Annual Report
for the
Year Ended 30 June 2021
S2 RESOURCES LTD
ABN 18 606 128 090
Annual Report 2021
Corporate Directory
Directors
Mark Bennett
Executive Chairman
Anna Neuling
Executive Director
Jeff Dowling
Non – Executive Director
Company Secretary
Anna Neuling
Registered Office
Share Register
Auditor
4/24 Parkland Road
Osborne Park WA 6017
Telephone:
Facsimile:
+61 8 6166 0240
+61 8 6270 5410
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth WA 6000
Telephone: 1300 787 575
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: 08 6382 4600
Stock Exchange Listing
S2 Resources Ltd’s shares are listed on the Australian Securities
Exchange (ASX).
ASX code: S2R
Website Address
www.s2resources.com.au
Annual Report 2021
Contents Page
Chairman’s Review
Operations Review
Directors Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Declaration of Independence
Independent Auditor’s Report
Additional ASX Information
Competent Persons Statement
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Annual Report 2021
Chairman’s Review
Although the year ending June 2021 continued to be troubled by the Covid-19 pandemic, S2 was able to
continue, and indeed ramp up, its exploration activities. The Company has commenced work on several new
projects in Western Australia and has pegged a belt-scale opportunity in New South Wales, and in Finland, has
been aggressively drilling its Aarnivalkea gold prospect whilst simultaneously farming out lower priority areas
to well credentialled partners.
Fraser Range, Western Australia
During the year, two strong electromagnetic conductors were identified and drilled in the Fraser Range. Both
holes intersected sulphides exactly where predicted, but they did not contain sufficient grades of nickel, copper
and PGE’s to be considered worthy of further work. Although this work did not result in a discovery it highlights
S2’s focussed, efficient and disciplined approach. In essence, we defined targets, and got a definitive answer
without spending an inordinate amount of time and money to reach that point. This enabled us to move quickly
on to the next opportunity without it becoming an opportunity cost.
West Yilgarn nickel-copper-PGE targets, Western Australia
Progress has been made on several nickel-copper-PGE targets identified and pegged on the western margin of
the Yilgarn Craton of Western Australia. At the West Murchison project, geochemical sampling has identified
coincident nickel-copper-PGE soil anomalies over the first of several suspected ultramafic intrusions analogous
to Chalice Mining’s Julimar discovery. At the Three Springs project, which is also considered prospective for
the same mineralisation style, access agreements have been reached with key landowners which will enable
work to start later in 2021.
Jillewarra, Western Australia
Gold and base metal exploration has commenced and is continuing on the Jillewarra project near Meekatharra,
where S2 is earning up to a 70% interest. Initial reconnaissance aircore drilling has identified gold anomalous
trends and limited reverse circulation drilling of these has intersected mineralisation.
Koonenberry, New South Wales
The Company has pegged a large area of the Koonenberry belt in northwestern New South Wales and is
awaiting grant of these tenements, which cover mafic-ultramafic intrusions considered prospective for nickel-
copper-PGE mineralisation. The belt has geological similarities with the Fraser Range belt of Western Australia
(where the S2 team discovered the Nova-Bollinger nickel-copper mine as Sirius Resources), the Circum-
Superior belt of northern Canada (which hosts the giant Raglan and Thompson nickel districts), and the
Pechenga belt of northwestern Russia (which hosts numerous large nickel sulphide deposits).
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Annual Report 2021
Finland
In Finland, the Company has taken the decision to aggressively drill the promising Aarnivalkea gold prospect
and farm out some of its other ground in order to minimise landholding costs and focus its expenditure whilst
remaining exposed to the considerable latent value of its strategic land position in this emerging gold and
nickel province. To this end, S2 has entered into two farmout arrangements whereby Canadian miner Kinross
and Canadian explorer Rupert Resources can earn a majority interest in respective areas with S2 retaining a
minority interest. Drilling of the 100% owned Aarnivalkea gold prospect is ongoing at the time of writing.
Corporate
During the year the Company welcomed Matthew Keane on board as Chief Executive Officer. Matt comes to
S2 having worked for BHP as a geologist, for Paladin as a corporate executive, and Argonaut as a resources
analyst.
The Company continues to be exposed to the potential future success of Todd River Resources (ASX:TRT)
through its shareholding, as the largest shareholder of TRT.
We have also continued with prudent financial management to ensure we remain well funded to explore
aggressively, whilst defraying costs through a services and office sublease agreement with TRT.
In summary, our aim remains the same. It is to make substantial discoveries capable of having a significant
impact on the value of the company. We have the capability of finding these and developing them into mines
should they be financially robust, technically low risk and in stable jurisdictions. However, but we are also
prepared to monetise assets should they be deemed financially marginal and/or technically risky rather than
persist with opportunities that can become a management diversion and an opportunity cost.
Although we have not yet made that company making discovery, we continue to diligently work towards that
end. I sincerely thank our loyal shareholders for their patience and look forward to a successful 2022.
Mark Bennett
Executive Chairman
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Operations Review
Annual Report 2021
Figure 1. S2 Australian and Finland project locations
Finland (100% S2, with up to 70% farm-out potential on selected licences)
S2 holds an area of 586 square kilometres in the prospective Central Lapland Greenstone Belt (“CLGB”) of
northern Finland via a mix of granted Exploration Licences, Exploration Licence applications and exploration
reservations. These areas have not been extensively or effectively explored in the past, despite the CLGB
hosting “world-class” gold and nickel-copper-cobalt-PGE deposits, including Agnico Eagle’s 7.4 million ounce
Kittilä gold mine, Boliden’s 298 million tonne Kevitsa copper-nickel-gold-PGE mine and Anglo American’s 44
million tonne Sakatti nickel-copper–PGE deposit.
On the Paana Central tenement, deeper diamond drilling (>100 metres below surface) was undertaken at the
Aarnivalkea prospect in two campaigns, one in October 2020 and a second commencing in early July 2021. The
October 2020 program comprised four holes aimed at testing below a 1,300 metre long zone of anomalous
gold detected in 2018 to 2019 shallow scout diamond drilling. All four holes intercepted gold mineralisation
with best intercepts of 6.8 metres at 11.8g/t gold from 223.0 metres, including 4.0 metres at 18.1g/t gold from
223.0 metres in hole FAVD0062 and 20.4 metres at 4.0g/t gold from 193.1 metres, including 8.5 metres at
8.6g/t gold from 198.0 metres in hole FAVD0064. These encouraging results prompted a follow-up program
which unfortunately was delayed to July 2021 due to limited drill rig availability in Finland. Drilling is currently
underway with at least fourteen 240 to 520 metres deep holes planned over a 1,300 metre strike length at
Aarnivalkea.
Reconnaissance diamond drilling was also conducted at the Aarnivalkea East target to test a base of till (BoT)
gold anomaly. Thirteen wide spaced holes confirmed a strongly altered and deformed shear zone with
numerous zones of narrow gold anomalism with the best individual intercept of 3.7 metres at 0.86g/t gold
from 85.0 metres in hole FPAD0005.
Surface geochemical sampling was undertaken at S2’s northernmost tenure in the CLGB on the Pahasvuoma
licence. This was the first on-ground exploration by S2 in the region and results will assist future gold targeting.
Infill surface geochemistry was also undertaken on the Keulakkopää licences to the southeast of Rupert
Resources Ikkari gold discovery to follow up on Au-As-Ag-Cu-Sb anomalies identified during an ionic leach soil
campaign in 2018.
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Annual Report 2021
At the Rupoas project, S2 has carried out reconnaissance exploration for magmatic nickel-copper-PGE
mineralisation, including BoT drilling and ground electromagnetic (EM) surveys. In September 2021, S2
completed two diamond holes into the Ruopas Isovaara EM plate, intersecting two 20-30cm zones of semi-
massive sulphides, comprising predominately pyrrhotite (iron sulphide) with minor chalcopyrite (copper
sulphide), associated with quartz veining. Assay results, primarily to determine precious metal content, were
still pending at time of writing this report.
In June 2021, S2 entered into a farm-in option agreement with Kinross Gold Corporation (K:TSX) on four
Exploration Licence and licence applications covering an area of 83 square kilometres prospective for gold
mineralisation. Under the agreement, Kinross can spend up to USD9.5 million (approximately A$13.1 million)
to earn a 70% interest in the Palvanen/Mesi and Home blocks, with a minimum expenditure requirement of
USD3.5 million over the first three years. In August 2021, S2 entered into another farm-in option agreement
on two Exploration Licence applications covering an area of 37 square kilometres with Rupert Resources
(RUP:V). Under this agreement, Rupert can spend up to EUR3.4 million (approximately AUD5.5 million) to earn
a 70% interest in the Sikavaara East and Sikavaara West licences, with an initial expenditure requirement of
EUR1.2 million over the first three years. Following these two agreements, S2 still retains 100% ownership of
461 square kilometres of additional tenure in the CLBG, incorporating the Aarnivalkea gold prospect and the
Ruopas nickel target.
Both gold and base metal exploration is ongoing in the CLGB.
Figure 2. Location map showing S2’s landholding in the Central Lapland Greenstone Belt, Finland. The map shows the areas related to
the Rupert and Kinross earn-in agreements. The map also shows neighbouring companies, mines and defined resources.
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Annual Report 2021
Jillewarra Joint Venture (S2 earning up to 70%)
In October 2020, S2 entered into a binding agreement with private company Black Raven Mining Pty Ltd to
earn a majority interest in a group of tenements known as the Jillewarra project, located approximately 50
kilometres west-northwest of Meekatharra in the Murchison goldfields of Western Australia. Under the
agreement, S2 can earn up to 70% of the project by spending A$5m over five years. The project covers 793
square kilometres and 40 kilometres strike of the Mingah Range Greenstone Belt, including the historical
Chesterfield and Wardabie mining centres. It is prospective for both lode style gold and volcanogenic massive
sulphide (VMS) base metal mineralisation. Despite its proximity to a number of active mines, Jillewarra
remains underexplored with very little drilling below 70 metres depth.
During financial year ending June 2021, S2 conducted several RC and aircore drilling programs. Better results
from the Dorothy and Margueritta prospects in the southern end of the belt included:
• 20.0 metres at 1.9g/t gold from 92 metres downhole, including, 4.0 metres at 6.8g/t gold from 92
metres, and 4.0 metres at 1.0g/t gold from 100 metres, and 4.0 metres at 1.6g/t gold from 108 metres
in SJWC0005 (RC drilling at Dorothy)
• 3.0 metres at 2.3g/t gold from 41 metres in SJWC0006 (Margueritta RC drilling)
• 4.0 metres at 11.1g/t gold from 28 metres, including 1.0 metre at 28.6g/t gold from 29 metres, and
5.0 metres at 2.6g/t gold from 42 metres in SJWC0011 (Margueritta South RC drilling)
• 27.0 metres at 0.5g/t Au from 48 metres to the end of hole, including 4.0 metres at 1.0g/t Au from 52
metres in SJWA0102 (Western Trend aircore drilling)
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Annual Report 2021
Figure 3. Location map of the Jillewarra project showing historic gold workings and prospect locations
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Annual Report 2021
West Murchison, Western Australia (S2 100%)
The West Murchison project comprises three Exploration Licences covering 693 square kilometres, prospective
for magmatic nickel-copper-PGE mineralisation. In May 2021, all three licences were granted following the
finalisation of a heritage agreement with the Wajarri Yamatji Native Title group. The licences contain mapped
mafic-ultramafic outcrops, as well as additional discrete magnetic features interpreted to be similar geology
under cover.
Limited early soil sampling by S2 over one of these intrusions termed the Woodrarung target, located in the
northern portion of the tenement package, identified a coherent coincident nickel-copper anomaly over
weathered ultramafics and a magnetic high. This anomaly is 200 metres wide at the 100ppm copper threshold,
with a best result of 550 ppm copper with coincident strongly anomalous nickel (up to 1,562 ppm). It is open
to the east where the interpreted southern margin of the underlying mafic-ultramafic body extends for a
further kilometre under cover. The same program also identified a significant gold in soil anomaly as well as a
single rock chip sample grading 0.83g/t gold. Modest platinum and palladium anomalism was also detected in
soils at Woodrarung.
Moving loop electromagnetic (MLEM) surveys and further soil geochemical sampling commenced from August
2021 over selected magnetic highs.
Three Springs, Western Australia (S2 100%)
S2 has two Exploration Licenses at its Three Springs project covering approximately 361 square kilometres over
several targets interpreted to represent mafic-ultramafic intrusions prospective for magmatic nickel-copper-
PGE mineralisation.
S2 has negotiated landholder access agreements over several key areas and will commence on-ground
exploration in early 2022. Initial activities will include auger geochemical sampling and ground EM. The timing
of these programs will be governed by local farming cycles.
Koonenberry (100% S2)
S2 has three Exploration Licence applications covering 2,712 square kilometres in northwestern New South
Wales (NSW) extending for a strike of 143 kilometres along the Koonenberry belt, which incorporates the Mt
Arrowsmith volcanic sequence. The scale and cratonic margin setting of this belt is analogous to the Fraser
Zone of the Albany Fraser Orogen, which hosts the Nova-Bollinger nickel-copper-PGE deposit (discovered by
S2’s predecessor, Sirius Resources in 2012) and the Tropicana gold deposit, and the Circum-Superior belt of
northern Canada, which hosts the giant Thompson and Raglan nickel districts. The belt contains early breakup
gabbros and comagmatic orthocumulate ultramafic picrite sills and intrusions similar in age and petrography
to those that host mineralisation in the Russian Pechenga nickel-copper-PGE district.
Early stage exploration was conducted by Vale-Inco between 2005 and 2010 which detected the presence of
nickel sulphides in the limited drilling by this company. However, the greater project area still remains largely
untested for intrusive nickel-copper-PGE mineralisation.
S2 is currently undertaking the right to negotiate process under the Native Title Act ahead of the grant of an
Exploration Licence. Planned activities for financial year 2022 include establishing land access agreements, EM
surveys, soil and rock chip sampling, regional mapping and data consolidation.
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Annual Report 2021
Fraser Range, Western Australia (S2 100%)
The Company has three exploration licences covering 176 square kilometres of the Fraser Range nickel
province. The licences are located 40 to 80 kilometres to the northeast of the Nova-Bollinger nickel-copper
mine. EM surveys identified two basement conductors on licences E28/2792 and E28/2791, which were each
tested with a single diamond drill hole. Both holes intercepted massive sulphides at depths predicted by EM,
comprising predominantly iron sulphides with no nickel and minor copper.
In August 2021, S2 undertook a soil geochemical sampling within the third exploration license (E28/2794), with
assay results from the program not yet received at time of writing this report.
Polar Bear, Western Australia (S2 100% nickel rights)
S2’s holds the nickel rights over an area of 568 square kilometres to the southeast of the Widgiemooltha and
Kambalda nickel sulphide trends. S2 retained these rights when it sold the Polar Bear project (comprising the
Polar Bear and Norcott projects and the Eundynie Joint Venture) to Higginsville Gold Operations (now owned
by Karora Resources Inc.). The nickel rights include the Halls Knoll, Taipan and Gwardar nickel prospects. No
exploration activities were conducted during financial year ended 30 June 2021.
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Annual Report 2021
Directors Report
The Directors of S2 Resources Ltd ("Directors") present their report on the consolidated entity consisting of S2 Resources
Ltd (“the Company” or “S2”) and the entities it controlled at the end of, or during, the year ended 30 June 2021 (“Group”).
Directors
The names and details of the Directors in office during the financial year and until the date of this Report are as follows.
Directors were in office for the entire year unless otherwise stated.
Jeff Dowling
Mark Bennett
Anna Neuling
Principal Activities
The principal continuing activity of the Group is mineral exploration.
Dividends
No dividends were paid or proposed to be paid to members during the financial year.
Review of Operations
Operating Result
The loss from continuing operations for the year ended 30 June 2021 after providing for income tax amounted to
$7,234,407.
The loss results from $5,294,837 of exploration expenditure incurred and expensed, $1,155,918 of share-based payments
expenses, $981,524 of administration costs, $400,980 of business development costs including travel, $151,849 of
depreciation costs, $56,314 of other income and $315,242 of other losses including bank charges. The exploration
expenditure incurred and expensed mainly relates to the Company’s Finnish and Australian projects. Also, during the year,
the Group accounted for its share of its associate’s consolidated statement of loss being $159,042 and a fair value
increment on reclassification of investment of $1,132,554.
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Annual Report 2021
Directors Report (cont)
Significant Changes in the State of Affairs
In July 2020, 61,976,000 shares were issued at 12.5 cents per share in a placement to institutional and sophisticated
investors.
In August 2020, the Group’s investment percentage in Todd River Resources Ltd (ASX:TRT) was reduced from 30.62% to
24.50%. This was due to a share issue by Todd River Resources Ltd in relation to a capital raising which S2 did not
participate in. In September 2020, the Group’s investment percentage in Todd River Resources Ltd (ASX:TRT) was reduced
to 18.48%. This was due to a share issue by Todd River Resources Ltd in relation to a project acquisition.
In October 2020, S2 entered into a binding agreement with private company Black Raven Mining Pty Ltd (“BRM”) to earn
a majority interest in a group of tenements known as the Jillewarra project (see S2 ASX announcement dated 5th October
2020). The farm-in comprised an up-front non-cash consideration, an earn-in phase, and a potential free carry, as
summarised below:
Issue of 5 million S2 shares to BRM at A$0.28, representing a consideration of A$1.4m (issued 5th October 2020)
•
• Minimum expenditure of A$2m within 2 years
• Cumulative expenditure of A$5m within 5 years to earn a 51% interest
• Completion of a study on Inferred Mineral Resources of at least 250,000 ounces of gold (or base metal equivalent)
within 7 years to earn a 70% interest
• On completion of this study by S2, BRM can elect to contribute, dilute, or revert to a free carried interest (“FCI”) to
commencement of commercial production
In the event of BRM opting for a FCI, BRM’s interest reduces to 25% and S2’s interest increases to 75%, and BRM repays
its free carry from 100% of its share of future revenue
In the event of S2 not completing a study within 7 years, S2’s interest decreases to 49%
•
•
In October 2020, Matthew Keane was appointed as Chief Executive Officer to fill the vacancy created by Mark Bennett
moving to the position of Executive Chairman. Mr Keane is a geologist with more than 20 years of experience in mining,
exploration and financial markets. He has worked in various technical and operational roles including exploration, mine
geology, scheduling and design, resource and reserve estimation, and production management for Lynas Gold (now
Lynas Corp) and BHP.
He also held a corporate development and investor relations role with uranium miner Paladin Energy, focused on
mergers, acquisitions and asset divestments.
Most recently, he has spent eight years in capital markets working as a metals and mining analyst for Argonaut Securities,
covering gold, base metals, bulk commodities, specialty minerals and uranium. He holds a BSc (Hons) Geology from the
University of Western Australia and a Masters of Business and Technology from the University of New South Wales.
In October 2020, the Group’s investment percentage in Todd River Resources Ltd (ASX:TRT) was reduced to 15.57%.
This was due to a share issue by Todd River Resources Ltd in relation to a capital raising which S2 did not participate in.
Since then, TRT has conducted a further equity raise which S2 did not participate in, and issued further shares reducing
the Company’s current investment percentage to 13.49%.
In June 2021, S2 through its wholly owned Finnish subsidiary Sakumpu Exploration Oy entered into a binding farm-in
option agreement with North American gold producer Kinross Gold Corporation on four exploration licence and licence
applications covering an area of 83 square kilometres in the Central Lapland Greenstone Belt in northern Finland. Under
the Agreement, Kinross can spend up to US$9.5 million to earn a 70% interest in these licences, with a minimum
expenditure requirement of US$3.5 million over the first 3 years.
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Annual Report 2021
Directors Report (cont)
COVID 19
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain
of coronavirus originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus
spread globally beyond its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO
classified the COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain
as to the full impact that the pandemic will have on its financial condition, liquidity, and future operating results.
Management has actively managed the global situation and its impact on the Group's financial condition, operations, and
workforce. During the year ended 30 June 2021, there have been no impacts from COVID-19 on the Group’s exploration
activities.
Although the Group cannot fully estimate the length or gravity of the COVID-19 effect, from its initial assessment, the
impact over the next 12 months does not appear to be significant, indicating the entity will be able to continue as a going
concern.
After Balance Date Events
On 16 August 2021 the Group through its wholly owned Finnish subsidiary Sakumpu Exploration Oy entered into a binding
farm-in option agreement with Rupert Resources on two exploration licence applications covering an area of 37 square
kilometres in the Central Lapland Greenstone Belt in northern Finland. Under the agreement, Rupert can spend up to
EUR3.4 million to earn a 70% interest in the Sikavaara East and Sikavaara West licences, with an initial expenditure
requirement of EUR1.2 million over the first three years.
On 31 August 2021, the Group completed its placement by issuing 41,483,676 shares to institutional and sophisticated
investors at an issue price of $0.12 resulting in the Group having additional working capital of $4,978,041. The placement
was undertaken within the Group’s 25% capacity under ASX Listing Rule 7.1 and 7.1A and accordingly no shareholder
approval was required in connection with the equity raising.
There has been no other matter or circumstance that has arisen since 30 June 2021 that has significantly affected, or may
significantly affect:
• the Group’s operations in future financial years;
• the result of those operations in future financial years; or
• the Group’s state of affairs in future financial years.
Likely Developments and Expected Results of Operations
The Group will continue its exploration activities in Australia and Finland for the foreseeable future. The Group will also
seek other exploration opportunities that will add value to the Group’s portfolio of assets.
Environmental Regulation
The Group’s operations are subject to environmental regulation under the laws of Finland, the Australian Commonwealth
and the State of Western Australia and New South Wales. The Board of Directors (“Board”) is of the view that all relevant
environmental regulation requirements have been met.
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Annual Report 2021
Directors Report (cont)
Information on Directors
Mark Bennett – Executive Chairman
Experience and Expertise
Dr Bennett was the Managing director and CEO of Sirius Resources NL (“Sirius”) from its inception until its merger with
Independence Group NL, and was non-executive director of Independence Group following the merger until June 2016.
He is a geologist with 30 plus years of experience in gold, nickel and base metal exploration and mining. He holds a BSc
in Mining Geology from the University of Leicester and a PhD from the University of Leeds and is a Member of the
Australasian Institute of Mining and Metallurgy, a Fellow of the Geological Society of London, a Fellow of the Australian
Institute of Geoscientists and a Member of the Australian Institute of Company Directors.
He has worked in Australia, West Africa, Canada, USA and Europe, initially for LionOre Mining International Limited and
WMC Resources Limited at various locations including Kalgoorlie, Kambalda, St.Ives, LionOre's nickel and gold mines
throughout Western Australia, the East Kimberley, and Stawell in Victoria. His more recent experience, as Managing
Director of Sirius, S2 Resources and as a director of private Canadian company True North Nickel, has been predominantly
in Western Australia (the Fraser Range including Nova-Bollinger, and the Polar Bear project in the Eastern Goldfields),
Quebec (the Raglan West nickel project), British Columbia, Sweden, Finland, and Nevada.
Positions held include various technical, operational, executive and Board positions including Executive Chairman,
Managing Director, Chief Executive Officer, Executive Director, Non-Executive Director, Exploration Manager and Chief
Geologist.
Dr Bennett is a two times winner of the Association of Mining and Exploration Companies "Prospector Award" for his
discoveries which include the Thunderbox gold mine, the Waterloo nickel mine and most recently the world class Nova-
Bollinger nickel-copper mine.
In addition to his technical expertise, Dr Bennett is very experienced in corporate affairs, equity capital markets, investor
relations and community engagement and led Sirius from prior to the discovery of Nova through feasibility, financing,
permitting and construction, and through the schemes of arrangement to merge with Independence and to demerge S2.
Other Directorships
Non-Executive Director of Todd River Resources Ltd since 30 November 2018.
Former Directorships in the Last Three Years
Dr Bennett has had no directorships of any other public listed company in the last three years.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
12,000,000
5,035,868
Jeff Dowling – Non- Executive Director
Experience and Expertise
Mr Dowling was Sirius’ Non-Executive Chairman until 21 September 2015 and is a highly experienced corporate leader
with 36 years' experience in professional services with Ernst & Young. Mr Dowling held numerous leadership roles
within Ernst & Young which focused on the mining, oil and gas and other industries.
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Annual Report 2021
Directors Report (cont)
His professional expertise centres around audit, risk and financial management derived from acting as lead partner on
large public company audits, capital raisings and corporate transactions. Mr Dowling's career with Ernst & Young
culminated in his appointment as Managing Partner of the Ernst & Young Western Region for a period of 5 years.
Mr Dowling has a Bachelor of Commerce from the University of Western Australia and is a fellow of the Institute of
Chartered Accountants, the Australian Institute of Company Directors and the Financial Services Institute of Australasia.
Mr Dowling is the Chairman of the Group’s Audit & Risk Committee and Chairman of the Remuneration & Nomination
Committee which was formed on 19 July 2016.
Other Directorships
Non-Executive Director of NRW Holdings Ltd since 22 August 2013.
Non-Executive Director of Fleetwood Corporation Ltd since 1 July 2017.
Non-Executive Director of Battery Minerals since 21 June 2019.
Former Directorships in the Last Three Years
Non-Executive Chairman of Battery Minerals from 25 January 2018 to 20 June 2019.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
5,250,000
700,000
Anna Neuling – Executive Director
Experience and Expertise
Ms Neuling was the Company Secretary and Chief Financial Officer of Sirius Resources NL from the company's inception
in 2009 until 22 September 2013 where she was appointed as Executive Director – Corporate and Commercial until its
merger with Independence Group that occurred on 21 September 2015.
Ms Neuling worked at Deloitte in London and Perth prior to joining LionOre Mining International Limited in 2005, until
its takeover by Norilsk Nickel. She holds a degree in mathematics from the University of Newcastle (UK).
She is a Fellow of the Institute of Chartered Accountants in England and Wales and has held a number of senior executive
positions in the resources industry, including CFO and Company Secretarial roles at several listed companies.
Ms Neuling is a member of the Group’s Audit & Risk Committee and Remuneration & Nomination Committee which was
formed on 19 July 2016.
Other Directorships
Non-Executive Director of MLG Oz Ltd since 23 March 2021.
Non-Executive Chair of Tombador Iron Resources Ltd since 25 September 2020.
Former Directorships in the Last Three Years
Non-Executive Director of CZR Resources Ltd from 02 November 2020 until 10 September 2021.
Ms Neuling has had no other directorships of any other public listed company in the last three years.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
7,250,000
675,000
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Annual Report 2021
Directors Report (cont)
Meetings of Directors
The number of meetings of the Board and of each Board Committee held during the year ended 30 June 2021 and the
number of meetings attended by each Director were:
Name
Mark Bennett (1)
Anna Neuling
Jeff Dowling
Directors’
Meetings
Audit & Risk
Committee
Remuneration &
Nomination
Committee
Meeting
Held
14
14
14
Meetings
attended
14
14
14
Meeting
Held
-
2
2
Meetings
attended
-
2
2
Meeting
Held
-
1
1
Meetings
attended
-
1
1
(1)
Mark Bennett is not a member of the Audit & Risk Committee or the Remuneration & Nomination
Committee
Indemnifying of Officers or Auditor
During the year the Group paid a premium in respect of insuring Directors and Officers of the Group against liabilities
incurred as a Director or Officer. The insurer shall pay on behalf of the Group or each Director or Officer all losses for
which the Director or Officer is not indemnified by the Group arising from a claim against a Director or Officer individually
or collectively.
The Group had not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Group against
a liability incurred as an auditor.
Options & Rights
Unissued ordinary shares of the Company under options or rights at the date of this Report are as follows:
Options
Number
7,750,000
2,350,000
2,400,000
50,000
18,000,000
200,000
200,000
2,000,000
7,350,000
Grant Date
17/10/2017
21/10/2017
28/11/2018
05/03/2019
12/11/2019
03/12/2019
27/08/2020
05/10/2020
17/11/2020
Expiry Date
Exercise Price $
16/10/2021
20/10/2021
27/11/2022
04/03/2023
11/11/2023
02/12/2023
26/08/2024
04/10/2024
16/11/2024
0.23
0.23
0.14
0.11
0.30
0.30
0.30
0.39
0.38
There were no shares issued since the end of the financial year on the exercise of options. No person entitled to exercise
an option had or has any rights by virtue of the option to participate in any share issue of any other body corporate.
1414 Annual Report 2021
Remuneration Report (audited)
This Remuneration Report, which has been audited, outlines the Key Management Personnel (as defined in AASB 124
Related Party Disclosures) (“KMP”) remuneration arrangements for the Group, in accordance with the requirements of
the section 308 (3c) of the Corporations Act 2001 and its Regulations.
The KMP covered in this remuneration report are:
- Mark Bennett – Executive Chairman
-
-
- Matthew Keane – Chief Executive Officer (CEO) commenced 04 November 2020
Anna Neuling – Executive Director and Company Secretary
Jeff Dowling – Non-Executive Director
The principles adopted have been approved by the Board and have been set out in this Remuneration Report. This
audited Remuneration Report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
1.
2. Details of remuneration
Service agreements
3.
Share-based compensation
4.
The information provided under headings 1 to 4 above includes remuneration disclosures that are required under
Accounting Standard AASB 124, Related Party Disclosures.
1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework which has been set out in detail under the remuneration structure
in this Remuneration Report aligns executive reward with achievement of strategic objectives and the creation of value
for shareholders, it conforms to market best practice for delivery of reward. The Board ensures that executive reward
satisfies the following key criteria for good reward governance practices:
competitiveness and reasonableness;
aligns shareholders and executive interests;
performance based and aligned to the successful achievement of strategic and tactical business objectives;
and
transparency.
Executive Directors
Remuneration to Executive Directors reflects the demands which are made on, and the responsibilities of, the Executive
Directors. Executive Directors’ remuneration is reviewed annually to ensure it is appropriate and in line with the market.
There are no retirement allowances or other benefits paid to Executive Directors other than superannuation guarantee
amounts as required.
The executive remuneration and reward framework has three components:
base pay;
share-based payments; and
other remuneration such as superannuation and long service leave.
1515
Annual Report 2021
Remuneration Report (audited) (cont)
1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
(CONTINUED)
The combination of these comprises the Executive Director's total remuneration.
Fixed remuneration, consisting of base salary and superannuation will be reviewed annually by the Remuneration &
Nomination Committee, based on individual contribution to corporate performance and the overall relative position of
the Group to its market peers.
Non - Executive Directors
Remuneration to Non-Executive Directors reflects the demands which are made on, and the responsibilities of, the Non-
Executive Directors. Non-Executive Directors’ remuneration is reviewed annually. The maximum aggregate for
remuneration of Non-Executive Directors is $300,000 and was approved by shareholders prior to the demerger of the
Company from Independence Group NL (formerly Sirius Resources NL) on 21 September 2015.
From 1 July 2020 to 30 June 2021, exclusive of superannuation guarantee the annual cash remuneration for the Non-
Executive Director was $75,000 per annum.
Company Performance
As an exploration company the Board does not consider the operating loss after tax as one of the performance indicators
when implementing an incentive based remuneration policy. The Board considers that identification and securing of new
business growth opportunities, the success of exploration and, if appropriate, feasibility activities, safety and
environmental performance, the securing of funding arrangements and responsible management of cash resources and
the Company’s other assets are more appropriate performance indicators to assess the performance of management at
this stage of the company’s development.
Short-term incentives
To align the remuneration of employees with the company aim of responsible management of cash resources, there were
no short-term incentives paid or proposed to be paid for the year ended 30 June 2021. The company’s approach with
regard to the use of short-term cash incentives will be assessed by the Remuneration & Nomination Committee on an
ongoing basis as the company evolves.
Long-term incentives
To align the Board and management with shareholder’s interests and with market practices of peer companies and to
provide a competitive total remuneration package, the Board introduced a long-term incentive (“LTI”) plan to motivate
and reward Executives and Non-Executive Directors. The LTI is provided as options over ordinary shares of the Company
under the rules of the Employee Share Option Plan and the Directors Option Plan as approved in September 2015.
Company performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Company performance due
to the nature of the Company’s operations being a non-producing resources exploration company.
The table below shows the losses and earnings per share of the Company for the last five financial years.
Net loss
Share price at year end
(cents)
Loss per share (cents)
2021
(7,234,407)
13
2020
(7,475,048)
9.3
2019
(8,288,971)
12
2018
(1,673,903)
16
2017
(10,020,602)
16
(2.34)
(3.02)
(3.34)
(0.68)
(4.12)
1616
Annual Report 2021
Remuneration Report (audited) (cont)
2. DETAILS OF REMUNERATION
Year Ended 30 June 2021
The amount of remuneration paid and entitlements owed to KMP is set out below.
2021
Directors
M Bennett (1)
A Neuling
J Dowling
Other Key Management
Personnel
M Keane (2)
CASH REMUNERATION AND ENTITLEMENTS
Cash remuneration
Salary
$
Post–employment
benefits
(superannuation)
$
Movement in
annual leave
entitlement owing
$
Total cash
payments and
entitlements
$
276,249
130,117
75,000
184,513
665,879
20,902
12,361
7,125
15,076
55,464
9,998
271
-
307,149
142,749
82,125
8,808
208,397
19,077
740,420
(1) As a result of Covid 19 travel restrictions and in order to minimise costs to the Company, Dr Bennett took 1 day a
week of unpaid leave from 1 January 2021 to 31 March 2021 and 2 days a week of unpaid leave from 1 April 2021 to 30
June 2021 resulting a reduction of cash remuneration received in comparison to prior year. His remuneration package is
still as per the summary of his service agreement provided below.
(2) Commenced 4 November 2020
Year Ended 30 June 2020
CASH REMUNERATION AND ENTITLEMENTS
Cash remuneration
2020
Salary
Directors
M Bennett
A Neuling
J Dowling
G Egerton-Warburton (2)
Other Key Management
Personnel
S Sain (3)
$
292,500
106,383
67,500
34,062
37,764
538,209
Post–employment
benefits
(superannuation)
$
Movement in annual
leave entitlement
owing (1)
$
Total cash
payments and
entitlements
$
20,383
10,106
6,412
3,206
3,326
43,433
(3,751)
(835)
-
-
309,132
115,655
73,912
37,268
(2,365)
38,725
(6,951)
574,692
1717
Annual Report 2021
Remuneration Report (audited) (cont)
2. DETAILS OF REMUNERATION (CONTINUED)
1) This column has been updated to show the movement in annual leave entitlement owing in the year rather than
the annual leave entitlement owing at the end of the year.
2) Mr Egerton- Warburton’s salary is for the period 1 July 2019 to 3 April 2020 when Mr Egerton- Warburton resigned
as Non-Executive Director.
3) Ms Sain’s salary is for the period 1 July 2019 to 24 December 2019 when Ms Sain resigned as Chief Financial Officer.
All directors and employees had a 40% salary reduction from 1 April 2020 to 30 June 2020.
Directors
M Bennett
A Neuling
J Dowling
Other Key Management
Personnel
M Keane
Directors
M Bennett
A Neuling
J Dowling
G Egerton-Warburton
Other Key Management
Personnel
S Sain
2021 TOTAL REMUNERATION
Total cash
payments and
entitlements
$
Options
issued
Total
$
$
LTI
% of
remuneration
307,149
142,749
82,125
287,280
215,460
143,640
594,429
358,209
225,765
208,397
740,420
208,599
854,979
416,996
1,595,399
48%
60%
64%
50%
2020 TOTAL REMUNERATION
Total cash
payments and
entitlements
$
Options
issued
Total
$
$
LTI
% of
remuneration
309,132
115,655
73,912
37,268
259,348
194,511
129,674
86,449
568,480
310,166
203,586
123,717
46%
63%
64%
70%
38,725
-
38,725
-
574,692
669,982
1,244,674
There were no non-monetary benefits other than options paid to the Directors or KMP for the year ended 30 June 2021.
1818
Annual Report 2021
Remuneration Report (audited) (cont)
3. SERVICE AGREEMENTS
For the year ended 30 June 2021, the following service agreements were in place with the Directors and KMP of S2:
On 4 September 2015, an Executive Services Agreement was entered into between the Company and Managing Director
and Chief Executive Officer Mark Bennett. Under the terms of the Agreement:
• Dr Bennett was paid a remuneration package of $325,000 per annum base salary plus statutory superannuation.
• Under the general termination of employment provision, the Company may terminate the Agreement by giving
Dr Bennett twelve months’ notice or payment in lieu of notice.
• Under the general termination of employment provision, Dr Bennett may terminate the Agreement by giving
•
the Company three months’ notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause, the Executive is not entitled to any payment.
On 3 April 2020, a Change of Role letter was entered into between the Company and Mark Bennett which changed his
role from Managing Director and Chief Executive Officer to Executive Chairman. All other terms remained in line with his
Executive Services Agreement.
On 10 September 2015, a letter of appointment was entered into between the Company and Non-Executive Chairman
Jeff Dowling. Under the terms of the Agreement:
• Mr Dowling was paid a remuneration package of $75,000 per annum base salary plus statutory superannuation.
• Under the general termination of employment provision, either party may terminate the Agreement by the
giving of written notice.
On 3 April 2020, a Change of Role Letter was entered into between the Company and Jeff Dowling which changed his role
from Non-Executive Chairman to Non-Executive Director. All other terms remained in line with his letter of appointment.
On 4 September 2015, an Executive Services Agreement was entered into between the Company and Executive Director
Anna Neuling. Under the terms of the Agreement as Executive Director:
• Ms Neuling was appointed as Executive Director, including the role of Company Secretary.
• Ms Neuling was paid a remuneration package of $120,000 per annum comprising a base salary plus statutory
superannuation for work on a part time basis (based on $300,000 full time equivalent).
• Under the general termination of employment provision, the Company may terminate the Agreement by giving
Ms Neuling twelve months’ notice or payment in lieu of notice.
• Under the general termination of employment provision, Ms Neuling may terminate the Agreement by giving
•
the Company three months’ notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause, the Executive is not entitled to any payment.
1919
Annual Report 2021
Remuneration Report (audited) (cont)
3. SERVICE AGREEMENTS (CONTINUED)
On 4 November 2020, the Company entered into an employment contract with Matthew Keane. Under the terms of the
Agreement:
Mr Keane was appointed as CEO and paid a remuneration package of $280,000 per annum base salary plus statutory
superannuation for work on a full time basis.
• Under the general termination of employment provision, the Company may terminate the Agreement by giving
Mr Keane twelve months’ notice or payment in lieu of notice.
• Under the general termination of employment provision, Mr Keane may terminate the Agreement by giving the
•
Company three months’ notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause Mr Keane is not entitled to any payment.
4. SHARE-BASED COMPENSATION
Option holdings
The numbers of options in the Company held during the year ended by each KMP of S2, including their related parties,
are set out below:
2021
Director
M Bennett
A Neuling
J Dowling
Balance at
the start of
the year
13,000,000
7,250,000
5,250,000
Granted
during the
year
Expired
during the
year
Other
changes
Balance at
the year
ended
2,000,000
1,500,000
1,000,000
3,000,000
1,500,000
1,000,000
Other Key
Management Personnel
M Keane
25,500,000
4,500,000
5,500,000
-
-
2,000,000
2,000,000
-
-
-
-
-
-
-
-
12,000,000
7,250,000
5,250,000
24,500,000
2,000,000
2,000,000
As at 30 June 2021, the number of options that have vested and exercisable were 35,250,000. All director options are
vested and exercisable.
2020
Annual Report 2021
Remuneration Report (audited) (cont)
4. SHARE BASED COMPENSATION (CONTINUED)
The option terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and
other KMP in the year ended or future reporting years are as follows:
Options issued
Series
Grant Date
Expiry date
Exercise
price
$
Fair value per
option
$
Vested
%
Directors Option Plan
Employee Share Option
Plan
8
12
16
15
17 Oct 2017
16 Oct 2021
0.23
12 Nov 2019 11 Nov 2023
0.30
17 Nov 2020
16 Nov 2024
0.38
0.08
0.04
0.14
100%
100%
100%
05 Oct 2020
4 Oct 2024
0.39
0.14
*
*Options vest a year after grant date.
Options issued in the year were priced using a Black-Scholes option pricing model using the inputs below:
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Fair Value
Interest rate
Series 15
0.28
0.39
80%
4 years
0.00%
0.14
0.29%
Series 16
0.28
0.38
80%
4 years
0.00%
0.14
0.29%
Shareholdings
The numbers of shares in the Company held during the year ended by each KMP of S2, including their related parties, are
set out below:
2021
Directors
M Bennett
A Neuling
J Dowling
Other Key Management
Personnel
M Keane
Balance at the
start of the year
Other changes during
the year
5,035,868
675,000
700,000
-
6,410,868
-
-
-
-
-
There were no shares granted to KMP’s during the reporting year as remuneration.
Balance for
the year
ended
5,035,868
675,000
700,000
-
6,410,868
2121
Annual Report 2021
Remuneration Report (audited) (cont)
Use of renumeration consultants
No remuneration consultants were engaged or used for the Group during the year ended 30 June 2021.
Voting and comments made at the Company's Annual General Meeting
At the 2020 Annual General Meeting, the resolution to adopt the Remuneration Report for the year ended 30 June 2020
was passed on a poll with 97.25% of votes cast on the poll voting “For” the resolution to adopt the Remuneration Report.
The Company did not receive any specific feedback at the Annual General Meeting regarding its remuneration practices.
Share trading policy
The trading of shares issued to participants under any of the Group’s employee equity plans is subject to, and conditional
upon, compliance with the Group’s employee share trading policy as per the Group’s Corporate Governance Policy.
Directors and executives are prohibited from entering into any hedging arrangements over unvested options under the
Group’s employee option plan. The Group would consider a breach of this policy as gross misconduct which may lead to
disciplinary action and potentially dismissal.
This concludes the Remuneration Report, which has been audited.
2222
Annual Report 2021
Directors Report (cont)
Proceedings on behalf of the Group
No person had applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those proceedings. No proceedings had been brought or intervened
in on behalf of the Group with leave of the court under section 237 of the Corporations Act 2001.
Audit Services
During the year ended 30 June 2021, $40,905 was paid or is payable for audit services provided by the auditors. There
were no non-audit services performed during the financial year.
Auditor’s Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 64.
Corporate Governance
The Directors support and adhere to the principles of corporate governance, recognising the need for the highest
standard of corporate behaviour and accountability.
Signed in accordance with a resolution of the Board of Directors.
Mark Bennett
Executive Chairman
Melbourne
23 September 2021
2323
Annual Report 2021
Annual Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2021
Other income
Corporate salaries and wages
Consulting and legal fees
Share and company registry
Rent, insurance and variable outgoings
Business development
Travel expenditure
Depreciation expense
Share-based payments
Gain on disposal of subsidiary
Foreign exchange (losses)/gains and bank charges
Finance cost of Lease Liability
Exploration expenditure expensed as incurred
Exploration impairment expense
Share of associate’s loss
Fair value adjustment for reclassification of investment
Associate impairment reversal (expense)
Loss before income tax
Income tax benefit/(expense)
Loss after income tax for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Changes in the fair value of Investments at fair value through other
comprehensive income
Items that may be classified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive income/(loss) for the year attributable to the
members of S2 Resources Ltd
Notes
13
8
8
8
5
7
30 June
2021
$
56,314
(508,227)
(188,163)
(159,726)
(125,408)
(356,763)
(44,217)
(151,849)
(1,155,918)
46,855
(315,243)
(10,737)
(5,294,837)
-
(159,042)
1,132,554
-
(7,234,407)
-
30 June
2020
$
74,570
(294,411)
(231,941)
(127,670)
(143,389)
(689,267)
(224,125)
(140,999)
(806,194)
-
61,970
(12,214)
(3,964,516)
(68,172)
(1,494,960)
-
586,270
(7,475,048)
-
(7,234,407)
(7,475,048)
3,536,932
(33,229)
167,982
50,285
(3,529,493)
(7,457,992)
Loss per share for loss attributable to the members of S2 Resources
Ltd
Basic loss per share (cents)
17
(2.34)
(3.02)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
2424
Consolidated Statement of Financial Position
as at 30 June 2021
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial assets held at fair value through other comprehensive income
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investments in associates
Exploration and evaluation
Property, plant and equipment
Right-of-Use Assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease Liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Lease Liabilities
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
Annual Report 2021
Notes
6
6
7
8
9
10
30 June
2021
$
7,316,846
322,790
101,161
6,246,071
30 June
2020
$
6,419,891
323,107
177,555
-
13,986,868
6,920,553
-
2,366,972
150,538
156,892
1,735,627
966,977
107,234
251,196
2,674,402
3,061,034
16,661,270
9,981,587
756,903
74,715
92,188
923,806
102,205
102,205
1,026,011
286,131
86,394
54,803
427,328
177,572
177,572
604,900
15,635,259
9,376,687
11
12
61,184,670
6,896,328
(52,445,739)
52,552,523
4,345,801
(47,521,637)
15,635,259
9,376,687
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
2525
Consolidated Statement of Changes in Equity
for the year ended 30 June 2021
Attributable to equity holders of the Group
in $ dollars
Share
capital
Other
Reserve
Share
based
payment
Reserves
Foreign
Currency
Translation
Reserve
Fair Value Other
Comprehensive
Income
(“FVOCI”)
Reserve
Accumulated
losses
Total
Annual Report 2021
52,552,523
4,016,601 144,517
184,683
-
(47,521,637)
(7,234,407)
167,982
167,982
3,536,932
3,536,932
(7,234,407)
9,376,687
(7,234,407)
3,704,914
(3,529,493)
Balance at 1 July 2020
Loss for the year
Other comprehensive income
Total comprehensive loss for the period
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Issue of share capital
Capital raising costs
Share-based payment transactions
Transfer of lapsed and expired options value to
accumulated losses
Total contributions by and distributions to owners
-
-
9,147,000
(514,853)
-
-
-
1,155,918
-
8,632,147
(2,310,305)
(1,154,387)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,147,000
(514,853)
1,155,918
-
167,982
-
3,536,932
2,310,305
(4,924,102)
-
6,258,572
Balance at 30 June 2021
61,184,670
2,862,214 144,517
352,665
3,536,932
(52,445,739)
15,635,259
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
2626
Annual Report 2021
Consolidated Statement of Changes in Equity
for the year ended 30 June 2020
Attributable to equity holders of the Group
in $ dollars
Share
capital
Other
Reserve
Share
based
payment
Reserves
Foreign
Currency
Translation
Reserve
Fair Value Other
Comprehensive
Income
(“FVOCI”)
Reserve
Accumulated
losses
Total
Balance at 1 July 2019
Total comprehensive income for the year
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Issue of share capital
Capital raising costs
Share-based payment transactions
Share options exercised
Transfer of lapsed and expired options value to
accumulated losses
Transfer cumulative gain on sale of investments to
accumulated losses
Total contributions by and distributions to owners
52,552,523
-
7,905,600 144,517
-
-
134,398
50,285
354,998
(33,229)
(45,063,551)
(7,469,776)
16,028,485
(7,457,992)
-
-
-
-
-
-
-
-
-
806,194
-
(4,695,193)
-
(3,888,999)
-
-
-
-
-
-
-
-
-
-
-
-
-
50,285
-
-
-
-
-
(321,769)
(354,998)
-
-
-
-
-
-
806,194
-
4,695,193
321,769
-
-
(2,458,086)
(6,651,798)
Balance at 30 June 2020
52,552,523
4,016,601 144,517
184,683
-
(47,521,637)
9,376,687
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
2727
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Cash flows from operating activities
Cash paid to suppliers and employees for corporate activities
Cash paid to suppliers and employees for exploration activities
Interest received
Interest and other finance costs paid
Income taxes refund/(paid)
Net cash used in operating activities
Cash flows from investing activities
Payment of property, plant and equipment
Investment in Todd River Resources Ltd
Net loss from sale of subsidiary
Net proceeds from disposal of investments
Net cash (used in)/derived from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Repayment of Borrowings
Receipts/(Payments) for cash backed guarantees
Cash from/ (used in) financing activities
Annual Report 2021
Notes
30 June
2021
$
30 June
2020
$
(1,352,586)
(1,720,917)
(4,503,659)
(4,227,264)
45,070
(15,374)
-
94,274
(19,160)
186,048
16
(5,826,549)
(5,687,019)
(103,939)
(33,824)
8
-
(1,403,063)
(2,044)
-
-
1,837,167
(105,983)
400,280
7,747,000
(514,853)
(85,742)
(6,700)
7,139,705
-
-
(64,080)
43,799
(20,281)
Net increase in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
1,207,173
(5,307,020)
(310,218)
81,848
6,419,891
11,645,063
6
7,316,846
6,419,891
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2828
Annual Report 2021
Notes to the Consolidated Financial Statements for the year ended 30 June 2021
S2 Resources Ltd (“Company” or “S2”) is a company incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange. The consolidated financial statements of the Group as at and for the year ended to 30
June 2021 comprise the Company and its subsidiaries (together referred to as the “Group” or “consolidated entity” and
individually as a “Group entity”).
The separate financial statements of the parent entity, S2 Resources Ltd, have not been presented within this financial
report. Summary parent information has been included in note 21.
The financial statements were authorised for issue on 23 September 2021 by the Directors of the Company.
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. The financial
statements and notes also comply with International Financial Reporting Standards as issued by the International
Accounting Standard Board (IASB). Material accounting policies adopted in the preparation of this financial report are
presented below. They have been consistently applied unless otherwise stated.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The consolidated
financial statements have been prepared on a going concern basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, certain classes of property, plant and
equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 1(a)(iii).
(i)
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
(ii)
Adoption of new and revised Accounting Standards
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB
that are mandatory for the current reporting year. The adoption of these Accounting Standards and Interpretations did
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
(ii)
Basis of preparation (continued)
Adoption of new and revised Accounting Standards (continued)
not have any material impact on the financial performance or position of the consolidated entity.
(iii) Use of estimates and judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events, that it
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year
are discussed below.
Impact of Coronavirus (COVID-19) pandemic.
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the company based on known information. Other than as addressed in specific notes, there does not currently
appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to
events or conditions which may impact the company unfavourably as at the reporting date or subsequently as a result of
the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the
terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the
next annual reporting period but may impact profit or loss and equity. Refer to note 13.
Exploration and evaluation costs
Exploration and evaluation costs are capitalised in an identifiable area of interest upon announcement of a JORC 2012
compliant resource and costs will be amortised in proportion to the depletion of the mineral resources at the
commencement of production. Key judgements are applied in considering costs to be capitalised which includes
determining expenditures directly related to these activities and allocating overheads between those that are expensed
and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. Factors that could impact the future commercial production at the
mine include the level of reserves and resources, future technology changes, which could impact the cost of mining,
future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be
recoverable in the future, they will be written off in the period in which this determination is made.
Classification of investment in Todd River Resources as Investment
The Group have reclassified the investment in Todd River Resources (“TRT”) from being an associate to an investment in
October 2020. Since 30 June 2020, the Group has not taken part in any of the TRT capital raisings, and as a result it is
holding less than 20%.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At less than 20%, significant influence is required to account for an investment as an investment in an associate. The
Group does not consider that it has significant influence over TRT due to the other substantial shareholders in TRT and
the composition of the TRT Board.
The date at which significant influence was judged to be no longer held was 26 October 2020.
(iv)
Principles of consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by S2 at the end
of the reporting year. A controlled entity is any entity over which S2 has the ability and right to govern the financial and
operating policies so as to obtain benefits from the entity’s activities.
Where controlled entities have entered or left the Group during the year, the financial performance of those entities is
included only for the period of the year that they were controlled. A list of controlled entities is contained in note 22 to
the financial statements.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the
consolidated Group have been eliminated in full on consolidation.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported
separately within the equity section of the Consolidated Statement of Financial Position and the Consolidated Statement
of Profit or Loss and Other Comprehensive Income. The non-controlling interests in the net assets comprise their
interests at the date of the original business combination and their share of changes in equity since that date.
(b)
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated financial statements
are presented in the Australian dollar ($), which is the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally
recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within
finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis
within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchanges rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. For example, translation difference on non-monetary assets and liabilities
such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss
and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are
recognised in other comprehensive income.
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NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency
as follows:
•
•
•
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position,
income and expenses for each statement of profit or loss and statement of comprehensive income are translated
at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions), and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate.
(c)
Revenue Recognition
Interest income is recognised on a time proportion basis using the effective interest method.
(d)
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for
each jurisdiction.
The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure
the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
(e)
Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being
the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value.
Any excess of the asset’s carrying value over its recoverable amount is expensed to the Consolidated Statement of Profit
or Loss and Other Comprehensive Income. Where it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.
(f)
Cash and Cash Equivalents
For the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
(g)
Trade and Other Receivables
A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of receivables. The amount of the provision is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is
immaterial. The amount of any provision is recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
(h)
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(i)
Investments in Associates
Principles of consolidation and equity accounting
Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally
the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for
by using the equity method of accounting after being initially recognised at cost.
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or
receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or excess its interest in the entity, including
any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment each reporting period.
Equity accounted investments – changes in ownership interests
When the group ceases to equity account for an investment because of a loss of significant influence, any retained
interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This
fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a
financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity
are accounted for as if the group had directly disposed of the related assets or liabilities.
(j)
Exploration and Evaluation
Exploration and evaluation assets acquired
Exploration and evaluation assets comprise of acquisition of mineral rights (such as joint ventures) and fair value (at
acquisition date) of exploration and expenditure assets from other entities. As the assets are not yet ready for use they
are not depreciated. Exploration and evaluation assets are assessed for impairment if:
•
•
•
•
•
the period for which the Group has the right to explore in the specific area has expired during the period or will
expire in the near future, and is not expected to be renewed; or
substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is
neither budgeted nor planned; or
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in
the specific area; or
sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development
or by sale; or
other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Once the technical feasibility and commercial viability of the assets are demonstrable, exploration and evaluation
assets are first tested for impairment and then reclassified to mine properties as development assets.
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is expensed in respect of each identifiable area of interest until such a
time where a JORC 2012 compliant resource is announced in relation to the identifiable area of interest. These costs are
only carried forward to the extent that they are expected to be recouped through the successful development of the area
or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then
any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development.
Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment annually in
accordance with AASB 6. Where impairment indicators exist, recoverable amounts of these assets will be estimated
based on discounted cash flows from their associated cash generating units.
The Statement of Profit or Loss and Other Comprehensive Income will recognise expenses arising from excess of the
carrying values of exploration and evaluation assets over the recoverable amounts of these assets.
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value,
accumulated costs carried forward are written off in the period in which that assessment is made. Each area of interest
is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not
be recoverable in the future.
(k)
Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working
condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they
are located and capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in
profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained
earnings.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be
measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for
cost, less its residual value.
Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each part of an
item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future
economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term or their useful
lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The depreciation rates used for each class of asset are:
buildings
fixtures and fittings
leasehold improvements
plant and equipment
•
•
•
•
• motor vehicles
16.67%
22.5% - 40%
20%
22.5% - 40%
20%
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
(l)
Leases
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the group under residual value guarantees
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that
the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-
use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted
•
to reflect changes in financing conditions since third party financing was received
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by S2
Resources Limited, which does not have recent third party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs, and
restoration costs.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-
line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life. While the group revalues its land and buildings that are presented within property, plant
and equipment, it has chosen not to do so for the right-of-use buildings held by the group.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised
on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Low-value assets comprise IT equipment and small items of office furniture.
(m)
Interest in Joint Ventures
The Group accounts for 100% of the assets, liabilities and expenses of joint venture activity. These have been
incorporated in the financial statements.
(n)
Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be
reimbursed the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the Statement of Profit or Loss and Other Comprehensive Income
net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from
the passage of time is recognised in finance costs.
(o)
Employee Benefits
(i) Equity Settled Compensation
The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity
to which employees become entitled is measured at grant date and recognised as an expense over the vesting period,
with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The
fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions.
The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount
recognised for services received as consideration for the equity instruments granted shall be based on the number of
equity instruments that eventually vest.
(ii) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to
be settled within 12 months after the end of the period in which the employees render the related service are recognised
in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be
paid when the liabilities are settled.
The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(iii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of
the period in which the employees render the related service is recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services provided by employees up
to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the end of the reporting period on national government bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the Employee Option Plan.
The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the
options granted, which includes any market performance conditions and the impact of any non-vesting conditions but
excludes the impact of any service and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The
total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any,
in profit or loss, with a corresponding adjustment to equity.
When the options are exercised, the Company transfers the appropriate amount of shares to the employee. The proceeds
received net of any directly attributable transaction costs are credited directly to equity.
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when
it is demonstrably committed to either terminating the employment of current employees according to a detailed formal
plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage
voluntary redundancy.
Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
(p)
Issued Capital
Ordinary shares are classified as equity. Costs associated with capital raisings (exclusive of GST) directly attributable to
the issue of new shares or options are shown in equity as a deduction from the proceeds. If the entity reacquires its own
equity instruments, e.g. as the result of a share buy-back, those instruments are deducted from equity and the associated
shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly
attributable costs associated with capital raisings (net of income taxes) is recognised directly in equity.
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit / (loss) attributable to equity holders of the Group, excluding
during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
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Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
(q)
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
(r)
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match
them with the costs that they are intended to compensate. This includes Job Keeper received due to COVID-19 during
the year which has been net off with the associated salaries.
(s)
Investments and other financial assets
Investments and other financial assets are recognised and derecognised on settlement date where the purchase or sale
of an investment is under a contract whose terms require delivery of the investment within the time-frame established
by the market concerned. They are initially measured at fair value, net of transaction costs, except for those financial
assets classified as fair value through profit or loss, which are initially measured at fair value.
The Group classifies its financial assets in the following measurement categories:
•
•
Those to be measured subsequently at fair value (either through other comprehensive income (OCI), or
through profit or loss); or
Those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of
the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, the classification will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
(i) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded
derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal
and interest.
3939
Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Group subsequently measures all equity investments at fair value. The fair values of quoted investments are based
on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes
fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions,
involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and
pricing models to reflect the issuer’s specific circumstances.
Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is
no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to
receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported
separately from other changes in fair value.
(ii) Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial
assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted by AASB 9, which
requires expected lifetime losses to be recognised from initial recognition of the receivables. The expected credit losses
on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience.
(t)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for year ended 30 June 2021. The consolidated
entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to
the consolidated entity, are set out below.
Amendment to Conceptual Framework for Financial Reporting
The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria
for assets and liabilities and clarifies some important concepts. It is arranged in eight chapters, as follows:
•
•
•
•
•
•
•
•
Chapter 1 – The objective of financial reporting
Chapter 2 – Qualitative characteristics of useful financial information
Chapter 3 – Financial statements and the reporting entity
Chapter 4 – The elements of financial statements
Chapter 5 – Recognition and derecognition
Chapter 6 – Measurement
Chapter 7 – Presentation and disclosure
Chapter 8 – Concepts of capital and capital maintenance
AASB 2019-1 has also been issued, which sets out the amendments to Australian Accounting Standards, Interpretations
and other pronouncements in order to update references to the revised Conceptual Framework. The changes to the
Conceptual Framework may affect the application of accounting standards in situations where no standard applies to a
particular transaction or event. In addition, relief has been provided in applying AASB 3 and developing accounting
policies for regulatory account balances using AASB 108, such that entities must continue to apply the definitions of an
asset and a liability (and supporting concepts) in the Framework for the Preparation and Presentation of Financial
Statements (July 2004), and not the definitions in the revised Conceptual Framework.
The amendments apply prospectively on or after 1 January 2020, with no material effect to the Group.
4040
Annual Report 2021
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Amendments to AASB 3: Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations to help
entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum
requirements for a business, remove the assessment of whether market participants are capable of replacing any missing
elements, add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a
business and of outputs, and introduce an optional fair value concentration test. New illustrative examples were provided
along with the amendments.
Since the amendments apply prospectively to transactions or other events that occur on or after the date of first
application, the Group will not be affected by these amendments on the date of transition.
Amendments to AASB 101: Definition of Material
This Standard amends AASB 101 Presentation of Financial Statements and AAS 108 Accounting Policies, Changes in
Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of
the definition. The amendments clarify that materiality will depend on the nature or magnitude of information. An entity
will need to assess whether the information, either individually or in combination with other information, is material in
the context of the financial statements. A misstatement of information is material if it could reasonably be expected to
influence decisions made by the primary users.
The amendments apply prospectively on or after 1 January 2020, with no material effect to the Group.
Amendments to IAS 1: Presentation of Financial Statements
This Standard aims to improve presentation in financial statements by clarifying the criteria for the classification of a
liability as either current or non-current.
This amendment is to:
•
•
Clarify that the classification of a liability as either current or non-current is based on the entity’s rights at the
end of the reporting period
Clarify the link between the settlement of the liability and the outflow of resources from the entity
The amendments apply prospectively on or after 1 January 2022. The client has not yet determined the impact of this
amendment.
4141
Annual Report 2021
NOTE 2. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, lease liabilities and accounts receivable and
payable.
The Group's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk and price
risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. Risk management is carried out by the Board of Directors under policies approved by the Board. The Board
identifies and evaluates financial risks and provides written principles for overall risk management.
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk, and
liquidity risk, credit risk and price risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s Australian Dollar current and non-current debt obligations with floating interest rates. The Group is also
exposed to interest rate risk on its cash and short term deposits.
2021
Floating
interest rate
Fixed interest
rate maturing in
1 year or less
$
$
4,312,273
-
4,312,273
-
195,000
195,000
Fixed interest
rate maturing
between 1 and
2 years
$
Non-interest
bearing
$
Total Weighted
average
effective
interest rate
%
$
-
-
-
3,004,573
127,790
3,132,363
7,316,846
322,790
7,639,636
0.34
0.61
-
-
-
-
-
-
74,715
-
74,715
-
-
102,205
102,205
756,903
-
756,903
74,715
-
756,903
102,205
933,823
Financial Instruments
(i) Financial assets
Available cash on hand
Restricted cash
Total financial assets
(ii) Financial liabilities
Trade and other payables
Lease liabilities – current
Lease
liabilities – non
current
Total financial liabilities
4242
Annual Report 2021
Fixed interest
rate maturing
between 1 and
2 years
$
Non-interest
bearing
$
Total Weighted
average
effective
interest rate
%
$
-
-
-
3,594,387
128,107
3,722,494
6,419,891
323,107
6,742,998
0.98%
1.05%
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
2020
Floating
interest rate
Fixed interest
rate maturing in
1 year or less
$
$
325,504
-
325,504
2,500,000
195,000
2,695,000
Financial Instruments
(i) Financial assets
Available cash on hand
Restricted cash
Total financial assets
(ii) Financial liabilities
Trade and other payables
Lease liabilities – current
liabilities – non
Lease
current
Total financial liabilities
Net Fair Values
-
-
-
-
-
-
-
-
-
286,131
286,131
86,394
177,572
-
-
86,394
177,572
263,966
286,131
550,097
The net fair value of financial assets and liabilities approximate carrying values due to their short-term nature.
Sensitivity Analysis – Interest Rate Risk
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at the reporting date. This
sensitivity analysis demonstrates the effect on the current period results and equity which could result from a change in
interest rates.
Change in loss:
Increase by 1%
Decrease by 1%
Change in equity:
Increase by 1%
Decrease by 1%
30 June
2021
$
(43,123)
43,123
30 June
2020
$
(3,255)
3,255
(43,123)
43,123
(3,255)
3,255
4343
Annual Report 2021
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Foreign exchange risk
Exposure
The Group holds foreign currency cash in Euro and US Dollar to operate in Finland and the United States. It also has
foreign currency receivables and payables in these countries which are exposed to foreign currency fluctuations. The
Group manages its foreign exchange risk and exposure by purchasing foreign currency for the following budget year and
reviews forecasted exchange rates by various banks on a monthly basis. The Group’s exposure to foreign currency risk
at the end of the reporting year, expressed in Australian dollar, was as follows:
Year ended 30 June 2021
Cash on hand
Restricted cash
Other receivables
Trade and other payables
Year ended 30 June 2020
Cash on hand
Restricted cash
Other receivables
Trade and other payables
EUR
$
2,860,296
66,136
15,317
(140,905)
2,800,844
EUR
$
3,330,495
68,458
24,870
(116,910)
3,306,913
USD
$
144,081
49,188
-
(3,990)
189,279
USD
$
240,767
53,883
-
(729)
293,921
SEK
$
-
-
-
-
SEK
$
23,104
-
483
3
23,590
Total
$
3,004,377
115,324
15,317
(144,895)
2,990,123
Total
$
3,594,366
122,341
25,353
(117,635)
3,624,424
Amounts recognised in profit or loss and other comprehensive income
During the year ended, the following foreign-exchange related amounts were recognised in profit or loss and other
comprehensive income:
Amounts recognised in profit or loss
Net foreign exchange gain/(loss) included in other income/other
expenses
Total net foreign exchange (losses) recognised in loss before income tax
for the year
2021
$
2020
$
310,218
62,110
310,218
62,110
Net gains/(losses) recognised in other comprehensive income
Translation of foreign operations
167,982
50,285
4444
Annual Report 2021
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in EUR/$exchange rates. The sensitivity of profit
or loss to changes in the exchange rates arises mainly from Euro and US dollar denominated financial instruments and
the impact on other components of equity arises from translation of foreign operations.
Impact on
post tax loss
$
(266,968)
266,968
Impact on
other
components
of equity
$
26,259
(26,259)
(601)
601
(4,908)
4908
EUR/$ exchange rate – increase 10%*
EUR/$ exchange rate – decrease (10%)*
USD/$ exchange rate – increase 10%*
USD/$ exchange rate – decrease (10%)*
*Holding all other variables constant
Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities. Management monitors rolling forecasts of the Group’s cash reserves on the
basis of expected development, exploration and corporate cash flows. This ensures that the Group complies with prudent
liquidity risk management by maintaining sufficient cash and marketable securities and the availability of funding through
the equity markets to meet obligations when due.
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and other receivables.
The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal
to the carrying amount of these instruments. The cash and cash equivalents are held with bank and financial institution
counterparties, which are rated AA- based on Standard and Poor’s rating agency.
The credit risk on other receivables is limited as it is comprised of prepayments and GST recoverable from the Australian
Taxation Office and tax authorities in Scandinavia. The credit risk on liquid funds is limited because the counter party is a
bank with high credit rating. There are no receivable balances which are past due or impaired.
Price risk
Exposure
The Group’s exposure to equity securities price risk arises from investments held by the Group and classified in the
statement of financial position as investments (see note 8). The Group’s investment is publicly traded on the Australian
Stock Exchange (“ASX”).
The Group is not currently exposed to commodity price risk.
4545
Annual Report 2021
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Sensitivity
The table below summarises the impact of increases/decreases of the investment’s share price on the Group’s equity
and post-tax loss for the year. The analysis is based on the assumption that the investment’s share price had increased
or decreased by 10% with all other variables held constant, and that the Group’s equity instrument moved in line with
the indexes.
ASX index – increase 10%
ASX index – decrease (10%)
Impact on
post tax loss
Impact on
post tax loss
2021
$
-
-
2020
$
-
-
Impact on
other
components
of equity
2021
$
(624,607)
624,607
Impact on
other
components
of equity
2020
$
-
-
There would be no impact on post tax loss as the Group does not recognise any financial assets at fair value through
profit or loss. Other components of equity would increase/decrease as a result of gains/losses on equity securities
classified as investments. As the fair value of investments would still be above cost, no impairment loss would be
recognised in profit or loss as a result of the decrease in the index.
Amounts recognised in statement of profit or loss and other comprehensive income
The amounts recognised in profit or loss and other comprehensive income in relation to the investments held by the
Group are disclosed in note 8.
4646
Annual Report 2021
NOTE 3. SEGMENT INFORMATION
For management purposes, the Group has four reportable segments as follows:
•
Finland exploration activities, which includes exploration and evaluation of mineral tenements in Central
Lapland.
• Australia exploration activities, which includes exploration and evaluation of mineral tenements in Western
Australia and New South Wales.
• US exploration activities, which includes exploration and evaluation of mineral tenements in Nevada. In March
2020, the Ecru project was withdrawn from and therefore there are no longer any exploration activities in the
US, any costs incurred relate to the storage of exploration equipment.
• Unallocated, which includes all other expenses that cannot be directly attributed to any of the segments above.
Segment information that is evaluated by the Chief Operating Decision Marker (as defined by AASB 8 Operating
Segments) is prepared in conformity with the accounting policies adopted for preparing the financial statements of the
Group.
SEGMENT RESULTS
Statement of profit or loss for
the year ended 30 June 2021
Other income
Corporate expenses
Business Development
Travel
Depreciation expense
Share-based payments
Other gain/(losses) - net
Finance Cost of Right of Use
asset
Exploration expenditure
expensed as incurred
Gain on disposal of subsidiary
Share of associate's loss
Fair value adjustment for
reclassification of investment
Loss before income tax
Income tax expense
Loss after income tax for the year
Finland
exploration
activities
-
-
-
-
-
-
-
Australia
exploration
activities
-
-
-
-
-
-
-
Unallocated
Total
56,314
(981,524)
(356,763)
(44,217)
(151,849)
(1,155,918)
(315,243)
56,314
(981,524)
(356,763)
(44,217)
(151,849)
(1,155,918)
(315,243)
-
-
(10,737)
(10,737)
(2,269,676)
(3,019,153)
-
-
(2,269,676)
-
(2,269,676)
(3,019,153)
-
(3,019,153)
(6,008)
46,855
(159,042)
1,132,554
(1,945,578)
-
(1,945,578)
(5,294,837)
46,855
(159,042)
1,132,554
(7,234,407)
-
(7,234,407)
4747
Annual Report 2021
NOTE 3. SEGMENT INFORMATION (CONTINUED)
Statement of profit or loss
for the year ended 30 June
2020
$
Other income
Corporate expenses
Business Development
Travel
Depreciation expense
Share-based payments
Other gain/(losses) - net
Finance Cost of Right of Use
asset
Exploration expenditure
expensed as incurred
Exploration impairment
expense
Share of associate's loss
Associate
expense
Loss before income tax
Income tax expense
Loss after income tax for the
year
impairment
Finland
exploration
activities
-
-
-
-
-
-
-
US
exploration
activities
-
-
-
-
-
-
-
Australia
exploration
activities
-
-
-
-
-
-
-
Unallocated
Total
74,570
(797,411)
(689,267)
(224,125)
(140,999)
(806,194)
61,970
74,570
(797,411)
(689,267)
(224,125)
(140,999)
(806,194)
61,970
-
-
-
(12,214)
(12,214)
(2,990,022)
(80,920)
(893,574)
-
(3,964,516)
-
-
(68,172)
-
-
-
-
(1,494,960)
(68,172)
(1,494,960)
-
(2,990,022)
-
-
(149,092)
-
-
(893,574)
-
(586,270)
(3,442,360)
-
(586,270)
(7,475,048)
-
(2,990,022)
(149,092)
(893,574)
(3,442,360)
(7,475,048)
SEGMENT ASSETS AND LIABILITIES
The Group’s assets are mostly attributable to the unallocated segment therefore assets attributable to exploration in
Finland and Australia is immaterial for disclosure.
NOTE 4. GROUP BENEFITS IN RELATION TO COVID
The Group was eligible for Job keeper and lodged claims in relation to their eligible employees which resulted in a benefit
of $36,000 in the year to 30 June 2021.
In the year to 30 June 2020 the Group received a benefit of $100,000 of Cash Boost of which $50,000 was received in the
year to 30 June 2021 in the period July to September 2020 upon lodgement of the Group’s BAS returns.
4848
NOTE 5. INCOME TAX
Recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Current tax
Deferred tax
Under (over) provided in prior years
Total income tax benefit/(expense) per Consolidated Statement of Profit or
Loss and Other Comprehensive Income
Numerical reconciliation between tax expense and pre-tax net loss
Net loss before tax
Income tax benefit at 26% (2020: 27.5%)
Income tax expense / (benefit) for overseas entities (at various rates)
Increase in income tax due to:
Non-deductible expenses
Current year tax losses not recognised
Decrease in income tax due to:
Movement in unrecognised temporary differences
Capital losses recognised during the year
Capital losses utilised during the year
Tax losses utilised during the year
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following:
Previous year tax losses brought forward
Tax revenue losses (1)
Annual Report 2021
30 June
2021
$
30 June
2020
$
-
-
-
-
-
-
-
-
(7,234,407)
(3,536,834)
1,446,803
(7,475,048)
(1,187,478)
(662,959)
392,063
1,618,407
540,082
1,118,423
79,561
-
-
-
121,932
(92,712)
92,712
-
6,767,436
1,683,226
8,450,662
5,581,723
1,185,713
6,767,436
(1) Net deferred tax assets have not been brought to account as it is not probable that within the immediate future tax
profits will be available against which deductible temporary differences and tax losses can be utilised.
4949
NOTE 6. CASH AND CASH EQUIVALENTS
Current
Cash at bank and in hand
Restricted cash
Annual Report 2021
30 June
2021
$
30 June
2020
$
7,316,846
322,790
7,639,636
6,419,891
323,107
6,742,998
NOTE 7. INVESTMENTS AND OTHER FINANCIAL ASSETS
(i) Classification of financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise of equity securities which are not
held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.
(ii) Equity investments at fair value through other comprehensive income
Equity investments at FVOCI comprise the following individual investments:
Investments
Balance at beginning of the year
Todd River Resources Ltd
Westgold Resources Ltd
Movement during the year
Todd River Resources Ltd transfer from investment in associate balance (note 8)
Todd River Resources change in fair value of investment
Westgold Resources Ltd disposal of shares
Balance as at 30 June
30 June
2021
$
30 June
2020
$
-
-
-
1,875,000
2,709,139
3,536,932
-
-
-
(1,875,000)
6,246,071
-
As at 23 September 2021, the share price of Todd River Resources Limited (“TRT”) has decreased to $0.062 which equates
to a value of $4,665,740.
5050
Annual Report 2021
NOTE 7: INVESTMENTS AND OTHER FINANCIAL ASSETS (CONTINUED)
(iii) Fair values of other financial assets at amortised cost
Financial assets at amortised cost include the following:
Current – Trade and other receivables
Trade and other receivables
30 June
2021
$
101,161
101,161
30 June
2020
$
177,555
177,555
Due to the short term nature of the trade and other receivables and prepayments, their carrying amount is considered
to be the same as their fair value.
NOTE 8. EQUITY INVESTMENT AND INTERESTS IN ASSOCIATES
The entity listed below have share capital consisting of ordinary shares and options of which 13.58% of the ordinary
shares are held directly by the Group.
The Groups investment in Todd River Resources Ltd (ASX:TRT) was reduced from 30.62% to 24.50% in August 2020 due
to a capital raising share issue by TRT that the Group did not participate in, to 18.48% in September 2020 due to a share
issue by TRT in relation to a project acquisition and to 15.57% in October due to a capital raising share issue by TRT that
the Group did not participate in and further to 13.58%.
The Group have reclassified the investment from being an associate to an investment in October 2020 as the Group no
longer has significant influence over TRT. See Note 1 for an explanation of the accounting judgement in relation to this
classification.
Investment in associate reconciliation
S2R's investment as at 1 July 2020 (1)
30 June 2021
$
1,735,627
Less Group’s share to October 2020
$
(159,042)
Fair value adjustment of interest retained (2)(3) $
1,132,554
Transfer to financial asset
Carrying amount
(2,709,139)
-
(1) This includes $8,703 of transaction costs.
(2) The share price as at 26 October 2020 which was the date of reclassification was 0.036 cents.
(3) This was taken through the profit and loss statement.
5151
Annual Report 2021
NOTE 8. EQUITY INVESTMENT AND INTERESTS IN ASSOCIATES (CONTINUED)
Investment in associate reconciliation
S2R's investment as at 1 July 2019
Increase in investment (1)
Less Group’s share
Less impairment reversal (expense) (2)
Carrying amount
30 June 2020
$
1,241,255
1,403,063
(1,494,961)
586,270
1,735,627
$
$
$
$
$
(1) This includes transaction costs.(2) The Group reversed the impairment as at June 2019 in the year ended 30 June 2020
on the basis of the market price of TRT shares as at 30 June 2020.
Amounts recognised in profit or loss
During the year, the following gains were recognised in the profit or loss and other comprehensive income.
30 Jun 2021
$
30 June 2020
$
Fair value adjustment for reclassification of investment
1,132,554
-
NOTE 9. EXPLORATION AND EVALUATION
Exploration costs
Movement during the year
Balance at beginning of the year
Exploration expenditure incurred during the year
Exploration expenditure incurred during the year and expensed (1)
Exploration expenditure relating to acquisitions (3)
Exploration impairment expense (2)
Foreign currency translation differences
Balance at end of the year
30 June
2021
$
30 June
2020
$
2,366,972
966,977
966,977
5,294,832
(5,294,837)
1,400,000
-
-
2,366,972
1,028,199
3,964,516
(3,964,516)
-
(68,172)
6,951
966,978
(1) During the year ended 30 June 2021 the exploration expenditure incurred pertains to the following:
5252
Annual Report 2021
NOTE 9. EXPLORATION AND EVALUATION (CONTINUED)
Australian Projects
Exploration expenditure incurred and expensed for Australia was $3,019,153.
Finland Projects
Exploration expenditure incurred and expensed for Finland was $2,269,676
US Projects
Exploration expenditure incurred and expensed for the in the US was $6,008 this relates to the storage of
exploration equipment.
(2) During the year ended 30 June 2020, the Group made a decision to withdraw from the Ecru Project and therefore
made an impairment expense of $68,172. This decision would result in the Group not earning into the Ecru joint
venture with Rengold.
(3) Expenditure incurred but not expensed for Australia was $1,400,000. In October 2020, S2 entered into a binding
agreement with private company Black Raven Mining Pty Ltd (“BRM”) to earn a majority interest in a group of
tenements known as the Jillewarra project (see S2 ASX announcement dated 5th October 2020). The farm-in
comprised an up-front non-cash consideration, an earn-in phase, and a potential free carry, as summarised
below:
Issue of 5 million S2 shares to BRM at A$0.28, representing a consideration of A$1.4m (issued 5th October 2020)
o
o Minimum expenditure of A$2m within 2 years
o Cumulative expenditure of A$5m within 5 years to earn a 51% interest
o Completion of a study on Inferred Mineral Resources of at least 250,000 ounces of gold (or base metal
equivalent) within 7 years to earn a 70% interest
o On completion of this study by S2, BRM can elect to contribute, dilute, or revert to a free carried interest (“FCI”)
to commencement of commercial production
In the event of BRM opting for a FCI, BRM’s interest reduces to 25% and S2’s interest increases to 75%, and
BRM repays its free carry from 100% of its share of future revenue
In the event of S2 not completing a study within 7 years, S2’s interest decreases to 49%
o
o
NOTE 10. TRADE AND OTHER PAYABLES
Trade and other payables (1)
30 June
2021
$
30 June
2020
$
756,903
286,131
(1) These amounts generally arise from the usual operating activities of the Group and are expected to be settled
within 12 months. Collateral is not normally obtained.
5353
Annual Report 2021
NOTE 11. SHARE CAPITAL
Ordinary shares fully paid
Movement in Share Capital
30 June
2021
No. of Shares
30 June
2021
$
30 June
2020
No. of Shares
30 June
2020
$
314,891,179
61,184,670
247,915,179
52,552,523
Share Placement
Share issue to BRM for Jillewarra Project - See Note
9 iii.
61,976,000
7,238,790
5,000,000
1,393,357
-
-
-
-
Ordinary shares fully paid
Balance at beginning of year
Balance at year end
247,915,179
52,552,523
247,915,179
52,552,523
314,891,179
61,184,670
247,915,179
52,552,523
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
NOTE 12. RESERVES
Share-based payments reserve (1)
Other reserve (2)
Foreign currency translation reserve (3)
Revaluation reserve (4)
30 June
2021
$
30 June
2020
$
2,862,214
144,517
352,665
3,536,932
6,896,328
4,016,601
144,517
184,683
-
4,345,801
(1) The share-based payments reserve recognises the fair value of the options issued to Directors, employees and service
providers.
Each share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by
the recipient on receipt of the option. The options carry neither rights to dividends or voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry.
In the year ended 30 June 2021, $2,310,305 in relation to the fair value of options which has lapsed or expired was
transferred to accumulated losses.
(2) The other reserve recognises the remaining non-controlling interest (33%) that was purchased from the Sakumpu
vendors on 30 November 2015. Sakumpu Exploration Oy is a registered entity in Finland.
(3) Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of.
(4) The revaluation reserve recognises the change in fair value of investments. Please refer to note 7 of these
financials.
5454
Annual Report 2021
NOTE 13. SHARE-BASED PAYMENTS
The following share-based payments arrangements were in existence during the current reporting year:
Options
Options Series
Number Issued
(6) Issued at 7 October
(7) Issued at 7 October
(8) Issued 17 October 2017
(9) Issued 21 October 2017
(10) Issued 28 November
(11) Issued 5 March 2019
(12) Issued 12 November
(13) Issued 3 December
(14) Issued 27 August 2020
(15) Issued 5 October 2020
(16) Issued 17 November
Total
1,000,000
11,950,000
7,750,000
3,400,000
2,900,000
50,000
18,000,000
400,000
200,000
2,000,000
7,350,000
55,000,000
Number at
30
June
2021
-
-
7,750,000
2,350,000
2,400,000
50,000
18,000,000
200,000
200,000
2,000,000
7,350,000
40,300,000
Grant Date
Expiry Date
Exercise
Price $
Fair value at
Grant Date
$
07/10/2016
07/10/2016
17/10/2017
21/10/2017
28/11/2018
05/03/2019
12/11/2019
03/12/2019
27/08/2020
05/10/2020
17/11/2020
06/10/2020
06/10/2020
16/10/2021
20/10/2021
27/11/2022
04/03/2023
11/11/2023
02/12/2023
26/08/2024
04/10/2024
16/11/2024
0.35
0.61
0.23
0.23
0.14
0.11
0.30
0.30
0.30
0.39
0.38
0.16
0.23
0.08
0.08
0.05
0.04
0.04
0.04
0.10
0.14
0.14
(6) .The 1,000,000 options in series 6 which vested immediately were issued to a Director of the Group.
(7) The 11,950,000 options in series 7 comprised 6,500,000 options issued to the Directors of the Group which
vested immediately, 2,700,000 options were issued to employees under the Employee Share Option Plan which
vest one year from grant date and 2,750,000 options were issued to service providers which vest one year from
grant date. For the service provider options, the value of services received was unable to be measured reliably
and therefore the value of services received was measured by reference to the fair value of options issued.
(8) The 7,750,000 options in series 8 which vested immediately were issued to the Directors of the Group which
vested immediately.
(9) The 3,400,000 options in series 9 comprised 2,950,000 options issued to employees under the Employee Share
Option Plan which vest one year from grant date and 450,000 options were issued to service providers which
vest one year from grant date. For the service provider options, the value of services received was unable to be
measured reliably and therefore the value of services received was measured by reference to the fair value of
options issued.
(10) The 2,900,000 options in series 10 comprised 2,500,000 were issued to employees under the Employee Share
Option Plan which vest one year from grant date and 400,000 options were issued to service providers which
vest one year from grant date. For the service provider options, the value of services received was unable to be
measured reliably and therefore the value of services received was measured by reference to the fair value of
options issued.
(11) The 50,000 options in series 11 which vests one year from grant date was issued to an employee under the
Employee Share Option Plan.
(12) The 18,000,000 options in series 12 comprised 15,500,000 options issued to the Directors of the Group which
vested immediately, 2,100,000 options were issued to employees under the Employee Share Option Plan which
vest one year from grant date and 400,000 options were issued to service providers which vest one year from
grant date. For the service provider options, the value of services received was unable to be measured reliably
and therefore the value of services received was measured by reference to the fair value of options issued.
5555
Annual Report 2021
NOTE 13. SHARE-BASED PAYMENTS (CONTINUED)
(13) The 400,000 options in series 13 which vests one year from grant date were issued to employees under the
Employee Share Option Plan.
(14) The 200,000 options in series 14 which vests one year from grant date were issued to a service provider under
the Service Provider Option Plan. For the service provider options, the value of services received was unable to
be measured reliably and therefore the value of services received was measured by reference to the fair value
of options issued.
(15) The 2,000,000 options in series 15 which vests one year from grant date was issued to an employee under the
Employee Share Option Plan.
(16) The 7,350,000 options in series 16 comprised 4,500,000 options issued to the Directors of the Group which
vested immediately, 2,450,000 options were issued to employees under the Employee Share Option Plan which
vest one year form grant date and 400,000 options were issued to service providers which vest one year from
grant date. For the service provider options, the value of services received was unable to be measured reliably
and therefore the value of services received was measured by reference to the fair value of options issued.
The weighted average fair value of the share options granted during the year is $0.14.
The total expense of the share based payments for the year was:
Options issued under Directors Option Plan
Options issued under Employee Share Plan
Options issued under Service Provider Plan
30 June
2021
$
646,380
457,557
51,981
1,155,918
30 June
2020
$
669,982
111,466
24,746
806,194
The weighted average contractual life for options outstanding at the end of the year was 2.03 years.
Options were priced using a Black-Scholes option pricing model using the inputs below:
Series 6
Series 7 Series 8
Series 9 Series 10
Grant date share price 0.25
0.35
Exercise price
100%
Expected volatility
4 years
Option life
0.00%
Dividend yield
3.35%
Interest rate
0.44
0.61
80%
4 years
0.00%
2.87%
0.16
0.23
80%
4 years
0.00%
2.34%
0.23
0.23
80%
4 years
0.00%
2.34%
0.09
0.14
80%
4 years
0.00%
2.29%
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest rate
Series 12
0.115
0.30
80%
4 years
0.00%
0.86%
Series 13
0.115
0.30
80%
4 years
0.00%
0.86%
Series 14
0.20
0.30
80%
4 years
0.00%
0.43%
Series 15
0.28
0.39
80%
4 years
0.00%
0.29%
Series 11
0.07
0.11
80%
4 years
0.00%
1.75%
Series 16
0.28
0.38
80%
4 years
0.00%
0.29%
5656
Annual Report 2021
NOTE 13. SHARE-BASED PAYMENTS (CONTINUED)
The following reconciles the outstanding share options granted in the year ended 30 June 2021:
30 June
2021
No. of Options
30 June
2020
No. of Options
30 June
2021
Weighted
average
exercise price
$
30 June
2020
Weighted
average
exercise price
$
Balance at the beginning of the year
41,600,000
0.34
50,450,000
Granted during the year
Exercised during the year
Expired during the year (1)
Balance at the end of the year
9,550,000
-
(10,850,000)
40,300,000
Un-exercisable at the end of the year
Exercisable at end of the year
5,050,000
35,250,000
(1) Options expired or cancelled during the year
0.38
-
0.56
0.29
0.38
0.28
18,400,000
-
(27,250,000)
41,600,000
2,900,000
38,700,000
0.35
0.30
0.27
0.34
0.30
0.34
For the year ended 30 June 2021, 10,850,000 employee, director and service provider share options were lapsed or
expired.
No amounts are unpaid on any of the shares. No person entitled to exercise an option had or has any rights by virtue of
the option to participate in any share issue of any other body corporate.
NOTE 14. DIVIDENDS
There were no dividends recommended or paid during the year ended 30 June 2021.
NOTE 15. KEY MANAGEMENT PERSONNEL DISCLOSURES
Short term employee benefits
Post-employment benefits
Annual Leave benefits
Share-based payment
Detailed remuneration disclosures are provided in the Remuneration Report.
30 June
2021
$
30 June
2020
$
665,879
55,464
42,468
854,979
1,618,790
538,209
43,433
23,390
669,982
1,275,015
5757
NOTE 16. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH USED IN OPERATING ACTIVITIES
Annual Report 2021
Loss for the year
Depreciation
Equity Settled share-based payment transaction
Exploration expenditure written off
Income tax benefit/(expense)
Other (gain)/losses – net
Gain on disposal of subsidiary
Share of associate’s loss
Associate impairment (reversal)/ expense
Fair Value adjustment for reclassification of investment
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions
(Increase)/Decrease in receivables
30 June
2021
$
(7,234,407)
151,849
1,155,918
-
-
310,218
(46,855)
159,042
-
(1,132,554)
687,652
37,385
85,203
30 June
2020
$
(7,475,048)
140,999
806,194
68,172
-
(61,970)
-
1,494,960
(586,270)
-
(374,380)
(18,246)
318,570
Net cash outflow from operating activities
(5,826,549)
(5,687,019)
NOTE 17. BASIC LOSS PER SHARE
30 June
2021
$
30 June
2020
$
(a)
Reconciliation of loss used in calculating loss per share
Basic loss per share
Loss attributable to the ordinary equity holders used in calculating basic loss per
share
(7,234,407)
(7,475,048)
(b) Weighted average number of shares used as the Denominator
Number
Number
Ordinary shares used as the denominator in calculating basic loss per share
309,145,641
247,915,179
(c) Basic loss per share
Basic loss per share
Where loss per share is non-dilutive, it is not disclosed.
Cents
(2.34)
Cents
(3.02)
5858
Annual Report 2021
NOTE 18. COMMITMENTS
The Group must meet the following tenement expenditure commitments to maintain them in good standing until they
are joint ventured, sold, reduced, relinquished, exemptions from expenditure are applied or are otherwise disposed of.
These commitments, net of farm outs, are not provided for in the financial statements and are:
Not later than one year
After one year but less than two years
After two years but less than five years
After five years*
* Per annum
NOTE 19. RELATED PARTY TRANSACTIONS
30 June
2021
$
1,096,345
982,189
1,452,591
190,749
3,721,874
30 June
2020
$
261,962
261,962
175,127
-
699,051
Other than the Directors and key management personnel salaries and options described in Note 15 and the Remuneration
Report, there were no related party transactions for the year ended 30 June 2021.
NOTE 20. JOINT VENTURES
The Group has interests in the following joint venture operations:
Tenement
Area
Activities
Eundynie
Nickel
2021
2020
80%
80%
5959
NOTE 21. PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Fair value and other comprehensive income reserve
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
Annual Report 2021
30 June
2021
$
7,171,975
8,667,169
15,839,144
297,562
102,203
399,765
15,439,379
30 June
2020
$
6,513,905
3,284,331
9,798,236
243,981
177,568
421,549
9,376,687
61,184,670
2,862,214
-
(48,607,505)
15,439,379
52,552,523
4,016,601
-
(47,192,435)
9,376,687
30 June
2021
$
30 June
2020
$
(3,725,375)
-
(3,725,375)
(7,419,490)
(33,229)
(7,452,719)
6060
Annual Report 2021
NOTE 22. SUBSIDIARIES
Name of entity
Third Eye Pty Ltd (1)
Southern Star Exploration Pty Ltd
Sirius Europa Pty Ltd
Norse Exploration Pty Ltd
Sakumpu Exploration Oy
S2 Exploration Quebec Inc.
S2 Sverige AB (2)
S2RUS Pty Ltd
S2RUS LLC
Nevada Star Exploration LLC
Country of
incorporation
Australia
Australia
Australia
Australia
Finland
Canada
Sweden
Australia
United States
United States
Class of Shares
Equity Holding
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2021
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
2020
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1)Third Eye Pty Ltd was incorporated during the period.
(2)S2 Sverige AB a dormant subsidiary was disposed of during June 2021.
NOTE 23. EVENTS OCCURRING AFTER THE REPORTING YEAR
On 16 August the Group through its wholly owned Finnish subsidiary Sakumpu Exploration Oy entered into a binding
farm-in agreement with Rupert Resources on two exploration licence applications covering an area of 37 square
kilometres in the Central Lapland Greenstone Belt in northern Finland. Under the agreement, Rupert can spend up to
3.4 million Euro’s to earn a 70% interest in the Sikavaara East and Sikavaara West licences, with an initial expenditure
requirement of 1.2 million Euro’s over the first three years.
On 30 August 2021, the Group completed its placement by issuing 41,483,676 shares to institutional and sophisticated
investors at an issue price of $0.12 resulting in the Group having additional working capital of $4,978,041. The placement
was undertaken within the Group’s 25% capacity under ASX Listing Rule 7.1 and 7.1A and accordingly no shareholder
approval was required in connection with the equity raising.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may
significantly affect the operation of the group, the results of those operations or the state of affairs of the group in
subsequent financial years.
NOTE 24. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services
provided by the auditor of the Group:
Audit services
Total remuneration for audit services
30 June
2021
$
40,905
40,905
30 June
2020
$
36,845
36,845
6161
Annual Report 2021
NOTE 25. FAIR VALUE MEASUREMENT
This note provides an update on the judgements and estimates in determining the fair values of the financial instruments
since the last annual financial report.
Fair Value Hierarchy
To provide an indication about the reliability of the inputs used in determining fair value. The Group classifies its financial
instruments into the three levels prescribed under accounting standards. An explanation of each level follows
underneath the table.
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value.
Level 1
Level 2
Level 3
Total $
As at 30 June 2021
$
Financial assets as FVOCI –
Equity Securities
6,246,071
$
-
$
-
6,246,071
There were no transfers between levels during the year. The Group’s policy is to recognise transfers into and out of the
fair value hierarchy levels at balance date.
The fair value of the financial assets and liabilities held by the Group must be estimated for recognition, measurement
and /or disclosure purposes. The Group measures fair value by level, per the following fair value measurement
hierarchy:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or the liability,
either directly (as prices) or indirectly (derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Valuation techniques used to determine fair values
The Group did not have any financial instruments that are recognised in the financial statements where their carrying
value differed from the fair value. The fair value of assets and liabilities are included at an amount at which the instrument
could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The
carrying value of amounts of cash and short term trade and other receivables, trade payables and other current liabilities
approximate their fair value largely due to the short term maturities of these payments.
Financial assets at fair value through other comprehensive income – equity securities
The fair value of the equity holdings held in ASX companies are based on the quoted market prices from the ASX on the
last trading day prior to the period end.
6262
Financial Report 2021
Directors’ Declaration
The Directors of the Group declare that:
1. The financial statements and notes as set out on pages 24 to 62 are in accordance with the Corporations Act 2001,
and
(a) comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(b) give a true and fair view of the financial position of the Group as at 30 June 2021 and of its performance for the
year ended on that date.
2. The financial report also complies with International Financial Reporting Standards as disclosed in note 1 to the
financial statements.
3. The Director acting in the capacity of Chief Executive Officer has declared that:
(a)
the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
(b)
the financial statements and notes for the financial year comply with the accounting standards; and
(c)
the financial statements and notes for the financial year give a true and fair view.
4. In the opinion of the Directors there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable.
5. The remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report comply with
Australian Accounting Standards AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations
Regulations 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Mark Bennett
Executive Chairman
Perth
23 September 2021
6363
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY ASHLEIGH WOODLEY TO THE DIRECTORS OF S2 RESOURCES
LIMITED
As lead auditor of S2 Resources Limited for the year ended 30 June 2021, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of S2 Resources Limited and the entities it controlled during the period.
Ashleigh Woodley
Director
BDO Audit (WA) Pty Ltd
Perth, WA
23 September 2021
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of S2 Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of S2 Resources Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
During the year, the Group entered into a binding
Our procedures included, but were not limited to:
agreement to earn a majority interest in a group of
tenements known as the Jillewarra project. The
consideration paid under this agreement has been
capitalised to the exploration and evaluation asset in
accordance with the Group’s accounting policy.
As the carrying value of the capitalised exploration and
evaluation asset represents a significant asset of the
Group at 30 June 2021, we considered it necessary to
assess whether any facts or circumstances exist to
suggest that the carrying amount of this asset may
exceed its recoverable amount.
Judgement is applied in determining the treatment of
exploration expenditure in accordance with Australian
Accounting Standard AASB 6 Exploration for and
·
Obtaining a schedule of the areas of interest held
by the Group and assessing whether the rights to
tenure of those areas of interest remained current
at balance date;
·
Vouching the consideration paid for the earn-in
interest to the signed farm-in agreement and
performing a re-calculation of the value of the
shares issued;
·
Considering the status of the ongoing exploration
programmes in the respective areas of interest by
holding discussions with management, and
reviewing the Group’s exploration budgets, ASX
announcements and director’s minutes;
Evaluation of Mineral Resources. In particular, whether
·
Considering whether any such areas of interest had
facts and circumstances indicate that the exploration
and evaluation assets should be tested for impairment.
reached a stage where a reasonable assessment of
economically recoverable reserves existed;
·
Considering whether any facts or circumstances
existed to suggest impairment testing was
required; and
·
Assessing the adequacy of the related disclosures
in Notes 9 and 1(a) to the Financial Statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 22 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of S2 Resources Limited, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Ashleigh Woodley
Director
Perth, 23 September 2021
Annual Report 2021
Additional ASX Information
The shareholder information set out below was applicable as at the dates specified.
Unlisted Securities
Options (Current as at 20 September 2021)
Number on issue
Number of
holders
Options expiring 17 October 2021 at an exercise price of $0.23
Options expiring 20 October 2021 at an exercise price of $0.23
Options expiring 27 November 2022 at an exercise price of $0.14
Options expiring 4 March 2023 at an exercise price of $0.11
Options expiring 11 November 2023 at an exercise price of $0.30
Options expiring 2 December 2023 at an exercise price of $0.30
Options expiring 26 August 2024 at an exercise price of $0.30
Options expiring 4 October 2024 at an exercise price of $0.39
Options expiring 16 November 2024 at an exercise price of $0.38
Holders of over 20% of unlisted securities
7,750,000
2,350,000
2,400,000
50,000
18,000,000
200,000
200,000
2,000,000
7,350,000
4
6
5
1
10
1
1
1
11
There are the following holders of more than 20% of unlisted securities as at 20 September 2021:
Mark Bennett
Distribution of Equity Securities
Number held
12,000,000
Analysis of numbers of ordinary shareholders by size of holding:
1
1,001
5,001
10,001
100,001
Number of Shareholders
-
-
-
-
and over
1,000
5,000
10,000
100,000
1,969
1,167
550
1,017
354
5,507
There are 3,173 holders holding less than a marketable parcel of ordinary shares based on the closing market price as at
20 September 2021.
Ordinary Shares subject to escrow
There are zero ordinary shares subject to either regulatory or voluntary escrow.
On-Market Buy-Back
There is no current on-market buy-back.
Voting Rights
The voting rights attaching to each class of equity securities are set out below:
(a)
Ordinary Shares: On a show of hands every member present at a meeting in person or by proxy shall have one
vote and upon a poll each share shall have one vote.
(b)
Options: These securities have no voting rights.
6969
Annual Report 2021
Substantial Holders (Current as at 20 September 2021)
Substantial holders of equity securities in the Company as per substantial shareholders notices are set out below:
Ordinary Shares
Name
Mark Gareth Creasy, Yandal Investments Pty Ltd, Ponton Minerals Pty Ltd,
Lake Rivers Gold Pty Ltd and Free CI Pty Ltd
Merian Global Investors (UK) Limited
Paradice Investment Management Pty Ltd
Number held
Percentage
of issued
shares
67,419,935
18.92%
46,621,574
14.93%
23,341,794
7.53%
Equity Security Holders (Current as at 20 September 2021)
The names of the twenty largest holders of quoted equity securities (ordinary shares) are listed below:
Rank Name
Units
% of Units
1
2
3
4
5
6
6
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
YANDAL INVESTMENTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PONTON MINERALS PTY LTD
FREE CI PTY LTD
LAKE RIVERS GOLD PTY LTD
61,671,036
42,482,707
30,616,099
8,312,410
8,312,409
8,312,409
BT PORTFOLIO SERVICES LIMITED
7,000,000
BLACK RAVEN MINING PTY LTD
5,000,000
GURRAVEMBI INVESTMENTS PTY LTD
5,000,000
DR MARK ANTHONY BENNETT
BRINDABELLA CAPITAL MANAGEMENT PTY LTD
BELLARINE GOLD PTY LTD
MARTINI 29 PTY LTD
PERTH SELECT SEAFOODS PTY LTD
BB CAPITAL PTY LTD
MR ALAIN CHEVALIER
ROXTRUS PTY LTD
MR ANDREW JOHN CLARINGBOLD
SEASCAPE CAPITAL PTY LTD
REDLAND PLAINS PTY LTD
4,095,000
4,000,000
3,025,000
3,000,000
3,000,000
2,506,411
2,100,000
2,005,946
2,000,000
2,000,000
1,922,187
17.31
11.92
8.59
2.33
2.33
2.33
1.96
1.40
1.40
1.15
1.12
0.85
0.84
0.84
0.70
0.59
0.56
0.56
0.56
0.54
Total of Top 20
Total Remaining Holders Balance
206,361,614
57.91
150,013,241
42.09
7070 Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
Annual Report 2021
Tenement Schedule at 30 June 2021
Project
Tenement ID
Registered Holder
Location
Ownership %
Status
Western Australia
Fraser Range
E28/2791
Southern Star Pty Ltd
Fraser Range
Fraser Range
E28/2792
Southern Star Pty Ltd
Fraser Range
Fraser Range
E28/2794
Southern Star Pty Ltd
Fraser Range
E51/1602
Tanzi Pty Ltd
E51/1603
Tanzi Pty Ltd
E51/1604
Tanzi Pty Ltd
Jillewarra
Jillewarra
Jillewarra
E51/1617
Black Raven Mining Pty Ltd
Jillewarra
E51/1906
Black Raven Mining Pty Ltd
Jillewarra
E51/1915
Black Raven Mining Pty Ltd
Jillewarra
M51/270
M51/353
M51/451
Tanzi Pty Ltd
Tanzi Pty Ltd
Tanzi Pty Ltd
P51/2696
Wood, Sandra
Jillewarra
Jillewarra
Jillewarra
Jillewarra
P51/2950
Black Raven Mining Pty Ltd
Jillewarra
P51/3082
Black Raven Mining Pty Ltd
Jillewarra
100%
100%
100%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
earning 51%
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
E51/1955
Black Raven Mining Pty Ltd
Jillewarra
earning 51% when granted Application
E51/1956
Black Raven Mining Pty Ltd
Jillewarra
earning 51% when granted Application
E51/1965
Black Raven Mining Pty Ltd
Jillewarra
earning 51% when granted Application
E51/1966
Black Raven Mining Pty Ltd
Jillewarra
earning 51% when granted Application
E51/2050
Third Eye Resources Pty Ltd
Jillewarra
earning 51% when granted Application
E51/2051
Third Eye Resources Pty Ltd
Jillewarra
earning 51% when granted Application
E51/2052
Third Eye Resources Pty Ltd
Jillewarra
earning 51% when granted Application
E51/2053
Third Eye Resources Pty Ltd
Jillewarra
earning 51% when granted Application
E51/2054
Third Eye Resources Pty Ltd
Jillewarra
earning 51% when granted Application
M51/885
Wood, Sandra
Jillewarra
earning 51% when granted Application
Three Springs
E70/5380
Southern Star Pty Ltd
Three Springs
Three Springs
E70/5381
Southern Star Pty Ltd
Three Springs
100%
100%
West Murchison E70/5382
Southern Star Pty Ltd
West Murchison 100%
West Murchison E09/2390
Southern Star Pty Ltd
West Murchison 100%
West Murchison E09/2391
Southern Star Pty Ltd
West Murchison 100%
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
E15/1298
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E15/1461
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E15/1541
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E63/1142
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E63/1712
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E63/1725
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E63/1756
Polar Metals Pty Ltd
Lake Cowan
100% nickel
E63/1757
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
7171
Annual Report 2021
M15/651
M15/710
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Polar Metals Pty Ltd
Lake Cowan
100% nickel
M15/1814
Polar Metals Pty Ltd
Lake Cowan
100% nickel
M63/230
M63/255
M63/269
M63/279
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P15/5958
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P15/5959
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1587
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1588
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1589
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1590
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1591
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1592
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1593
Polar Metals Pty Ltd
Lake Cowan
100% nickel
P63/1594
Polar Metals Pty Ltd
Lake Cowan
100% nickel
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
M63/662
Lake Cowan
100% nickel when granted
Application
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Polar Bear
Eundynie JV
E15/1458
Eundynie JV
E15/1459
Eundynie JV
E15/1464
Eundynie JV
E63/1726
Eundynie JV
E63/1727
Eundynie JV
E63/1738
Polar Metals Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Polar Metals Pty Ltd /
Shumwari Pty Ltd
Lake Cowan
80% nickel
Lake Cowan
80% nickel
Lake Cowan
80% nickel
Lake Cowan
80% nickel
Lake Cowan
80% nickel
Lake Cowan
80% nickel
Norcott
Norcott
New South Wales
E15/1487
Polar Metals Pty Ltd
Mt Norcott
100% nickel
E63/1728
Polar Metals Pty Ltd
Mt Norcott
100% nickel
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Koonenberry
ELA6198
Third Eye Resources Pty Ltd Koonenberry
100% when granted
Koonenberry
ELA6199
Third Eye Resources Pty Ltd Koonenberry
100% when granted
Koonenberry
ELA6200
Third Eye Resources Pty Ltd Koonenberry
100% when granted
Application
Application
Application
Finland
Exploration Licenses
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Kerjonen
ML2015:0061
Keulakkopää
ML2016:0058
Ruopas
Pahtapuura
ML2017:0040
Paana Central
ML2018:0081
Aakenusvaara
ML2018:0105
Paana W2
ML2018:0107
Putaanperä
ML2016:0063
Sakumpu Exploration Oy
Central Lapland
100%
Sakumpu Exploration Oy
Central Lapland
100%
Sakumpu Exploration Oy
Central Lapland
100%
Sakumpu Exploration Oy
Central Lapland
100%
Sakumpu Exploration Oy
Central Lapland
100%
Sakumpu Exploration Oy
Central Lapland
100%
Granted
Granted
Granted
Granted
Granted
Granted
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
7272
Annual Report 2021
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Sakumpu Exploration Oy
Central Lapland
100% when granted
Application
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Central Lapland
Kinross JV
Kinross JV
Kinross JV
Kinross JV
Sikavaara E
ML2016:0056
Paana West
ML2017:0028
Paana East
ML2017:0029
Selkä
ML2017:0037
Nuttio
ML2017:0041
Hanhijarvi
ML2017:0112
Pikkulaki
ML2017:0111
Ruopas 1
ML2018:0065
Pahasvuoma
ML2019:0085
Rova
ML2019:0086
Sikavaara W
ML2019:0107
Ruopas
Pahtapuura 1
ML2020:0041
Ruopas
Ollerokka
ML2020:0042
Ruopas
ML2020:0043
Paana Silas
ML2021:0057
Paanapyytö
ML2021:0058
Palvanen
ML2016:0062
Mesi
ML2017:0034
Home
ML2017:0042
Home 1
ML2018:0109
Sakumpu Exploration Oy
Central Lapland
Sakumpu Exploration Oy
Central Lapland
Sakumpu Exploration Oy
Central Lapland
Sakumpu Exploration Oy
Central Lapland
Sakumpu Exploration Oy
Central Lapland
100% when granted
100% (Kinross earning
70%)
100% when granted
(Kinross earning 70%)
100% when granted
(Kinross earning 70%)
100% when granted
(Kinross earning 70%)
100% when granted
(Kinross earning 70%)
100% when granted
(Kinross earning 70%)
Application
Granted
Application
Application
Application
Application
Application
Exploration Reservations
Central Lapland
Central Lapland
Kehrävarsi
VA2021:0028
Kevuvuoma
VA2021:0029
Sakumpu Exploration Oy
Central Lapland
Sakumpu Exploration Oy
Central Lapland
7373 Financial Report 2021
Competent Persons Statement
The information in this report that relates to exploration results from Australia and Finland is based on information
compiled by John Bartlett who is an employee of the company. Mr Bartlett is a member of the Australasian Institute of
Mining and Metallurgy. Mr Bartlett has sufficient experience of relevance to the style of mineralisation and the types of
deposits under consideration, and to the activities undertaken, to qualify as Competent Persons as defined in the 2012
Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Mr Bartlett consents to the inclusion in this report of the matters based on information in
the form and context in which it appears.
7474