REG - Sovereign Metals Ltd - Half-Year Accounts
13/03/2024 07:00
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RNS Number : 6629G Sovereign Metals Limited 13 March 2024
INTERIM FINANCIAL REPORT
FOR THE HALF YEAR ENDED
31 DECEMBER 2023
abn 71 120 833 427
CORPORATE DIRECTORY
Directors Nominated Advisor & Broker
Mr Benjamin Stoikovich Chairman
SP Angel Corporate Finance LLP
Mr Frank Eagar Managing Director and CEO
Prince Frederick House
Mr Ian Middlemas Non-Executive Director
35-39 Maddox Street
Dr Julian Stephens Non-Executive Director
London W1S 2PP, United Kingdom
Mr Mark Pearce Non-Executive
Director Brokers
Mr Nigel Jones Non-Executive Director Berenberg, Gossler & Co, KG, London Branch
60 Threadneedle Street
London EC2R 8HP
United Kingdom
Company Secretary T: +44 20 3753 3132
Mr Dylan Browne
Share Register
London Office Australia
Unit 3C, 38 Jermyn Street, London
SW1Y 6DN, United Kingdom Computershare Investor Services Pty Ltd
Telephone: +44 207 478 3900
Level 17
221 St Georges Terrace
Perth WA 6000
Cape Town Office
Telephone: 1300 850 505
International: +61 8 9323 2000
Ground Floor, Block C,
Facsimile: +61 8 9323 2033
The Terraces, Steenberg Office Park
Cape Town, South Africa
United Kingdom
Operations Office Computershare Investor Services PLC
The Pavilions,
Area 4
Bridgewater Road,
Bristol BS99 6ZZ
Lilongwe
Telephone: +44 370 702 0000
Malawi
Solicitors
Thomson Geer
Registered and Principal Office
Level 9, 28 The Esplanade
Perth WA 6000
Telephone: +61 8 9322 6322 Auditor
Ernst & Young
Stock Exchange Listings
Australia
Australian Securities Exchange Bankers
ASX Code: SVM - Ordinary Shares National Australia Bank
United Kingdom Standard Bank - Malawi
London Stock Exchange (AIM)
AIM Code: SVML - Depository Interests
CONTENTS
Directors' Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Competent Person Statement
Auditor's Independence Declaration
Independent Auditor's Review Report
DIRECTORS' REPORT
The Directors of Sovereign Metals Limited present their report on Sovereign
Metals Limited (Sovereign or the Company or Parent) and the entities it
controlled at the end of, or during, the half year ended 31 December 2023
(Consolidated Entity or Group).
DIRECTORS
The names of Directors in office at any time during the financial period or
since the end of the financial period are:
Current Directors
Mr Benjamin Stoikovich Chairman
Mr Frank Eagar Managing Director and
CEO (appointed 20 October 2023)
Mr Ian Middlemas Non-Executive Director
Dr Julian Stephens Non-Executive Director
(previously Managing Director, Non-Executive as of 20 October 2023)
Mr Mark Pearce Non-Executive Director
Mr Nigel Jones Non-Executive
Director
All Directors were in office from 1 July 2023 until the date of this report,
unless otherwise noted.
REVIEW AND RESULTS OF OPERATIONS
KASIYA RUTILE-GRAPHITE PROJECT
Sovereign is focused on the development of its Kasiya rutile-graphite project
(Kasiya or the Project) in Malawi. The Pre-Feasibility Study (PFS) confirmed
Kasiya as a potentially major critical minerals project delivering
industry-leading economic returns and sustainability metrics.
The Company's objective is to develop a large-scale, long life rutile-graphite
operation, focusing on developing an environmentally and socially responsible,
sustainable operation.
Figure 1: Sovereign's Kasiya project displaying location in South-East Africa
Kasiya is the largest rutile deposit in the world with more than double the
contained rutile as its nearest rutile peer, Sierra Rutile. The Kasiya Mineral
Resource Estimate (MRE) is 1.8 Billion tonnes (Bt) at 1.0% rutile resulting in
17.9 Million tonnes (Mt) tonnes of contained natural rutile and 24.4Mt of
contained graphite. The MRE has broad zones of very high-grade rutile which
occurs contiguously across a very large area of over 200km(2). Rutile
mineralisation lies in laterally extensive, near surface, flat "blanket" style
bodies in areas where the weathering profile is preserved and not
significantly eroded. Kasiya's graphite co-product MRE is 1.8Bt at 1.4%
graphite, containing over 24.4Mt of graphite.
SUMMARY AND HIGHLIGHTS DURING AND SUBSEQUENT TO PERIOD END
PFS Results
· Results of the PFS released in late 2023 demonstrated
Kasiya's potential to become the world's largest rutile producer at an average
of 222kt per annum and one of the world's largest natural graphite producers
outside of China at an average of 244kt per annum based on an initial 25 year
life-of-mine (LOM)
· PFS delivered compelling economics with a post-tax
NPV(8) of US$1.6 Billion and post-tax IRR of 28%. This long-life,
multi-generational operation was modelled to initially generate over US$16
Billion of revenue and provide an average annual EBITDA of US$415 Million per
annum
· The PFS modelling was limited to only 25 years with an
initial Probable Ore Reserves declared of 538Mt, representing only 30% of the
total Project MRE
Project Optimisation
· Sovereign advanced optimisation test work and technical
studies for Kasiya with the Company's strategic investor, Rio Tinto
· Significant field activities and a number of test work
programs have commenced in order to provide data for the Project optimisation
phase
· The Company aims to become the world's largest, lowest
cost and lowest-emissions producer of two critical minerals - titanium
(rutile) and graphite
Rio Tinto invests $40.6m to become a 15% Strategic Investor
· Rio Tinto made an investment of A$40.6 million in
Sovereign resulting in an initial 15% shareholding plus options to increase
their position to potentially 19.99% within 12 months
· Rio Tinto's investment represents a significant step
towards unlocking a major new supply of low-CO(2) natural rutile and flake
graphite
· Under the Investment Agreement, Rio Tinto will provide
assistance and advice on technical and marketing aspects including Sovereign's
graphite co-product, with a primary focus on spherical purified graphite for
the lithium-ion battery anode market
Key Management Appointments to Drive Project Optimisation and Development at
Kasiya
· Appointment of experienced African based mining
executive, Mr Frank Eagar, as the new Managing Director and CEO
· Previous Managing Director Dr Julian Stephens has
transitioned to Non-Executive Director
· Key technical appointments of experienced African
engineering, social, environmental and legal teams to work on project
optimisation and advancing the development of the Kasiya Project
Lithium-Ion battery graphite program upscaled
· Over 60 tonnes of ore was extracted targeting
production of an initial 600kg of natural graphite for lithium-ion battery
anode test work and product qualification
· The upscaled graphite qualification program will
support ongoing Project studies
· Sovereign and Rio Tinto have agreed to collaborate to
qualify graphite from Kasiya, with a particular focus on supplying the
spherical purified graphite (SPG) segment of the lithium-ion battery anode
market
· This graphite qualification program coincides with
China's announced curbs on exports of natural graphite, a critical mineral for
the US, EU, Japan and Australia
Figures 2 & 3: Bulk sample mechanised spiral drilling and sampling at
Kasiya in November 2023
Extensions to Rutile & Graphite Mineralisation at Kasiya
· Wide-spaced regional reconnaissance drilling, outside
the current JORC (2012) compliant MRE area, identified a 8km extension of
mineralisation to the south which remains open along strike and at depth
· Results are testament to the world-class scale of the
Kasiya deposit and demonstrate potential for a future increase of the Kasiya's
MRE, which is already the largest natural rutile deposit and second largest
flake graphite deposit in the world
Figure 4: Southern newly defined mineralised extensions at Kasiya
Strong Support from the Government of Malawi
· The Government of Malawi has applauded the timely
investment by Rio Tinto and marked it as a milestone towards realising the
country's aspirations of growing the mining sector as a priority industry
· PFS demonstrates Kasiya's potential to provide
significant socio-economic benefits for Malawi including fiscal returns, job
creation, skills transfer and sustainable community development initiatives
· With mining being one of the key pillars for growth
under Malawi's economic development strategy (Agriculture, Tourism, Mining -
ATM Policy) and the potential for Kasiya to be a project of national
significance, the Government has constituted an Inter-ministerial Project
Development Committee to work alongside the Company to assist in the
permitting process
Highly-experienced social specialist appointed
· Africa-based social specialist consultancy,
SocialEssence were appointed to lead social and community development programs
for Sovereign in Malawi
· SocialEssence joins Sovereign's Owners Team and will
design, implement, and manage several social and community initiatives which
will feed into Project studies and permitting
· SocialEssence has a strong and successful track record
of implementing social responsibility programs across southern Africa,
including at First Quantum Minerals' Zambian project
Commissioning of Sustainable Farming Initiative in Malawi
· Sovereign initiated a Conservation Farming Program in
Malawi as part of its sustainability initiatives related to the development of
Kasiya
· Local farmers will be trained in sustainable farming
techniques to increase maize crop yield; protect soil from erosion and
degradation; and to improve long term food security
· Supporting local communities in addressing their social
priorities is a core principle of Sovereign's ESG Strategy as the company
advances the development of Kasiya
· Sovereign's owner's team have previously implemented
this program at First Quantum Minerals' Zambian operations where over 7,000
farmers were participating in the program by 2022
Figure 5: Local communities embracing the conservation farming program
Transfer of Malingunde licence to NGX Limited
In January 2024, NGX Limited (NGX) was issued with a retention licence of the
Malingunde graphite project which fully completed the demerger of Sovereign's
standalone graphite projects. In 2023, Sovereign successfully demerged its
standalone graphite projects (Nanzeka Project, Malingunde Project, Duwi
Project and Mabuwa Project) into NGX, which listed on ASX in June 2023.
OPERATING RESULTS
The net operating loss after tax for the half year ended 31 December 2023 was
$6,976,503 (2022: $8,486,503) which is attributable to:
(i) Interest income of $938,402 (2022: $138,366) earned on
term deposits held by the Group;
(ii) exploration and evaluation expenditure of $5,027,397 (2022:
$5,792,042), which is attributable to the Group's accounting policy of
expensing exploration and evaluation expenditure (other than expenditures
incurred in the acquisition of the rights to explore) incurred by the Group in
the period subsequent to the acquisition of the rights to explore up to the
successful completion of definitive feasibility studies for each separate area
of interest. The exploration and evaluation expenditure in the current period
predominately relates to the Group's PFS at its Kasiya Project in Malawi;
(iii) business development expenses of $996,548 (2022: $1,130,083)
which are attributable to the Group's investor and shareholder relations
activities including but not limited to public relations costs, marketing and
digital marketing, broker and advisor fees, travel costs, conference fees,
business development consultant fees and costs of the Group's ASX and AIM
listings; and
(iv) non-cash share based payments expenses of $1,089,974 (2022:
$1,061,657) which is attributable to the Group's accounting policy of
expensing the value of shares, incentive options and rights (estimated using
an appropriate pricing model) granted to key employees, consultants and
advisors. The value of incentive options and rights is measured at grant date
and recognised over the period during which the option and rights holders
become unconditionally entitled to the incentive securities.
FINANCIAL POSITION
At 31 December 2023, the Group had cash reserves of $39,436,707 (30 June 2023:
$5,564,376) placing it in an excellent financial position to continue with the
development of Kasiya.
At 31 December 2023, the Company had net assets of $44,263,313 (30 June 2023:
$9,672,569), an increase of 358% compared with the prior period. This is
largely attributable to the increase in cash reserves following the investment
made by Rio Tinto in the period.
SIGNIFICANT POST BALANCE DATE EVENTS
Other than the above, there are no matters or circumstances which have arisen
since 31 December 2023 that have significantly affected or may significantly
affect:
· the operations, in periods subsequent to 31 December 2023, of
the Group;
· the results of those operations, in periods subsequent to 31
December 2023, of the Group; or
· the state of affairs, in periods subsequent to 31 December
2023, of the Group.
AUDITOR'S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, Ernst &
Young, to provide the directors of Sovereign Metals Limited with an
Independence Declaration in relation to the review of the half year financial
report. This Independence Declaration is on page 17 and forms part of this
Directors' Report.
This report is made in accordance with a resolution of the directors made
pursuant to section 306(3) of the Corporations Act 2001.
For and on behalf of the Directors
Frank Eagar
Managing Director and CEO
13 March 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
Note Half Year Ended Half Year Ended
31 December 2023
31 December 2022
$
$
Interest income 938,402 138,366
Other expenses (173,386) (45,234)
Exploration and evaluation expenses (5,027,397) (5,792,042)
Corporate and administrative expenses (572,119) (474,014)
Business development expenses (996,548) (1,130,083)
Share based payments expense 4(d) (1,089,974) (1,061,657)
Demerger expenses (55,481) (121,839)
Loss before income tax (6,976,503) (8,486,503)
Income tax expense - -
Loss for the period (6,976,503) (8,486,503)
Other comprehensive income/(loss), net of income tax:
Items that may be reclassified subsequently to profit or loss
Exchange differences on foreign entities 3,530 (38,018)
Other comprehensive income/(loss) for the period, net of income tax 3,530 (38,018)
Total comprehensive loss for the period (6,972,973) (8,524,521)
Loss attributable to members of Sovereign Metals Limited (6,972,973) (8,524,521)
Total comprehensive loss attributable to members of Sovereign Metals Limited (6,972,973) (8,524,521)
Loss per share
Basic and Diluted loss per share (cents per share) 5 (1.1) (1.8)
The above Consolidated Statement of Profit or Loss and Other Comprehensive
Income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Note 31 December 2023 30 June 2023
$
$
ASSETS
Current Assets
Cash and cash equivalents 39,436,707 5,564,376
Other receivables 353,837 286,484
Other financial assets 245,000 420,000
Total Current Assets 40,035,544 6,270,860
Non-current Assets
Property, plant and equipment 525,551 532,039
Exploration and evaluation assets 3 5,086,129 5,086,129
Total Non-current Assets 5,611,680 5,618,168
TOTAL ASSETS 45,647,224 11,889,028
LIABILITIES
Current Liabilities
Trade and other payables 1,288,116 2,063,838
Provisions 95,795 152,621
Total Current Liabilities 1,383,911 2,216,459
TOTAL LIABILITIES 1,383,911 2,216,459
NET ASSETS 44,263,313 9,672,569
EQUITY
Issued capital 4(a) 117,835,631 74,508,488
Reserves 4(b) (5,080,122) (3,320,226)
Accumulated losses (68,492,196) (61,515,693)
TOTAL EQUITY 44,263,313 9,672,569
The above Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
Issued Capital Share Based Demerger Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity
$
$
$
Payments Reserve $ $
$
Balance at 1 July 2023 74,508,488 4,155,950 (7,336,678) (139,498) (61,515,693) 9,672,569
Net loss for the period - - - - (6,976,503) (6,976,503)
Other comprehensive income - - - 3,530 - 3,530
Total comprehensive income/(loss) for the period - - - 3,530 (6,976,503) (6,972,973)
Transactions with owners, recorded directly in equity
Issue of placement shares 40,598,258 - - - - 40,598,258
Transfer from SBP reserve on conversion of performance rights 2,853,400 (2,853,400) - - - -
Share based payments expense - 1,089,974 - - - 1,089,974
Share issue costs (124,515) - - - - (124,515)
Total transactions with owners recorded directly in equity 43,327,143 (1,763,426) - - - 41,563,717
Balance at 31 December 2023 117,835,631 2,392,524 (7,336,678) (135,968) (68,492,196) 44,263,313
Balance at 1 July 2022 78,860,187 2,084,466 - (87,695) (55,695,820) 25,161,138
Net loss for the period - - - - (8,486,503) (8,486,503)
Other comprehensive loss - - - (38,018) - (38,018)
Total comprehensive loss for the period - - - (38,018) (8,486,503) (8,524,521)
Transactions with owners, recorded directly in equity
Issue of shares upon exercise of options 27,000 - - - - 27,000
Transfer from SBP reserve upon exercise of options 12,108 (12,108) - - - -
Share based payments expense - 1,061,657 - - - 1,061,657
Share issue costs (88,430) - - - - (88,430)
Total transactions with owners recorded directly in equity (49,322) 1,049,549 - - - 1,000,227
Balance at 31 December 2022 78,810,865 3,134,015 - (125,713) (64,182,323) 17,636,844
The above Consolidated Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
Half Year Ended Half Year Ended
31 December 2023
31 December 2022
$
$
Cash flows from operating activities
Payments to suppliers and employees (7,050,623) (7,314,907)
Interest received 744,942 150,791
Net cash used in operating activities (6,305,681) (7,164,116)
Cash flows from investing activities
Payments for purchase of plant and equipment (205,902) (23,970)
Repayment of loan receivable from NGX Limited 34,434 -
Net cash used in investing activities (171,468) (23,970)
Cash flows from financing activities
Proceeds from issue of shares 40,598,258 -
Payments for share issue costs (248,778) (600,221)
Net cash from/(used in) financing activities 40,349,480 (600,221)
Net increase/(decrease) in cash and cash equivalents 33,872,331 (7,788,307)
Net foreign exchange differences - 4,764
Cash and cash equivalents at the beginning of the period 5,564,376 18,892,741
Cash and cash equivalents at the end of the period 39,436,707 11,109,198
The above Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
1. MATERIAL ACCOUNTING POLICY INFORMATION
Sovereign Metals Limited (the "Company") is a for profit company limited by
shares and incorporated in Australia, whose shares are publicly traded on the
Australian Securities Exchange and the AIM Market of the London Stock
Exchange. The consolidated interim financial statements of the Company as at
and for the period from 1 July 2023 to 31 December 2023 comprise the Company
and its subsidiaries (together referred to as the "Group"). The nature of the
operations and principal activities of the Group are as described in the
Directors' Report. The interim consolidated financial statements of the Group
were authorised for issue in accordance with the resolution of the directors
on 12 March 2024.
This interim financial report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this report is
to be read in conjunction with the audited annual report of Sovereign for the
year ended 30 June 2023 (where comparative amounts have been extracted from)
and any public announcements made by the Group during the interim reporting
period in accordance with the continuous disclosure requirements of the
Corporations Act 2001.
(a) Basis of Preparation of Half Year Financial Report
The consolidated financial statements have been prepared on the basis of
historical cost, except for the revaluation of certain financial instruments.
Cost is based on the fair values of the consideration given in exchange for
assets. All amounts are presented in Australian dollars. There have been no
changes in the critical accounting judgements or key sources of estimation
since 30 June 2023.
(b) Statement of Compliance
The consolidated interim financial report complies with Australian Accounting
Standards, including AASB 134 which ensures compliance with International
Financial Reporting Standard ("IFRS") IAS 34 "Interim Financial Reporting" as
issued by the International Accounting Standards Board. The accounting
policies adopted in the preparation of the half-year financial report are
consistent with those applied in the preparation of the Group's annual
financial report for the year ended 30 June 2023, except for new standards,
amendments to standards and interpretations effective 1 July 2023. In the
current half year, the Group has adopted all of the new and revised Standards
and Interpretations issued by the AASB that are relevant to its operations and
effective for the current annual reporting period.
(d) Issued standards and interpretations not early adopted
Standard/Interpretation Application Date of Standard Application Date for Group
AASB 2020-1 Amendments to Australian Accounting Standards - Classification of 1 January 2024 1 July 2024
Liabilities as Current or Non-Current
AASB 2022-6 Amendments to Australian Accounting Standards - Non-current 1 January 2024 1 July 2024
Liabilities with Covenants
AASB 2014-10 Amendments to Australian Accounting Standards - Sale or 1 January 2025 1 July 2025
Contribution of Assets between an Investor and its Associate or Joint Venture
Australian Accounting Standards and Interpretations that have recently been
issued or amended but are not yet effective have not been adopted by the Group
for the reporting period ended 31 December 2023. Those which may be relevant
to the Group are set out in the table below, but these are not expected to
have any significant impact on the Group's financial statements:
2. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal
reports about components of the Consolidated Entity that are regularly
reviewed by the chief operating decision maker in order to allocate resources
to the segment and to assess its performance. The Consolidated Entity has one
operating segment, being exploration in Malawi.
3. EXPLORATION AND EVALUATION ASSETS
31 December 2023 30 June 2023
$
$
(a) Movement in Exploration and Evaluation Assets
Malawi Project:
Carrying amount as at 1 July 5,086,129 7,170,282
Disposals - Demerger of NGX Limited - (2,084,153)
Closing balance((i)) 5,086,129 5,086,129
Note:
(i) The ultimate recoupment of costs carried forward for
exploration and evaluation is dependent on the successful development and
commercial exploitation or sale of the respective areas of interest..
4. EQUITY SECURITIES ISSUED
31 December 2023 30 June 2023
$
$
(a) Issued Capital
563,003,401 (30 June 2023: 470,875,023) fully paid ordinary shares 117,835,631 74,508,488
(Note 4(c))
(b) Reserves
Share Based Payment Reserve
6,100,000 (30 June 2023: 6,100,000) tranche 2 performance rights - 2,484,430
7,810,000 (30 June 2023: 7,810,000) tranche 3 performance rights 2,149,093 1,671,52
3,150,000 (30 June 2023: nil) tranche 4 performance rights 110,699 -
4,150,000 (30 June 2023: nil) tranche 5 performance rights 132,732 -
Total Share Based Payments Reserve (Note 4(d)) 2,392,524 4,155,950
Foreign Currency Translation Reserve (FCTR)
Exchange differences (135,968) (139,498)
Total Foreign Currency Translation Reserve (FCTR) (135,968) (139,498)
Demerger Reserve (7,336,678) (7,336,678)
Tota Demerger Reserve (7,336,678) (7,336,678)
Total Reserves (5,080,122) (3,320,226)
(c) Movements in Ordinary Share Capital were as follows:
Date Details No. of Shares Issue Price $
$
1 Jul 23 Opening balance 470,875,023 - 74,508,488
Various Issue of placement shares 83,535,510 0.486 40,598,258
25 Aug 23 Issue of advisory fee shares 2,492,868 - -
29 Sep 23 Issue of shares upon conversion of performance rights 6,100,000 - 2,853,400
31 Dec 23 Share issue costs - - (124,515)
31 Dec 23 Closing balance 563,003,401 117,835,631
1 Jul 22 Opening Balance 470,725,023 78,860,187
7 Jul 22 Issue of shares upon exercise of options 150,000 $0.14 27,000
7 Jul 22 Transfer from SBP reserve upon exercise of options - - 12,108
23 Mar 23 In-specie distribution on demerger of NGX Limited - - (4,178,114)
30 Jun 23 Share issue costs - - (212,693)
30 Jun 23 Closing Balance 470,875,023 - 74,508,488
(d) Movements in Options and Performance Rights were as follows:
Date Details No. of Performance Rights $((i))
1 Jul 2023 Opening balance 13,910,000 4,155,950
29 Sep 2023 Transfer from SBP reserve upon conversion of performance rights (6,100,000) (2,853,400)
Various Issue of performance rights 8,600,000 -
31 Dec 2023 Share based payment expense - 1,089,974
31 Dec 2023 Closing balance 16,410,000 2,392,524
1 Jul 22 Opening Balance 12,440,000 2,084,466
7 Jul 22 Transfer from SBP reserve upon exercise of options - (12,108)
Various Issue of performance rights 1,920,000 -
1 Jun 23 Lapse of performance rights (450,000) (256,164)
30 Jun 23 Share-based payment expense - 2,339,756
30 Jun 23 Closing Balance 13,910,000 4,155,950
Notes
(i) The value of performance rights granted during the period is estimated as at the date of grant based on the underlying share price (recognised over the vesting period (if applicable) in accordance with Australian Accounting Standards.
During the period, 1,300,000 "Definitive Feasibility Study Milestone"
performance rights were issued and 6,100,000 "Pre-Feasibility Study Milestone"
performance rights converted into ordinary shares, the terms of which are
consistent with what is disclosed in the Group's Annual Report for 30 June
2023. During the period, 3,150,000 "Grant of Mining Licence Milestone"
performance rights which convert on the unconditional grant of a Mining
Licence at the Kasiya Rutile Project in accordance with the relevant Malawi
mines act and 4,150,000 "Final Investment Decision Milestone" which convert on
a documented resolution of the Board authorising the construction of the
Kasiya Rutile Project were issued.
5. LOSS PER SHARE
Half Year Ended Half Year Ended
31 December 2023
31 December 2022
Cents per Share
Cents per Share
Basic and diluted loss per share
From continuing operations (1.1) (1.8)
Total basic and diluted loss per share (1.1) (1.8)
The following reflects the loss and share data used in the calculations of
basic and diluted loss per share:
Half Year Ended Half Year Ended
31 December 2023
31 December 2022
$
$
Net loss used in calculating basic and diluted earnings per share (6,976,503) (8,486,503)
Half Year Ended Half Year Ended
31 December 2023
31 December 2022
No. of Shares
No. of Shares
Weighted average number of ordinary shares used in calculating basic earnings 544,889,130 470,870,105
per share
Adjusted weighted average number of ordinary shares and potential ordinary 544,889,130 470,870,105
shares used in calculating basic and diluted earnings per share
Non-dilutive securities
As at 31 December 2023, 36,549,598 unlisted Options and 16,410,000 unlisted
Performance Rights (which represent 50,959,598 potential Ordinary Shares) were
non-dilutive as they would decrease the loss per share. As at 31 December
2022, 11,105,125 unlisted Incentive Options and 12,800,000 unlisted
Performance Rights (which represent 23,905,125 potential Ordinary Shares) were
non-dilutive as they would decrease the loss per share.
Conversions, calls, subscriptions or issues after 31 December 2023
Since 31 December 2023, no Performance Rights were issued. Other than the
above, there have been no conversions to, calls of, or subscriptions for
ordinary shares or issues of potential ordinary shares since the reporting
date and before the completion of this financial report.
6. COMMITMENTS AND CONTINGENCIES
(a) Commitments
31 December 2023 30 June 2023
$
$
Exploration Commitments - Malawi Project:
Within one year 48,502 51,962
After one year but not more than five years 34,549 65,771
83,051 117,733
As a condition of retaining the current rights to tenure to exploration
tenements, the Group is required to pay an annual rental charge and meet
minimum expenditure requirements for each tenement. These obligations are not
provided for in the financial statements and are at the sole discretion of the
Group. The majority of the remaining exploration commitments relate to
licences with a term greater than one year. For the purposes of disclosure,
the Group has apportioned the remaining commitments on an equal monthly basis
over the remaining term of the exploration licences.
(b) Contingencies
At the last annual reporting date, the Consolidated Entity did not have any
material contingent liabilities. There has been no material change in
contingent assets and liabilities of the Consolidated Entity during the half
year.
7. DIVIDENDS PAID OR PROVIDED FOR
No dividend has been paid or provided for during the half year (2022: nil).
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The net fair value of financial assets and financial liabilities approximates
their carrying value.
9. SUBSEQUENT EVENTS AFTER BALANCE DATE
There are no matters or circumstances which have arisen since 31 December 2023
that have significantly affected or may significantly affect:
· the operations, in periods subsequent to 31 December 2023, of
the Group;
· the results of those operations, in periods subsequent to 31
December 2023, of the Group; or
· the state of affairs, in periods subsequent to 31 December
2023, of the Group.
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Sovereign Metals Limited,
I state that:
In the opinion of the Directors:
(a) the financial statements and notes thereto are in accordance
with the Corporations Act 2001, including:
(i) complying with Accounting Standard AASB 134: Interim
Financial Reporting and the Corporations Regulations 2001; and
(ii) giving a true and fair view of the consolidated entity's
financial position as at 31 December 2023 and of its performance for the half
year ended on that date.
(b) there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable.
This declaration is signed in accordance with a resolution of the Board of
Directors made pursuant to section 303(5) of the Corporations Act 2001.
On behalf of the Board
Frank Eagar
Managing Director and CEO
13 March 2024
COMPETENT PERSON STATEMENT
Competent Person Statement
The information in this announcement that relates to Production Targets, Ore
Reserves, Processing, Infrastructure and Capital Operating Costs, Metallurgy
(rutile and graphite) is extracted from the announcement dated 28 September
2023 entitled 'Kasiya Pre-Feasibility Study Results'. Sovereign confirms that:
a) it is not aware of any new information or data that materially affects the
information included in the original announcement; b) all material assumptions
and technical parameters underpinning the Production Target, and related
forecast financial information derived from the Production Target included in
the original announcement continue to apply and have not materially changed;
and c) the form and context in which the relevant Competent Persons' findings
are presented in this presentation have not been materially modified from the
original announcement.
The information in this announcement that relates to the Mineral Resource
Estimate is extracted from an announcement dated 5 April 2023 entitled 'Kasiya
Indicated Resource Increased by over 80%' which is available to view at
www.sovereignmetals.com.au and is based on, and fairly represents information
compiled by Mr Richard Stockwell, a Competent Person, who is a fellow of the
Australian Institute of Geoscientists (AIG). Mr Stockwell is a principal of
Placer Consulting Pty Ltd, an independent consulting company. Sovereign
confirms that a) it is not aware of any new information or data that
materially affects the information included in the original announcement; b)
all material assumptions included in the original announcement continue to
apply and have not materially changed; and c) the form and context in which
the relevant Competent Persons' findings are presented in this announcement
have not been materially changed from the original announcement.
Kasiya Total Indicated + Inferred Mineral Resource Estimate at 0.7% rutile
cut-off grade
Classification Resource Rutile Grade Contained Rutile Graphite Grade (TGC) (%) Contained Graphite
(Mt)
(%)
(Mt)
(Mt)
Indicated 1,200 1.0% 12.2 1.5% 18.0
Inferred 609 0.9% 5.7 1.1% 6.5
Total 1,809 1.0% 17.9 1.4% 24.4
Ore Reserve for the Kasiya Deposit
Classification Tonnes Rutile Grade Contained Rutile Graphite Grade (TGC) (%) Contained Graphite RutEq. Grade*
(Mt)
(%)
(Mt)
(Mt)
(%)
Proved - - - - - -
Probable 538 1.03% 5.5 1.66% 8.9 2.00%
Total 538 1.03% 5.5 1.66% 8.9 2.00%
* RutEq. Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) +
Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) / Rutile Price
(US$1,484/t). All assumptions are taken from this Study ** Any minor summation
inconsistencies are due to rounding.
Forward Looking Statement
This release may include forward-looking statements, which may be identified
by words such as "expects", "anticipates", "believes", "projects", "plans",
and similar expressions. These forward-looking statements are based on
Sovereign's expectations and beliefs concerning future events. Forward looking
statements are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could cause actual
results to differ materially from such statements. There can be no assurance
that forward-looking statements will prove to be correct. Sovereign makes no
undertaking to subsequently update or revise the forward-looking statements
made in this release, to reflect the circumstances or events after the date of
that release.
AUDITOR'S INDEPENDENCE DECLARATION
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