REG - Sunrise Resources - Final Results
24/01/2024 07:00
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RNS Number : 6602A Sunrise Resources Plc 24 January 2024
SUNRISE RESOURCES PLC
("Sunrise" or the "Company")
24 January 2024
Audited Results for the year to 30 September 2023
Sunrise Resources plc is pleased to announce its Chairman's Statement and
audited results for the year ended 30 September 2023.
The Company will announce posting of its Annual Report and Financial
Statements which will also be published on the Company's website along with
Notice of the Annual General meeting in due course.
For more information please contact:
Sunrise Resources plc Tel: +44 (0)1625 838 884
Patrick Cheetham, Executive Chairman
Tel: +44 (0)207 628 3396
Beaumont Cornish Limited
Nominated Adviser
James Biddle/Roland Cornish
Tel: +44 (0)207 469 0930
Peterhouse Capital Limited
Broker
Lucy Williams/Duncan Vasey
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
Qualified Person Information:
The information in this release has been compiled and reviewed by Mr. Patrick
Cheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the
AIM Note for Mining and Oil & Gas Companies. Mr. Cheetham is a Member of
the Institute of Materials, Minerals & Mining and also a member of the
Australasian Institute of Mining & Metallurgy.
Chairman's Statement
Dear Shareholders,
I am pleased to present your Annual Report for 2023 which covers the financial
year ended 30 September 2023.
The Operating Review of this Annual Report describes developments on the
Company's projects in 2023 and includes details of market developments and
market projections for natural pozzolan, the key supplementary cementitious
material on which our CS and Hazen projects in Nevada, USA, are based.
For some time now our efforts have been focussed on finding an industry
partner to help develop our mine-ready CS Project and we are currently in
discussions with a number of possible partners. I appreciate that for
shareholders, and indeed for the Board, the progress in finding an industry
partner is disappointingly slow. Consumers of performance industrial minerals
are conservative and slow to make decisions to take up new products, like
natural pozzolan, to replace established products. But the industry is
changing and demand for pozzolan is now growing. We are in the fortunate
position that we can maintain our interest in the project at low cost whilst
partner discussions continue. Our CS Project is large and very high quality
and can be brought into production in a relatively short time frame.
Following the Roman era of cement production and the 20(th) Century period
when natural pozzolan was used extensively in major dam projects in the USA,
we are now entering a new era for natural pozzolan which is already
contributing to the decarbonisation of the cement and concrete industries
globally through the production of blended cements with a lower embodied
carbon content. In the USA the consumption of cementitious materials is
forecast to increase at a 10% annualised rate from just over 129 million
tonnes in 2021 to over 154 million tonnes by 2030. However, the production of
ordinary Portland cement will largely be static as no new cement plants are
likely to be built, nor clinker production expanded. The increased consumption
of cement will mainly come from increased use of blended cements where
ordinary Portland cement is blended with supplementary cementitious materials
such as natural pozzolan. Production of natural pozzolan is forecast to
increase from a level of around 1.2 million tons per annum today to nearly 6
million tonnes per annum by 2030 with 62% of the 2030 supply expected to come
from California and Nevada based on known resources which includes those held
by Sunrise Resources.
In addition to our large deposits of natural pozzolan, our portfolio of
industrial minerals projects includes the Pioche Sepiolite Project in Nevada,
a low-cost acquisition which is under option to Tolsa, the world's largest
sepiolite producer. Tolsa has carried out trenching and drilling in 2023. This
has defined a large body of sepiolite bearing clay but further work is
required to better understand the commercial properties of the Pioche
sepiolite and determine the best processing methods and range of commercial
products that might be produced at Pioche. Consequently, at the end of
December 2023, the Company agreed to extend Tolsa's option to purchase the
Pioche project in exchange for a further option fee payment of US$100,000 and
an increase in the option exercise price from US$1.25 million to US$1.4
million. Sunrise will be entitled to a 3% gross revenue royalty on production
of sepiolite if the option is exercised, which we believe now has an increased
probability.
The prospect of royalty cash flow has also advanced at two other projects in
2023. Our 2% royalty on the Garfield Project was brought into focus earlier
this year when the property operator, Golden Metal Resources, announced that a
significant copper porphyry system was identified at Garfield following the
results of a high-resolution soil geochemical sampling survey. The pace of
exploration is also increasing around our Jacksons Wash Claims which major
gold producer Kinross holds an option to purchase subject to Sunrise retaining
a 2.5% royalty.
The Company holds several additional projects in Nevada and Australia. This
includes the Reese Ridge Project in Nevada where field work this year resulted
in the discovery of outcropping high grade zinc mineralisation. The results
from 3D conductivity modelling of electromagnetic data have identified
conductivity anomalies directly below the surface mineralisation which may
represent a body of sulphide mineralisation of economic interest. The Project
is now drill ready.
Other than this, we have not carried out significant exploration this year as
we have sought to preserve funds in what remains a very difficult market for
junior exploration companies. We were fortunate to have raised a total of
£480,000 at the beginning of the financial year and we operate with a low
cost base, sharing administration costs with Tertiary Minerals plc.
Following the end of the reporting period, in November 2023, and as a
contingency measure, the Company carried out a split of its share capital and
a buy-back and cancellation of deferred shares. The net result was to lower
the par value of its ordinary shares to a level that is now well below market
value allowing the Company to raise funds via the issue of new equity in
future.
Our next Annual General Meeting will be held in London on 22 February 2024. At
this AGM we will be seeking approval for resolutions to allow for the issue of
new shares and the disapplication of pre-emption rights as we usually do.
Without the first of these resolutions the Company cannot issue new shares at
all. The second resolution allows the Company to issue shares for cash other
than strictly pro-rata to existing shareholders. For example, it allows for
rounding of entitlements and to exclude the issue of shares to shareholders in
jurisdictions where it would be illegal. Rights issues are, in any event,
prohibitively expensive for small companies and these resolutions will allow
the directors flexibility to issue new shares to raise funds as and when
necessary, up to a limit that is rarely used.
I urge shareholders to support these resolutions as, until such time as the
Company is self-funding, the Company needs to be able to issue shares to raise
funds to continue as a going concern.
We look forward to welcoming shareholders at the AGM and to reporting the
Company's progress in 2024.
Patrick Cheetham
Executive Chairman
23 January 2024
Strategic Report
The Directors present their Strategic Report for the year ended 30 September
2023.
The principal activity of the Company is the acquisition, exploration and
development of mineral projects, primarily in the western USA.
Our strategy is to develop cash flow from the Company's key projects, through
joint mine developments, project sales and joint ventures as well as royalty
interests, in order that the Company's activities become self-funding.
The Company's Business Model is to acquire 100% ownership of mineral assets at
minimal expense. This is usually accomplished through the identification of
exploration opportunities and low cost claim staking or applying for
exploration licences from the relevant authority. This is the case for all but
one of the Company's projects. In other cases, rights are negotiated with
existing project owners for initially low periodic payments that rise over
time as confidence in the project value increases as is the case for the Bay
State Silver Project.
The Group currently operates with a low-cost base to maximise the funds that
can be spent on value adding exploration and development activities. The
Company's administration costs are reduced via a cost sharing Management
Services Agreement with Tertiary Minerals plc ("Tertiary").
The Company's ambition is to deliver on this strategic plan and details of the
Company's projects and developments during the reporting period are given in
the Operating Review.
Until the Company becomes profitable and self-funding, its operations are
financed by periodic capital raisings, through private share placings, the
issue of other financial instruments and through project sales and joint
ventures. Where possible the Board will seek to secure additional funding from
a range of sources, for example debt funding, pre-financing through offtake
agreements and other joint arrangements.
Over the past few years, the Company has established a valuable portfolio of
drill-ready precious metal, base metal and industrial mineral projects. Our
strategy remains to valorise those projects through sale or other arrangements
seeking, wherever possible, free-carried exposure to increases in value and
production from the projects.
Organisation Overview
The Group's business is directed by the Board and is managed by the Executive
Chairman. The Company has a Management Services Agreement with Tertiary which
was the original parent of the Company. Under this cost sharing agreement,
Tertiary provides all of the Company's administration and technical services,
including the technical and management services of the Executive Chairman, at
cost. Day-to-day activities are managed from Tertiary's offices in
Macclesfield in the United Kingdom, but the Group operates in two other
countries and the corporate structure of the Group reflects the historical
pattern of project acquisition by the Group and the need, where appropriate,
for fiscal and other reasons, to have incorporated entities in particular
territories.
The Group's exploration activity in Nevada, USA, is undertaken through two
local subsidiaries, SR Minerals Inc. and Westgold Inc.
In Australia, the Company operates through an Australian subsidiary, Sunrise
Minerals Australia Pty Ltd.
The Board of Directors comprises two independent non-executive directors and
the Executive Chairman. The Executive Chairman is also Executive Chairman of
Tertiary, but otherwise the Board is independent of Tertiary. Tertiary is not
a significant shareholder (as defined under the AIM Rules) in the Company.
Financial & Performance Review
The Group is not yet producing minerals and so has no income other than a
small amount of bank interest and payments from project transactions.
Consequently, the Group is not expected to report profits until it disposes of
or is able to profitably develop or otherwise realise the value of its
exploration and development projects.
The Group reports a loss of £391,291 for the year (2022: £478,223) after
administration costs of £425,419 (2022: £291,860). The loss includes
expensed pre-licence and reconnaissance exploration costs of £3,753 (2022:
£5,638), and other income of £36,881 (2022: £13,474) being an option fee
paid by Tolsa USA, Inc. in connection with the Pioche Project and a lease
payment made by Kinross Gold U.S.A., Inc. in connection with the Jacksons Wash
Project. Administration costs include a charge of £5,319 (2022: £1,087)
relating to the value of certain share warrants held by employees of Tertiary
and by third parties calculated in accordance with IFRS 2.
The Financial Statements show that, at 30 September 2023, the Group had net
current assets of £212,009 (2022: £155,776). This represents the cash
position and receivables, less trade and other payables. These amounts are
shown in the Consolidated and Company Statements of Financial Position and are
also components of the net assets of the Group. Net assets also include
various "intangible" assets of the Company. As the term suggests, these
intangible assets are not cash assets but include some of this year's and
previous years' expenditure on mineral projects where that expenditure meets
the criteria in Note 1(d) of the accounting policies. The intangible assets
total £2,409,311 (2022: £2,503,812) and a breakdown by project is shown in
Note 2 to the financial statements.
Details of intangible assets, investments and right of use assets are also set
out in Notes 9, 8 and 17 respectively.
Net assets also include the market value at the year-end of shares in VR
Resources Ltd and Power Metal Resources plc which are held as "available for
sale" investments as set out in Note 8.
Impairment
Expenditure which does not meet the criteria for continued capitalisation set
out in Note 1(n), such as pre-licence and reconnaissance costs, are expensed
and added to the Company's loss. The loss reported in any year can also
include expenditure for specific projects carried forward in previous
reporting periods as an intangible asset but which the Board determines is
"impaired" in this reporting period.
It is a consequence of the Company's business model that there will be
impairments of unsuccessful exploration projects from time to time. The extent
to which expenditure is carried forward as intangible assets is a measure of
the extent to which the value of the Company's expenditure is preserved.
Biannual reviews are carried out by the Directors as to whether there are any
indications of impairment of the Group's assets.
An impairment review of the carrying values of exploration and development
projects (and in the Company, the associated intercompany loans) as at 30
September 2023 was undertaken by the Directors under IFRS 6 and IAS 36. As a
result of the year-end review it was judged that no projects or intercompany
loan should be impaired. Further information on the judgements made can be
found in the Operating Review. Projects which are held for sale or joint
venture have not been impaired as it is anticipated that their carrying values
will be recovered through sale or through residual joint venture interests in
future.
The intangible asset value of a project, shown at cost, should not be confused
with the realisable or market value of a particular project which will, in the
Directors' opinion, be at least equal in value and often considerably higher.
Hence the Company's market capitalisation on the AIM Market is usually in
excess of the net asset value of the Group.
The Company finances its activities through issue of share capital placings
and other arrangements, and, occasionally, asset sales. As the Company's
projects become more advanced there may be strategic opportunities to obtain
funding for some projects through joint venture, production sharing, royalty
and other marketing arrangements.
Key Performance Indicators
The financial statements of a mineral exploration and development company can
provide a moment in time snapshot of the financial health of a company but do
not provide a reliable guide to the performance of the Company or its Board.
The usual financial key performance indicators ("KPIs") relating to financial
performance are neither applicable nor appropriate to measure the value
creation of a company which is involved in mineral exploration and development
which currently has no turnover. The applicable KPIs are predominantly
qualitative rather than quantitative and relate to the success, or otherwise,
of exploration and mineral discovery on the Group's projects which is
extensively covered in the Operating Review of the Strategic Report.
The Company does seek to reduce overhead costs, where practicable, but is
reporting higher administration costs this financial year of £425,419 (2022:
291,860). This is in part due to legal costs associated with agreements,
increases in audit fees and nominated advisor and broker fees, together with
foreign exchange variances during the year.
In exploring for valuable mineral deposits, we accept that not all our
exploration will be successful but also that success can be rewarding. We
therefore expect that our shareholders will be invested for the potential for
capital growth taking a long-term view of management's track record in mineral
discovery and development.
Fundraising
The Directors prepare annual budgets and cash flow projections that include
the proceeds of future fundraising necessary within the next 12 months to meet
the Group's overheads and planned discretionary project expenditure. The
successful raising of finance is required based on projections to enable the
Group and Company to meet their liabilities as they fall due and continue to
operate on a going concern basis.
Operating Review
Sunrise Resources plc is a mineral exploration and development company with
operations in Nevada, USA, and Western Australia.
The Company's projects in Nevada are held through two 100% owned subsidiary
companies, SR Minerals Inc., which holds the Company's industrial minerals and
certain longer established projects, and Westgold Inc. which holds the
company's interest in more recently acquired projects in Nevada. The Company's
Baker's Gold Project in Australia is held through an Australian subsidiary,
Sunrise Minerals Australia Pty Ltd.
Industrial Minerals Projects
CS POZZOLAN-PERLITE PROJECT, NEVADA
The Company's CS Pozzolan-Perlite Project in Esmeralda County, Nevada, USA,
covers large deposits of natural pozzolan and perlite and is planned as the
Company's first mine development project.
Large deposits of both industrial minerals have been defined by mapping,
trenching, drilling and bulk sampling with 14.5 million tons of pozzolan and
1.3 million tons of perlite included in the mine plan. An additional area,
the Northeast Zone, presents a large additional target for natural pozzolan so
far defined only by one drill hole and surface sampling.
The value of the market for pozzolan is substantially higher than that for
perlite and the deposits of natural pozzolan at the CS Project are far larger
than the deposits of perlite. In addition, perlite is itself a natural
pozzolan. Consequently, the Company is focused on the production of natural
pozzolan for the time being.
For some time now the Company has been in discussions with various groups with
the objective of securing investment and material offtake agreements for the
development of the project. These discussions usually involve extensive
testing of the material, both in its own right and as a blend with proprietary
cements and/or cement blends. Currently, the Company is in talks and with a
number of groups including cement producers and a producer of natural
pozzolan.
The CS Project is "mine ready" with the key operating permits already in
place. The Company is able to maintain this mine-ready status at low cost and
with no time constraints as to when mining must start, save for periodic
renewals of the air quality permit and payment of annual claim fees.
What is Natural Pozzolan?
Natural pozzolan is a naturally occurring Supplementary Cementitious Material
("SCM") that is used to partially replace and reduce the use of ordinary
Portland cement, a major source of the greenhouse gas CO(2) in cement mixes,
concrete and mortars.
Natural pozzolan also takes the place of coal fly ash pozzolans, the supply of
which is rapidly declining in the western world due to the continued closure
of coal-fired power stations.
The natural pozzolan on the Company's projects in Nevada is a pozzolanic
volcanic glass that needs only to be ground to be used as a SCM.
What is Perlite?
Perlite is a glassy raw material which expands on heating by up to 20 times in
volume into a white or pale coloured low-density material. Expanded perlite is
used in various industrial and household applications such as insulation,
paint texturing, plaster and concrete fillers, building material fillers,
formed insulation and fire-proofing. It also has application as filter aids,
insulating industrial cryogenic storage vessels and as a potting medium in
gardening and horticulture to aid water retention and aeration of the soil. In
recent years, especially during the Covid lockdown period, one of the largest
areas of growing demand was for large-scale hydroponic farming resultant of
the legalisation of cannabis in many US states.
According to the United States Geological Survey ("USGS"), production of raw
perlite in the USA was steady in 2022, at around 880,000 tons with a modest 5%
rise in demand being met by an increase in imports rather than an increase in
domestic production. Demand for perlite for use in horticulture has weakened,
as some growers substitute perlite with cheaper wood fibre, and there has been
a levelling off in demand from the cannabis growing market post-Covid.
The Role Of Natural Pozzolan In CO(2) Net-Zero Strategies
The development of the Company's natural pozzolan projects are taking place
against a background of fundamental change in the cement and concrete
industries; a change which is being driven by climate change targets to
achieve net zero CO(2) emissions.
After water, concrete is the most used substance on Earth. Whilst 14 billion
cubic metres of concrete were poured globally in 2020, this is forecast to
increase to 20 billion cubic metres annually by 2050 with continuing global
urbanisation and population growth. This activity is currently responsible for
8% of the world's man-made emissions, half of which comes from the burning of
fuel and the other half by direct release of CO(2) from burning limestone in
the cement clinker stage of production of ordinary Portland cement ("OPC").
Net zero CO(2) targets are therefore a major challenge for the cement and
concrete industries but one they must meet. In the US, as elsewhere around the
world, these targets are enshrined in State legislation, industry-body
commitments and are increasingly driven by cement and concrete customers and
specifiers. In addition, one of the Implementation Priorities in US President
Biden's November 2021 Executive Order "Implementation of the US$1.2 trillion
Infrastructure Investment and Jobs Act" is "building infrastructure that is
resilient and that helps combat the crisis of climate change". This will
result in priority being given to greener and more sustainable building
materials in contracts awarded under the Infrastructure Bill.
Another significant development which advances the potential of natural
pozzolan was the enactment of The Inflation Reduction Act of 2022. This Act
includes a US$5.8 billion package of grants, rebates and loans for
decarbonisation of heavy industries like steel and cement. A key element for
the transition of large cement companies to a lower carbon footprint is to
incorporate SCMs into their cement formulations. The packages introduced by
The Inflation Reduction Act of 2022 specifically provide funding for
manufacturers that install equipment capable of slashing greenhouse gas
emissions.
Southern California is a major target market for the Company's CS Project and
California has the largest economy of all the US States. In September 2021, in
the first law of its kind in the US, California's Carbon Cap-and-Trade scheme
was signed into legislation and directly targets greenhouse gas emissions
associated with the cement industry. This Cement Decarbonization legislation
is focused on achieving net zero emissions from the industry by the end of
2045. It works by putting a periodically declining limit on carbon emissions
for a given entity, allows those entities to trade unused allowances but
imposes fines on any entity exceeding its allowance. Experts believe this will
pave the way for similar Federal legislation in the US.
2021 also saw the publication by The US Portland Cement Association of its
road map to carbon neutrality. A key component for this road map is the
production of blended cements whereby OPC is diluted with either limestone (1L
cement) or natural pozzolan (1P cement) or both in a ternary blend (1T cement)
either by inter-grinding with OPC clinker stage or by blending ground
limestone or natural pozzolan with ground OPC.
A clear trend is emerging where cement companies are moving towards the
production of blended cements in distinct steps, concentrating initially on
the production of 1L cement where circa 10% limestone is blended with OPC.
This is an easy win for the cement companies as limestone is always available
locally as the main source of cement clinker. However, this does not add
anything to the durability of concrete as natural pozzolan does.
The next evolutionary step being adopted by the industry is the production of
1T cements where both limestone and an SCM such as natural pozzolan (or
fly-ash or blends of fly-ash and natural pozzolan) can be used to dilute OPC
by up to 50% and improve the sustainability of concrete made with blended
cements.
Due to their high carbon emissions, cement plants have difficulty expanding
their OPC production and it is unlikely that any new OPC cement plants will be
built in the foreseeable future. The production of blended cements not only
provides for more durable and sustainable concrete with lower embodied carbon,
but it also allows a cement company to sell more cement per ton of OPC clinker
capacity. The production of clinker is often the volume limiting step to
cement production.
This is an important consideration particularly as cement companies are
currently operating at full clinker capacity. It does, however, require
investment in additional grinding capacity.
The Role Of Natural Pozzolan In Sustainable Development
In addition to building greener structures, a key part of sustainability in
the concrete industry is the building of more durable structures with longer
life.
Whereas "Roman concrete" structures made with natural pozzolan have survived
for millennia, some concrete structures from parts of the 20(th) century made
with OPC are susceptible to "concrete cancer". This is due to the reaction
of alkalis in OPC with "reactive" silica in concrete aggregates and results in
expansion, cracking and spalling of the concrete (Alkali Silica Reaction or
"ASR").
As high-quality aggregate supplies for concrete become scarcer, the concrete
industry is having to use more reactive aggregates that can severely impact
the quality of the resulting concrete.
The use of high quality SCMs such as natural pozzolan will mitigate ASR by
tying up and immobilising the alkalis in cement, preventing their reaction
with silica in the aggregates. So much so that the use of pozzolans is often
mandated by State Departments of Transport for public infrastructure
construction work to ensure more sustainable structures.
Sustainability, and ASR mitigation in particular, is therefore a significant
factor in choosing the use of natural pozzolan in net zero CO(2) strategies.
Of all the strategies being adopted by the cement and concrete industries,
only the use of SCMs can mitigate ASR and so we expect to see natural pozzolan
used in conjunction with other CO(2) reduction strategies.
Pozzolan Market Study
During the year the Company released the findings of a market study
commissioned by the Company with Cement Distribution Consultants of Amsterdam
("CDC") to evaluate market opportunities and market growth predictions for
cement and the use of SCMs, including natural pozzolan, in the USA, and
California and Nevada in particular which are being targeted by the Company
with its CS and Hazen natural pozzolan projects in Nevada.
The market study provides the Company with a detailed breakdown of cement
markets, county by county in California and for the two main population
centres in Nevada (Reno-northern Nevada and Las Vegas-Henderson). It also
details the production profiles of all cement producers and ready-mix
companies in these two states and details movements of cement within and
between different US states.
Moreover, the report is helping the Company to identify a wider range of
potential partners for the development of its natural pozzolan projects in
Nevada.
Cement Markets
California's cement production of around 10.7 million tons per annum ("mtpa")
is located almost entirely in southern California. CalPortland Cement ("CPC",
a subsidiary of Japan's Taiheiyo Cement Corporation) is the largest cement
producer in California with an installed capacity of 4.5 mtpa. Cemex is second
with 3.1 mtpa and Mitsubishi is the third largest with a capacity of 1.4 mtpa.
A fourth cement plant, Tehatchapi, has a capacity of 0.9 mtpa and is owned by
Unacem of Peru which operates in the US through Drake Cement. The California
plants are believed to be working at high-capacity utilisation.
Only CalPortland's Redding plant, with a capacity of about 0.6 mtpa, supplies
northern California directly following the closure, on environmental grounds,
of Heidelberg Cement's Permanente plant at Cupertino near San José in
northern California.
The cement market in Nevada is much smaller than in California. Nevada's
cement consumption in 2022 was 1.7 million tons ("mt"). Of this volume about
0.7 mt is produced in Nevada's only cement plant at Fernley by Nevada Cement
(Eagle Materials) and the rest is supplied from California, Arizona and Utah.
Nevada Cement has a rail terminal in Sacramento, supplied from its Fernley
cement plant, and it has recently purchased a ship import terminal in
Sacramento.
The California cement market is strongly influenced by the overall cement
market in the wider Southwest US as the combined states of Nevada, Arizona,
Utah, New Mexico and Colorado have a structural cement deficit which is
compensated from the cement plants in southern California.
When cement consumption is low in the region, the region is largely
self-sufficient with only small inflows from the large cement plants in
southern California. These plants then supply a significant part of their
production by rail to the northern California market. In these periods (e.g.
during and after the 2008 - 2011 financial crisis) there are no cement imports
into California.
When cement consumption in the southwest US grows, an overall deficit builds
and this is then filled by the cement plants in southern California which
direct their output more to the region and reduce the supply (by rail) to
northern California. The corresponding shortage in northern California is then
resolved by imports from Asia via the ship terminals. The ship terminals are
mainly owned by the cement producers. When cement demand in the southwest US
grows further the cement plants in southern California direct more cement to
the region and when they cannot fully supply the southern California market
anymore the local cement terminals in the port of Los Angeles, Long Beach open
up. Here, also, the import terminals are owned by the cement producers.
Ready-Mix Companies
Most cement and SCM's are destined, with sand and gravel aggregates, for the
production of concrete in pre-cast concrete structures or for use by the
ready-mix industry.
In California and Nevada, the production and sale of concrete is dominated by
the major cement producers which are vertically integrated. Nevertheless,
there are a significant number of large independent ready-mix companies owned
by non-cement producing materials (aggregate) companies, some of which are
showing interest in adding natural pozzolan to their mix of products.
Natural Pozzolan
All of the cement producers in southern California have shown interest in
natural pozzolan as an SCM and CPC is currently permitting a deposit of
natural pozzolan near to their Mohave cement plant in southern California. In
northern Nevada, Nevada Cement is producing natural pozzolan from a
third-party quarry near Reno.
Production of natural pozzolan is currently taking place at dedicated grinding
plants in Utah (Geofortis) and Arizona (Kirkland Mining & Drake Cement)
where the market is either internal or with the ready-mix companies and with
fly ash suppliers producing blended fly ash/natural pozzolan products.
Market Forecasts
CDC has provided the Company with forecasts to 2030 of consumption and
production of cement and the three main volumetrically important SCMs - fly
ash, ground granulated blast furnace slag ("GGBS") and natural pozzolan. This
data has been provided independently from the market study commissioned by the
Company. The forecasts are detailed and cover every state in the USA. CDC has
also provided 2021 figures for comparison which is taken as a baseline year
when use of natural pozzolan was in its infancy.
Tables 1, 2 and 3 show the 2030 forecasts and 2021 comparisons for the US as a
whole, and for California and Nevada separately.
Considering the US as a whole, Table 1 shows that:
· the consumption of cementitious materials (including ordinary
Portland cement) is forecast to increase at an annualised rate of 10% from
just over 129 million tonnes to over 154 million tonnes by 2030.
· the production of ordinary Portland cement will reduce, albeit
marginally, as no new cement plants will be built and no existing plants will
be expanded so cement clinker production will be relatively steady.
· the increased consumption of cement will come entirely from
increased use of the main SCMs through the production of blended cements or by
blending SCMs and cement at the ready-mix or casting plants or at various
cement terminals.
· fly ash production will reduce from over 24.3 mtpa in 2021 to
15.7 mtpa in 2023 but consumption will increase and be met from overseas
imports and/or reclamation of historically ponded fly ash.
· US consumption and production of GGBS will increase marginally,
constrained by domestic and international availability, and changing iron and
steel making technologies.
· US consumption and production of natural pozzolan will increase
from a very low base to nearly 6 mtpa by 2030.
Whilst looking at the US as a whole is instructive, when those same statistics
are considered on a state-by-state basis there are substantial regional
differences. These differences arise due to the availability of different SCMs
in different states, transport costs and state-to-state infrastructure etc.,
as well as varying state legislation on mandating SCM use and decarbonisation
of the cement industry.
Of primary interest to Sunrise are the target markets in California and
Nevada.
Tables 2 and 3 show comparable statistics for California and Nevada
respectively for 2021 and 2030. The tables show that:
· production of cement will increase in both states through
increased use of SCMs in line with predicted national trends.
· consumption of fly ash will increase only marginally and the
production of fly ash in Nevada will cease. This reflects the lack of fly ash
production and ponded fly ash in California and Nevada.
· production of natural pozzolan will increase substantially in
both states based on known resources of volcanic natural pozzolan which
include the Company's Hazen and CS Projects in Nevada.
· California and Nevada together are expected to produce 62% of all
SCMs consumed in the US.
The Company's natural pozzolan projects are well placed to benefit from these
structural changes in the cement and concrete industries and the forecast
increase in the market for natural pozzolan.
Table 1. Total US Cement & SCM Consumption 2021 & 2030
2021 2030
Total Cement + SCM Consumption 129,439,000 154,692,000
Cement 109,913,000 108,284,000
SCM (All) 19,526,000 46,408,000
Fly Ash
US Consumption 10,651,000 29,806,000
US Production 24,338,000 15,710,000
Imports or Reclaimed from Landfill 500,000 14,096,000
Surplus (Landfill & Other) 14,187,000 -
Ground Granulated Blast Furnace Slag
US Consumption 8,335,000 10,875,000
US Production 6,200,000 7,750,000
US Imports from Overseas 2,135,000 3,125,000
Natural Pozzolan
US Consumption 540,000 5,726,000
US Production 520,000 5,726,000
US Imports from Overseas 20,000 -
Table 2. California Cement & SCM Consumption 2021 & 2030
2021 2030
Total Cement + SCM Consumption 12,649,000 15,116,000
Cement 10,741,000 10,581,000
SCM (All) 1,908,000 4,535,000
Fly Ash
State Consumption 965,000 1,255,000
State Production - -
Imports from Other States (inc. Reclaimed) 803,000 513,000
Imports from Overseas 162,000 742,000
Ground Granulated Blast Furnace Slag
State Consumption 653,000 852,000
State Production - -
Imports from Other States 3,000 74,000
Imports from Overseas 650,000 778,000
Natural Pozzolan
State Consumption 290,000 2,428,000
State Production 280,000 1,800,000
Exports to other states 10,000 628,000
Imports from overseas 20,000 -
Table 3. Nevada Cement & SCM Consumption 2021 & 2030
2021 2030
Total Cement + SCM Consumption 2,037,000 2,435,000
Cement 1,730,000 1,704,000
SCM (All) 307,000 731,000
Fly Ash
State Consumption 267,000 339,000
State Production 93,000 -
Imports from Other States (inc. Reclaimed) 174,000 329,000
Imports from Overseas - -
Ground Granulated Blast Furnace Slag
State Consumption - -
State Production - -
Imports from Other States - -
Imports from Overseas - -
Natural Pozzolan
State Consumption 40,000 391,000
State Production 20,000 1,100,000
Exports to Other States 20,000 709,000
Imports from Overseas - -
HAZEN NATURAL POZZOLAN PROJECT, NEVADA
The Hazen Pozzolan Project is located in Churchill County in Northern Nevada
32km by road from the town of Fernley and 38km by road from the County town of
Fallon.
The Company's mining claims were staked in June 2021 to cover a deposit of
glassy pumice targeted as a natural pozzolan. Pumice is currently mined
elsewhere in the US as natural pozzolan and at Hazen was mined as a
lightweight aggregate from a shallow open pit some decades ago.
The Hazen pozzolan deposit is just 9km from a rail siding on the arterial
east-west Union Pacific line and is therefore well positioned for rail
transport to the regional markets of northern California, points east, as well
as the local markets around Reno and northern Nevada. Its location is
therefore complementary to the Company's CS Pozzolan-Perlite Project which is
targeting different cement and concrete markets in southern California and the
expanding adjacent cities of Las Vegas and Henderson in southern Nevada.
Whilst the Hazen Project is less advanced than the CS Project, the Company's
laboratory testwork to date has shown that the material present in the pit is
of similar high quality to the CS Project pozzolan. It exceeds the
specifications of ASTM standard C618 and mitigates the deleterious alkali
silica reaction that occurs when concrete is made using reactive aggregates.
The Hazen pumice has the additional property that it is lightweight and so it
will also be evaluated for its potential as a lightweight aggregate for use in
lightweight concrete blocks and facing stones.
Further work is required to determine the extent of the Hazen deposit although
indications are that the pumice extends several hundred meters beyond the
limits of the existing open pit.
At the end of 2022, the Company entered into a collaborative arrangement with
an existing processor of natural pozzolan for mining and test grinding of a
bulk sample of the Company's Hazen natural pozzolan deposit in northern
Nevada. At its own cost the processor mined a 250-ton bulk sample of Hazen
natural pozzolan and shipped the bulk sample to its process plant to be
processed. This bulk sample has not yet been processed due to plant
availability and the processor's own priorities.
PIOCHE SEPIOLITE PROJECT, NEVADA
The Pioche Sepiolite Project (the "Pioche Project") is located close to the
historic mining town of Pioche in Lincoln County, Nevada. It lies within 4km
of US Highway 93, from which it can be accessed by a network of 4WD tracks,
and 47km from rail at the town of Caliente, Nevada.
The Pioche Project was originally identified whilst evaluating the area for
deposits of natural pozzolan and was acquired by claim staking at low cost.
High-grade sepiolite was subsequently identified in outcrop.
What is Sepiolite
Sepiolite is a non-swelling, lightweight, porous clay with outstanding
sorption capacity. The largest market globally for sepiolite is for use in
lightweight non-clumping pet litters, where it has superior properties
compared to other clays used in this application. It is also used extensively
in agriculture as a slow-release absorbent and adsorbent carrier for chemicals
and pesticides, in animal feeds as a binder and carrier for nutrients and
growth promoter. It is also used as a suspending agent in paints, medicines,
pharmaceuticals and cosmetics, and in high temperature drilling muds.
Sepiolite is a very uncommon clay and there are very few commercial deposits
in the world, and, with one exception, there are no significant sepiolite
deposits known in the US, so a large potential market would exist for any new
US producer of sepiolite.
The Pioche Project claims are currently under option to Spanish company, Tolsa
S.A. ("Tolsa"), the world's largest producer of sepiolite. Tolsa may purchase
the Pioche Project for US$1.4 million and an ongoing payment to Sunrise of a
3% royalty. This option expires on 28 December 2024.
If the option is exercised, SR Minerals Inc. will retain a 3% royalty on all
minerals and mineral materials produced and sold from the Pioche Project
claims and any further claims acquired by either party in a 2-mile radius of
the external boundary of the original claims (the "Mineral Products Royalty").
The Mineral Products Royalty is calculated as gross revenue less sales bonus,
commissions, rebates and any other discounts provided to unrelated third
parties. The Mineral Products Royalty will be payable from the commencement of
commercial production for a period of 25 years and a nominal advance royalty
of US$50,000 per annum will be paid if production is not started for any
reason within 5 years from 28 June 2022.
Twenty per cent of all payments, including royalties, will be payable by the
Company as a success fee to an unrelated third party, a sepiolite industry
specialist, who brokered the agreement with Tolsa.
During the year, Tolsa doubled the claim area for the Pioche Project and
completed topographic surveys, trenching and a drilling programme. The drill
programme was carried out using an auger drill mounted on a Ford F550 truck
and hauled from Tolsa USA, Inc.'s Casper Wyoming mine area.
Twenty drill holes were completed for a total of 929.5 linear ft. Holes were
drilled to an average depth of 47ft reflecting the shallow occurrence of
sepiolite amenable to open-pit mining. The drill holes were spaced relatively
evenly over an area of 2km x 1.1km, where track access allowed and where
surface disturbance could be minimised. A helical drill stem was used to
extract the samples and sepiolite, and samples were then cut from the
materials retained on the auger drill stem on extraction from the ground. Good
recovery was achieved.
The drilling, taken together with trenching, has confirmed two main levels of
medium-high grade sepiolite clay and 166 samples were taken and shipped to
Tolsa's laboratories in Madrid. Based on textures, appearance, colour and
lithological differences, 40 samples were selected for testing for their
commercial properties.
A large deposit of sepiolite bearing clay has been defined and work is ongoing
to define the commercial properties of the Pioche sepiolite and determine the
best processing methods and range of commercial products that might be
produced at Pioche.
NEWPERL PERLITE PROJECT, NEVADA
The NewPerl Project is located approximately 85km from the CS Project in
Nevada, USA, and contains a number of areas where surface samples have shown
excellent test results for production of horticultural grades of perlite.
Subject to further testing, this could be suitable for feed into the CS
Project in the future.
Drill testing of the NewPerl Project scheduled for 2023 was deferred as a cost
saving measure.
Gold, Silver & Base Metal Projects
REESE RIDGE PROJECT, NEVADA
The Reese Ridge Project is located on the south side of the prospective
Humboldt Structural Zone, 83km south-southwest of Battle Mountain, Nevada.
It also lies adjacent to the Reese River geothermal system which has been, and
continues to be, explored for geothermal energy. This exploration has included
use of a number of geophysical techniques common to the mineral exploration
industry, including ZTEM(TM).
The Reese Ridge Project has evolved from the Company's Reese River industrial
limestone project and was first suggested as an interesting target when
prospecting by the Company yielded an unremarkable limestone sample containing
a few spots of the lead sulphide mineral galena which was submitted for
analysis and returned a value of 15.9% zinc (with 0.3% lead and 17ppm silver).
The high zinc content was unexpected, unexplained and given a low priority.
Since then, various Company prospecting campaigns have focused on a broader
area containing numerous conspicuous iron-rich gossans of generally limited
extent but which attracted the Company's attention, and that of early
prospectors, and were found to contain exotic geochemistry and consistently
anomalous zinc, lead and silver with values up to 6.8% zinc, 3.3% lead and
51g/t silver. Forty-three samples taken from these gossans and old workings
averaged 0.86% zinc.
In May 2023, the original high-grade zinc sample site was revisited and two
further samples were collected and analysed with the following results:
· Sample No 52303: 13.6% zinc, 12.8% lead, 146ppm silver.
· Sample No.52304: 29.6% zinc, 0.3% lead, 7ppm silver.
Sample 52303 contained visible galena and so the high lead content was to be
expected. However, the very high zinc values in both samples were again a
surprise as the samples were otherwise inconspicuous. It is believed that the
zinc in these samples is present as secondary zinc oxide, carbonate or
silicate minerals. These minerals are difficult to identify in the field in an
area where the rocks are significantly altered and do not have the stand-out
character of iron rich gossans and are easily overlooked.
Whilst the widespread high visibility iron rich gossans at Reese Ridge are
part of the same mineralising system, they were likely a red herring to the
early prospectors and to our own earlier follow up sampling campaigns, given
that less visually distinctive samples are now confirmed to contain very high
zinc levels.
The geological setting and geological features of the target are consistent
with a Carbonate Replacement Deposit ("CRD") style of mineralisation. These
can be large and high grade. A relevant example is the Hermosa Project in the
neighbouring State of Arizona which was acquired by South32 in a US$1.3
billion takeover and which includes the Taylor Deposit (138 million tonne
Mineral Resource with a zinc equivalent grade of 8.61%) now under development.
During the year, the Company sourced the data from a 2010 ZTEM electromagnetic
geophysical survey carried out to explore for geothermal energy and
commissioned leading Canadian geophysical company, Geotech Ltd ("Geotech"), to
carry out further processing and 2D and 3D inversions on the ZTEM data.
3D inversion produces a 3D model that "maps" the conductivity of the earth at
and below surface. The newly developed 3D model has confirmed an annular zone
of low resistivity (high conductivity) below the surface mineralisation that
extends from near surface to a depth of nearly 1,000m. This annular zone
surrounds a core of high resistivity which the Company interprets as a
granitic intrusion. This would be consistent with a CRD model for
mineralisation. In other work at the Reese Ridge Project, the Company has
received results from a petrological report on thin section examination of
mineralised surface samples. This has indicated that the zinc mineralisation
at surface is largely contained in secondary minerals, the result of
weathering or alteration, but remnants of zinc sulphide (sphalerite) and lead
sulphide (galena) were identified consistent with sulphide mineralisation at
depth and a possible source for the low resistivity anomaly. A review of
chemical analyses from the surface mineralisation has identified anomalously
high levels of the metal gallium in the high-grade zinc samples - up to 68ppm
gallium.
Gallium is an essential mineral in the production of semi-conductors and is
increasingly used in the production of solar panels. It is also used in high
frequency computer chips. It is extracted from some zinc ores and
approximately 80% of the world's gallium is produced in China. China has, in
the recent past, placed restrictions on the export of gallium and gallium
compounds in response to the US's restrictions on the exports of high-end
computer chips to China.
The Company is now planning a follow-up exploration programme to include drill
testing.
JACKSON WASH GOLD & PERLITE PROJECT, NEVADA
The Jackson Wash Project is located 16km from the NewPerl Project in Nevada
and was acquired as a target for horticultural grade perlite. However, the
project area is also prospective for gold and silver.
The claims are currently leased to global gold producer Kinross Gold U.S.A.,
Inc. ("Kinross") which also holds an option to purchase the claims at any time
before 6 October 2030 for US$500,000 and the grant to Sunrise of a 2.5% Net
Smelter Return Royalty.
For Kinross, the Company's Jackson's Wash Project claims form part of a larger
project area centred on the historic Montezuma silver, gold and mercury mining
centre. This is an active exploration area for Kinross which has recently
advised the Company that it is currently planning to increase its exploration
activity in the wider project area.
The Company retains the right to mine perlite on its project claims during the
lease/option period.
CLAYTON SILVER-GOLD PROJECT, NEVADA
The property lies in the Walker Lane Mineral Belt. It is some 30km southeast
of the producing Mineral Ridge Gold Mine and 30km southwest of the major
historic mining centre of Goldfield, where a number of large gold-silver
deposits are currently under development.
The mineralisation at the Clayton Project was discovered in the 1980s when
drilling programmes were conducted by Freeport-McMoRan Gold and Coeur
Exploration. Wide intervals of low-grade silver mineralisation were
intersected and it was postulated that gold-silver values were under-reporting
due to loss of fines from the reverse circulation drilling method.
This historical drilling loss of silver was corroborated by the Company when a
twin diamond drill hole delivered an 84% increase in the silver grade compared
to an original Freeport hole.
The Clayton Project is available for joint venture although the Company will
consider follow up drilling as resources become available. No exploration was
conducted at the Clayton Project in the reporting period.
NEWARK GOLD PROJECT, NEVADA
The Newark Gold Project is located at the southern end of the Battle
Mountain-Eureka (Cortez) gold trend. It lies 40km south of, and along the same
structural zone as, the past-producing Alligator Ridge Mine, 13km southwest of
the past producing Illipah Gold Mine and 20km east of the Pan Gold Mine.
The Newark Project was originally targeted for Carlin-style gold
mineralisation by Freeport in the 1980s following the discovery of anomalous
gold values in silicified rocks in a favourable structural and stratigraphic
setting. Carlin-style deposits can be both large (e.g. Goldstrike which
contains 39 million ounces gold at a grade of 3.3 g/t) and high-grade (e.g.
Barrick's recent Goldrush discovery which contains 21 million ounces gold at a
grade of 6.9 g/t).
Freeport drilled a total of 16 holes. Significantly, hole NWK8 intersected 47m
of low-level gold (average 0.14 ppm gold) in jasperoid from 75m to the end of
the hole at 122m. Drilling is warranted to test this gold bearing jasperoid
and to deepen the hole through to about 400m depth to test the underlying
Joana Limestone which can be a significant host for Carlin-style gold
mineralisation.
The Company will consider a joint venture partnership for this project. No
exploration was conducted at the Newark Project in the reporting period.
BAKER'S GOLD PROJECT
The Baker's Gold Project is located 25km southeast of Meekatharra in the
Murchison Goldfield of Western Australia.
Since acquiring the Project, the Company has carried out soil sampling and a
preliminary programme of drilling with significant mineralisation being
intersected in drill hole 21SBRC002 (2m interval from 64m down hole grading
14.4 g/t gold including 1m grading 26.5 g/t gold).
The Company has applied for a mining lease and a prospecting licence to cover
this mineralisation and is working towards the grant of one or other of the
licences.
No work was carried out in 2023 and costs incurred in connection with the
Baker's Gold Project continue to be impaired pending the rationalisation of
the Company's tenement applications.
Royalty Interests
GARFIELD PROJECT, NEVADA
Sunrise Resources retains a 2% Net Smelter Return Royalty at the Garfield
Project following its sale to Golden Metal Resources plc ("GMR").
The Garfield Project is located in the prolific Walker Lane Mineral Belt in
Nevada, USA, and is an active exploration project for GMR. In September
2023, GMR advised that exploration work "has confirmed the potential for large
scale porphyry and skarn type copper mineralised bodies" with copper
mineralisation now defined in two zones, named the Power Line Zone and
High-Grade Zone, following the completion of a soil geochemical sampling
programme.
The Power Line Zone is a northeast-southwest trending copper-in-soil anomaly
which extends for over 1,500m in length (remains open towards the southwest),
located in the west of the project area. The Power Line Zone connects the
original Garfield showing discovered by Sunrise with a previously isolated
zone located towards the southwest, where limited historical rock sampling
results returned up to 2.6% copper and 0.54g/t gold.
At the High-Grade Zone, a circa 1.5km by 0.8km copper-in-soil anomaly, which
remains open towards north, south and east, is located in the southeast of the
Project area and approximately 1km southeast of the Power Line Zone. Limited
historical rock sampling completed near what is now the western end of the
High-Grade Zone returned up to 5.53% copper, which highlights the potential of
this large, newly defined copper mineralised system.
GMR reports that it will be conducting priority follow up exploration at
Garfield, with focus on the High-Grade Zone.
Sunrise's 2% Net Smelter Royalty interests covers all of the Power Line Zone
and the majority of the High Grade Zone.
STONEWALL GOLD PROJECT, NEVADA
Westgold Inc. holds a 2% Net Smelter Return Royalty from GMR in the Stonewall
Project, also a key project for GMR.
Stonewall is prospective for epithermal-style gold-silver mineralisation.
JUNCTION PROJECT, NEVADA
Until recently, the Company held a royalty interest in a number of claims sold
in 2017 to Canadian company, VR Resources Limited ("VRR"). VRR allowed these
claims to lapse during the year after its drilling programmes failed to live
up to earlier expectations.
Other Projects
SR Minerals Inc. continues to hold mining claims at a number of additional
projects in Nevada including the Bay State Silver Project, the County Line
Diatomite Project and the Ridge Limestone Project. These projects are
available for sale or joint venture.
An agreement was reached with the underlying owners of the Bay State Silver
Project claims in 2021 to reduce the annual lease payments to a nominal amount
for the next three years.
Health and Safety
The Group has maintained strict compliance with its Health and Safety Policy
and is pleased to report there have been no lost time accidents during the
year.
Environment
No Group company has had or been notified of any instance of non-compliance
with environmental legislation in any of the countries in which they work.
Risks & Uncertainties
The Board regularly reviews the risks to which the Group is exposed and
ensures through its meetings and regular reporting that these risks are
minimised as far as possible.
The principal risks and uncertainties facing the Group at this stage in its
development and in the foreseeable future are detailed below together with
risk mitigation strategies employed by the Board.
Risk Mitigation Strategies
Exploration Risk
The Group's business is mineral exploration and development which are The directors bring many years of combined mining and exploration experience
speculative activities. There is no certainty that the Group will be and an established track record in mineral discovery.
successful in the definition of economic mineral deposits, or that it will
proceed to the development of any of its projects or otherwise realise their
value.
The Company maintains a portfolio of exploration projects, including projects
at the drill stage, in order to spread the risk associated with mineral
exploration.
Resource/Reserve Risk
All mineral projects have risk associated with defined grade and continuity. When relevant, Mineral Resources and Reserves are estimated by independent
Mineral Resources and Reserves are always subject to uncertainties in the specialists on behalf of the Group and reported in accordance with accepted
underlying assumptions which include the quality of the underlying data, industry standards and codes. The directors are realistic in the use of metal
geological interpretations, technical assumptions and price forecasts. and mineral price forecasts and impose rigorous practices in the QA/QC
programmes that support its independent estimates.
Development and Marketing Risk
Delays in permitting, financing, mine commissioning and marketing a project To reduce development risk the directors will ensure that its permitting,
and its products may result in delays to the Group meeting production targets. financial evaluation and financing and market mechanisms are robust and
thorough and will seek to position the Company as a low-cost producer.
Commodity Price Risk
Changes in commodity prices can affect the economic viability of mining The Company consistently reviews commodity prices and trends for its key
projects and affect decisions on continuing exploration activity. projects throughout the development cycle.
Mining and Processing Technical Risk
Notwithstanding the completion of metallurgical testwork, test mining and From the earliest stages of exploration, the directors look to use consultants
pilot studies indicating the technical viability of a mining operation, and contractors who are leaders in their field and in future will seek to
variations in mineralogy, mineral continuity, ground stability, groundwater strengthen executive management and the Board with additional technical and
conditions and other geological conditions may still render a mining and financial skills as the Company transitions from exploration to production.
processing operation economically or technically non-viable.
Environmental and Social Governance (ESG) Risk
Exploration and development of a project can be adversely affected by The development of industrial minerals projects such as the CS Project carry a
environmental and social legislation and the unforeseen results of lower level of environmental and social liability than gold or base metal
environmental and social impact studies carried out during evaluation of a projects due to low levels of toxic contaminants in the ore and processing
project. Once a project is in production, unforeseen events can give rise to chemicals.
environmental liabilities.
The Company has adopted an Environmental, Social and Governance Policy (the
"ESG Policy") and avoids the acquisition of projects where liability for
legacy environmental issues might fall upon the Company.
The ESG Policy will be updated in future to reflect the status of the
Company's projects.
Political Risk
All countries carry political risk that can lead to interruption of activity. The Company's strategy restricts its activities to stable, democratic and
Politically stable countries can have enhanced environmental and social mining friendly jurisdictions.
permitting risks, risks of strikes and changes to taxation, whereas less
developed countries can have, in addition, risks associated with changes to
the legal framework, civil unrest and government expropriation of assets.
The Company has adopted a Bribery & Anti-Corruption Policy and a Code of
Conduct and these are strictly enforced.
Partner Risk
Whilst there has been no past evidence of this, the Group can be adversely The Board's policy is to maintain control of certain key projects so that it
affected if joint venture partners are unable or unwilling to perform their can control the pace of exploration and development and reduce partner risk.
obligations or fund their share of future developments.
For projects where other parties are responsible for critical payments and
expenditures the Company's agreements legislate that such payments and
expenditures are promptly met.
Financing & Liquidity Risk
The Company has an ongoing requirement to fund its activities through the The Company maintains a good network of contacts in the capital markets that
equity markets and in future to obtain finance for project development. There has historically met its financing requirements. The Company's low overheads
is no certainty such funds will be available when needed. and cost-effective exploration strategies help reduce its funding requirements
and currently the outstanding directors' fees are settled in shares.
Nevertheless, further equity issues will be required over the next 12 months.
Financial Instruments
Details of risks associated with the Group's Financial Instruments are given The directors are responsible for the Group's systems of internal financial
in Note 19 to the financial statements. control. Although no systems of internal financial control can provide
absolute assurance against material misstatement or loss, the Group's systems
are designed to provide reasonable assurance that problems are identified on a
timely basis and dealt with appropriately.
In carrying out their responsibilities, the directors have put in place a
framework of controls to ensure as far as possible that ongoing financial
performance is monitored in a timely manner, that corrective action is taken
and that risk is identified as early as practically possible, and they have
reviewed the effectiveness of internal financial controls.
The Board, subject to delegated authority, reviews capital investment,
property sales and purchases, additional borrowing facilities, guarantees and
insurance arrangements.
Exchange Rate Risk
The value of the Company's assets held in overseas subsidiaries will vary with The Company's project expenditures are discretionary and subject to constant
exchange rate fluctuations, especially in the US Dollar/Pound Sterling review and changing priorities. The Company does not speculate on exchange
exchange rate. rates or hedge its foreign currency exposures but will consider doing so once
expenditures become more predictable and locked in.
As much of the Company's exploration costs are incurred in US Dollars, the
Company's budget costs will be subject to exchange rate variations when
actually incurred.
Forward-Looking Statements
This Annual Report may contain certain statements and expressions of belief,
expectation or opinion which are forward-looking statements, and which relate,
inter alia, to the Company's proposed strategy, plans and objectives or to the
expectations or intentions of the Company's directors. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors beyond the control of the Company that could cause the actual
performance or achievements of the Company to be materially different from
such forward-looking statements.
Section 172 (1) Statement
Section 172 of the Companies Act 2006 requires a director of a company to act
in the way he or she considers, in good faith, would be most likely to promote
the success of the company for the benefit of its members as a whole. This
requires a director to have regard, among other matters, to: the likely
consequences of any decision in the long-term; the interests of the Company's
employees; the need to foster the Company's business relationships with
suppliers, clients, joint arrangement partners and others; the impact of the
Company's operations on the community and the environment; the desirability of
the Company maintaining a reputation for high standards of business conduct;
and the need to act fairly with members of the Company.
The Company's directors give careful consideration to these factors in
discharging their duties. The stakeholders we consider are our shareholders,
employees, suppliers (including consultants and contractors), our joint
arrangement partners, the regulatory bodies that we engage with and those that
live in the societies and geographical areas in which we operate. The
directors recognise that building strong, responsible and sustainable
relationships with our stakeholders will help us to deliver our strategy in
line with our long-term objectives.
Having regard to:
The likely consequences of any decision in the long-term:
The Company's Aims and Business Model are set out at the head of this
Strategic Report and in the Chairman's Statement. The Company's mineral
exploration and development business is, by its very nature, long-term and so
the decisions of the Board always consider the likely long-term consequences
and take into consideration, for example, trends in metal and minerals supply
and demand, the long-term political stability of the countries in which the
Company operate and the potential impact of its decisions on its stakeholders
and the environment. As the Company aims to transition the CS Project into
production, other projects also become important to the long-term future of
the Company and this has framed the Board's decision to allocate a portion of
capital to the testing of some of the Company's precious metal projects and to
acquiring new projects. The Board's approach to general strategy and long-term
risk management are set out in the Corporate Governance Statement (Principle
1) and the section on Risks and Uncertainties.
The interests of the Company's employees:
Other than the Board, the Company has no employees. It relies on the employees
of Tertiary Minerals plc who are engaged through a services agreement, but all
of these employees have daily access to the Executive Chairman and their views
are considered in the Board's decision making. Further details on the Board's
employment policies, health and safety policy and employee engagement are
given in the Corporate Governance Statement (Principle 8).
The need to foster the Company's business relationships with its stakeholders:
The sustainability of the Company's business long-term is dependent on
maintaining strong relationships with its stakeholders. The factors governing
the Company's decision making and the details of stakeholder engagement are
set out in the Corporate Governance Statement (Principles 2, 3, 8 and 10).
Having regard to the impact of the Company's operations on the community and
the environment:
The Company requires a "social licence" to operate sustainably in the mining
industry and so the Board makes careful consideration of any potential impacts
of its activities on the local community and the environment. The Board
strives to maintain good relations with the local communities in which it
operates and with local businesses. For example, in permitting the CS Project
for production the Board has carried out extensive work and consultation with
regulators and the local community representatives to evaluate the benefits
and impacts of its CS Project. Further discussion of these activities and
Board considerations can be found in the Environmental, Social and Governance
("ESG") Statement and in the Corporate Governance Statement (Principle 3).
The desirability of the Company maintaining a reputation for high standards of
business conduct:
The Board recognises that its reputation is key to its long-term success and
depends on maintaining high standards of corporate governance. It has adopted
the QCA Code of Corporate Governance and sets out in detail how it has
complied with the 10 key principles of the QCA Code in the Corporate
Governance Statement. This contains details of various Company policies
designed to maintain high standards of business conduct such as the Share
Dealing Policy; the ESG Policy; the Health and Safety Policy, the Social Media
Policy and the Bribery & Anti-Corruption Policy and Code of Conduct.
The need to act fairly between Members of the Company:
The Board ensures that it takes decisions in the interests of the members
(shareholders) as a whole and aims to keep shareholders fully informed of
significant developments, ensuring that all shareholders receive Company news
at the same time. The Executive Chairman devotes time to answering genuine
shareholder queries, no individual or group of shareholders is given
preferential treatment. Further information is provided in the Corporate
Governance Statement (Principles 2 and 10).
This Strategic Report was approved by the Board of Directors on 23 January
2024 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Directors' Responsibilities
The directors are responsible for preparing the Strategic Report, the
Directors' Report and the financial statements in accordance with applicable
law and regulations.
Company law requires directors to prepare financial statements for a company
for each financial year. Under that law the directors have elected to prepare
the Group and Company financial statements in accordance with applicable law
and UK adopted International Accounting Standards. Under company law the
directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group for that period. The directors
are also required to prepare the financial statements in accordance with the
AIM Rules of the London Stock Exchange for companies whose securities are
traded on the AIM market.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are
reasonable and prudent;
· state whether they have been prepared in accordance
with applicable law and UK adopted International Accounting Standards, subject
to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Company and the Group
will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and the
Directors' Report and other information included in the Annual Report and
financial statements are prepared in accordance with applicable law in the
United Kingdom.
Website Publication
The maintenance and integrity of the Sunrise Resources plc website is the
responsibility of the directors. Legislation in the United Kingdom governing
the preparation and dissemination of the accounts and the other information
included in annual reports may differ from legislation in other jurisdictions.
Information from the Directors' Report
The directors are pleased to submit their Annual Report and audited financial
statements for the year ended 30 September 2023.
The Strategic Report contains details of the principal activities of the
Company and includes the Operating Review which provides detailed information
on the development of the Group's business during the year and indications of
likely future developments and events that have occurred after the financial
year-end.
Going Concern
In common with many exploration companies, the Company raises finance for its
exploration and appraisal activities in discrete tranches. Further funding is
raised as and when required. When any of the Group's projects move to the
development stage, specific project financing will be required.
The directors prepare annual budgets and cash flow projections that extend
beyond 12 months from the date of this report. Given the Group's cash position
at the year-end of £177,967 (2022: £96,126) these projections include the
estimated proceeds of future fundraising necessary within the next 12 months
to meet the Group's overheads and planned discretionary project expenditures
and to maintain the Company and its subsidiaries as going concerns. Although
the Company has been successful in raising finance in the past, there is no
assurance that it will obtain adequate finance in the future. This represents
a material uncertainty related to events or conditions which may cast
significant doubt on the Group and Company's ability to continue as going
concerns and, therefore, that they may be unable to realise their assets and
discharge their liabilities in the normal course of business. However, the
directors have a reasonable expectation that they will secure additional
funding, when required, to continue meeting corporate overheads and
exploration costs for the foreseeable future and the directors therefore
believe that the going concern basis is appropriate for the preparation of the
financial statements.
Dividend
The directors do not recommend the payment of any dividend.
Financial Instruments and Other Risks
The business of mineral exploration and evaluation has inherent risks. Details
of the Group's financial instruments and risk management objectives and of the
Group's exposure to risk associated with its financial instruments are given
in Note 19 to the financial statements.
Details of risks and uncertainties that affect the Group's business are given
in the Strategic Report.
Directors
The directors holding office in the period were:
Mr P L Cheetham - Chairman of the Board and Chairman of the Nomination
Committee.
Mr R D Murphy - Chair of the Remuneration Committee and a member of the
Nomination and Audit Committees.
Mr J Cole - Chair of the Audit Committee and member of the Nomination and
Remuneration Committees.
Attendance at Board and Committee Meetings
The Board retains control of the Group with day-to-day operational control
delegated to the Executive Chairman. The full Board meets four times a year
and on any other occasions it considers necessary.
Board Nomination Audit Remuneration
Meetings Committee Committee Committee
Director Attended Held Attended Held Attended Held Attended Held
P L Cheetham 15 15 1 1 3 3 2 3
R D Murphy 15 1 3 3
J Cole 15 1 3 3
The directors' shareholdings are shown in Note 16 to the financial statements.
Events After The Balance Sheet Date
(i) Capital Restructure
At a General Meeting on 22 November 2023, the shareholders approved the
sub-division of the Company's ordinary share capital, whereby each existing
Ordinary Share with a nominal value of 0.1p was subdivided into 1 new Ordinary
Share of 0.001p and 1 Deferred Share of 0.099p each, and the subsequent buy
back and cancellation of the Deferred Shares. The Sub-Division was completed
on 23 November 2023. The Deferred Shares had no significant rights attached to
them and carried no right to vote or to participate in distribution of surplus
assets and were not admitted to trading on the AIM market of the London Stock
Exchange plc. The Deferred Shares effectively carried no value and the Buy
Back and Cancellation of the Deferred Shares was completed on 29 November
2023. The Buy Back of the Deferred Shares was funded by an issue of 10,000
ordinary shares at a price of 0.07 pence per share made specifically for that
purpose.
(ii) Pioche Project
By an agreement dated 27 December 2023, the Company agreed with Tolsa USA,
Inc. to extend the term of the Option Agreement to 28 December 2024 in
exchange for a payment of a further option fee of US$100,000 by 15 January
2023 and an increase in the Option Exercise Price from US$1.25 million to
US$1.4 million.
Shareholders
As at the date of this report the following interests of 3% or more in the
issued share capital of the Company appeared in the share register.
As at 23 January 2024 Number % of share
of shares capital
Interactive Investor Services Nominees Limited SMKTISAS 426,799,948 10.42%
Interactive Investor Services Nominees Limited SMKTNOMS 420,159,497 10.26%
Barclays Direct Investing Nominees Limited CLIENT1 349,014,635 8.52%
Hargreaves Lansdown (Nominees) Limited 15942 334,431,899 8.17%
Smith & Williamson Nominees Limited 292,784,545 7.15%
Hargreaves Lansdown (Nominees) Limited VRA 247,952,429 6.05%
Interactive Investor Services Nominees Limited TDWHSIPP 179,712,466 4.38%
HSDL Nominees Limited 155,189,251 3.79%
Hargreaves Lansdown (Nominees) Limited HLNOM 144,541,872 3.53%
HSDL Nominees Limited MAXI 124,862,685 3.05%
Details of directors' interests in shares and warrants are given in Note 16 to
the Financial Statements.
Disclosure of Audit Information
Each of the directors has confirmed that so far as they are aware, there is no
relevant audit information of which the Company's Auditor is unaware, and that
they have taken all the steps that they ought to have taken as a director in
order to make themselves aware of any relevant audit information and to
establish that the Company's Auditor is aware of that information.
Auditor
A resolution to reappoint Crowe U.K. LLP as Auditor of the Company will be
proposed at the forthcoming Annual General Meeting.
Charitable and Political Donations
During the year, the Group made no charitable or political donations.
Annual General Meeting
The Company's Annual General Meeting will be held on Thursday 22 February 2024
at 10.00 a.m.
Conflicts of Interest
The Companies Act 2006 permits directors of public companies to authorise
directors' conflicts and potential conflicts, where appropriate, where the
Articles of Association contain a provision to this effect. The Company's
Articles contain such a provision. Procedures are in place in order to avoid
any conflict of interest between the Company and Tertiary Minerals plc.
Tertiary provides corporate and project management services to Sunrise.
Approved by the Board on 23 January 2024 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Board of Directors
The Directors and Officers of the Company during the financial year were:
Patrick Cheetham Roger Murphy
Executive Chairman Senior Non-Executive Director
Key Experience: Key Experience:
· Founding director · Career focus in capital raising for mining and oil & gas
companies
· Mining geologist with more than 40 years' experience in mineral
exploration · Former MD, Investment Banking, of Dundee Securities Europe Ltd
· More than 35 years in public company management · Geologist
Appointed: March 2005 Appointed: May 2016
Committee Memberships: Chairman of the Nomination Committee Committee Memberships: Chairman of the Remuneration Committee and Member of
Audit and Nomination Committees
External Commitments: Executive Chairman of Tertiary Minerals plc
External Commitments: Partner and non-executive Director of Madini Minerals,
Executive Director of Zamare Minerals Ltd, Sarn Helen Gold Limited and TREO
Minerals Ltd.
James Cole Rod Venables
Non-Executive Director Company Secretary
Key Experience: Key Experience:
· Chartered Accountant with strong commercial background and track · Qualified company/commercial solicitor
record of success in fundraising, mergers, disposals and acquisitions in
resource sector · Director and Head of Company Secretarial Services at City Group PLC
· Previously Finance Director for the Goal Group Limited. Formerly · Experienced in both Corporate Finance and Corporate Broking
Chief Financial Officer Cominco Resources Ltd, AIM/TSX traded European
Minerals Corporation plc and TSX/OSE traded Crew Gold Corporation.
Appointed: July 2019
Appointed: May 2021
External Commitments: Company Secretary for Tertiary Minerals plc and other
clients of City Group PLC
Committee Memberships: Chairman of the Audit Committee and a Member of the
Remuneration and Nomination Committees
External Commitments: Provides independent financial consultancy to a number
of companies.
Corporate Governance
Chairman's Overview
There is no prescribed corporate governance code for AIM companies and the
London Stock Exchange prefers to give companies the flexibility to choose from
a range of codes which suit their specific stage of development, sector and
size.
The Board considers the corporate governance code published by the Quoted
Companies Alliance to be the most suitable code for the Company. Accordingly,
the Company has adopted the principles set out in the QCA Corporate Governance
Code (the "QCA Code") and applies these principles wherever possible, and
where appropriate given its size and available resources. The Company's
Corporate Governance Statement was reviewed by the Board on 23 January 2024.
The Company has set out on its website and in its Corporate Governance
Statement the 10 principles of the QCA Code and details of the Company's
compliance. The Code was updated post year-end and the 2023 QCA Code is
designed to apply to companies whose financial years start on or after 1 April
2024.
Patrick Cheetham, in his capacity as Chairman, has overall responsibility for
the corporate governance of the Company and the Board is responsible for
delivering on our well-defined business strategy having due regard for the
associated risks and opportunities.
The Company's corporate governance arrangements now in place are designed to
deliver a corporate culture that understands and meets shareholder and
stakeholder needs and expectations whilst delivering long-term value for
shareholders.
The Board recognises that its principal activity, mineral exploration and
development, has potential to impact on the local environment and communities
and consequently has adopted an Environmental, Social and Governance ("ESG")
Policy to ensure that the Group's activities have minimal environmental and
social impact. Where appropriate the Group's contracts with suppliers and
contractors legally bind those suppliers and contractors to do the same. The
Group's activities, carried out in accordance with the ESG Policy, have had
only minimal environmental and social impact at present and this policy is
regularly reviewed. Where appropriate, all work is carried out after advance
consultation with affected parties.
The Board recognises the benefits that social media engagement can have in
helping the Company reach out to shareholders and other stakeholders, but it
also recognises that misuse or abuse of social media can bring the Company
into disrepute. To facilitate the responsible use of social media, the Company
has adopted a Social Media Policy.
The Board has also adopted a Share Dealing Code for dealings in shares of the
Company by directors and employees and a Bribery & Anti-Corruption Policy
and Code of Conduct applicable to employees, suppliers and contractors.
The Group recognises that the goodwill of its contractors, consultants and
suppliers is important to its business success and seeks to build and maintain
this goodwill through fair dealings. The Group has a prompt payment policy and
seeks to settle all agreed liabilities within the terms agreed with suppliers.
The amount shown in the Consolidated and Company Statements of Financial
Position in respect of trade payables at the end of the financial year
represents 39 days of average daily purchases (2022: 23 days). This amount is
calculated by dividing the creditor balance at the year end by the average
daily Group spend in the year.
The Board recognises it has a responsibility to provide strategic leadership
and direction in the development of the Group's health and safety strategy in
order to protect all of its employees and other stakeholders. The Company has
developed a Health and Safety Policy to clearly define roles and
responsibilities and in order to identify and manage risk.
Your Board currently comprises three directors of which two are non-executive
and considered by the Board to be independent. We believe that this balance
provides an appropriate level of independent oversight. The Board has the
ability to seek independent advice although none was deemed necessary in the
year under review. The Board is aware of the need to refresh its membership
from time to time and to match its skill set to those required for the
development of its mineral interests and will consider appointing additional
independent non-executive directors in the future.
Patrick Cheetham
Executive Chairman
Environmental, Social and Governance Statement
Sunrise Resources plc and its subsidiaries ("the Company") practice
responsible exploration as reflected in this Environmental, Social and
Governance ("ESG") policy statement and as demonstrated by our actions. By
doing so we reduce project risk, avoid adverse environmental and social
impacts, optimising benefits for all stakeholders while adding value to our
projects.
Our business associates, consultants and contractors ("Associated Parties")
perform much of our primary activities at our projects and therefore we
require that all Associated Parties working on our behalf or for our
subsidiaries accept and adhere to the principles set out in this policy. We
encourage input from those with local knowledge and we review this policy on a
regular basis.
Our ESG policy is guided by the Prospectors & Developers Association of
Canada's (PDAC) Framework for Responsible Exploration (known as e3 Plus) which
encourages mineral exploration companies to support and improve social,
environmental and health and safety performance across all exploration
activities around the world.
Adopting Responsible Governance and Management
The Company is committed to environmentally and socially responsible mineral
exploration and has developed and implemented policies and procedures for
corporate governance and ethics. We ensure that all staff and key Associated
Parties are familiar with these and have appropriate levels of knowledge of
these policies and procedures.
The Company employs persons and engages contractors with the required
experience and qualifications relevant to their specific tasks and, where
necessary, seeks the advice of specialists to improve the understanding and
management of social, environmental, human rights and security, health and
safety, and in the application of traditional knowledge.
The Company's Corporate Governance Statement and Bribery & Anti-Corruption
policy and Code of Conduct can be viewed on our website here:
https://www.sunriseresourcesplc.com/corporate-governance
(https://www.sunriseresourcesplc.com/corporate-governance) .
Applying Ethical Business Practices
As well as our shareholders and staff, our stakeholders include local
communities and local leadership, local, regional and national government and
regulatory authorities, suppliers, contactors and consultants, our local
business partners and other interested parties. Our corporate culture and
policies require honesty, integrity, transparency and accountability in all
aspects of our work and when interacting with all stakeholders.
The Company takes all necessary steps to ensure that activities in the field
minimise or mitigate any adverse impacts on both the environment and on local
communities.
Commitment to Project Due Diligence and Risk Assessment
We make sure we are informed of the laws, regulations, treaties and standards
that are applicable with respect to our activities. We ensure that Associated
Parties are informed and prepared before going into the field in order to
minimise the risk of miscommunication, unnecessary costs and conflict, and to
understand the potential for creating opportunities with local communities
where possible.
Engaging Host Communities and Other Affected and Interested Parties
Sunrise is committed to engaging positively with local communities, regulatory
authorities, suppliers and other stakeholders in its project locations, and
encourages feedback through this engagement. Through this process, the Company
develops and fosters the relationships on which our business relies for
success.
Respecting Human Rights
The exploration activities of Sunrise are carried out in line with applicable
laws on human rights in its home jurisdiction and those of the countries in
which it works. The Company does not engage in activities that have adverse
human rights impacts.
Protecting the Environment
We are committed to ensuring that environmental standards are met or exceeded
in the course of our exploration activities. Applicable laws and local
guidelines in all project jurisdictions are followed diligently and
exploration programmes are only carried out once relevant permits and
approvals have been secured from the appropriate regulatory bodies.
In Nevada, USA, most of our exploration is carried out on Federally owned land
administered by the Bureau of Land Management ("BLM") which requires the
submission of financial bonds for reclamation of exploration activities and
which holds the Company to account. Provisions are made in the financial
statements for reclamation costs in accordance with calculations set by the
BLM. When operating on private lands the Company applies the same rigorous
standards for reclamation.
In Australia, field exploration activity requires prior approval from the
Department of Mines, Industry Regulation and Safety which imposes
environmental reclamation obligations on any such approvals.
Where our activities create ground disturbance, we ensure that full
rehabilitation is carried out in accordance with regulations and we take care
to minimise the impact of our activities on local flora and fauna, choosing
less impactful exploration methods where possible.
Safeguarding the Health and Safety of Workers and the Local Population
Company activities are carried out in accordance with its Health and Safety
Policy which adheres to all applicable laws. It ensures that its Associated
Parties are made aware of and follow these policies where relevant.
Corporate Governance Statement
The Board of Sunrise Resources plc comprises three members. Nevertheless,
there are Audit, Remuneration and Nomination Committees to ensure proper
governance in compliance with the QCA Code. The QCA Code sets out ten
principles which should be applied. The principles are set out below with an
explanation of how the Company applies each principle, and the reasons for any
aspect of non-compliance.
Principle One: Establish a strategy and business model which promote long-term
value for shareholders.
The Company has a clearly defined strategy and business model that has been
adopted by the Board and is set out in the Strategic Report. Details of the
challenges to the execution of the Company's strategy and business model and
how those will be addressed can be found in Risks and Uncertainties in the
Strategic Report.
Principle Two: Seek to understand and meet shareholder needs and expectations.
The Board is committed to maintaining good communication with its shareholders
and investors. The Chairman and members of the Board from time to time meet
with shareholders and investors directly or through arrangements with the
Company's brokers to understand their investment requirements and expectations
and to address their enquiries and concerns.
All shareholders are encouraged to attend the Company's Annual General
Meetings where they can meet and directly communicate with the Board. After
the close of business at the Annual General Meeting, the Chairman makes an
up-to-date corporate presentation and opens the floor to questions from
shareholders.
Shareholders are also welcome to contact the Company via email at
info@sunriseresourcesplc.com with any specific queries.
The Company also provides regulatory, financial and business news updates
through the Regulatory News Service (RNS) and various media channels such as
X, formerly Twitter. Shareholders also have access to information through the
Company's website, www.sunriseresourcesplc.com, which is updated on a regular
basis and which includes the latest corporate presentation on the Group.
Contact details are also provided on the website.
Principle Three: Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
The Board takes regular account of the significance of social, environmental
and ethical matters affecting the business of the Group. The Board has adopted
an Environmental, Social and Governance ("ESG") Policy, which can be found on
the Company website and an ESG Statement can be found in this Annual Report.
The Company engages positively with local communities, regulatory authorities,
suppliers and other stakeholders in its project locations and encourages
feedback through this engagement. Through this process, the Company identifies
the key resources and fosters the relationships on which the business relies.
Principle Four: Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
The Board regularly reviews the risks to which the Group is exposed and
ensures through its meetings and regular reporting that these risks are
minimised as far as possible whilst recognising that its business
opportunities carry an inherently high level of risk. The principal risks and
uncertainties facing the Group at this stage in its development and in the
foreseeable future are detailed in Risks and Uncertainties in the Strategic
Report, together with risk mitigation strategies employed by the Board.
Principle Five: Maintain the board as a well-functioning, balanced team led by
the chair.
The Board's role is to agree the Group's long-term direction and strategy and
monitor achievement of its business objectives. The Board meets formally four
times a year for these purposes and holds additional meetings when necessary
to transact other business. The Board receives regular and timely reports for
consideration on all significant strategic, operational and financial matters.
Relevant information for consideration by the Board is circulated in advance
of its meetings.
Further details on the Board's meetings are provided in the Directors' Report.
The Board is supported by the Audit, Remuneration and Nomination Committees.
The Board currently consists of the Executive Chairman (Patrick Cheetham), and
two non-executive directors (Roger Murphy and James Cole). The current Board's
preference is that independent non-executive directors comprise the majority
of Board members. Patrick Cheetham is currently the Chairman and Chief
Executive. Patrick Cheetham has a service contract as Chairman of the Company
and his services as Chief Executive are provided to the Company, at cost,
through a Management Services Agreement with Tertiary Minerals plc
("Tertiary"), in which he is a shareholder and where he is also employed as
Chairman. In 2023, Patrick Cheetham dedicated over 46% of his working time to
the Company. The combined role of Chairman and Chief Executive results in cost
savings and is considered acceptable whilst there is a majority of independent
directors on the Board and having regard to the fact that the Company is not
yet revenue generating.
The non-executive directors have committed the time necessary to fulfil their
roles during the year. The attendance record of the directors at Board and
Board Committee meetings are detailed in the Directors' Report.
The current non-executive directors are considered independent of management
and free from any business or other relationship which could materially
interfere with the exercise of their independent judgement.
Principle Six: Ensure that between them the directors have the necessary up to
date experience, skills and capabilities.
The Board considers the current balance of sector, financial and public market
skills and experience of its directors are relevant to the Company's business
and are appropriate for the current size and stage of development of the
Company and the Board considers that it has the skills and experience
necessary to execute the Company's strategy and business plan and discharge
its duties effectively.
The directors maintain their skills through membership of various professional
bodies, attendance at mining conferences and through their various external
appointments.
All Directors have access to the advice and services of the Company Secretary
who is responsible for ensuring that Board procedures and applicable rules and
regulations are observed. All directors are able to take independent
professional advice, if required, in relation to their duties and at the
Company's expense.
Principle Seven: Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement.
The ultimate measure of the effectiveness of the Board is the Company's
progress against the long-term strategy and aims of the business. This
progress is reviewed in Board meetings held formally at least four times a
year. The Executive Chairman's performance is regularly reviewed by the rest
of the Board.
The Nomination Committee, currently consisting of the Executive Chairman and
the two non-executive directors, meets once a year to lead the formal process
of rigorous and transparent procedures for Board appointments. During this
meeting the Nomination Committee reviews the structure, size and composition
of the Board; succession planning; leadership; key strategic and commercial
issues; conflicts of interest; time required from non-executive directors to
execute their duties effectively; the overall effectiveness of the Board; and
the Committee's own terms of reference.
Under the Articles of Association, new directors appointed to the Board must
stand for election at the first Annual General Meeting of the Company
following their appointment. Under the Articles of Association, existing
directors retire by rotation and may offer themselves for re-election.
Principle Eight: Promote a corporate culture that is based on ethical values
and behaviours.
The Board recognises and strives to promote a corporate culture based on
strong ethical and moral values. The Group is currently managed via a service
agreement with Tertiary. It has no employees outside the non-executive
directors, but encourages Tertiary's employees to understand all aspects of
the Group's business and Tertiary seeks to remunerate its employees fairly,
being flexible where practicable. In future, the Group will give full and fair
consideration to applications for employment received regardless of age,
gender, colour, ethnicity, disability, nationality, religious beliefs,
transgender status or sexual orientation. The Board takes account of
Tertiary's employees' interests when making decisions, and suggestions from
those employees aimed at improving the Group's performance are welcomed.
The corporate culture of the Company is promoted to Tertiary's employees,
suppliers and contractors and is underpinned by the implementation and regular
review, enforcement and documentation of various policies: the Health and
Safety Policy; the Environmental, Social and Governance ("ESG") Policy; the
Share Dealing Policy; the Bribery & Anti-Corruption Policy & Code of
Conduct; Privacy and Cookies Policy and Social Media Policy. These procedures
enable the Board to determine that ethical values are recognised and
respected.
The Board recognises that its principal activity, mineral exploration and
development, has potential to impact on local environments and communities,
and as such an ESG Policy was developed with this in mind and this replaces
the previous to ensure that, wherever they take place, the Group's activities
have minimal environmental and social impact. Where appropriate the Group's
contracts with suppliers and contractors legally bind those suppliers and
contractors to do the same. The Group's activities carried out in accordance
with the ESG Policy have had only minimal environmental and social impact and
this policy is regularly reviewed. Where appropriate, all work is carried out
after advance consultation with affected parties.
Principle Nine: Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board.
The Board has overall responsibility for all aspects of the business. The
Chairman is responsible for overseeing the running of the Board, ensuring that
no individual or group dominates the Board's decision-making, and that the
non-executive directors are properly briefed on all operational and financial
matters. The Chairman has overall responsibility for corporate governance
matters in the Group and chairs the Nomination Committee. The Chairman has the
responsibility for implementing the strategy of the Board and managing the
day-to-day business activities of the Group. The Company Secretary is
responsible for ensuring that Board procedures are followed, and applicable
rules and regulations are complied with. Key operational and financial
decisions are reserved for the Board through quarterly project reviews, annual
budgets, and quarterly budget and cash-flow forecasts and on an ad hoc basis
where required.
The two non-executive directors are responsible for bringing independent and
objective judgment to Board decisions. The Board has established Audit,
Remuneration and Nomination Committees with formally delegated duties and
responsibilities. James Cole currently chairs the Audit Committee, Roger
Murphy chairs the Remuneration Committee and Patrick Cheetham chairs the
Nomination Committee.
This Corporate Governance statement will be reviewed at least annually to
ensure that the Company's corporate governance framework evolves in line with
the Company's strategy and business plan.
Principle Ten: Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders.
The Company regularly communicates with, and encourages feedback from, its
shareholders who are its key stakeholder group. The Company's website is
regularly updated and users, including all stakeholders, can register to be
alerted via email when material announcements are made. The Company's contact
details are on the website should stakeholders wish to make enquiries of
management.
The Group's financial reports for at least the past five years can be found
here: https://www.sunriseresourcesplc.com/financial-reports and contains past
Notices of Annual General Meetings.
The results of voting on all resolutions in general meetings are posted to the
Company's website, including any actions to be taken as a result of
resolutions for which votes against have been received from at least 20 per
cent of independent votes.
Audit Committee Report
The Audit Committee is a sub-committee of the Board, comprised of the
independent non-executive directors and assists the Board in meeting
responsibilities in respect of external financial reporting and internal
controls. The Audit Committee also keeps under review the scope and results of
the audit. It also considers the cost-effectiveness, independence and
objectivity of the auditors taking account of any non-audit services provided
by them. James Cole is Chair of the Audit Committee.
The specific objectives of the Committee are to:
a) maintain adequate quality and effective scope of the
external audit of the Group including its branches where applicable and review
the independence and objectivity of the auditors.
b) ensure that the Board of Directors has adequate
knowledge of issues discussed with its external auditor.
c) ensure the financial information and reports issued
by the Company to AIM, shareholders and other recipients are accurate and
contain proper disclosure at all times.
d) maintain the integrity of the Group's administrative
operating and accounting controls and internal control principles.
e) ensure proper accounting policies are adhered to by
the Group.
The Committee has unlimited access to the external auditors, to senior
management of the Group and to any external party deemed necessary for the
proper discharge of its duties. The Committee may consult independent experts
where it considers necessary to perform its duties.
The Audit Committee reviews the financial controls of the Company on a regular
basis and is satisfied that the Group's financial controls and reporting
procedures are robust and sufficient to ordinarily prevent fraud and ensure
that senior management, the Committee and the Board are fully aware of the
Company's financial position at all times.
The Audit Committee met three times in the last financial year, on 9 December
2022, 31 May 2023 and 9 August 2023. Significant reporting issues considered
during the year included the following:
1. Impairments
The Committee has reviewed the carrying values of the Group projects as at 30
September 2023, and recoverability of loans from the Parent Company to
subsidiary undertakings and carried out impairment reviews. The project
carrying values are assessed against the IFRS 6 criteria set out in Note 1(n).
Loans to subsidiary undertakings are assessed for impairment under IFRS 9.
As a result of this, it was judged that no projects or intercompany loans
should be impaired.
2. Going Concern
The Committee also considered the Going Concern basis on which the accounts
have been prepared (see Note 1(b)). The directors are satisfied that the Going
Concern basis is appropriate for the preparation of the financial statements.
James Cole
Chair - Audit Committee
Remuneration Committee Report
The Remuneration Committee is a sub-committee of the Board and comprises the
independent non-executive directors. Roger Murphy is Chair of the Remuneration
Committee.
The primary objective of the Committee is to review the performance of the
executive directors and review the basis of their service agreements and make
recommendations to the Board regarding the scale and structure of their
remuneration.
However, the Company does not currently remunerate any of the directors other
than in their capacity as directors. Whilst the Chairman of the Board, Patrick
Cheetham, does have an executive role, his technical and managerial services
are provided under a general service agreement with Tertiary Minerals plc and
his remuneration is fixed by Tertiary Minerals plc. Nonetheless, it is the
role of the Remuneration Committee to ensure that the executive director is
appropriately incentivised and rewarded for his services to the Company and
this is considered as part of the Committee's review of any Long-Term
Incentive Plan.
The Remuneration Committee met three times during the financial year under
review, on 7 November 2022, 22 March 2023 and 9 August 2023.
Roger Murphy
Chair - Remuneration Committee
Nomination Committee Report
The Nomination Committee comprises the Chairman and the independent
non-executive directors. Patrick Cheetham is Chair of the Nomination
Committee.
The primary objective of the Nomination Committee is to lead the formal
process of reviewing and making recommendations as to Board appointments and
other Board changes and to make appropriate recommendations to the Board.
The Committee is required, amongst other things, to:
a) Review the structure, size and composition (including
the skills, knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to Board appointments and any Board
changes.
b) Give full consideration to succession planning for
directors and other senior executives in the course of its work, taking into
account the challenges and opportunities facing the Company, and the skills
and expertise needed on the Board in the future.
c) Keep under review the leadership needs of the
organisation to compete effectively in the marketplace.
d) Review annually the time required from non-executive
directors and non-executive directors. Performance evaluation should be used
to assess whether the executive directors and non-executive directors are
spending enough time in fulfilling their duties.
e) Arrange periodic reviews of the Committee's own
performance and, at least annually, review its constitution and terms of
reference to ensure it is operating at maximum effectiveness and recommend any
changes it considers necessary to the Board for approval.
f) Ensure that prior to the appointment of a director,
the proposed appointee should be required to disclose any other business
interests that may result in a conflict of interest and be required to report
any future business interests that may result in a conflict of interest.
The Committee carries out its duties for the Parent Company, major subsidiary
undertakings and the Group as a whole and met once during the period under
review, on 3 May 2023 to review the Terms of Reference for the Committee and
to consider their continuing suitability.
The Committee is satisfied that the current Board has a depth of experience
and level, and range of skills appropriate to the Company at this stage in its
development. It is however recognised that the Company is likely to need
additional expertise as it moves forward into commercial production and so the
composition of the Board will be kept under careful review to ensure that the
Board can deliver long-term growth in shareholder value.
Patrick Cheetham
Chair - Nomination Committee
Publication of Statutory Accounts
The financial information set out in this announcement does not constitute the
Company's Annual Accounts for the period ended 30 September 2023 or 2022. The
financial information for 2022 is derived from the Statutory Accounts for
2022. Full audited accounts in respect of that financial period have been
delivered to the Registrar of Companies. The Statutory Accounts for 2023 will
be delivered to the Registrar of Companies following the Company's Annual
General Meeting. The Auditors have reported on the 2023 and 2022 accounts.
Neither set of accounts contain a statement under section 498(2) of (3) the
Companies Act 2006 and both received an unqualified audit opinion. However,
there was an emphasis of matter in relation to a requirement that the Company
raise funds in the future to continue as a going concern.
Availability of Financial Statements
The Annual Report containing the full financial statements for the year to 30
September 2023 will be uploaded to the Shareholders Documents section of the
Company's website on or around 26 January 2024:
https://www.sunriseresourcesplc.com/shareholder-documents.
Consolidated Income Statement
for the year ended 30 September 2023
Notes 2023 2022
£ £
Pre-licence exploration costs 3,753 5,638
Impairment of deferred exploration expenditure - 194,247
Administration costs 425,419 291,860
Other income 22 (36,881) (13,474)
Operating loss (392,291) (478,271)
Interest receivable 1,000 48
Loss before taxation 3 (391,291) (478,223)
Tax on loss 7 - -
Loss for the year attributable to equity holders of the parent (391,291) (478,223)
Loss per share - basic and diluted (pence) 6 (0.010) (0.013)
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2023
2023 2022
£ £
Loss for the year (391,291) (478,223)
Items that could be reclassified subsequently to the income statement:
Foreign exchange translation differences on foreign currency net investments (215,389) 441,434
in subsidiaries
Items that will not be reclassified to the income statement:
Changes in the fair value of equity investments (7,466) (22,962)
(222,855) 418,472
Total comprehensive loss for the year attributable to equity holders of the (614,146) (59,751)
parent
Consolidated and Company Statements of Financial Position
at 30 September 2023
Company Registration Number: 05363956
Notes Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Non-current assets
Intangible assets 9 2,409,311 - 2,503,812 -
Right of use assets 17 5,536 - 11,147 -
Investment in subsidiaries 8 - 2,754,113 - 2,609,413
Other investments 8 11,192 5,625 20,075 11,250
2,426,039 2,759,738 2,535,034 2,620,663
Current assets
Receivables 11 145,459 30,369 167,425 49,164
Cash and cash equivalents 12 177,967 160,711 96,126 73,644
323,426 191,080 263,551 122,808
Current liabilities
Trade and other payables 13 (108,773) (95,104) (104,936) (90,061)
Lease liabilities 17 (2,644) - (2,839) -
Convertible Loan Note 23 (300,000) (300,000) - -
(411,417) (395,104) (107,775) (90,061)
Net current (liabilities)/assets (87,991) (204,024) 155,776 32,747
Non current liabilities
Lease liabilities 17 - - (2,874) -
Provisions for liabilities 20 (29,525) - (32,079) -
(29,525) - (34,953) -
Net assets 2,308,523 2,555,714 2,655,857 2,653,410
Equity
Called up share capital 14 4,095,052 4,095,052 3,833,559 3,833,559
Share premium account 5,680,316 5,680,316 5,680,316 5,680,316
Share warrant reserve 14 42,815 42,815 40,101 40,101
Fair value reserve 2,674 11,874 10,140 17,500
Foreign currency reserve 14 188,714 1,321 404,103 1,321
Accumulated losses (7,701,048) (7,275,664) (7,312,362) (6,919,387)
Equity attributable to owners of the parent 2,308,523 2,555,714 2,655,857 2,653,410
The Company reported a loss for the year ended 30 September 2023 of £358,882
(2022: £552,391).
These financial statements were approved and authorised for issue by the Board
on 23 January 2024 and were signed on its behalf.
P L
Cheetham
J Cole
Executive
Chairman
Director
Consolidated Statement of Changes in Equity
Group Share Share Share Fair Foreign Accumulated Total
capital premium warrant value currency losses £
£ account reserve reserve reserve £
£ £ £ £
At 30 September 2021 3,701,805 5,675,616 40,164 33,102 (37,331) (6,835,289) 2,578,067
Loss for the year - - - - - (478,223) (478,223)
Change in fair value - - - (22,962) - - (22,962)
Exchange differences - - - - 441,434 - 441,434
Total comprehensive loss for the year - - - (22,962) 441,434 (478,223) (59,751)
Share issue 131,754 4,700 - - - - 136,454
Share-based payments expense - - 1,087 - - - 1,087
Transfer of expired warrants - - (1,150) - - 1,150 -
At 30 September 2022 3,833,559 5,680,316 40,101 10,140 404,103 (7,312,362) 2,655,857
Loss for the year - - - - - (391,291) (391,291)
Change in fair value - - - (7,466) - - (7,466)
Exchange differences - - - - (215,389) - (215,389)
Total comprehensive loss for the year - - - (7,466) (215,389) (391,291) (614,146)
Share issue 261,493 - - - - - 261,493
Share-based payments expense - - 5,319 - - - 5,319
Transfer of expired warrants - - (2,605) - - 2,605 -
At 30 September 2023 4,095,052 5,680,316 42,815 2,674 188,714 (7,701,048) 2,308,523
Company Statement of Changes in Equity
Company Share Share Share Fair Foreign Accumulated Total
capital premium warrant value currency losses £
£ account reserve reserve reserve £
£ £ £ £
At 30 September 2021 3,701,805 5,675,616 40,164 28,662 1,321 (6,368,146) 3,079,422
Loss for the year - - - - - (552,391) (552,391)
Change in fair value - - - (11,162) - - (11,162)
Exchange differences - - - - - - -
Total comprehensive loss for the year - - - (11,162) - (552,391) (563,553)
Share issue 131,754 4,700 - - - - 136,454
Share-based payments expense - - 1,087 - - - 1,087
Transfer of expired warrants - - (1,150) - - 1,150 -
At 30 September 2022 3,833,559 5,680,316 40,101 17,500 1,321 (6,919,387) 2,653,410
Loss for the year - - - - - (358,882) (358,882)
Change in fair value - - - (5,626) - - (5,626)
Exchange differences - - - - - - -
Total comprehensive loss for the year - - - (5,626) - (358,882) (364,508)
Share issue 261,493 - - - - - 261,493
Share-based payments expense - - 5,319 - - - 5,319
Transfer of expired warrants - - (2,605) - - 2,605 -
At 30 September 2023 4,095,052 5,680,316 42,815 11,874 1,321 (7,275,664) 2,555,714
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2023
Notes Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Operating activity
Operating (loss)/profit before interest (392,291) (392,050) (478,271) (570,441)
Depreciation/interest charge 17,20 4,944 - 5,595 -
Share-based payment charge 5,319 5,319 1,087 1,087
Shares issued in lieu of net wages 15,520 15,520 31,279 31,279
Fees paid by issues of shares (redemption fees) 42,857 42,857 - -
Impairment charge - deferred exploration expenditure 9 - - 194,247 -
Increase/(decrease) in provision for impairment of loans to subsidiaries 8 - - - 318,100
(Increase)/decrease in receivables 11 (21,966) (18,795) (36,620) (26,463)
Increase/(decrease) in trade and other payables 13 3,837 5,043 4,075 (9,704)
Net cash outflow from operating activity (384,637) (384,963) (278,608) (256,142)
Investing activity
Interest received 1,000 31,892 48 18,003
Cash receipt from disposal of exploration assets - - - -
Cash receipt from disposal of equity investments 8 - - 23,263 23,263
Development expenditures 9 (124,761) - (137,490) -
Loans to subsidiaries - (144,700) - (173,926)
Net cash outflow from investing activity (123,761) (112,808) (114,179) (132,660)
Financing activity
Issue of share capital (net of expenses) 118,636 118,636 104,500 104,500
Lease payments 17 (2,623) - (2,874) -
Shares issued via exercise of warrants - - 675 675
Convertible loan note 400,000 400,000 - -
Net cash inflow from financing activity 516,013 518,636 102,301 105,175
Net increase/(decrease) in the year 50,472 63,722 (290,486) (283,627)
Cash and cash equivalents at start of year 96,801 74,319 371,740 337,817
Exchange differences 30,694 22,670 14,872 19,454
Cash and cash equivalents at 30 September 12 177,967 160,711 96,126 73,644
Notes to the Financial Statements
for the year ended 30 September 2023
Background
Sunrise Resources plc (the "Company") is a public company incorporated and
domiciled in England. Its shares are traded on the AIM Market of the London
Stock Exchange EPIC: SRES.
The Company is a holding company (together, "the Group") for one company
incorporated in Australia, and two companies incorporated in Nevada, in the
United States of America. The Group's financial statements are presented in
Pounds Sterling (£) which is also the functional currency of the Company.
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the Group's financial
statements.
1. Accounting policies
(a) Basis of preparation
The financial statements have been prepared on the basis of the recognition
and measurement requirements of applicable law and UK adopted International
Accounting Standards.
(b) Going concern
In common with many exploration companies, the Company raises finance for its
exploration and appraisal activities in discrete tranches. Further funding is
raised as and when required. When any of the Group's projects move to the
development stage, specific project financing will be required.
The directors prepare annual budgets and cash flow projections that extend
beyond 12 months from the date of this report. Given the Group's cash position
at year end (£177,967), these projections include the proceeds of future
fundraising necessary within the next 12 months to meet the Company's and
Group's overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the Company has
been successful in raising finance in the past, there is no assurance that it
will obtain adequate finance in the future. This represents a material
uncertainty related to events or conditions which may cast significant doubt
on the Group's and Company's ability to continue as going concerns and,
therefore, that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the directors have a
reasonable expectation that they will secure additional funding when required
to continue meeting corporate overheads and exploration costs for the
foreseeable future and therefore the directors believe that the going concern
basis is appropriate for the preparation of the financial statements. In
considering the longer term financial outlook of the Group, the continued
viability of the most significant exploration and evaluation assets as set out
in Note 1(n) is critical to this assessment.
(c) Basis of consolidation
Investments, including long-term loans, in the subsidiaries are valued at the
lower of cost or recoverable amount, with an ongoing review for impairment.
The Group's financial statements consolidate the financial statements of the
Company and its subsidiary undertakings using the acquisition method and
eliminate intercompany balances and transactions.
In accordance with section 408 of the Companies Act 2006, the Company is
exempt from the requirement to present its own statement of comprehensive
income. The amount of the loss for the financial year recorded within the
financial statements of the Company is £358,882 (2022: £552,391).
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in relation to separate
areas of interest (which may comprise more than one exploration licence or
exploration licence applications) are capitalised and carried forward where:
(1) such costs are expected to be recouped through
successful exploration and development of the area, or alternatively by its
sale; or
(2) exploration and/or evaluation activities in the area
have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to the areas are continuing.
A biannual review is carried out by the directors to consider whether there
are any indications of impairment in capitalised exploration and development
costs. Full impairment reviews were carried out in order to assess the
carrying values of each project as at 31 March 2023 and 30 September 2023.
This involved consideration of changes in circumstances and evidence including
exploration results, changes in tenure of mineral rights, economic
circumstances such as market prices, opportunities for realisation such as
sale or joint ventures and viability, comparing anticipated future costs with
expected recoverable value. For each project, based upon the relevant
considerations, the directors formed a view regarding the recoverability of
capitalised expenditure and continued compliance with the IFRS 6 criteria for
recognition and deferral.
Where an indication of impairment is identified, the relevant value is written
off to the income statement in the period for which the impairment was
identified. An impairment of exploration and development costs may be
subsequently reversed in later periods should conditions allow.
Accumulated costs, where the Group does not yet have an exclusive exploration
licence and in respect of areas of interest which have been abandoned, are
written off to the income statement in the year in which the pre-licence
expense was incurred or in which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the lower of cost
and expected net recoverable amount. On reaching a mining development
decision, for example, the commitment of capital to mine development,
exploration and evaluation costs are reclassified as development costs and all
development costs on a specific area of interest will be amortised over the
useful economic life of the projects, once they become income generating and
the costs can be recouped.
(e) Trade and other receivables and payables
Trade and other receivables and payables are measured at initial recognition
at fair value and subsequently measured at amortised cost.
(f) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand.
(g) Leases
IFRS 16 requires the recognition of lease commitments as right of use assets
and the recognition of a corresponding liability. Lease costs are recognised
in the income statement in the form of depreciation of the right of use asset
over the lease term and interest charges representing the unwind of the
discount on the lease liability.
Short term leases, which fall outside the IFRS 16 requirements, having a
duration of 12 months or less, are charged to the income statement on straight
line basis.
(h) Deferred taxation
Deferred taxation, if applicable, is provided in full in respect of taxation
deferred by temporary differences between the treatment of certain items for
taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are regarded as
recoverable.
(i) Foreign currencies
The Group's consolidated financial statements are presented in Pounds Sterling
(£), being the functional currency of the Company, and the currency of the
primary economic environment in which the Company operates. Monetary assets
and liabilities denominated in foreign currencies are translated at the rate
of exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign operations and the
assets and liabilities of overseas subsidiaries, associated undertakings and
joint arrangements, that have a functional currency different from the Group's
presentation currency, are translated at the closing exchange rates. Income
statements of overseas subsidiaries, that have a functional currency different
from the Group's presentation currency, are translated at exchange rates at
the date of transaction. Exchange differences arising on opening reserves are
taken to the foreign currency reserve in equity.
(j) Share warrants and share-based payments
The Company issues warrants to employees (including directors) and third
parties. The fair value of the warrants is recognised as a charge measured at
fair value on the date of grant and determined in accordance with IFRS 9,
adopting the Black-Scholes-Merton model. The fair value is recognised on a
straight-line basis over the vesting period, with a corresponding adjustment
to equity, based on the management's estimate of shares that will eventually
vest. The expected life of the warrants is adjusted, based on management's
best estimates, for the effects of non-transferability, exercise restrictions
and behavioural considerations. The details are shown in Note 15.
The Company also issues shares in order to settle certain liabilities,
including payment of fees to directors. The fair value of shares issued is
based on the closing mid-market price of the shares traded on the AIM market
on the day prior to the date of settlement and it is expensed on the date of
settlement with a corresponding increase in equity.
(k) Financial assets designated at fair value through OCI
Upon initial recognition, the Group can elect to classify irrevocably its
equity investments as equity instruments designated at fair value through OCI
when they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on
an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or
loss. Dividends are recognised as other income in the statement of profit or
loss when the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of the financial
asset, in which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment assessment.
The Group elected to classify irrevocably its listed equity investments under
this category.
(l) Reclamation costs
The Group's mining and exploration activities are subject to various
governmental laws and regulations relating to the protection of the
environment. The Group records a liability for the estimated future
rehabilitation costs and decommissioning of its development projects at the
time a constructive obligation is determined.
When provisions for closure and environmental rehabilitation are initially
recognised, the corresponding cost is capitalised as an intangible asset,
representing part of the cost of acquiring the future economic benefits of the
operation. The capitalised cost of closure and environmental rehabilitation
activities is recognised in mining interests and, from the commencement of
commercial production, is amortised over the expected useful life of the
operation to which it relates. Any change in the value of the estimated
expenditure is reflected in an adjustment to the provision and asset.
(m) Standards, amendments and interpretations not yet
effective
At the date of authorisation of these financial statements, there are no
amended reporting standards and interpretations that impact the Group as they
are either not relevant to the Group's activities or require accounting which
is consistent with the current accounting policies.
(n) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies above, management
has identified the judgemental areas that have the most significant effect on
the amounts recognised in the financial statements:
Intangible assets - exploration and evaluation
IFRS 6 "Exploration for and Evaluation of Mineral Resources" requires that
exploration and evaluation assets shall be assessed for impairment when facts
and circumstances suggest that the carrying amount may exceed recoverable
amount.
In practical terms, this requires that project carrying values are regularly
monitored and assessed for recoverability whether from future exploitation of
resources or realised by sale to a third party.
Where activities have not reached a stage, which permits reasonable
confirmation of the existence of mineral reserves, the directors must form a
judgement whether future exploration and evaluation should continue. This
requires management to use their sector experience, apply their specialist
expertise and form a conclusive judgement whether or not, on the balance of
evidence that further exploration is justified to determine if an economically
viable mining operation can be established in future. Such estimates,
judgements and assumptions are likely to change as new information and
evidence becomes available. If it becomes apparent, in the judgement of the
directors, that recovery of capitalised expenditure is unlikely, the carrying
value should be considered as impaired and treated as detailed below.
Impairment
Impairment reviews for deferred exploration and evaluation costs are carried
out on a project-by-project basis, with each project representing a potential
single cash generating unit. The directors are required to continually monitor
and review the carrying values by reference to new developments, stages in the
exploration process and new circumstances. Assessment of the potential
impairment of assets requires an updated judgement of the probability of
adequate future cash flows from the relevant project. It includes
consideration of:
(a) The period for which the entity has the right to explore in
the specific area and whether this right will expire in the near future, and
whether the right is expected to be renewed.
(b) Whether substantive expenditure on further exploration for
and evaluation of mineral resources for the specific project is either
budgeted or planned.
(c) Whether exploration for and evaluation of mineral resources
on the specific project has led to the discovery of commercially viable
quantities of mineral resources and whether the entity has decided to
discontinue such activities on the project.
(d) Whether sufficient data exist to indicate that, although a
development on the specific project is likely to proceed, the carrying amount
of the exploration and evaluation asset is likely to be recovered in full from
successful development of a mine or by the sale of the project.
The judgements in respect of key projects are as follows;
The CS Project in Nevada continues to be the Group's lead project with a
carrying value of £1,439,893. In the judgement of the directors, this is
justified as, following the successful grant of various mining and production
permits, discussions with potential customers and partners for the development
of the project is ongoing .
At the Hazen Project a bulk sample was extracted during the reporting period
and is awaiting customer trials and as work is continuing the project is not
impaired.
The Pioche Project is under evaluation by Tolsa S.A. who has carried out
drilling and testwork during the reporting period and so no impairment is
justified.
The Reese Ridge Project is an early-stage exploration project and drill
targets were defined in 2023. As exploration is ongoing the project is not
impaired.
Although further exploration at the Bay State Project, Nevada (carrying value
£458,259) was budgeted, due to cost saving measures during the reporting
period, no evaluation was carried out , however project leases and claims are
being maintained. In the judgement of the directors further evaluation and
exploration is justified as, despite some drilling issues in prior exploration
programmes, positive drilling results have been obtained so far. In the
opinion of the directors this asset is not impaired.
Although there has been no exploration during the reporting period on the
County Line Project, Nevada (carrying value £158,102), in the judgement of
the directors further evaluation of the production potential is justified in
view of its proximity to the CS Project and project synergies. Additional
testwork has been budgeted for and the Company's mining claims have been
renewed for a further 12-month period. The project is not impaired.
Positive drilling results have previously been obtained from the Clayton
Project, Nevada (carrying value of £134,151) and further exploration has been
budgeted, therefore in the opinion of the directors the project is not
impaired.
Also, in relation to other projects, the exploration rights are being
maintained and further exploration and/or drilling is budgeted therefore the
directors have reached the conclusion that no other impairments are required.
Going concern
The preparation of financial statements requires an assessment of the validity
of the going concern assumption. This in turn is dependent on finance being
available for the continuing working capital requirements of the Group. Based
on the assumption that such finance will become available, the directors
believe that the going concern basis is appropriate for these accounts.
Share warrants and share-based payments
The estimates of costs recognised in connection with the fair value of share
warrants requires that management selects an appropriate valuation model and
make decisions on various inputs into the model including the volatility of
its own share price, the probable life of the warrants before exercise, and
behavioural consideration of warrant holders.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors. The Board
considers the business has one reportable segment, the management of
exploration projects, which is supported by a Head Office function. For the
purpose of measuring segmental profits and losses the exploration segment
bears only those direct costs incurred by or on behalf of those projects, no
Head Office cost allocations are made to this segment. The Head Office
function recognises all other costs.
2. Segmental Analysis (continued)
2023 Exploration Head Total
projects office £
£ £
Consolidated Income Statement
Pre-licence exploration costs 3,753 - 3,753
Share-based payments - 5,319 5,319
Impairment of deferred exploration expenditure - - -
Other expenses - 420,100 420,100
Other Income (36,881) - (36,881)
Operating loss 33,128 (425,419) (392,291)
Interest receivable - 1,000 1,000
Loss before tax 33,128 (424,419) (391,291)
Taxation - - -
Loss for the year attributable to equity holders of the parent 33,128 (424,419) (391,291)
Non-current assets
Intangible assets:
Deferred exploration costs:
County Line Diatomite Project, USA 158,102 - 158,102
Bay State Silver Project, USA 458,259 - 458,259
NewPerl Project/Jackson Wash Project, USA 74,708 - 74,708
Ridge Limestone Project, USA 36,682 - 36,682
CS Pozzolan-Perlite Project, USA 1,439,893 - 1,439,893
Clayton Gold Project, USA 134,151 - 134,151
Newark Silver-Gold Project, USA 36,059 - 36,059
Hazen Pozzolan Project, USA 23,586 - 23,586
Pioche Sepiolite, USA 17,287 - 17,287
Reese Ridge Project, USA 30,584 - 30,584
2,409,311 - 2,409,311
Right of use assets 5,536 - 5,536
Other investments - 11,192 11,192
2,414,847 11,192 2,426,039
Current assets
Receivables 112,606 32,853 145,459
Cash and cash equivalents - 177,967 177,967
112,606 210,820 323,426
Current liabilities
Trade and other payables (17,104) (91,669) (108,773)
Lease liabilities (2,644) - (2,644)
Net current assets 92,858 119,151 212,009
Non-current liabilities
Reclamation liabilities (29,525) - (29,525)
Lease liabilities - - -
Convertible Loan Note - (300,000) (300,000)
Net assets 2,478,180 (169,657) 2,308,523
Other data
Deferred exploration additions 124,761 - 124,761
Exchange rate adjustments to deferred exploration costs (219,262) - (219,262)
2. Segmental Analysis (continued)
2022 Exploration Head Total
projects office £
£ £
Consolidated Income Statement
Pre-licence exploration costs 5,638 - 5,638
Share-based payments - 1,087 1,087
Impairment of deferred exploration expenditure 194,247 - 194,247
Other expenses - 290,773 290,773
Other income (13,474) - (13,474)
Operating loss (186,411) (291,860) (478,271)
Interest receivable - 48 48
Loss before tax (186,411) (291,812) (478,223)
Taxation - - -
Loss for the year attributable to equity holders of the parent (186,411) (291,812) (478,223)
Non-current assets
Intangible assets:
Deferred exploration costs:
County Line Diatomite Project, USA 168,990 - 168,990
Bay State Silver Project, USA 497,398 - 497,398
NewPerl Project/Jackson Wash Project, USA 79,419 - 79,419
Ridge Limestone Project, USA 36,997 - 36,997
CS Pozzolan-Perlite Project, USA 1,505,188 - 1,505,188
Clayton Gold Project, USA 144,187 - 144,187
Newark Silver-Gold Project, USA 38,013 - 38,013
Hazen Pozzolan Project, USA 18,748 - 18,748
Pioche Sepiolite, USA 14,872 - 14,872
2,503,812 - 2,503,812
Right of use assets 11,147 - 11,147
Other investments - 20,075 20,075
2,514,959 20,075 2,535,034
Current assets
Receivables 110,099 52,835 162,934
Cash and cash equivalents - 96,126 96,126
110,099 148,961 259,060
Current liabilities
Trade and other payables (16,132) (84,313) (100,445)
Lease liabilities (2,839) - (2,839)
Net current assets 91,128 64,648 155,776
Non-current liabilities
Reclamation liabilities (32,079) - (32,079)
Lease liabilities (2,874) - (2,874)
Net assets 2,571,134 84,723 2,655,857
Other data
Deferred exploration additions 138,054 - 138,054
Exchange rate adjustments to deferred exploration costs 427,432 - 427,432
3. Loss before income tax
The operating loss is stated after charging: 2023 2022
£ £
Fees payable to the Company's auditor for:
The audit of the Company's annual accounts 18,242 13,421
Other Services:
Interim review of accounts 1,725 1,200
Corporation tax fees 1,045 998
4. Directors' emoluments
Remuneration in respect of directors was as follows: 2023 2022
£ £
P L Cheetham (salary) 21,333 16,000
J Cole (salary) 21,333 16,000
R D Murphy (salary) 21,333 16,000
63,999 48,000
The above remuneration amounts do not include non-cash share-based payments
charged in these financial statements in respect of share warrants issued to
the directors amounting to £4,335 (2022: £262) or Employer's National
Insurance contributions of £3,589 (2022: £Nil).
The directors are also the key management personnel. If all benefits are taken
into account, the total key management personnel compensation would be
£71,924 (2022: £48,262).
5. Staff costs
Staff costs for the Group and the Company, including directors, were as 2023 2022
follows:
£ £
Wages and salaries 64,000 48,000
Social security costs 3,589 -
Pension - -
Share-based payments 4,335 262
71,924 48,262
The average monthly number of employees employed by the Group and the Company 2023 2022
during the year was as follows:
Number Number
Directors 3 3
Other Officers - -
3 3
The Company does not employ any staff directly apart from the directors. The
services of technical and administrative staff are provided by Tertiary
Minerals plc as part of the Management Services Agreement between the two
companies (see Note 16).
The Company issues share warrants to employees of Tertiary Minerals plc from
time to time and these non-cash share-based payments resulted in a charge
within the financial statements of £118 (2022: £157).
Company secretarial services are provided by Mr R. Venables through City Group
plc.
6. Loss per share
Loss per share has been calculated using the loss for the year attributable to
equity holders of the Company and the weighted average number of shares in
issue during the year.
2023 2022
Loss (£) (391,291) (478,223)
Weighted average shares in issue (No.) 3,955,796,532 3,734,454,207
Basic and diluted loss per share (pence) (0.010) (0.013)
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted earnings per
ordinary share are identical to those used for the basic earnings per ordinary
share. This is because the exercise of share warrants would have the effect of
reducing the loss per ordinary share and is therefore anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the Group recording
a taxable loss (2022: £Nil).
The tax credit for the period is lower than the credit resulting from the loss
before tax at the standard rate of corporation tax in the UK - 19% (2022:
19%). The differences are explained below.
Tax reconciliation 2023 2022
£ £
Loss before tax (391,291) (478,223)
Tax at 19% (2022: 19%) (74,345) (90,862)
Pre-trading expenditure not deductible for tax purposes 5,305 17,563
Expenditure not deductible for tax purposes 11,752 268
Unrelieved losses carried forward (57,288) (73,031)
Tax charge/credit for year - -
Total losses carried forward (4,448,062) (4,158,554)
Factors that may affect future tax charges
The Group has total losses carried forward of £4,448,062 (2022: £4,158,554).
This amount would be charged to tax, thereby reducing tax liability, if
sufficient profits were made in the future capped to £5m per annum allowance.
The deferred tax asset has not been recognised as the future recovery is
uncertain given the exploration status of the Group.
8. Investments
Subsidiary undertakings
Company Country of Date of Type and percentage Principal activity
incorporation/ incorporation/ of shares held at
registration registration 30 September 2023
Sunrise Minerals Australia Pty Ltd Australia 7 October 2009 100% of ordinary shares Mineral exploration
SR Minerals Inc. Nevada, USA 12 January 2014 100% of ordinary shares Mineral exploration
Westgold Inc. Nevada, USA 13 April 2016 100% of ordinary shares Mineral exploration
The registered office of Sunrise Minerals Australia Pty Ltd is Level 4, 35-37
Havelock Street West, Perth, WA 6005.
The registered office of SR Minerals Inc. and Westgold Inc. is 241 Ridge
Street, Suite 210, Reno, NV 89501.
Investment in subsidiary undertakings Company Company
2023 2022
£ £
Value at start of year 2,609,413 2,753,586
Additions 144,700 173,927
Movement in provision - (318,100)
At 30 September 2,754,113 2,609,413
Investments in share capital of subsidiary undertakings
The directors consider that the carrying value of the Company's investments in
shares of subsidiary undertakings totalling £63 is not material and therefore
does not require an impairment review.
Loans to Group undertakings
Amounts owed by subsidiary undertakings are unsecured and payable in cash.
Loan interest is charged to US subsidiaries on intercompany loans with Parent
Company.
A review of the recoverability of investments in and loans to subsidiary
undertakings totalling £2,754,113 has been carried out in accordance with
IFRS 9. As a result, the directors have concluded that no potential credit
losses arose in the year. The assessment has been based upon a review of the
underlying exploration assets held by the subsidiary undertakings.
Other investments - listed investments
Company Country of Type and percentage Principal activity
incorporation/ of shares held at
registration 30 September 2023
VR Resources Ltd Canada 0.09% of ordinary shares Mineral exploration
Power Metal Resources plc United Kingdom 0.04% of ordinary shares Mineral exploration
Investment designated at fair value through OCI Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Value at start of year 20,075 11,250 63,503 45,675
Additions - - - -
Disposals - - (23,263) (23,263)
Movement in valuation (7,466) (5,625) (20,165) (11,162)
Movement in foreign exchange 1,417 - - -
At 30 September 11,192 5,625 20,075 11,250
The fair value of each investment is equal to the market value of its shares
at 30 September 2023, based on the closing mid-market price of shares on its
equity exchange market.
These are level one inputs for the purpose of the IFRS 13 fair value
hierarchy.
9. Intangible assets
Deferred exploration expenditure Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Cost
At start of year 5,426,535 2,203,594 4,861,613 2,203,594
Reclamation - - (564) -
Additions 124,761 - 138,054 -
Foreign currency exchange adjustments (219,262) - 427,432 -
At 30 September 5,332,034 2,203,594 5,426,535 2,203,594
Impairment
At start of year (2,922,723) (2,203,594) (2,728,476) (2,203,594)
Impairment losses during the year - - (194,247) -
At 30 September (2,922,723) (2,203,594) (2,922,723) (2,203,594)
Net book value
At 30 September 2,409,311 - 2,503,812 -
At start of year 2,503,812 - 2,133,137 -
During the year the directors carried out an impairment review with reference
to IFRS 6.20 (a) which resulted in no impairment being required. Refer to
accounting policy 1(d) and 1(j) for a description of the considerations used
in the impairment review.
10. Property, plant and equipment
The Group has the use of tangible assets held by a related undertaking,
Tertiary Minerals plc, under a Management Services Agreement between the two
companies.
11. Receivables
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Prepayments 18,528 16,203 41,052 37,506
Other receivables 126,931 14,166 126,373 11,658
At 30 September 145,459 30,369 167,425 49,164
12. Cash and cash equivalents
Cash at bank and in hand Group Company Group Company
2023 2023 2022 2022
£ £ £ £
At 30 September 177,967 160,711 96,126 73,644
13. Trade and other payables
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Amounts owed to related undertaking - Tertiary Minerals plc 50,749 50,749 46,233 46,233
Trade creditors 10,095 8,993 10,450 9,057
Accruals 31,734 23,265 19,762 10,771
Deferred income 4,098 - 4,491 -
Other payables 10,916 10,916 20,116 20,116
Other taxation and social security 1,181 1,181 3,884 3,884
At 30 September 108,773 95,104 104,936 90,061
14. Share capital and reserves
2023 2023 2022 2022
Number £ Number £
Share capital - Allotted, called up and fully paid
Ordinary shares of 0.1p each
Balance at start of year 3,833,559,087 3,833,559 3,701,804,687 3,701,805
Shares issued in the year 261,492,943 261,493 131,754,400 131,754
Balance at 30 September 4,095,052,030 4,095,052 3,833,559,087 3,833,559
During the year to 30 September 2023, the following share issues took place:
An issue of 80,000,000 0.1p ordinary shares at 0.1p per share to Towards Net
Zero, LLC ("TNZ") by way of a share placing in relation to the First Closing
of a Convertible Securities Issuance Deed (29 November 2022), for a total
consideration of £80,000.
An issue of 20,116,000 0.1p ordinary shares at 0.1p per share to three
directors, for a total consideration of £20,116 in satisfaction of directors'
fees (16 January 2023).
An issue of 35,714,286 0.1p Ordinary Shares at 0.1p per share, by exercise of
conversion rights (TNZ convertible loan note), for a total consideration of
£35,714 before expenses (6 April 2023).
An issue of 15,519,800 0.1p ordinary shares at 0.1p per share to three
directors, for a total consideration of £15,520 in satisfaction of directors'
fees (8 June 2023).
An issue of 3,000,000 0.1p ordinary shares at 0.1p per share in settlement of
a portion of outstanding net fees to Mining and Metals Research Corporation,
for a total consideration of £3,000 (8 June 2023).
An issue of 35,714,286 0.1p Ordinary Shares at 0.1p per share, by exercise of
conversion rights (TNZ convertible loan note), for a total consideration of
£35,714 before expenses (4 July 2023).
An issue of 71,428,571 0.1p Ordinary Shares at 0.1p per share, by exercise of
conversion rights and the issue of fee shares in connection with the Deed (TNZ
second convertible loan note), for a total consideration of £71,429 before
expenses (11 August 2023).
During the year to 30 September 2022 a total of 131,754,400 0.1p ordinary
shares were issued, at an average price of 0.34p per share, for a total
consideration of £136,455 net of expenses.
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net assets of the
Group's foreign operations, which relate to subsidiaries only, from their
functional currency into the Parent's functional currency, being Sterling, are
recognised directly in the foreign currency reserve.
Share warrant reserve
The share warrant reserve is used to recognise the value of equity-settled
share warrants provided to employees, including key management personnel, as
part of their remuneration, and to third parties in connection with
fundraising. Refer to Note 15 for further details.
Share premium reserve
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium.
Fair value reserve
Fair value reserve represents the cumulative fair value changes of
available-for-sale equity investment assets.
15. Share warrants granted
Warrants not exercised or expired at 30 September 2023
Issue date Exercise price Number Exercisable Expiry dates
21/02/19 0.160p 4,000,000 Any time from 21/02/20 21/02/24
21/02/19 0.110p 4,000,000 Any time from 21/02/20 21/02/24
06/08/20 0.195p 35,000,000 *Any time from 05/08/21 05/08/25
05/08/22 0.113p 8,000,000 Any time from 05/08/23 05/08/27
24/03/23 0.150p 25,000,000 **Any time from 31/12/23 24/03/28
09/08/23 0.100p 9,000,000 Any time from 09/08/24 09/08/28
Total 85,000,000
*Of these, 15,000,000 warrants cannot be exercised before the Company makes
the first sustainable sale of perlite/pozzolan product from the CS Project.
**These 25,000,000 warrants did not meet their vesting criteria and expired on
31 December 2023.
Share warrants are issued for nil consideration and are exercisable as
disclosed above. They are exchangeable on a one for one basis for each
ordinary share of 0.1p at the exercise price on the date of conversion.
Share warrant movements:
2023 2022
Number of Weighted Number of share warrants Weighted
share average average
warrants exercise exercise
price price
(Pence) (Pence)
Outstanding at start of year 168,750,000 0.19 49,500,000 0.18
Granted during the year 34,000,000 0.14 122,500,000 0.19
Forfeited during the year - - - -
Exercised during the year - - (500,000) 0.135
Expired during the year (117,750,000) 0.20 (2,750,000) 0.135
Outstanding at end of year 85,000,000 0.16 168,750,000 0.19
Exercisable at end of year 51,000,000 0.17 160,750,000 0.19
The share warrants outstanding at 30 September 2023 had a weighted average
exercise price of 0.16p (2022: 0.19p), a weighted average fair value of 0.05p
(2022: 0.02p) and a weighted average remaining contractual life of 2.97 years.
In the year ended 30 September 2022, warrants were granted on 18 July 2022 as
part of fundraise and to Peterhouse Capital Limited as settlement of broker
commission and broker quarterly fee with an aggregate estimated fair value of
£667.
In the year ended 30 September 2022, warrants were granted on 5 August 2022 to
non-executive directors of the Company and employees of Tertiary Minerals plc
with an aggregate estimated fair value of £2,735. Note 5 explains the value
recognised in the reporting period in respect of Tertiary Minerals plc.
In the year ended 30 September 2023, warrants were granted on 24 March 2023
and 9 August 2023 to the Executive Chairman, the non-executive directors of
the Company and employees of Tertiary Minerals plc with an aggregate estimated
fair value of £3,005. Note 5 explains the value recognised in the reporting
period in respect of Tertiary Minerals plc.
In the year to 30 September 2023, the Company recognised expenses of £5,319
(2022: £1,087) related to issuing of share warrants in connection with
equity-settled share-based payment transactions. The fair value is charged to
administrative expenses and where there is a vesting period it is charged on a
straight-line basis over the vesting period, together with a corresponding
increase in equity, based on the management's estimate of shares that will
eventually vest.
The fair values of warrants are estimated using a Black-Scholes-Merton Pricing
Model and charged to administrative expenses on a straight-line basis over the
vesting period, together with a corresponding increase in equity, based on the
management's estimate of shares that will eventually vest.
The inputs into the Black-Scholes-Merton Pricing Model were as follows: 2023 2022
Weighted average share price 0.09p 0.11p
Weighted average exercise price 0.14p 0.19p
Expected volatility 50% 60%
Expected life 4.74 0.75
Risk-free rate 0.04% 0.02%
Expected dividend yield 0% 0%
Expected volatility was determined by calculating the historical volatility of
the Company's share price over the previous 3 years. The expected life used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
16. Related party transactions
Key management personnel
The directors holding office at the year end and their warrants held in the
share capital of the Company are:
At 30 September 2023 At 30 September 2022
Shares Share Warrant Warrant Shares Share
number warrants exercise expiry number warrants
number price date number
P L Cheetham* 255,785,016 30,000,000 0.195p 05/08/25 247,532,996 30,000,000
(†)25,000,000 0.150p 24/03/28
J Cole 20,555,653 2,500,000 0.113p 05/08/27 6,863,763 2,500,000
2,500,000 0.100p 09/08/28
R D Murphy 78,785,677 2,000,000 0.160p 21/02/24 65,093,787 6,500,000
2,000,000 0.195p 05/08/25
2,500,000 0.113p 05/08/27
2,500,000 0.100p 09/08/28
*Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham
(†)These 25,000,000 warrants did not meet their vesting criteria and expired
on 31 December 2023.
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the consolidated accounts
of Tertiary Minerals plc, which held 0.12% of the issued share capital of
Sunrise Resources plc on 30 September 2023 (2022: 0.57%).
Tertiary Minerals plc provides management services to Sunrise Resources plc
and consequently during the year the Group incurred costs of £167,558 (2022:
£171,052).
At the balance sheet date, an amount of £50,749 (2022: £46,232) was due to
Tertiary Minerals plc, included in trade and other payables (Note 13).
Patrick Cheetham, the Executive Chairman of the Company, is also a director of
Tertiary Minerals plc.
17. Leases
Right of use assets Group Group
2023 2022
£ £
Cost
At start of year 25,399 21,010
Additions - -
Disposals - -
Foreign currency exchange adjustments (2,224) 4,389
At 30 September 23,175 25,399
Depreciation
At start of year (14,252) (7,587)
Charge for the year (4,635) (5,080)
Disposals - -
Foreign currency exchange adjustments 1,248 (1,585)
At 30 September (17,639) (14,252)
Carrying amounts
At 30 September 5,536 11,147
At start of year 11,147 13,423
Lease liabilities Group Group
2023 2022
£ £
Cost
At start of year 5,713 7,015
Additions - -
Lease payments (2,623) (2,874)
Interest charge 54 106
Foreign currency exchange adjustments (500) 1,466
At 30 September 2,644 5,713
Minimum Interest Present
lease £ value
payments £
£
No later than one year 2,644 - 2,644
Later than one year and no later than 5 years - - -
Later than five years - - -
Total lease liabilities 2,644
Current liabilities 2,644
Non-current liabilities -
The right of use assets and related lease liabilities are for the lease of
water rights for use in conjunction with the CS Project in Nevada, USA. Total
cash flow outflow amount is £4,689. This lease expires on 5 December 2024 but
may be renewed with consent from the Lessor.
18. Capital management
The Group's capital requirements are dictated by its project and overhead
funding requirements from time to time. Capital requirements are reviewed by
the Board on a regular basis.
The Group manages its capital to ensure that entities within the Group will be
able to continue as going concerns, to increase the value of the assets of the
business and to provide an adequate return to shareholders in the future when
exploration assets are taken into production.
The Group manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of its
assets. In order to maintain or adjust the capital structure the possibilities
open to the Group in future include issuing new shares, consolidating shares,
returning capital to shareholders, taking on debt and selling assets.
19. Financial instruments
At 30 September 2023, the Group's and Company's financial assets consisted of
receivables due within one year, other investments and cash and cash
equivalents. At the same date, the Group and Company had no financial
liabilities other than trade and other payables due within one year and had no
agreed borrowing facilities as at this date. There is no material difference
between the carrying and fair values of the Group's and Company's financial
assets and liabilities.
The carrying amounts for each category of financial instrument held at 30
September 2023, as defined in IFRS 9, are as follows:
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Financial assets at amortised cost 304,898 174,877 245,433 108,238
Financial assets at fair value through other comprehensive income 11,192 5,625 20,075 11,250
Financial Liabilities at amortised cost 435,663 393,923 118,728 66,061
Risk management
The principal risks faced by the Group and Company resulting from financial
instruments are liquidity risk, foreign currency risk and, to a lesser extent,
interest rate risk and credit risk. The directors review and agree policies
for managing each of these risks as summarised below. The policies have
remained unchanged from previous periods as the risks are assessed not to have
changed.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars, Australian Dollars and
others to provide funding for exploration and evaluation activity, whilst the
Company holds cash balances in Sterling, US Dollars, Australian Dollars and
small amounts in other currencies.
The Company is dependent on equity fundraising through private placings which
the directors regard as the most cost-effective method of fundraising. The
directors monitor cash flow in the context of their expectations for the
business to ensure sufficient liquidity is available to meet foreseeable
needs.
Currency risk
The Group's financial risk management objective is broadly to seek to make
neither profit nor loss from exposure to currency or interest rate risks. The
Group is exposed to transactional foreign exchange risk and takes profits and
losses as they arise as, in the opinion of the directors, the cost of hedging
against fluctuations would be greater than the related benefit from doing so.
Fluctuations in the exchange rate may have a material effect on reported loss
or equity.
Bank balances were held in the following denominations: Group Company Group Company
2023 2023 2022 2022
£ £ £ £
United Kingdom Sterling 158,988 158,988 49,959 49,959
Australian Dollar 4,302 635 8,588 4,381
United States Dollar 14,599 1,010 37,501 19,226
Other 78 78 78 78
Interest rate risk
The Company finances operations through equity fundraising. The Company
currently has borrowings in the form of convertible securities in respect of
which fees are payable on conversion where the market price of the Company's
ordinary shares is less than the par value.
Fluctuating interest rates have the potential to affect the loss and equity of
the Group and the Company insofar as they affect the interest paid on
financial instruments held for the benefit of the Group. The directors do not
consider the effects to be material to the reported loss or equity of the
Group or the Company presented in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such as VAT
refunds, invoices issued to related parties and its joint arrangements for
management charges. The amounts outstanding from time to time are not material
other than for VAT refunds which are considered by the directors to be low
risk.
The Company has exposure to credit risk in respect of its cash deposits with
NatWest bank and this exposure is considered by the directors to be low risk.
20. Provision for liabilities
Group 2023 2022
£ £
Reclamation Liability 32,079 26,665
At start of year
Additions - 2,915
Reduction/reversal - (3,479)
Interest 255 409
Exchange adjustments (2,809) 5,569
At 30 September 29,525 32,079
The Group makes provision for future reclamation costs relating to exploration
projects. Provisions are calculated based upon internal estimates and expected
costs based upon past experience and expert guidance where appropriate.
Reclamation liabilities are covered by reclamation bonds and reclamation takes
place when exploration on a particular project or project area terminates or
when the Company seeks repayment of a particular reclamation bond. Estimates
of reclamation liability are made using regularly updated government
exploration cost estimation software and the risk associated with such
estimates is judged by the directors to be low.
21. Contingent assets
The Company has the following contingent assets:
Golden Metal Resources 2% Net Smelter Return Royalty, received as part of the
consideration for the disposal of the Stonewall and Garfield exploration
projects in June 2021.
No values have been assigned to these contingent assets on the basis that
realisation is uncertain and considered to be unpredictable.
22. Other income
Lease Option agreement with Kinross
In October 2021, the Company entered into a lease/option agreement with
Kinross Gold U.S.A., Inc. ("Kinross") granting Kinross a Lease and Option to
purchase the Company's 25 Jackson Wash mining claims in Nevada, USA. Under the
terms of the Agreement, a lease payment was made to the Company of US$5,000 in
October 2023. If the option is exercised, the Company will retain a 2.5% Net
Smelter Return Royalty.
Sale Option agreement with Tolsa
In June 2022, the Company granted Tolsa USA, Inc. ("Tolsa") an option to
purchase the Pioche Sepiolite Project. This option was extended in December
2022 and Tolsa paid a US$50,000 extension fee to the Company.
23. Convertible Loan note
On 29 November 2022, the Company raised £280,000 through a share placing of
80,000,000 new ordinary shares and the issue of a £200,000 convertible
security (the "First Convertible Security). The agreement, with US
institutional investor Towards Net Zero LLC ("TNZ"), allowed the Company to
issue a further convertible security within 6 months of the Closing Date, 6
December 2022, to raise a further £200,000 subject to certain conditions
precedent.
On 5 June 2023, the conditions precedent were met, and the Company issued a
further £200,000 convertible security (the "Second Convertible Security).
The convertible securities balance at 30 September 2023 totalled £300,000
having been reduced by £100,000 as follows:
a) On 6 April 2023, the Company announced that it had received a
Conversion Notice from TNZ in respect of £25,000 of the First Convertible
Security. As a result, the Company issued a total of 35,714,286 new ordinary
shares at a price of 0.1 pence per share. This included 10,714,286 Fee Shares
and 25,000,000 Conversion Shares.
b) On 4 July 2023, the Company announced that it had received a further
Conversion Notice from TNZ in respect of £25,000 of the First Convertible
Security. As a result, the Company issued a total of 35,714,286 new ordinary
shares at a price of 0.1 pence per share. This included 10,714,286 Fee Shares
and 25,000,000 Conversion Shares.
c) On 11 August 2023, the Company announced that it had received a
further Conversion Notice from TNZ in respect of £50,000 of the Second
Convertible Security. As a result, the Company issued a total of 71,428,571
new ordinary shares at a price of 0.1 pence per share. This included
21,428,571 Fee Shares and 50,000,000 Conversion Shares.
The convertible securities are free of interest.
24. Events after the year-end
Capital Restructure
At a General Meeting on 22 November 2023, the shareholders approved the
sub-division of the Company's ordinary share capital, whereby each existing
Ordinary Share with a nominal value of 0.1p was subdivided into 1 new Ordinary
Share of 0.001p and 1 Deferred Share of 0.099p each, and the subsequent buy
back and cancellation of the Deferred Shares. The Sub-Division was completed
on 23 November 2023. The Deferred Shares had no significant rights attached
to them and carried no right to vote or to participate in distribution of
surplus assets and were not admitted to trading on the AIM market of the
London Stock Exchange plc. The Deferred Shares effectively carried no value
and the Buy Back and Cancellation of the Deferred Shares was completed on
29 November 2023 and was funded by an issue of 10,000 ordinary shares at 0.07
pence made for that specific purpose.
Pioche Project
By an agreement dated 27 December 2023, the Company agreed with Tolsa USA,
Inc. to extend the term of the Option Agreement to 28 December 2024 in
exchange for a payment of a further option fee of US$100,000 by 15 January
2024 and an increase in the Option Exercise Price from US$1.25 million to
US$1.4 million.
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