REG - Sunrise Resources - Half-year Report
31/05/2023 12:00
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RNS Number : 1886B Sunrise Resources Plc 31 May 2023
31 May 2023
SUNRISE RESOURCES PLC
("Sunrise" or the "Company")
HALF-YEARLY REPORT 2023
Sunrise Resources plc, is pleased to announce its unaudited interim results
for the six months ended 31 March 2023, a copy of which is also available on
the Company's website, www.sunriseresourcesplc.com.
Operational Highlights
CS Pozzolan-Perlite Project, Nevada
Ø Discussions continue with interested parties for the development of the
project.
Ø Interest in natural pozzolan accelerating in 2023 driven by legislative
pressures on the cement industry to decarbonise and a growing acceptance that
fly ash supplies in the US are not sustainable.
Ø Cement Distribution Consultants commissioned to produce a detailed market
study on cement and pozzolans in California and Nevada to provide the Company
with additional market intelligence and to identify additional partnership
opportunities.
Ø Projections to 2030 indicate the combined market for cement and pozzolans
will grow from 12.6 million tons to 15.1 million tons in the key California
markets with growth to be met by increasing production and inter-state imports
of pozzolan including 2.4 million tons of natural pozzolan.
Ø CS Project is shovel ready; Company has a first mover advantage.
Hazen Pozzolan Project, Nevada
Ø 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.
Ø Test mining completed successfully, pozzolan is free digging.
Ø Laboratory tests on bulk sample reported to be satisfactory.
Ø Unusually severe winter storms have limited the availability of silo space
for the test grind which is still awaited.
Pioche Sepiolite Project, Nevada
Ø Project continues to be advanced by Tolsa, the world's largest producer of
sepiolite.
Ø Trenching programme confirmed multiple beds of sepiolite and generated
several mini-bulk samples, now under evaluation in Spain.
Ø 31 additional mining claims staked to more than double the size of the
Pioche Project.
Ø Resource definition drilling scheduled for June 2023.
Ø Detailed site topographic survey in progress to better define drill sites.
Ø Tolsa has made the US$50,000 interim payment, can purchase the project for
US$1.25m by 28 December 2023 and Sunrise will retain a 3% gross revenue
royalty on all claims.
Reese Ridge Base Metal and Gold Project, Nevada
Ø New project located on the south side of the prospective Humboldt
Structural Zone.
Ø Numerous gossans and alteration zones at surface with grab samples up to
15.8% zinc, 3.3% copper, 0.37g/t gold and 51g/t silver in separate samples
with multiple pathfinder elements, including arsenic and thallium.
Ø Satellite imagery shows large alteration areas associated with this
mineralisation.
Ø Significant low resistivity target identified below the surface
mineralisation from past geothermal energy exploration programme.
Ø Project prospective for a number of different styles of mineralisation
including carbonate replacement lead-zinc-copper-silver and Carlin-style gold
deposits.
Financial Results Summary
Group loss for the six months ended 31 March 2023 of £145,911 comprising:
· Income includes £32,344 for granting option rights to Tolsa,
£4,043 from lease and £380 interest receivable.
· Less administration costs of £180,426 and expensed pre-licence
exploration costs £2,252.
Project expenditure of £39,012 was capitalised.
Funding during the period
In November 2022, the Company issued a two-year zero-coupon convertible
security of £200,000 to Toward Net Zero LLC ("TNZ") and in addition £80,000
(before expenses) was raised via a share placing, both as part of a funding
package of up to £480,000 with TNZ.
Shares to the value of £20,116 were issued in January 2023 in satisfaction of
a portion of outstanding directors' fees.
On 31 March 2023, the Company held £180,896 in cash and cash equivalents and
listed investments with a current value of £15,341.
The Company relies upon periodic capital fundraisings until such time as
cashflow can be derived either from the sale of assets or future operations.
Further information:
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
CAUTIONARY NOTICE
The news release 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. Accordingly, you should not rely on any
forward-looking statements and save as required by the AIM Rules for Companies
or by law, the Company does not accept any obligation to disseminate any
updates or revisions to such forward-looking statements.
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.
Chairman's Statement
I am pleased to present the Company's unaudited financial results for the six
months' period ended 31 March 2023.
In the period under review we have continued and extended our efforts to
secure the future development of our flagship CS Pozzolan-Perlite project in
Nevada, USA. Our experience, and that of others in the pozzolan business, is
that cement companies are incredibly conservative and slow to act. However,
the evidence from the 2023 NPA Symposium, where attendance levels were up
300%, is that 2023 may prove to be a pivotal year as the cement companies
react to the realities of climate change legislation. I encourage
shareholders to read the recent RNS Reach announcement in which some key
points from the NPA Symposium are discussed.
Portland cement is responsible for 8% of the global man-made carbon dioxide
emissions and Net-zero CO(2) targets are therefore a major challenge for the
cement and concrete industries. In the US, these targets are enshrined in
Federal and State legislation and industry-body commitments and are
increasingly driven by cement and concrete customers and specifiers. One of
the Implementation Priorities in US President Biden's November 2021 Executive
Order "Implementation of the $1.2 trillion Infrastructure Investment and Jobs
Act" is "building infrastructure that is resilient and that helps combat the
crisis of climate change". The Inflation Reduction Act of 2022 includes a $5.8
billion financial package for decarbonisation of heavy industries like steel
and cement. California has the largest economy of all the US States and
southern California is a major target market for the CS Project. In September
2021 California's Carbon Cap-and-Trade scheme was signed into legislation and
directly targets greenhouse gas emissions associated with the cement industry.
These legislative changes are driving strong interest in natural pozzolan
which can replace up to 30% of Portland cement in cement and concrete mixes
and be a major contributor to net-zero strategies.
The CS Project is shovel ready. We are in a favourable position to take
advantage of these projections and the increasing interest in natural
pozzolan. This interest is coming not just from the cement companies, but also
from the established fly ash distributers who see the writing on the wall for
fly ash and the opportunities both for the production of fly ash/pozzolan
mixes to extend remaining fly ash supplies, and the rise of blended cements
with a substantially reduced carbon footprint.
Our focus in the reporting period at the CS Project has been on the markets
for pozzolan rather than perlite as this is the larger business opportunity,
having the better potential to attract external funding, and recognising that
our perlite deposits can also be utilised as natural pozzolan.
Our Hazen Pozzolan Project is a much earlier stage project, but has a
favourable location close to rail and the cement markets of northern
California. This has attracted the attention of an existing producer of
natural pozzolan already serving this market and we have agreed a
collaborative programme to test mine and grind a bulk sample of Hazen
pozzolan. The mining exercise completed successfully, demonstrated that the
Hazen pozzolan is free digging and so cheap to mine and we await the results
of the test grind which has been delayed by a particularly difficult winter
which has prevented silo space from becoming available.
In order to provide additional market intelligence and identify additional
partnership opportunities we have commissioned a detailed, granular, study of
the markets for cements and pozzolans in California and Nevada with
independent Cement Distribution Consultants ("CDC"). CDC has also provided us
with its projections on the US and individual State markets to 2030. This
assumes that ordinary Portland cement production will remain steady whilst
increasing demand for cement and concrete will be met by blended cements using
natural and other pozzolans. These projections identify a US wide shortfall by
2030 of 18.8 million tons of pozzolan, 2.7 million tons in California alone.
In California this shortfall is predicted to be met by increased consumption
of natural pozzolan from other states.
Our partner on the Pioche Sepiolite Project, our third key project, is Tolsa,
the world's largest producer of sepiolite. Tolsa continues to make progress
with testwork ongoing in Spain on bulk samples extracted during last years'
trenching programme. Planning is also well underway for drill testing this
summer of the extensive sepiolite beds now known to exist as Tolsa moves
towards its decision to purchase the Pioche project by year end. This has
potential to provide a significant injection of funds into the Company and,
moreover, we will retain a gross revenue royalty which has potential to
provide a significant cash flow in future years.
We were pleased to see Golden Metal Resources plc ("GMR") make its recent IPO
debut on AIM. We hold royalty interests on two of the four projects held by
GMR in Nevada and we look forward to their further exploration of these
projects. Cash flow from royalties commands a higher valuation than cash flow
from equity participation as royalty cash flow is risk free and unrelated to
profitability.
In the longer term we see the potential to build up a valuable portfolio of
mining royalties from the sale of other projects held by the Company. We
continue to add to our project interests where opportunities are presented at
low cost, and in the reporting period we staked claims at the Reese Ridge
Project where we have found high values of base metals in gossans at surface
and where there is a compelling target for drill testing.
The Company's projects were recently reviewed and valued by our broker,
Peterhouse, in a recently published research note which highlights a
substantial undervaluation of the Company by the market. It also identifies a
number of triggers for further value appreciation. This research note can be
accessed via our website.
I would like to thank shareholders for their patient support, and we look
forward to bringing you further news from our key projects this summer.
Patrick Cheetham
Executive Chairman
31 May 2023
Consolidated Income Statement
for the six months to 31 March 2023
Six months Six months Twelve months to
to 31 March to 31 March 30 September
2023 2022 2022
Unaudited Unaudited Audited
£ £ £
Pre-licence exploration costs (2,252) (4,133) (5,638)
Impairment of deferred exploration assets - - (194,247)
Administration costs
(180,426) (160,623) (291,860)
Other income 36,387 11,422 13,474
Operating loss (146,291) (153,334) (478,271)
Interest receivable 380 11 48
Loss before income tax (145,911) (153,323) (478,223)
Income tax - - -
Loss for the period attributable to equity
holders of the parent (145,911) (153,323) (478,233)
Loss per share - basic and fully diluted (pence) (Note 2) (0.004) (0.004) (0.013)
Consolidated Statement of Comprehensive Income
for the six months to 31 March 2023
Six months Six months Twelve months
to 31 March to 31 March to 30 September
2023 2022 2022
Unaudited Unaudited Audited
£ £ £
Loss for the period (145,911) (153,323) (478,223)
Other comprehensive income:
Items that could be reclassified subsequently to the income statement:
Foreign exchange translation differences on foreign currency net investments in subsidiaries
(246,823) 61,117 441,434
Items that will not be reclassified to the Income Statement:
Changes in the fair value of equity investments
(3,119) (14,282) (22,962)
(249,942) (14,282) 418,472
Total comprehensive loss for the period attributable to equity holders of the parent
(395,853) (106,488) (59,751)
Consolidated Statement of Financial Position
as at 31 March 2023
As at As at As at
31 March 31 March 30 September
2023 2022 2022
Unaudited Unaudited Audited
£ £ £
Non-current assets
Intangible assets 2,292,959 2,228,941 2,503,812
Right of use assets 7,749 11,603 11,147
Other investments 15,341 49,553 20,075
2,316,049 2,290,097 2,535,034
Current assets
Receivables 151,325 147,358 167,425
Cash and cash equivalents 180,896 183,923 96,126
332,221 331,281 263,551
Current liabilities
Trade and other payables (54,930) (103,178) (104,936)
Lease liability (2,587) (1,171) (2,839)
Net current assets 274,704 226,932 155,776
Non-Current liabilities
Lease liability - (3,632) (2,874)
Share subscription loan (200,000)
Provisions for liabilities and charges (29,129) (24,458) (32,079)
(229,129) (28,090) (34,953)
Net assets 2,361,624 2,488,939 2,655,857
Equity
Called up share capital 3,933,675 3,711,086 3,833,559
Share premium account 5,680,316 5,683,695 5,680,316
Share warrant reserve 39,136 39,015 40,101
Fair value reserve 7,021 18,820 10,140
Foreign currency reserve 157,280 23,786 404,103
Accumulated losses (7,455,804) (6,987,463) (7,312,362)
Equity attributable to owners of the parent 2,361,624 2,488,939 2,655,857
Consolidated Statement of Changes in Equity
Share Share Fair Foreign
Share premium warrant reserve value currency Accumulated
capital account reserve reserve losses Total
£ £ £ £ £ £ £
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 period - - - - - (153,323) (153,323)
Change in fair value - - - (14,282) - - (14,282)
Exchange differences - - - - 61,117 - 61,117
Total comprehensive
loss for the period - - - (14,282) 61,117 (153,323) (106,488)
Share issue 9,281 8,079 - - - - 17,360
Share based payments expense - - - - - - -
Transfer of expired warrants - - (1,150) - - 1,150 -
At 31 March 2022 3,711,086 5,683,695 39,014 18,820 23,786 (6,987,462) 2,488,939
Loss for the period - - - - - (324,900) (324,900)
Change in fair value - - - (8,680) - - (8,680)
Exchange differences - - - - 380,317 - 380,317
Total comprehensive -
loss for the period - - - (8,680) 380,317 (324,900) 46,737
Share issue 122,473 (3,379) - - - - 119,094
Share based payments expense - - 1,087 - - - 1,087
Transfer of expired warrants - - - - - - -
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 period - - - - - (145,911) (145,911)
Change in fair value - - - (3,119) - - (3,119)
Exchange differences - - - - (246,823) - (246,823)
Total comprehensive
loss for the period - - - (3,119) (246,823) (145,911) (395,853)
Share issue 100,116 - - - - - 100,116
Share based payments expense - - 1,504 - - - 1,504
Transfer of expired warrants - - (2,469) - - 2,469 -
At 31 March 2023 3,933,675 5,680,316 39,136 7,021 157,280 (7,455,804) 2,361,624
Consolidated Statement of Cash Flows
for the six months to 31 March 2023
Six months Six months Twelve months
to 31 March to 31 March to 30 September
2023 2022 2022
Unaudited Unaudited Audited
£ £ £
Operating activity
Operating Loss (146,291) (153,323) (478,271)
Depreciation/interest charge 2,286 2,285 5,595
Share based payment charge 1,504 - 1,087
Shares issued in lieu of net wages 20,116 16,685 31,279
Shares issued via exercise of warrants - 675 -
Impairment of deferred exploration asset - - 194,247
Reclamation provision - (2,950) -
(Increase)/decrease in receivables 16,098 (16,553) (36,620)
Increase/(decrease) in trade and other payables (50,007) 2,317 4,075
Net cash outflow from operating activity (156,294) (150,864) (278,608)
Investing activity
Interest received 380 11 48
Receipts from disposal of equity investments - - 23,263
Project development expenditures (39,012) (37,145) (137,490)
Net cash outflow from investing activity (38,632) (39,571) (114,179)
Financing activity
Issue of share capital (net of expenses) 80,000 - 104,500
Issue of shares via exercise of warrants - 675 675
Share subscription loan 200,000
Lease payments (2,587) (2,437) (2,874)
Net cash inflow from financing activity 277,413 1,762 102,301
Net increase/(decrease) in cash and cash equivalents 82,487 (189,760) (290,486)
Cash and cash equivalents at start of period 96,126 371,740 371,740
Exchange differences 2,283 1,943 14,872
Cash and cash equivalents at end of period 180,896 183,923 96,126
Notes to the Interim Statement
1. Basis of preparation
The consolidated interim financial information has been prepared in accordance
with the accounting policies that are expected to be adopted in the Group's
full financial statements for the year ending 30 September 2023 which are not
expected to be significantly different to those set out in Note 1 of the
Group's audited financial statements for the year ended 30 September 2022.
These are based on the recognition and measurement requirements of applicable
law and UK adopted International Accounting Standards. The financial
information has not been prepared (and is not required to be prepared) in
accordance with IAS 34. The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of this financial
information.
The financial information in this statement relating to the six months ended
31 March 2023 and the six months ended 31 March 2022 has neither been audited
nor reviewed by the Independent Auditor pursuant to guidance issued by the
Auditing Practices Board. The financial information presented for the year
ended 30 September 2022 does not constitute the full statutory accounts for
that period. The Annual Report and Financial Statements for the year ended 30
September 2022 have been filed with the Registrar of Companies. The
Independent Auditor's Report on the Annual Report and Financial Statements for
the year ended 30 September 2022 was unqualified, although it did draw
attention to matters by way of emphasis in relation to going concern.
The directors prepare annual budgets and cash flow
projections for a 15-month period. These projections include the proceeds of
future fundraising necessary within the period to meet the Company's and the
Group's planned discretionary project expenditures and to maintain the Company
and the Group as a going concern. 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. These factors represent a material uncertainty
related to events or conditions which may cast significant doubt on the
entity's ability to continue as a going concern and, therefore, that it may be
unable to realise its assets and discharge its liabilities in the normal
course of business. However, the directors have a reasonable expectation that
they will secure additional funding when required to continue meeting
corporate overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for the
preparation of the financial statements.
2. Loss per share
Loss per share has been calculated on the attributable loss
for the period and the weighted average number of shares in issue during the
period.
Six months Six months Twelve months
to 31 March to 31 March to 30 September
2023 2022 2022
Unaudited Unaudited Audited
Loss for the period (£) (145,911) (153,323) (478,223)
Weighted average shares in issue (No.) 3,894,814,406 3,705,826,898 3,734,454,207
Basic and diluted loss per share (pence) (0.004) (0.004) (0.013)
The loss attributable to ordinary shareholders and weighted average number of
shares for the purpose of calculating the diluted earnings per share are
identical to those used for the basic earnings per share. This is because
the exercise of share warrants would have the effect of reducing the loss per
share and is therefore not dilutive under the terms of IAS33.
3. Share capital
During the six months to 31 March 2023 the following share issues took place:
An issue of 80,000,000 Ordinary Shares of 0.1p at 0.1p per share for a total
consideration of £80,000, as part of a share placing with Toward Net Zero LLC
(30 November 2022).
An issue of 20,116,000 Ordinary Shares of 0.1p at 0.1p per share to three
directors, for a total consideration of £20,116, in satisfaction of a portion
of outstanding directors' fees (17 January 2023).
The total number of Ordinary Shares in issue on 31 March 2023 was
3,933,675,087 (30 September 2022: 3,833,559,087).
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