exploration program on these
projects continues to focus on:
· Drill testing targets
· Collection and Interpretation of geophysical data
· Mapping and geochemical sampling of new areas
At 30 June 2022, the capitalised exploration and evaluation costs for the
Other Ecuadorian projects totalled US$95.25 million. The high priority
projects consist of 41 concessions and total capitalised expenditure is
US$67.86 million. The other 31 regional concessions total capitalised costs
are US$27.40 million.
Based on the exploration work conducted to date at the Other Ecuadorian
projects, the Company:
· continues to have the right to explore in the area
· has not lost access to any areas and is working pro-actively with
communities to build a strong licence ahead of major field work
· has met its expenditure commitments
· remains positive around the prospectivity of the project area,
with encouraging geological results encountered to date
· insufficient data exists to abandon or relinquish any of these
projects
Accordingly, management have assessed that there are no indicators of
impairment for the aggregate carrying value of US$95.25 million.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 13 Intangible Assets (continued)
Acapulco Mining projects
The main exploration project of Acapulco Mining Pty Ltd is the Mt Perry
project. A comprehensive assessment of the project has identified the Upper
Chinaman's Creek prospects as the highest priority high-grade opportunity.
Based on the exploration work conducted to date, the Company:
· continues to have the right to explore in the area
· has met its expenditure commitments and is now actively seeking a
joint venture partner to pursue further exploration on the projects
· remains positive around the prospectivity of the project areas,
with encouraging exploration results encountered to date
· insufficient data exists to abandon or relinquish the project
Accordingly, management have assessed that there are no indicators of
impairment for the aggregate carrying value of US$6.50 million.
Central Minerals projects
Central Minerals Pty Ltd holds the Rannes project where recently completed
exploration activities include:
· Work on the Rannes Project focused on plate modelling of VTEM data and
commencement of the integration of 3DIP, VTEM and magnetic inversion model
data
· Air-photo based litho-structural geological review and interpretation
Based on the exploration work conducted to date, the Company:
· continues to have the right to explore in the area
· has met its expenditure commitments and is now actively seeking a
joint venture partner to pursue further exploration on the projects
· remains positive around the prospectivity of the project areas,
with encouraging exploration results encountered to date
· insufficient data exists to abandon or relinquish the project
Accordingly, management have assessed that there are no indicators of
impairment for the aggregate carrying value of US$3.30 million.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 14 Loan Receivables and Other Assets
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Loan receivables and other current assets
Company Funded Loan Plan Receivable 3,553,291 6,495,930 3,553,291 6,495,930
Closing balance at the end of the reporting period 3,553,291 6,495,930 3,553,291 6,495,930
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Loan receivables and other non-current assets
Security bonds 1,749,213 1,457,324 756,332 756,332
Closing balance at the end of the reporting period 1,749,213 1,457,324 756,332 756,332
Company funded loan plan receivable
Balance at beginning of reporting period 6,495,930 6,373,398 6,495,930 6,373,398
Proceeds received from repayment of the loans during the period (2,408,511) (1,065,245) (2,408,511) (1,065,245)
Fair value adjustment recognised as an employee benefit expense (669,211) - (669,211) -
Accretion of interest 789,946 449,613 789,946 449,613
Effect of foreign exchange (654,863) 738,164 (654,863) 738,164
Balance at end of reporting period 3,553,291 6,495,930 3,553,291 6,495,930
The CFLP is a plan established by the Company to assist employees in
exercising share options. On 29 October 2018, the Company assisted employees
to exercise 19,950,000 options previously issued to employees of the Company
in 2016 via the CFLP. Since inception and until 30 June 2022 repayments of
US$3,473,756 have been received against the loans provided. As at 30 June
2022, 4 employees remain beneficiaries of the Plan, with 1 employee having
repaid their loan in early July 2022.
The key terms of this CFLP on the date the loans were granted were as follows:
· The employee may only use a loan under the Plan to pay for the
exercise of Employee Options granted by the Company.
· The loan will be granted for a maximum period of 2 years
(extended in the meantime).
· No interest will be charged on the loan.
· The loan is secured by the shares granted on the exercise of the
Employee Options.
· The loans provided are full recourse.
As the loan provided by the Company was at a favourable rate of interest for
the employees, the loan receivable under the Plan was fair valued at the date
of grant. The fair value of the loan was estimated based on the future cash
flow and a market rate of 7%. In future reporting periods, post inception, the
loan has been measured at amortised cost. The loans provided are full recourse
loans. If the sale of shares does not cover the outstanding loan balance in
full, repayment of the balance will be recovered from the employees. This
transaction was a non-cash transaction with employees. Management have
considered the likelihood of default is low and the expected credit losses
under the loans will be immaterial and accordingly, no impairment has been
recognised at 30 June 2022. The Company has the ability to sell the shares,
and accordingly the exposure to credit risk is low.
On 24 February 2020 the maturity date for the CFLP was extended by 12 months
to 29 October 2021. All other terms of the CFLP remained consistent. The
12-month extension of the loan resulted in an overall increase of US$402,082
in employee benefits expense. This fair value adjustment is represented in the
above table and was recognised as an employee benefit expense.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 14 Loan Receivables and Other Assets (continued)
The Board of Directors in June 2021 resolved to extend the CFLP until 31
December 2021. During the October 2021 board meeting, the Board of Directors
resolved to extend the CFLP again, this time for a further six months, to 30
June 2022. This extension of the loan resulted in an overall increase of
US$669,211 in employee benefits expense. This fair value adjustment is
represented in the above table and was recognised as an employee benefit
expense.
On 24 August 2022, it was proposed to extend the CFLP for 3 individuals whom
due to their positions in the Company had additional restrictions from trading
during the year ended 30 June 2022. This extension will see their loan
repayments terms extended until 31 December 2022.
Security bonds relate to cash security held against office premises (Level 27;
111 Eagle St, Brisbane, Queensland Australia, 1 King Street, St Paul's London
United Kingdom, Baarerstrasse 21, 6300 Zug), cash security held by the
Queensland Department of Natural Resources and Mines against Queensland
exploration tenements held by the Group and on cash backed bank guarantees
held by the Ecuadorian Ministry of Environment against Ecuadorian exploration
tenements held by the Group.
Note 15 Deferred Taxation
Recognised deferred tax assets and liabilities
Group Opening balance Net (charged)/credited to income Net (charged) / credited to other comprehensive income Net (charged) / credited to equity Net movement on unwind / transfer Closing balance
US$ US$
US$ US$ US$ US$
2022
Recognised deferred tax assets
Carried forward tax losses - 6,295,129 - - - 6,295,129
Accruals / provisions 1,517,126 (443,509) - 11,111 - 1,084,728
Potential benefit 1,517,126 5,851,620 - 11,111 - 7,379,857
Recognised deferred tax liabilities
Financial assets held at fair value through other comprehensive income (1,201,733) 102,643 267,087 - - (832,003)
Derivative liabilities 43,314 (90,424) - - - (47,110)
NSR Liability (borrowings) - (4,200,444) - - - (4,200,444)
Exploration and evaluation assets (2,599,253) 146,911 - - - (2,452,342)
Foreign exchange gains/losses 2,518,843 (6,361,967) - - - (3,843,124)
Property, plant and equipment - (1,069) - - - (1,069)
IFRS 16 right of use asset (278,297) 74,088 - - - (204,209)
Potential benefit (1,517,126) (10,330,262) 267,087 - - (11,580,301)
Net deferred taxes - (4,478,642) 267,087 11,111 - (4,200,444)
Deferred tax assets not recognised
Unused tax losses 25,423,063 (4,126,551) - - - 21,296,512
Temporary differences(1) 9,341,592 6,319,277 - - - 15,660,869
Tax benefit 34,764,655 2,192,726 - - - 36,957,381
(1) Exploration expenditure incurred in the Solomon Islands that has been
expensed. This expenditure is deductible over 5 years from when production
commences.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Group Opening balance Net (charged) / credited to income Net (charged) / credited to other comprehensive income Net (charged) / credited to equity Net movement on unwind / transfer Closing balance
US$ US$
US$ US$ US$ US$
2021
Recognised deferred tax assets
Carried forward tax losses 7,184,409 (7,184,409) - - - -
Accruals / provisions 1,431,263 (670,986) - 756,849 - 1,517,126
Derivative liabilities (67,340) 110,654 - - - 43,314
Foreign exchange gains/losses (5,317,434) 7,836,277 - - - 2,518,843
Potential benefit 3,230,898 91,536 - 756,849 - 4,079,283
Recognised deferred tax liabilities
Financial assets held at fair value through other comprehensive income (569,295) 60,036 (692,474) - - (1,201,733)
Exploration and evaluation assets (2,302,332) (296,921) - - - (2,599,253)
IFRS 16 right of use asset (359,271) 80,974 - - - (278,297)
Potential benefit (3,230,898) (155,911) (692,474) - - (4,079,283)
Net deferred tax liabilities - (64,375) (692,474) 756,849 - -
Deferred tax assets not recognised
Unused tax losses 5,369,347 20,053,716 - - - 25,423,063
Temporary differences(1) 8,962,905 378,687 - - - 9,341,592
Tax benefit 14,332,252 20,432,403 - - - 34,764,655
(1) Exploration expenditure incurred in the Solomon Islands that has been
expensed. This expenditure is deductible over 5 years from when production
commences.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Company Opening balance Net (charged) / credited to income Net (charged) / credited to other comprehensive income Net (charged) / credited to equity Closing balance
US$
US$ US$ US$
2022
Recognised deferred tax assets
Carried forward tax losses - 3,847,148 - - 3,847,148
Accruals / provisions 303,013 38,433 - - 341,446
Capital raising costs 1,119,475 (468,570) - 11,111 662,016
Other temporary differences 11,039 38,161 - - 49,200
Potential benefit 1,433,527 3,455,172 - 11,111 4,899,810
Recognised deferred tax liabilities
Financial assets held at fair value through other comprehensive income (1,201,733) 102,642 267,087 - (832,004)
Derivative liabilities 43,313 (90,424) - - (47,111)
Foreign exchange gains / (losses) - (3,848,385) - - (3,848,385)
Property, plant and equipment - (1,069) - - (1,069)
IFRS 16 right of use asset (275,107) 103,866 - - (171,241)
Potential benefit (1,433,527) (3,733,370) 267,087 - (4,899,810)
Net deferred tax liabilities - (278,198) 267,087 11,111 -
Deferred tax assets not recognised
Unused tax losses 22,008,697 (7,145,119) - - 14,863,578
Unused capital losses - - - - -
Temporary differences 2,973,922 (2,973,922) - - -
Tax benefit 24,982,619 (10,119,041) - - 14,863,578
The deferred tax asset in respect of these items has not been recognised as
future taxable profit is not anticipated within the foreseeable future.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Company Opening balance Net (charged) / credited to income Net (charged) / credited to other comprehensive income Net (charged) / credited to equity Closing balance
US$
US$ US$ US$ US$
2021
Recognised deferred tax assets
Carried forward tax losses 4,860,353 (4,860,353) - - -
Accruals / provisions 363,929 (60,916) - - 303,013
Capital raising costs 977,865 (615,239) - 756,849 1,119,475
Other temporary differences 20,083 (9,044) - - 11,039
Potential benefit 6,222,230 (5,545,552) - 756,849 1,433,527
Recognised deferred tax liabilities
Financial assets held at fair value through other comprehensive income (569,295) 60,036 (692,474) - (1,201,733)
Derivative liabilities - 43,313 - - 43,313
Foreign exchange gains / (losses) (5,317,434) 5,317,434 - - -
IFRS 16 right of use asset (335,501) 60,394 - - (275,107)
Potential benefit (6,222,230) 5,481,177 (692,474) - (1,433,527)
Net deferred taxes - (64,375) (692,474) 756,849 -
Deferred tax assets not recognised
Unused tax losses 5,347,495 16,661,202 - - 22,008,697
Unused capital losses - - - - -
Temporary differences - 2,973,922 - - 2,973,922
Tax benefit 5,347,495 19,635,124 - - 24,982,619
The deferred tax asset in respect of these items has not been recognised as
future taxable profit is not anticipated within the foreseeable future.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 16 Other Receivables and Prepayments
Group Group Company Company
2022 2021 (restated)(1) 2022 2021
US$ US$ US$ US$
Other receivables 1,807,935 3,666,760 623,282 1,341,539
Taxes receivable 2,592,334 665,533 128,258 206,001
Prepayments 341,887 1,219,655 310,043 391,076
Other receivables and prepayments 4,742,156 5,551,948 1,061,583 1,938,616
(1) See Note 1
Other receivables represent Australian Goods and Services Tax receivable and
deposits made to landowners in Ecuador for land purchases. Management have
considered the expected credit loss on the deposits to landowners as
immaterial and accordingly, no impairment has been recognised at 30 June 2022.
As these land deposits are dependent on the Cascabel project, they are not
impaired. There is no indication the Cascabel project will not go ahead.
Note 17 Cash and Cash Equivalents
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Cash at bank 26,102,133 109,562,103 21,032,524 72,918,016
Cash and cash equivalents in the statement of cash flows 26,102,133 109,562,103 21,032,524 72,918,016
Note 18 Allotted, Called-up and Fully Paid Share Capital and Reserves
(a) Authorised Share Capital
2021 2021
No. of Shares Nominal Value £
At 1 July 2020 - Ordinary shares 2,905,511,333 29,055,113
Previous years increase in authorised capital having expired (443,750,000) (4,437,500)
Previous years increase in authorised capital having expired (615,440,300) (6,154,403)
Increase in authorised share capital of two-thirds of issued capital on 17 1,230,880,689 12,308,807
December 2020
At 30 June 2021 - Ordinary shares 3,077,201,722 30,772,017
2022 2022
No. of Shares Nominal Value £
At 1 July 2021 - Ordinary shares 3,077,201,722 30,772,017
Previous years increase in authorised capital having expired (1,230,880,689) (12,308,807)
Increase in authorised share capital of two-thirds of issued capital on 15 1,529,211,000 15,282,110
December 2021
At 30 June 2022 - Ordinary shares 3,375,532,033 33,745,320
Ordinary shares participate in dividends and the proceeds on winding up the
Company in proportion to the number of shares held. At shareholder meetings
each ordinary share is entitled to one vote when a poll is called, otherwise
each shareholder has one vote on show of hands.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 18 Allotted, Called-up and Fully Paid Share Capital and Reserves
(continued)
(b) Changes in Allotted, Called-up and Fully Paid Share Capital and Share
Premium
No. of Shares Nominal Value Share Premium Total
US$ US$
US$
Ordinary shares of 1p each at 1 July 2020 2,072,213,494 29,281,511 353,220,481 382,501,992
Shares issued at $0.42 - Valuestone 12 November 2020 11,900,000 156,579 4,843,421 5,000,000
Shares issued at £0.255 - Placing share issue 28 April 2021 204,922,643 2,846,328 69,735,022 72,581,350
Shares issued at £0.255 - Directors share issue 28 April 2021 1,543,858 21,440 525,276 546,716
Shares issued at £0.255 - Retail Offer share issue 28 April 2021 1,736,437 24,140 591,428 615,568
Shares issued at £0.25 - Exercise of employee options 15 June 2021 1,500,000 20,701 496,834 517,535
Share issue costs charge to share premium account - - (2,593,300) (2,593,300)
Ordinary shares of 1p at 30 June 2021 2,293,816,432 32,350,699 426,819,162 459,169,861
No. of Shares Nominal Value Share Premium Total
US$ US$
US$
Ordinary shares of 1p each at 1 July 2021 2,293,816,432 32,350,699 426,819,162 459,169,861
Share issue costs charge to share premium account - - (25,922) (25,922)
Ordinary shares of 1p at 30 June 2022 2,293,816,432 32,350,699 426,793,240 459,143,939
(c) Other Reserves
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Financial assets held at fair value through other comprehensive income 2,047,393 3,253,029 2,047,393 3,253,029
Share based payment reserve 9,356,670 16,791,596 9,356,670 16,791,596
Other reserves (466,305) (632,034) - -
Total Other reserves 10,931,758 19,412,591 11,404,063 20,044,625
Capital management
Management controls the capital of the Group in order to generate long-term
shareholder value and ensure that the Group can fund operations and continue
as a going concern. Management effectively manages the Group's capital by
assessing the Group's financial risks and adjusting its capital structure in
response to changes in these risks and in the market. These responses
include share issues and debt considerations. Given the nature of the Group's
current activities the entity will remain dependant on equity funding in the
short to medium term until such time as the Group becomes self-financing from
the commercial production of mineral resources.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 19 Trade and Other Payables
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Current
Trade payables 1,294,293 838,753 885,985 744,927
Other payables (1) 4,046,719 3,834,339 298,327 229,316
Accrued expenses 1,168,066 3,174,564 760,658 501,152
Trade and other current payables 6,509,078 7,847,656 1,944,970 1,475,395
(1) It includes employee benefits amounted US$1,292,407 (2021: US$1,009,212)
Trade and other payables are measured at amortised cost.
The decrease in accrued expenses for the Group mainly relates to the decrease
in drilling costs for the year ended 30 June 2022.
Note 20 Leases
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Current liability
Lease liability 415,132 335,749 309,668 319,275
Balance at the end of the reporting period 415,132 335,749 309,668 319,275
Non current liability
Lease liability 326,374 607,214 303,573 607,214
Balance at the end of the reporting period 326,374 607,214 303,573 607,214
(a)Right-of-Use assets
Group Company
Property, Plant & Equipment Property, Plant & Equipment
US$ US$
At 1 July 2021 931,527 917,026
Additions 260,019 -
Depreciation (429,280) (286,634)
Foreign exchange movements (59,585) (59,585)
At 30 June 2022 702,681 570,807
(b)Lease liabilities
Group Company
US$ US$
At 1 July 2021 942,963 926,489
Additions 233,566 -
Interest expense included in statement of profit and loss (note 6) 64,325 57,907
Interest expense capitalised 9,657 -
Lease payments (448,353) (310,503)
Foreign exchange movements (60,652) (60,651)
At 30 June 2022 741,506 613,242
( )
Notes to the Financial Statements
For the year ended 30 June 2022
Note 21 - Borrowings
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Current liability
Bridging loan - - - -
Accrued interest - - - -
Balance at the end of the reporting period - - - -
Bridging loan
Balance at beginning of reporting period - 15,248,303 - 15,248,303
Accrued interest - 371,275 - 371,275
Repayment of loan - (15,619,578) - (15,619,578)
Balance at end of reporting period - - - -
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Non-current liability
Net Smelter Royalty 84,076,077 106,574,217 - -
Balance at the end of the reporting period 84,076,077 106,574,217 - -
NSR Financing
Balance at beginning of reporting period 106,574,217 - - -
Additions - funds received under the loan - 84,380,422 - -
Additions - funds utilised in repaying Bridging Loan - 15,619,578 - -
Transaction costs adjusted through retained earnings - (726,427) - -
Transaction costs at recognition - (2,318,598) - -
Accrued interest 12,505,564 9,619,242 - -
Remeasurement of amortised cost (35,003,704) - - -
Balance at end of reporting period 84,076,077 106,574,217 - -
Notes to the Financial Statements
For the year ended 30 June 2022
Note 21 - Borrowings (continued)
On 11 September 2020, Franco-Nevada advanced to SolGold US$100 million, the
Royalty Purchase Price under the NSR Financing Agreement, less the amount of
outstanding principal and interest under the US$15 million secured bridging
loan pursuant to the Bridge Loan Agreement ("BLA") with Franco-Nevada
announced on 11 May 2020. The aggregate amount owing under the BLA was repaid
out of the proceeds of the NSR financing. This financing arrangement is
classified as a financial liability at amortised cost and was recognised at
the amount received adjusted for transaction costs paid.
The accounting policy disclosed within the 30 September 2020 interim financial
statements noted that the NSR was classified as fair value through profit or
loss ("FVTPL"). Following further analysis, Management elected not to measure
the hybrid instrument at FVTPL but rather to measure the host debt at
amortised cost and the embedded derivative at FVTPL.
Management also notes that US$726,427 of transaction costs were expensed in
the 30 June 2020 income statement, as it was not sufficiently certain due to
COVID-19 that the transaction would close. Management has recognised an
adjustment to restate the prior year retained earnings to reflect this in the
30 June 2021 Consolidated Financial Statements.
In return for the royalty purchase price, Franco-Nevada has been granted a
perpetual 1% royalty interest to be calculated by reference to net smelter
returns from the Cascabel concession area in accordance with the terms and
conditions set out in the NSR financing agreement. Financial liabilities
classified at amortised costs are calculated using the effective interest
method, which allocates expenses at a constant rate over the term of the
investment. The effective interest rate is the internal rate of return of the
liability at initial recognition through the expected life of the financial
liability, which in this case is the time from the recognition until the end
of the mine life of the Alpala mine.
Key terms to the financing include:
· Funding amount: US$100 million with upscale option to US$150
million
· Royalty terms: 1.0% NSR for $100 million
· Buy-back option: A 50% buy-back option exercisable at SolGold's
election for six years from closing at a price delivering Franco-Nevada a 12%
IRR
· Gold conversion: option in favour of Franco-Nevada to convert the
NSR interest into a gold-only NSR interest (six years from year two of
operations). The amount of the gold net smelter return will be calculated on a
net present value neutral basis
· Proceeds to fund the costs to complete the feasibility study,
with any surplus to be used for SolGold's share of the development of Alpala
The NSR financing agreement included an upscale option at the Group's control.
The option expired during the financial year.
Key inputs for the estimation of future cash flows of the effective interest
rate are:
· All operating assumptions are based on the latest available
development plan
· The NSR top-up and minimum annual payment are assessed based on
the latest operating assumptions
· Gold price of $1,300 per ounce
· Copper price of $7,268 per tonne
· Silver price of $16 per ounce
The EIR was calculated using the available development plan at the time of
recognising the NSR and results in a discount rate of 11.84% (real).
Management has reviewed its assessment and considers that the buy-back option
is not an embedded derivative which needs to be separately accounted for as it
is closely related. As such, it is not required to be accounted for as a
separate instrument in accordance with IFRS 9.
In previous periods Management assessed that the fair value of this embedded
derivative was nil or immaterial, as there is no expectation or likelihood
that the buy-back option will be exercised by SolGold.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 22 - Other financial liabilities
Group Company
2022 2021 2022 2021
US$ US$ US$ US$
Movements in financial liabilities
Balance at 1 July 2,926,000 2,312,254 2,926,000 2,312,254
Additions - - - -
Fair value adjustment through profit or loss (539,000) 613,746 (539,000) 613,746
Balance at 30 June 2,387,000 2,926,000 2,387,000 2,926,000
The fair values of these financial liabilities approximate their carrying
amounts principally due to their short-term nature or the fact that they are
measured and recognised at fair value.
The following table represents the Group's financial liabilities measured and
recognised at fair value.
US$ US$ US$ US$
Level 1 Level 2 Level 3 Total
2022
Derivative liability at fair value through profit or loss - - 2,387,000 2,387,000
2021
Derivative liability at fair value through profit or loss - - 2,926,000 2,926,000
The derivative liability at fair value through profit or loss has been valued
using the Monte Carlo Simulation method.
2022 2021
Fair value of share options and assumptions £0.37 Options £0.37 Options
30 June 2022 30 June 2021
Number of options (Note 23) 19,250,000 19,250,000
Share price at issue date £0.2920 £0.2920
Exercise price £0.370 £0.370
Expected volatility 65.700% 63.879%
Time to expiry 2.43 years 3.43 years
Expected dividends 0.00% 0.00%
Risk-free interest rate (short-term) 1.91% (0.16%)
Fair value $0.124 $0.152
Valuation methodology Monte Carlo Value Monte Carlo Value
For the financial year ended 30 June 2022/2021 2022 2021
US$ US$
Derivative liability recognised in statement of comprehensive income loss (539,000) 613,746
Notes to the Financial Statements
For the year ended 30 June 2022
Note 23 Share Options
At 30 June 2022 the Company had 32,250,000 options outstanding for the issue
of ordinary shares (2021: 106,875,000).
Options
Share options are granted to employees under the company's Employee Share
Option Plan ("ESOP"). The employee share option plan is designed to align
participants' interests with those of shareholders.
Unless otherwise documented with the Company, when a participant ceases
employment prior to the vesting of their share options, the share options are
forfeited after 90 days unless cessation of employment is due to termination
for cause, whereupon they are forfeited immediately. The Company prohibits key
management personnel from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally two to three years.
There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share
with the exercise price payable in cash.
Share options issued
There were 3,000,000 options granted during the year ended 30 June 2022 (2021:
3,000,000).
On 24 February 2022, the Company issued 3,000,000 unlisted share options over
ordinary shares of the Company to an employee in line with an executive
service agreement. The options are exercisable at £0.26 and expire on 15 June
2024.
Date of grant Exercisable from Exercisable to Exercise price Number granted Number at 30 June 2022
2 December 2019(1) The options vested immediately and exercisable through to 2 December 2024 2 December 2024 £0.37 19,250,000 19,250,000
27 April 2020 The options vested immediately and exercisable through to 26 April 2023 26 April 2023 £0.25 7,000,000 7,000,000
2 March 2021 The options vested immediately and exercisable through to 2 March 2024 2 March 2024 £0.36 3,000,000 3,000,000
24 February 2022 The options vested immediately and exercisable through to 15 June 2024 15 June 2024 £0.26 3,000,000 3,000,000
32,250,000 32,250,000
(1)Options issued to BHP as part of the share subscriptions on 2 December 2019
and exercisable at £0.37 within 5 years. These options fall outside the scope
of IFRS 2 and are classified as a derivative financial liability as they do
not meet the fixed for fixed test.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 23 Share Options (continued)
Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 30 June 2021
5 July 2018 The options vested immediately, and exercisable through to 4 July 2021 4 July 2021 £0.60 250,000 250,000
6 November 2018 The options vested immediately, and exercisable through to 6 November 2021 6 November 2021 £0.60 82,875,000 72,375,000
20 December 2018 The options vested immediately, and exercisable through to 20 December 2021 20 December 2021 £0.60 11,375,000 5,000,000
2 December 2019 The options vested immediately and exercisable through to 2 December 2024 2 December 2024 £0.37 19,250,000 19,250,000
27 April 2020 The options vested immediately and exercisable through to 26 April 2023 26 April 2023 £0.25 7,000,000 7,000,000
2 March 2021 The options vested immediately and exercisable through to 2 March 2024 2 March 2024 £0.36 3,000,000 3,000,000
123,750,000 106,875,000
Share-based payments
The number and weighted average exercise price of share options are as
follows:
Weighted average exercise price Number of options Weighted average exercise price Number of options
2022 2022 2021 2021
Outstanding at the beginning of the year £0.53 106,875,000 £0.54 185,162,000
Exercised during the year - - £0.25 1,500,000
Expired/lapsed during the year £0.60 77,625,000 £0.60 72,062,000
Forfeited during the year - - £0.60 7,725,000
Granted during the year £0.26 3,000,000 £0.36 3,000,000
Outstanding at the end of the year £0.32 32,250,000 £0.53 106,875,000
Exercisable at the end of the year £0.32 32,250,000 £0.53 106,875,000
The options outstanding at 30 June 2022 have an exercise price of £0.25,
£0.26, £0.36 and £0.37 (2021: £0.25, £0.36, £0.37, £0.40 and £0.60)
and a weighted average contractual life of 1.97 years (2021: 1.03 years).
Notes to the Financial Statements
For the year ended 30 June 2022
Note 23 Share Options (continued)
Share-based payments (continued)
Share options held by Directors are as follows:
Share options held At 30 June 2022 At 30 June 2021 Option Price Exercise Period
Nicholas Mather - 5,000,000 60p 20/12/18 - 20/12/21
Jason Ward - 5,000,000 60p 06/11/18 - 06/11/21
The total number of options outstanding at year end is as follows:
Share options held Share options held Option price Exercise periods
at 30 June 2022 at 30 June 2021
- 250,000 £0.60 Exercisable through to 04/07/2021
- 72,375,000 £0.60 Exercisable through to 06/11/2021
- 5,000,000 £0.60 Exercisable through to 20/12/2021
19,250,000 19,250,000 £0.37 Exercisable through to 02/12/2024
7,000,000 7,000,000 £0.25 Exercisable through to 26/04/2023
3,000,000 3,000,000 £0.36 Exercisable through to 02/03/2024
3,000,000 - £0.26 Exercisable through to 15/06/2024
32,250,000 106,875,000
The fair value of services received in return for share options granted is
measured by reference to the fair value of share options granted. This
estimate is based on the Black-Scholes model considering the effects of the
vesting conditions, expected exercise period and the dividend policy of the
Company.
2022
Fair value of share options and assumptions £0.26 Options
24 February 2022
Number of options 3,000,000
Share price at issue date £0.275
Exercise price £0.26
Expected volatility 66.369%
Option life 2.31 years
Expected dividends 0.00%
Risk-free interest rate (short-term) 1.22%
Fair value £0.113
Valuation methodology Black-Scholes
For the financial year ended 30 June 2022 2022 2021
US$ US$
Share based payments expense recognised in statement of comprehensive income 454,336 315,436
The calculation of the volatility of the share price on the above options was
based on the Company's daily closing share price over the option life period,
dependant on the exercise period attributable to the tranche of options, prior
to the date the options were issued.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 23 Share Options (continued)
Share-based payments (continued)
2021
Fair value of share options and assumptions £0.25 Options £0.36 options
27 April 2020(1) 2 March 2021
Number of options 1,500,000 3,000,000
Share price at issue date £0.26 £0.223
Exercise price £0.25 £0.36
Expected volatility 60.548% 64.407%
Option life 3.00 years 3.00 years
Expected dividends 0.00% 0.00%
Risk-free interest rate (short-term) 0.14% 0.10%
Fair value £0.107 £0.065
Valuation methodology Black-Scholes Black-Scholes
For the financial year ended 30 June 2021 US$ US$ Total US$
Share based payments expense recognised in statement of comprehensive income 47,377 268,059 315,436
The calculation of the volatility of the share price on the above options was
based on the Company's daily closing share price over the two or three-year
period, dependant on the exercise period attributable to the tranche of
options, prior to the date the options were issued.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 24 Financial Instruments (Group and Company)
Financial instruments by category (Group)
Financial assets Financial assets at amortised cost Financial assets held at fair value through OCI
2022 2021 2022 2021
Cash and cash equivalents 26,102,133 109,562,103 - -
Other receivables 1,807,935 3,666,760 - -
Loans receivable and other non-current assets 1,749,213 1,457,324 - -
Loans receivable and other current assets 3,553,291 6,495,930 - -
Equity investments - - 5,351,844 6,825,042
Total financial assets 33,212,572 121,182,117 5,351,844 6,825,042
Financial liabilities Financial liabilities at amortised cost Financial liabilities at fair value through profit or loss
2022 2021 2022 2021
Trade and other payables 6,509,078 7,847,656 - -
Derivative liability - - 2,387,000 2,926,000
NSR 84,076,077 106,574,217 - -
Bridging Loan - - - -
Lease liabilities 741,506 942,967 - -
Total financial liabilities 91,326,661 115,364,846 2,387,000 2,926,000
Financial instruments by category (Company)
Financial assets Financial assets at amortised cost Financial assets held at fair value through OCI
2022 2021 2022 2021
Cash and cash equivalents 21,032,524 72,918,016 - -
Other receivables 623,282 1,341,539 - -
Loans receivable and other non-current assets 756,332 756,332 - -
Loans receivable and other current assets 3,553,291 6,495,930 - -
Loans with subsidiaries 185,599,916 167,399,767
Equity investments - - 5,346,323 6,819,046
Total financial assets 211,565,345 248,911,584 5,346,323 6,819,046
Financial liabilities Financial liabilities at amortised cost Financial liabilities at fair value through profit or loss
2022 2021 2022 2021
Trade and other payables 1,646,644 1,246,080 - -
Derivative liability - - 2,387,000 2,926,000
Lease liabilities 613,241 926,489 - -
Total financial liabilities 2,259,885 2,172,569 2,387,000 2,926,000
If required, the Board of Directors determines the degree to which it is
appropriate to use financial instruments, commodity contracts or other hedging
contracts or techniques to mitigate risks. The main risks for which such
instruments may be appropriate are foreign currency risk and liquidity risk,
each of which is discussed below. The main credit risk is the non-collection
of loans and other receivables which include refunds and tenement security
deposits. There were no overdue receivables at year end, apart from the
amounts owing for the CFLP (Note 14).
For the Company, the main credit risk is the non-collection of loans made to
its subsidiaries. The Directors expect to collect the loans through the
successful exploration and subsequent exploitation of the subsidiaries'
tenements.
There have been no changes in financial risks from the previous year. During
the years ended 30 June 2022 and 2021 no trading in commodity contracts was
undertaken.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 24 Financial Instruments (Group and Company) (continued)
Market risk
Interest rate risks
The Group's and Company's policy is to retain its surplus funds on the most
advantageous term of deposit available up to twelve months' maximum duration.
The increase/decrease of 2% in interest rates will impact the Group's income
statement by a gain/loss of US$522,043 and the Company's income statement by
US$420,650. The Group considers that a +/- 2% movement in interest rates
represents reasonable possible changes.
Foreign currency risk
The Group has potential currency exposures in respect of items denominated in
foreign currencies comprising:
§ Transactional exposure in respect of operating costs, capital expenditures
and, to a lesser extent, in currencies other than the functional currency of
operations which require funds to be maintained in currencies other than the
functional currency of operation; and
§ Translation exposures in respect of investments in overseas operations
which have functional currencies other than United States dollars.
Currency risk in respect of non-functional currency expenditure is reviewed by
the Board.
The table below shows the extent to which Group companies have monetary assets
and liabilities in different currencies. Foreign exchange differences on
retranslation of such assets and liabilities are taken to the statement of
comprehensive income.
Group Functional currency of entity
Net financial assets / (liabilities) AUD USD TOTAL
2022
Australian dollar (AUD) 35,890 4,477,773 4,513,663
Solomon Island dollar (SBD) 23 - 23
Canadian dollar (CAD) - 1,155,292 1,155,292
Great British pound (GBP) - 2,097,138 2,097,138
Swiss franc (CHF) - 162,691 162,691
35,913 7,892,894 7,928,807
Group Functional currency of entity
Net financial assets / (liabilities) AUD USD TOTAL
2021
Australian dollar (AUD) 67,499 2,052,268 2,119,767
Solomon Island dollar (SBD) 6,302 - 6,302
Canadian dollar (CAD) - 1,771,005 1,771,005
Great British pound (GBP) - 3,129,986 3,129,986
Swiss franc (CHF) - 13,988 13,988
73,801 6,967,247 7,041,048
Company Functional currency of entity
Net financial assets / (liabilities) AUD USD TOTAL
2022
Australian dollar (AUD) - 4,347,334 4,347,334
Canadian dollar (CAD) - 1,147,090 1,147,090
Great British pound (GBP) - 2,097,138 2,097,138
- 7,591,562 7,591,562
Company Functional currency of entity
Net financial assets / (liabilities) AUD USD TOTAL
2021
Australian dollar (AUD) - 1,960,513 1,960,513
Canadian dollar (CAD) - 1,762,803 1,762,803
Great British pound (GBP) - 3,129,986 3,129,986
- 6,853,302 6,853,302
Notes to the Financial Statements
For the year ended 30 June 2022
Note 24 Financial Instruments (Group and Company) (continued)
The main currency exposure relates to the effect of re-translation of the
Group's assets and liabilities in Australian dollar (AUD) and the Great
British Pound (GBP). A 10% increase in the A$/US$ and GBP/US$ exchange rates
would give rise to a change of approximately US$734,533 (2021: US$583,305) in
the Group net assets and reported earnings. A 10% decrease in the A$/US$ and
GBP/US$ exchange rates would give rise to a change of approximately US$600,981
(2021: US$477,250). The Group does not hedge foreign currency exposures and
manages net exposures by buying and selling foreign currencies at spot rates
where necessary. In respect of other monetary assets and liabilities held in
currencies other than United States dollars, the Group ensures that the net
exposure is kept to an acceptable level, by buying or selling foreign
currencies at spot rates where necessary to address short-term imbalances.
Credit risk
The Group is exposed to credit risk primarily from the financial institutions
with which it holds cash and cash deposits and loans receivable under the
CFLP.
The banks and their credit ratings with which the Group had cash accounts at
30 June 2022 were US$766,083 in cash accounts with Macquarie Bank Limited
(BBB) in Australia, US$20,827,794 in cash accounts with Westpac Bank (AA-) in
Australia, US$3,207,398 in cash accounts with Banco Guayaquil (AAA-) in
Ecuador, US$79,651 in cash accounts with Produbanco (B) in Ecuador, US$36,446
in cash accounts with Lloyds Bank (A+), US$1,171,729 in cash accounts with
Credit Suisse (A-) in Switzerland, and US$13,009 in petty cash. Including
other receivables, the maximum exposure to credit risk at the reporting date
is the carrying value of these assets and was US$30,844,289 (2021:
US$118,020,597).
The Company is also exposed to credit risk due to the cash balance it holds
directly. It is also exposed to credit risk on the CFLP receivable. At 30 June
2022, the company had US$21,032,524 in cash and cash equivalents (2021:
US$72,918,016) and US$3,553,291 of CFLP receivable (2021: US$6,495,930). The
maximum exposure to credit risk at the reporting date was US$24,585,815 (2021:
US$79,413,946).
Credit risk is managed by dealing with banks with high credit ratings assigned
by international credit rating agencies. Furthermore, funds are deposited with
banks of high standing in order to obtain market interest rates. Credit risk
over the Company funded loan plan is reduced due to the loan being secured by
shares and the Company has full recourse to recover the loans from the
employees in the event that there is a shortfall when the shares are
exercised.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 24 Financial Instruments (Group and Company) (continued)
Liquidity risks
The Group and Company raises funds as required on the basis of budgeted
expenditure for the next 12 to 24 months, dependent on a number of prevailing
factors. Funds are generally raised in capital markets from a variety of
eligible private, corporate and fund investors, or from interested third
parties (including other exploration and mining companies) which may be
interested in earning an interest in the Group's projects. The success or
otherwise of such capital raisings is dependent upon a variety of factors
including general equities and metals market sentiment, macro-economic
outlook, project perspectivity, operational risks and other factors from time
to time. When funds are sought, the Group balances the costs and benefits of
equity financing versus alternate financing options. Funds are provided to
local sites monthly, based on the sites' forecast expenditure.
All liabilities held by the Group and Company are contractually due and
payable within 1 year, excluding the non-current lease liability payments, NSR
financing agreement and derivative liabilities which are greater than 12
months as set in the table below:
Contractual maturities of financial liabilities Less than 6 months 6 - 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows
As at 30 June 2022
Trade payables 6,509,078 - - - - 6,509,078
Borrowings - - - - 84,076,077 84,076,077
Lease liabilities 207,566 207,566 326,374 - - 741,506
Derivative liabilities - - - 2,387,000 - 2,387,000
Total 6,716,644 207,566 326,374 2,387,000 84,076,077 93,713,661
Contractual maturities of financial liabilities Less than 6 months 6 - 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years Total contractual cash flows
As at 30 June 2021
Trade payables 7,847,656 - - - - 7,847,656
Borrowings - - - - 106,574,217 106,574,217
Lease liabilities 176,111 159,638 291,463 315,751 - 942,963
Derivative liabilities - - - 2,926,000 - 2,926,000
Total 8,023,767 159,638 291,463 3,241,751 106,574,217 118,290,836
Fair values
In the Directors' opinion, there is no material difference between the book
value and fair value of any of the Group's and Company's financial
instruments. The classes of financial instruments are the same as the line
items included on the face of the statement of financial position and have
been analysed in more detail in notes to the financial statements.
All the Group's financial assets, with the exception of investments held at
fair value through other comprehensive income are categorised as other
financial assets at amortised cost.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 25 Commitments
The Group also has certain obligations to expend minimum amounts on
exploration in tenement areas. These obligations may be varied from time to
time and are expected to be fulfilled in the normal course of operations of
the Group.
The combined commitments of the Group related to its granted tenement
interests are as follows:
Location Up to 12 Months 13 Months to 5 Years Later than 5 Years
Ecuador 3,065,430 9,196,290 -
Solomon Islands 100,000 100,000 -
Queensland 243,599 109,024 -
3,409,029 9,405,314 -
To keep tenements in good standing, work programs should meet certain minimum
expenditure requirements. If the minimum expenditure requirements are not
met, the Group has the option to negotiate new terms or relinquish the
tenements. The Group also has the ability to meet expenditure requirements
by joint venture or farm in agreements.
Note 26 Related Parties
(a) Group
Transactions between related parties are on normal commercial terms and
conditions and are no more favourable than those available to other parties
unless otherwise stated.
a) Transactions with Directors and Director-Related
Entities
(i) The Company had a commercial agreement with Samuel
Capital Pty Ltd ("Samuel") for the engagement of Nicholas Mather as
Non-Executive Director of the Company. For the year ended 30 June 2022
US$72,205 was paid or payable to Samuel (2021: US$827,381). These amounts
are included in Note 5 (Remuneration of Key Management Personnel). The total
amount outstanding at year end is US$6,330 (2021: US$nil).
(ii) Mr Brian Moller (a Director until 15(th) December
2021), is a partner in the Australian firm HopgoodGanim lawyers. For the
year ended 30 June 2022, HopgoodGanim were paid or payable US$8,899 (2021:
US$72,456) for the provision of legal services to the Company. The services
were based on normal commercial terms and conditions. The total amount
outstanding at year end was US$997 (2021: US$nil).
(iii) Mr James Clare (a Director), is a partner in the
Canadian firm Bennett Jones lawyers. For the year ended 30 June 2022,
Bennett Jones were paid or payable US$301,730 (2021: US$486,246) for the
provision of legal services to the Company. The services were based on
normal commercial terms and conditions. The total amount outstanding at year
end was US$nil (2021: US$nil)
(iv) The Company had a commercial agreement with Bayview
PMF Pty Ltd ("Bayview") for the engagement of Jason Ward (Director to May
2022) and his wife (until January 2022) for managerial and administrative
services. For the year ended 30 June 2022 US$369,634 was paid or payable to
Bayview. The total amount outstanding at year end was US$nil.
Share and Option transactions of Directors are shown under Notes 5 and 22.
(b) Company
The Company has related party relationships with its subsidiaries (see Note 9
and Note 10), Directors and other key personnel (see Notes 5 and 20).
Subsidiaries
The Company has an investment in subsidiaries balance of US$152,964,303 (2021:
US$120,045,844). The transactions during the year have been included in Note
9.
The Company also has an intercompany loan with SolGold Finance AG with a
balance of US$185,599,916 (2021: US$167,399,767). The transactions during the
year have been included at Note 10.
(c) Controlling party
In the Directors' opinion there is no ultimate controlling party.
Notes to the Financial Statements
For the year ended 30 June 2022
Note 27 Contingent Assets and Liabilities
A 2% NSR is payable to Santa Barbara Resources Limited, who were the previous
owners of the Cascabel tenements. These royalties can be bought out by
paying a total of US$4 million. Fifty percent (50%) of the royalty can be
purchased for US$1 million 90 days following the completion of a feasibility
study and the remaining 50% of the royalty can be purchased for US$3 million
90 days following a production decision. The smelter royalty is considered
to be a contingent liability as the Group has not yet completed the
feasibility study at 30 June 2022 as such there is significant uncertainty
over the timing of any payments that may fall due.
SolGold elected to undertake the Optional Subscription under the terms of the
Term Sheet ("Term Sheet") signed between SolGold plc and Cornerstone Capital
Resources Inc. ("CGP"), CGP's subsidiary Cornerstone Ecuador S.A. ("CESA"),
and Exploraciones Novomining S.A. ("ENSA"), and holds an aggregate registered
and beneficial equity position in ENSA of 85% under the terms of the Term
Sheet. CGP and CESA elected to obtain the benefit of the Financing Option
whereby SolGold will solely fund all operations and activities of ENSA until
the completion of a Feasibility Study, including CESA's contribution as the
registered and beneficial holder of an aggregate equity position in ENSA of
15%. After completion and delivery of the Feasibility Study, SolGold and CESA
shall jointly fund the operations and activities of ENSA based on their
respective equity positions in ENSA on a proportionate basis. Furthermore, the
Term Sheet allows for SolGold to be fully repaid for the financing provided,
including interest at LIBOR plus 2% for the expenditures incurred by SolGold
from the time CGP and CESA elected to obtain the benefit of the Financing
Option and the completion of the first phase drill program. SolGold is to be
repaid out of 90% of CESA's distribution of earnings or dividends from ENSA or
the Cascabel Tenement to which CESA would otherwise be entitled. If CESA
does not elect to contribute and its equity stake in ENSA is diluted to below
10%, its equity stake in ENSA will be converted to a 0.5% interest in the Net
Smelter Return and SolGold may acquire this interest for US$3.5 million at any
time. At 30 June 2022, Cornerstone's equity interest in ENSA had not been
diluted below 10%.
The amount receivable from CESA at 30 June 2022 was US$48,184,491 (2021:
US$40,603,042). This has been considered as a contingent asset, as there is
uncertainty as to whether ENSA will be able to distribute earnings or
dividends.
There are no other material contingent assets and liabilities at 30 June 2022
(2021: nil).
Note 28 Subsequent Events
On 5 July 2022 SolGold announced the grant of a total of 10,000,000 long term
incentive employee options and the allotment and issue of 1,336,182 new
ordinary shares to Mr Darryl Cuzzubbo, Chief Executive Officer and Managing
Director. The Incentives were triggered by requirements within the Executive
Remuneration Contract executed in January 2022, and in accordance with the
Company's Directors Remuneration Policy and Long Term Incentive Plan Rules,
which were approved by shareholders on 30 June 2022. The Options will vest in
three separate tranches, each with a thirty six (36) month expiry date.
On 11 August 2022 SolGold announced that Ayten Saridas, Group CFO, resigned.
The Company appointed Keith Pollocks as Interim Group CFO. The Company also
announced that Jason Ward informed the Board of his decision to step down as
Head of Exploration. Mr Ward will remain as an advisor to the Company to
continue to help drive SolGold's exploration strategy.
Keith Marshall, independent Non-Executive Director, resigned from the Board
effective from 12th August 2022. He will remain as an advisor to the Company's
technical committee to oversee the Cascabel Project and to ensure a smooth
transition to the new Vice President Projects, Bernie Loyer.
On 24 August it was proposed to extend the CFLP for 3 individuals whom due to
their positions in the Company had additional restrictions from trading during
the year ended 30 June 2022. This extension will see their payments terms
extend until 31 December 2022.
On 30 August 2022 SolGold announced the issue of 599,257 new ordinary shares
to Mr Steve Botts, President, SolGold Ecuador and the issue of 299,629 new
ordinary shares to Mr Harold 'Bernie' Loyer, Vice President Projects. SolGold
announced the appointments of Mr Botts and Mr Loyer on 14 July 2022 and they
assumed their roles on 1 August 2022 and 27 July 2022, respectively. These
Incentives were triggered by requirements within the Executive Remuneration
Contracts executed in July 2022 for recruitment inducement purposes.
The Directors are not aware of any other significant changes in the state of
affairs of the Group or events after the reporting date that would have a
material impact on the consolidated or Company financial statements.
Certain information contained in this announcement would have been deemed
inside information.
CONTACTS
Rufus Gandhi
SolGold Plc (Company Secretary) Tel: +61 (0) 7 3303 0660
Fawzi Hanano / Lia Abady
SolGold Plc (Investors / Communication) Tel: +44 (0) 20 3823 2130
investors@solgold.com.au (mailto:investors@solgold.com.au) /
info@solgold.com.au (mailto:info@solgold.com.au)
Tavistock (Media)
Jos Simson / Gareth Tredway Tel: +44 (0) 20 7920 3150
Follow us on twitter @SolGold_plc
ABOUT SOLGOLD
SolGold is a leading resources company focussed on the discovery, definition
and development of world-class copper and gold deposits and continues to
strive to deliver objectives efficiently and in the interests of shareholders.
SolGold is exploring the length and breadth of this highly prospective and
gold-rich section of the Andean Copper Belt which is currently responsible for
c40% of global mined copper production.
The Company operates with transparency and in accordance with international
best practices. SolGold is committed to delivering value to its shareholders,
while simultaneously providing economic and social benefits to impacted
communities, fostering a healthy and safe workplace and minimizing the
environmental impact.
Dedicated stakeholders
SolGold employs a staff of approximately 800 employees of whom 99% are
Ecuadorian. This is expected to grow as the operations expand at Cascabel, and
in Ecuador generally. SolGold focusses its operations to be safe, reliable and
environmentally responsible and maintains close relationships with its local
communities. SolGold has engaged an increasingly skilled, refined and
experienced team of geoscientists using state of the art geophysical and
geochemical modelling applied to an extensive database to enable the delivery
of ore grade intersections from nearly every drill hole at Alpala. SolGold has
close to 60 geologists on the ground in Ecuador exploring for economic copper
and gold deposits.
About Cascabel
The Alpala deposit is the main target in the Cascabel concession, located on
the northern section of the heavily endowed Andean Copper Belt, the entirety
of which is renowned as the base for nearly half of the world's copper
production. The project area hosts mineralisation of Eocene age, the same age
as numerous Tier 1 deposits along the Andean Copper Belt in Chile and Peru to
the south. The project base is located at Rocafuerte within the Cascabel
concession in northern Ecuador, an approximately three-hour drive on sealed
highway north of the capital Quito, close to water, power supply and Pacific
ports.
Having fulfilled its earn-in requirements, SolGold is a registered shareholder
with an unencumbered legal and beneficial 85% interest in ENSA (Exploraciones
Novomining S.A.) which holds 100% of the Cascabel concession covering
approximately 50km(2). The junior equity owner in ENSA is required to repay
15% of costs since SolGold's earn in was completed, from 90% of its share of
distribution of earnings or dividends from ENSA or the Cascabel concession. It
is also required to contribute to development or be diluted, and if its
interest falls below 10%, it shall reduce to a 0.5% NSR royalty which SolGold
may acquire for US$3.5million.
SolGold's Regional Exploration Drive
SolGold is using its successful and cost-efficient blueprint established at
Alpala, and Cascabel generally, to explore for additional world class copper
and gold projects across Ecuador. SolGold is a large and active concessionaire
in Ecuador.
The Company wholly owns four other subsidiaries active throughout the country
that are now focussed on a number of high priority copper and gold resource
targets, several of which the Company believes have the potential, subject to
resource definition and feasibility, to be developed in close succession or
even on a more accelerated basis compared to Cascabel.
SolGold is listed on the London Stock Exchange and Toronto Stock Exchange
(LSE/TSX: SOLG). The Company has on issue a total of 2,296,051,501 fully paid
ordinary shares and 42,250,000 share options.
See www.solgold.com.au (http://www.solgold.com.au) for more information.
Follow us on twitter @SolGold plc
CAUTIONARY NOTICE
News releases, presentations and public commentary made by SolGold plc (the
"Company") and its Officers may contain certain statements and expressions of
belief, expectation or opinion which are forward looking statements, and which
relate, inter alia, to interpretations of exploration results to date and the
Company's proposed strategy, plans and objectives or to the expectations or
intentions of the Company's Directors, including the plan for developing the
Project currently being studied as well as the expectations of the Company as
to the forward price of copper. Such forward-looking and interpretative
statements involve known and unknown risks, uncertainties and other important
factors beyond the control of the Company that could cause the actual
performance or achievements of the Company to be materially different from
such interpretations and forward-looking statements.
Accordingly, the reader should not rely on any interpretations or
forward-looking statements; and save as required by the exchange rules of the
TSX and LSE or by applicable laws, the Company does not accept any obligation
to disseminate any updates or revisions to such interpretations or
forward-looking statements. The Company may reinterpret results to date as
the status of its assets and projects changes with time expenditure, metals
prices and other affecting circumstances.
This release may contain "forward‑looking information" within the meaning of
applicable Canadian securities legislation. Forward‑looking information
includes, but is not limited to, statements regarding the Company's plans for
developing its properties. Generally, forward‑looking information can be
identified by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or state that certain
actions, events or results "may", "could", "would", "might" or "will be
taken", "occur" or "be achieved".
Forward‑looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be materially
different from those expressed or implied by such forward‑looking
information, including but not limited to: transaction risks; general
business, economic, competitive, political and social uncertainties; future
prices of mineral prices; accidents, labour disputes and shortages and other
risks of the mining industry. Although the Company has attempted to identify
important factors that could cause actual results to differ materially from
those contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended. There
can be no assurance that such information will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such statements. Factors that could cause actual results to differ
materially from such forward-looking information include, but are not
limited to, risks relating to the ability of exploration activities (including
assay results) to accurately predict mineralization; errors in management's
geological modelling and/or mine development plan; capital and operating costs
varying significantly from estimates; the preliminary nature of visual
assessments; delays in obtaining or failures to obtain required governmental,
environmental or other required approvals; uncertainties relating to the
availability and costs of financing needed in the future; changes in equity
markets; inflation; the global economic climate; fluctuations in commodity
prices; the ability of the Company to complete further exploration activities,
including drilling; delays in the development of projects; environmental
risks; community and non-governmental actions; other risks involved in the
mineral exploration and development industry; the ability of the Company to
retain its key management employees and skilled and experienced personnel; and
those risks set out in the Company's public documents filed on SEDAR at
www.sedar.com (http://www.sedar.com) . Accordingly, readers should not place
undue reliance on forward‑looking information. The Company does not
undertake to update any forward-looking information, except in accordance with
applicable securities laws.
The Company and its officers do not endorse, or reject or otherwise comment on
the conclusions, interpretations or views expressed in press articles or
third-party analysis, and where possible aims to circulate all available
material on its website.
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